What is an Express Scripts Performance Bond?
An Express Scripts Performance Bond is a $500,000 surety bond required for independent pharmacies that wish to contract with Express Scripts and participate in their pharmacy benefit management (PBM) network. This bond serves as a financial guarantee that your pharmacy will fulfill all contractual obligations with Express Scripts.
🏥Who Needs This Bond?
Independent pharmacies seeking to become Express Scripts network providers must obtain this bond as part of the credentialing process. It’s a mandatory requirement before your Provider Agreement can be executed.
🛡️What Does It Guarantee?
The bond guarantees that your pharmacy will adhere to all provisions of the contract, including timely medication delivery, accurate prescription processing, compliance with regulations, and proper billing practices.
💰Who Does It Protect?
The bond protects Express Scripts and their plan sponsors (insurance companies, employers) from financial losses if your pharmacy fails to meet contractual obligations or commits fraud.
Important Note: A surety bond is NOT insurance. While insurance protects you (the bondholder), a surety bond protects Express Scripts (the obligee). If a claim is paid on your bond, you are legally required to reimburse the surety company for the full amount paid, plus any associated costs and fees.
Why Does Express Scripts Require This Bond?
Express Scripts requires performance bonds to mitigate financial risk and protect their plan sponsors. Here’s why:
⚠️Risk Mitigation
Independent pharmacies represent a credit risk to Express Scripts’ plan sponsors, who pay claims for pharmacy services. The bond provides a financial safety net if a pharmacy defaults on its obligations or goes out of business.
✅Pre-Qualification
The surety bond underwriting process pre-qualifies pharmacies by verifying their creditworthiness, financial stability, and capacity to fulfill contracts. This helps ensure only qualified pharmacies join the network.
💵Financial Guarantee
The $500,000 bond provides immediate financial recourse if a pharmacy breaches the contract, commits fraud, or causes financial losses to plan sponsors or patients. This protects the integrity of the entire network.
Bond Requirements & Specifications
Key Requirements from Express Scripts:
- Bond Amount: $500,000 (non-negotiable)
- Minimum Duration: 2 years continuous coverage (may be extended at Express Scripts’ discretion)
- Surety Rating: Must be issued by a surety company with an A.M. Best rating of A-VII or better
- Timing: Bond must be posted BEFORE the Provider Agreement is offered
- Continuous Coverage: Bond must remain active and cannot lapse during the contract period
- Renewal: Express Scripts may waive or require bond renewal after the initial 2-year period
What You’ll Need to Apply:
📋Personal Financials
- ✓ Personal financial statements (balance sheets) for all owners
- ✓ Personal tax returns (last 2-3 years)
- ✓ Credit authorization
- ✓ Written verification of liquid assets
🏢Business Financials
- ✓ Current balance sheet
- ✓ Income statement (P&L)
- ✓ Business tax returns (last 2-3 years)
- ✓ Business bank statements
👤Additional Documents
- ✓ Resumes of all owners (showing pharmacy experience)
- ✓ Completed surety bond application
- ✓ NCPDP number
- ✓ Copy of pharmacy license
Underwriting Note: Express Scripts Performance Bonds are considered financial guarantee bonds. The surety company will primarily evaluate your financial capacity and creditworthiness. Strong personal and business financials are essential for approval and the best rates.
How Much Does an Express Scripts Performance Bond Cost?
The cost of your Express Scripts Performance Bond is determined by your creditworthiness and financial strength. The premium is calculated as a percentage of the $500,000 bond amount.
Excellent Credit
$5,000 – $7,500/year
1.0% – 1.5% of bond amount
Credit Score: 700+
Strong financials
Established pharmacy
Clean business history
Adequate liquid assets
Good Credit
$10,000 – $15,000/year
2.0% – 3.0% of bond amount
Credit Score: 650-699
Acceptable financials
Some credit issues
Newer business OK
May require indemnity
Fair/Challenged Credit
$15,000 – $25,000+/year
3.0% – 5.0%+ of bond amount
Credit Score: Below 650
Credit challenges
Past bankruptcies
Limited financials
Collateral may be required
Good News: Even if you have credit challenges, we work with specialized surety companies that offer programs for applicants with less-than-perfect credit. We can often find a solution where others cannot.
