OIG to CMS: Move Forward With Surety Bond Rule for Home Health Agencies

The Centers for Medicare and Medicaid Services (CMS) needs to put into effect a rule it made more than a decade ago requiring home health agencies to obtain surety bonds as a mechanism to protect Medicare from overpayments, says the Office of the Inspector General (OIG). 

It’s been 15 years since CMS first promulgated the rule, but the requirement has remained unimplemented.

“The surety bond requirement is an important program integrity tool that provides a sentinel effect of keeping fraudulent providers out of the program and a means for Medicare to guarantee recoupment of some overpayments,” says OIG in its executive summary of the study. “Not implementing this tool leaves Medicare at risk of losing millions of dollars in overpayments.”

Under the rule, home health agencies would need to get surety bonds in the amount of $50,000 or 15% of the annual amount paid to the agency by Medicare, whichever is greater.

Between 2007 and 2011, CMS made about $590 million in overpayments to home health agencies. As of Feb. 29, 2012, those agencies still owed CMS approximately $408 million of those excess reimbursements. 

If agencies had been following surety bond requirement, OIG estimates that CMS could have recovered at least $39 million of those remaining overpayments. Out of 2,000 home health agencies, 21% still had overpayment amounts, excluding interest, of more than $50,000 each, while more than a quarter had outstanding excess reimbursements of more than $500,000. 

“We recommend that CMS implement the [home health agency] surety bond requirement,” says OIG, further recommending that to recoup a higher percentage of overpayments made, CMS should also consider increasing the surety bond amounts above $50,000 for agencies with high overall Medicare payments. 

CMS reportedly agreed with the recommendation.

Read OIG’s report

Written by Alyssa Gerace

Alyssa Gerace

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