Guide to the Patient Trust and Medicare Bonds

by Matthew Bruns

Surety bonds exist to protect both companies and consumers, make sure laws and regulations are followed, and as a way to seek financial redress for those harmed. They are three-party agreements between a surety company, a principal (the company performing the service) and the obligee (the recipient of the work or the entity requiring the bond). Two surety bonds exist to protect those living with everyday medical or living care:
- Patient Trust bonds
- Medicare bonds
The Medicare bonds are aimed to reduce fraud, and guarantee unpaid claims, penalties and assessments that the Center for Medicare and Medicaid Service (CMS) imposes. Manufacturers and suppliers of durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) are required to buy Medicare bonds, as are all pharmacies and nursing homes. Should a nursing home or pharmacy handle patients’ money unethically, the bond issuer—often an insurance or surety company—seeks recompense for the wronged patients.
Last fall, a rule by the CMS took effect, requiring DMEPOS providers and pharmacies to purchase $50,000 surety bonds to conduct business and bill Medicare. The CMS applied the mandate starting in January 2009 with an original deadline of Oct. 1.
Some pharmacies received an extension until Dec. 31, 2009. Nevertheless, DMEPOS suppliers need to purchase a bond for each operating location. Concerns arose from the CMS that patients in rural areas may struggle to find medical care if suppliers pull out of the market because of the bond requirement.
Another type of surety bond in Texas and many other states, the patient trust bond, works similarly. Long-term care facilities are required almost everywhere in the country to purchase a patient trust bond. To the patients’ benefit, the bond makes certain that the facility does not improperly manage patients’ money. If a valid claim is filed against the bond by a patient or family member, the facility could pay the whole value of the bond.
Patient trust bonds can provide a peace of mind to patients and their families. But just because these bonds have widely become the law, it’s important to check that assisted-living, long-term and nursing homes meet laws and regulations. When you or your loved ones rely on living and medical assistance, it’s comforting to know that the bonds are on your side.

About the Author This is a guest post by Matt Bruns, a principal at SuretyBonds.com. Matt is writing as part of their Surety Bond Education Program.”