Factors That Affect Your Premium Rate:
- Personal Credit Score: The single most important factor in determining your rate
- Business Credit: How your pharmacy has handled vendor payments and business obligations
- Financial Strength: Liquidity, assets, net worth, and cash reserves
- Years in Business: Established pharmacies with track records get better rates
- Industry Experience: Owner experience in pharmacy operations
- Claims History: Any previous surety bond claims will increase rates
- Legal Issues: Bankruptcies, judgments, liens, or regulatory actions
How to Get Your Express Scripts Performance Bond
1. Submit Application
Complete our simple online application. It’s free and takes only 10 minutes. No obligation to purchase.
2. Provide Documents
Upload your financial documents securely. Our team will review and may request additional information.
3. Receive Quote
Get your personalized quote within 24-48 hours. We’ll explain all terms and answer your questions.
4. Sign & Pay
Review and sign your bond agreement. Make payment via check, ACH, or credit card (fees may apply).
5. Receive Bond
Your bond is issued immediately and delivered via email and overnight mail. Submit to Express Scripts!
Timeline: Most Express Scripts Performance Bonds are approved and issued within 1-3 business days after receipt of complete financial documentation. In some cases, we can expedite approval to 24 hours for well-qualified applicants.
Understanding the Three-Party Surety Bond Relationship
A surety bond involves three parties, each with distinct roles and responsibilities:
🏛️The Obligee: Express Scripts
Express Scripts is the party requiring the bond. They are protected by the bond and have the right to file a claim if you breach the contract or fail to meet your obligations.
Contact Info:
Network Credentialing HQ 2W02
1 Express Way, St. Louis, MO 63121
Phone: (888) 571-8182
Fax: (866) 515-3482
Email: [email protected]
🏪The Principal: Your Pharmacy
You (the pharmacy owner) are the principal purchasing the bond. You guarantee to abide by all contract terms. If a claim is paid, you must reimburse the surety.
Your Responsibilities:
- Pay the annual premium
- Fulfill all contract obligations
- Reimburse any paid claims
- Maintain continuous coverage
🤝The Surety: Bond Company
The surety company underwrites and issues the bond. They investigate claims and may pay valid claims up to $500,000, then seek reimbursement from you.
Surety Requirements:
- Must have A.M. Best rating of A-VII or better
- Licensed in all 50 states
- Financially stable and reputable
Critical Understanding: When a claim is filed and validated, the surety pays Express Scripts first (protecting them from loss), then seeks full reimbursement from you. This is why the underwriting process examines your ability to repay such a claim. You remain ultimately liable for all claims.
What Happens If a Claim is Filed?
Understanding the claims process is crucial. While claims are rare, knowing the process helps you protect your business.
Common Reasons for Claims:
- Fraudulent Billing: Submitting false or inflated claims to Express Scripts or plan sponsors
- Contract Breach: Failure to meet delivery timeframes or service level agreements
- Medication Errors: Dispensing incorrect medications or dosages causing harm or financial loss
- Failure to Deliver: Not fulfilling prescription orders or going out of business mid-contract
- Regulatory Violations: Breaking laws or regulations governing pharmacy operations
- Financial Insolvency: Closing business while owing money or having unfulfilled obligations
The Claims Process:
1. Claim Filed
Express Scripts files a claim with the surety company, providing evidence of breach or loss.
2. Investigation
The surety investigates the claim, requesting your response and supporting documentation.
3. Validation
If the claim is valid, the surety determines the amount owed (up to $500,000).
4. Payment
The surety pays Express Scripts for the valid claim amount plus interest and costs.
5. Reimbursement
You must reimburse the surety for all amounts paid, plus legal fees and expenses.
Important: Failing to reimburse a paid claim can result in collections, lawsuits, judgments, and severe damage to your personal and business credit. Your personal indemnity agreement makes you personally liable, even if your pharmacy is a corporation or LLC.
