Know About Medicare & Medicaid Bonds

Medicare & Medicaid Bonds are used to eradicate any kind of billing frauds in durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) manufacturing or supplying. The bond ensures that all the manufacturers and suppliers bill appropriately. The bond is used to protect the consumers from any malpractices or embezzlements committed by the manufacturers or suppliers. This ensures the customers that the business with whom they are working for are operating in accordance with the state laws.

Cost of the Medicare & Medicaid Bonds

The cost of these bonds varies for each state as the personal specific requirements of the states are different. You have to pay a premium amount which is a certain percentage of the total bond amount. Usually, the bonds cost start from $50,000 and the rates increase because of many reasons. The percentage costs vary each company. Usually, the percentage of premium lies in between 5-10% of the total bond amount.

The DMEPOS suppliers must maintain a minimum of $50,000 of coverage for each National Provider Identifier (NPI) that is under their operation. If they have five NPIs then they must maintain a coverage of $250,000.

How Does This Bond Works?

The surety insurance contract gives some financial security that the business will fulfill the commitments according to the contract. In Medicare & Medicaid Surety Bonds, the point of the bonds is to make sure that the businesses bill properly. Similar to other bonds in Medicare & Medicaid bonds also there is a requirement of three parties.

  • Obligee: This is the government agency which needs the bond from the manufacturers and suppliers.

  • Principal: This is the business that buys the bond for a specific amount to guarantee their work performance and they are bearers for any mishap.

  • Surety: This is the underwriter who issues the bond. These are handled by the insurance agencies.

Under any circumstances, if the principal feels to meet the obligations, then the obligee will claim in opposition to the bond. At that time the surety has to pay the amount to the obligee. The principal should repay the amount to the principal.


These bonds are used to eradicate the frauds that have been happening in DMEPOS due to suppliers and manufacturers. They just want to make sure that there is no misuse of billing. All the DMEPOS manufacturers and suppliers should buy this bond.

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