On January 2, 2009, the Centers for Medicare and Medicaid Services ("CMS") issued a final rule requiring suppliers of durable medical equipment, prosthetics, orthotics and supplies ("DMEPOS") to post a base surety bond in the amount of $50,000 to participate in Medicare.

A surety bond requirement was mandated by the Balanced Budget Act of 1997. In addition to the base surety bond, CMS is imposing additional, elevated surety bond requirements on so-called "high risk" suppliers. DMEPOS suppliers who have had an adverse legal action within the 10 years preceding enrollment, revalidation, or reenrollment must pay an additional elevated surety bond of $50,000 per occurrence. The rule defines a final adverse action as:

• A Medicare-imposed revocation of any Medicare billing privileges;
• Suspension or revocation of a license to provide health care by any state licensing authority;
• Revocation or suspension by an accreditation organization;
• A conviction of a federal or state felony offense [as defined in Section 424.535 of the Conditions for Medicare Payment] within the last ten years preceding enrollment, revalidation, or re-enrollment; or
• An exclusion or debarment from participation in a federal or state health care program.

DMEPOS suppliers seeking enrollment or with a change in ownership must meet the surety bond requirements as of May 4, 2009.

Existing DMEPOS suppliers must meet the surety bond requirements as of October 2, 2009.

CMS has provided exceptions to the surety bond requirements that include, among others, an exception for physicians and non-physician practitioners who furnish items to their own patients as part of physician services.