Insights & Interesting Facts
Express Scripts requires independent pharmacies to post a $500,000 performance surety bond as part of network credentialing, guaranteeing contract compliance (e.g., accurate claims, timely payments).
Bond Duration & Surety Standards
Minimum 2 years initial term; extendable; surety must have A.M. Best A-VII or higher rating; rigorous underwriting due to size.
Premium Range
1-5% of penal sum ($5,000-$25,000 annual premium); good credit 1-2% ($5k-$10k), average 2-4%, poor higher with financials/collateral.
Purpose & Claims
Mitigates risk to plan sponsors from unsecured pharmacies; claims if breach (e.g., overbilling, non-delivery); surety investigates before payout.
Application Process
Online credentialing first, then bond submission pre-agreement; multi-year options save; digital issuance common for qualified applicants.
|
Credit Profile |
Rate % |
Annual Premium ($500k bond) |
Notes |
|---|---|---|---|
| Excellent (750+) | 1-2% | $5,000-$10,000 | Instant, minimal docs |
| Good (700-749) | 2-3% | $10,000-$15,000 | Financial statements |
| Average (650-699) | 3-4% | $15,000-$20,000 | Experience review |
| Fair/Poor (<650) | 4-5%+ | $20,000-$25,000+ | Collateral/indemnity req. |
Frequently Asked Questions
What is an Express Scripts Performance Bond?
An Express Scripts Performance Bond is a $500,000 surety bond required for independent pharmacies that wish to contract with Express Scripts and join their pharmacy benefit management network. The bond guarantees that the pharmacy will fulfill all contractual obligations, including timely delivery of medications, accurate prescription processing, and compliance with industry regulations.
How much does an Express Scripts Performance Bond cost?
The cost of an Express Scripts Performance Bond typically ranges from 1% to 3% of the $500,000 bond amount, depending on the pharmacy owner’s creditworthiness and financial strength. For applicants with excellent credit (700+ credit score), rates can start as low as 1% ($5,000 annually). Those with good credit (650-699) may pay 2-3% ($10,000-$15,000 annually). Applicants with challenged credit may pay 3-5% or more ($15,000-$25,000+ annually).
What are the requirements to qualify for an Express Scripts Performance Bond?
To qualify, you must provide: (1) Personal financial statements for all owners, (2) Business financial statements (balance sheet and income statement), (3) Resumes of owners showing pharmacy experience, (4) Completed surety bond application, (5) Verification of liquid assets and bank statements, (6) Personal and business tax returns (typically last 2-3 years). The surety company must have an A.M. Best rating of A-VII or better, and the bond must be maintained for a minimum of 2 years.
How long does it take to get approved for an Express Scripts Performance Bond?
Most Express Scripts Performance Bonds are approved within 1-3 business days after submission of complete financial documentation. In some cases, approval can be obtained within 24 hours for well-qualified applicants with strong credit and financials. However, if additional documentation is needed or if there are credit issues to address, the process may take 5-7 business days.
Can I get an Express Scripts Performance Bond with bad credit?
Yes, it is possible to obtain an Express Scripts Performance Bond with challenged credit, though the premium rate will be higher (typically 3-5% or more). Some specialized surety companies work specifically with applicants who have credit issues, including past bankruptcies, collections, or tax liens. Additional collateral or personal guarantees may be required. Strong business financials and pharmacy experience can help offset credit concerns.
Why does Express Scripts require a $500,000 performance bond?
Express Scripts requires this bond to protect their plan sponsors and members from financial losses if a pharmacy fails to meet contractual obligations. Independent pharmacies represent a credit risk to Express Scripts’ plan sponsors who pay claims for pharmacy services. The bond ensures financial compensation is available if the pharmacy breaches the agreement, commits fraud, goes out of business, or otherwise causes financial harm. The surety bond underwriting process also pre-qualifies pharmacies, ensuring only financially stable providers join the network.
Is an Express Scripts Performance Bond the same as insurance?
No, a surety bond is not insurance. While insurance protects the bondholder (you), a surety bond protects the obligee (Express Scripts). If a claim is paid on your bond, you are legally required to reimburse the surety company for the full amount paid, plus any costs, legal fees, and interest. You remain ultimately responsible for all claims. The bond is a financial guarantee of your performance, not insurance against losses.
How do I apply for an Express Scripts Performance Bond?
To apply: (1) Complete an online surety bond application (free and no obligation), (2) Submit personal financial statements for all owners, (3) Provide business financial statements (balance sheet and income statement), (4) Submit owner resumes highlighting pharmacy experience, (5) Provide verification of cash and liquid assets, (6) Include personal and business tax returns for the last 2-3 years. Your surety bond professional will review your application and provide a firm quote, typically within 1-2 business days. Once approved, you’ll sign the bond agreement and make payment, then receive your bond immediately.
What happens when my 2-year bond expires?
Upon expiration of the initial 2-year obligation, Express Scripts may either (1) waive the bond requirement entirely, allowing you to continue without a bond, or (2) require you to provide a replacement surety bond for an additional 2-year term. This decision is made at Express Scripts’ sole discretion based on your performance history, claims experience, and financial stability. If renewal is required, you’ll need to go through the underwriting process again with updated financial statements.
Can I cancel my Express Scripts Performance Bond?
You cannot unilaterally cancel an Express Scripts Performance Bond without consequences. The bond must remain in continuous effect for the minimum 2-year period (or longer if Extended by Express Scripts). If you cancel the bond before completing the required term, you will be in breach of your Provider Agreement with Express Scripts, which may result in immediate termination of your contract, loss of network participation, and potential financial claims. You can only cancel with Express Scripts’ written consent.
Do I need to renew my bond annually?
Yes, Express Scripts Performance Bonds typically require annual renewal payments, even though the bond term is a minimum of 2 years. You’ll receive a renewal notice 30-60 days before your anniversary date. The renewal premium may be the same as your initial premium if nothing has changed, or it may increase/decrease based on changes to your credit, financial condition, or claims history. Failure to pay the renewal premium will result in bond cancellation and breach of contract with Express Scripts.
What if I’m a new pharmacy with limited financial history?
New pharmacies can still obtain Express Scripts Performance Bonds, though it may be more challenging and costly. Underwriters will place greater emphasis on: (1) Owner’s personal credit and financial strength, (2) Owner’s experience in pharmacy management, (3) Business plan and financial projections, (4) Available startup capital and liquid assets, (5) Personal indemnity and guarantees from owners. New pharmacies typically pay higher rates (2-4%) and may require additional collateral or co-signers. Having a solid business plan and strong personal financials is essential.
Are there alternatives to the Express Scripts Performance Bond?
No, Express Scripts does not accept alternatives to the surety bond. They specifically require a $500,000 performance surety bond issued by a licensed surety company with an A.M. Best rating of A-VII or better. They do not accept: (1) Letters of credit, (2) Cash deposits, (3) CDs or securities, (4) Personal guarantees alone, (5) Insurance policies. The surety bond is a mandatory, non-negotiable requirement for network participation.
What information does Express Scripts need from my surety bond?
Express Scripts requires the following bond details: (1) Your NCPDP number must appear on the bond, (2) The pharmacy name must exactly match your license and application, (3) The bond must reference Express Scripts as the obligee, (4) It must be for exactly $500,000 (no more, no less), (5) The surety company name and A.M. Best rating must be verified, (6) The bond must show a 2-year minimum term, (7) It must be properly executed with surety’s power of attorney. Submit the original bond to: Network Credentialing HQ 2W02, 1 Express Way, St. Louis, MO 63121.
Will my bond premium change if I have a claim?
Yes, having a claim on your Express Scripts Performance Bond will almost certainly increase your premium significantly at renewal, and may make it difficult or impossible to obtain bonding in the future. Even a single claim demonstrates increased risk to sureties. Additionally, if you fail to reimburse a paid claim, your bond will be immediately cancelled and you will be unable to obtain bonding from any surety company until the debt is fully repaid. This would result in immediate termination of your Express Scripts contract.
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