Key Changes And Implications Of Proposed Medicare Surety Bond Rules
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CMS proposed new rules in 2016 aimed at reducing fraud and abuse within Medicare, Medicaid, and CHIP by tightening provider enrollment and surety bond requirements.
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Providers would be required to disclose extensive current and past affiliations with individuals or entities involved in adverse regulatory or financial events, including unpaid debts, enrollment revocations, or payment suspensions.
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CMS would gain expanded authority to deny, revoke, or terminate Medicare enrollment if disclosed (or undisclosed) affiliations are deemed a risk to program integrity.
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Reenrollment bars could increase significantly—from a maximum of 3 years to as many as 10 years, with repeat offenders potentially facing up to 20-year bans.
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Reapplication bars would also be extended for applications containing false, misleading, or selectively provided information.
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CMS would receive broader authority to reject Medicare DMEPOS surety bonds, including the ability to reject all bonds issued by a surety that fails to meet payment obligations.
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While intended to curb abuse, the proposed changes could increase compliance burdens, underwriting scrutiny, and access challenges for legitimate providers seeking surety bonds.
By Gary Swiftbonds, nationally recognized expert in surety bonds, bid bonds, and performance bonds.
Below is a good article on some of the changes in surety bonds.
These changes are aimed at curbing abuses in the surety bond arena. However, some of the “cures” seem to go too far and will place an additional burden on everyone that wants to get a bond in the future.
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Proposed changes for surety bonds: Counter abuses to the program, or place too heavy burdens on providers?
On March 1, 2016, CMS published a proposed rule that seeks to address a growing number of abuses of the federal healthcare program by certain Medicare providers. The rule* titled “Medicare, Medicaid, and Children’s Health Insurance Programs; Program Integrity Enhancements to the Provider Enrollment Process” includes a number of provisions that directly concern providers and suppliers of Medicare.
These include an increase in requirements for disclosure of affiliations by providers, greater CMS authority to deny Medicare enrollment, and changes to reenrollment and reapplication bars, as well as greater CMS authority in relation to approving or rejecting the Medicare surety bond of a provider.
Requirement to disclose affiliations and events
Under the new rule, providers who seek to enroll for Medicare or revalidate their enrollment will be required to disclose former or current affiliations with individuals who have or have had a “disclosable event”. An affiliation is considered:
· direct or indirect ownership interest of 5% or more in another organization
· partnership interest in an organization;
· role as officer or director in a corporation
· any form of managerial or operational authority at another organization
· a reassigned relationship as defined under 42 CFR § 424.80 (Code of Federal Regulations).
Events that prompt the need for providers to disclose affiliations with such individuals include:
· individuals’ uncollected debt to Medicaid, Medicare or the Children’s Health Insurance Program (CHIP)
· individuals’ denial of participation in Medicare, Medicaid, or CHIP
· cases of payment suspension under any federal health program at any time
· revocation or termination of such indviduals’ enrollment to any of the above programs.
Increased CMS authority over Medicare enrollment
The rule also provides for greater CMS authority when determining who should be allowed to enroll as a provider of these services. It lists a number of criteria that CMS will utilize in assessing enrollments and deciding whether something constitutes a serious risk.
If a provider does not disclose all such events and affiliations in their entirety, for example, CMS may deny them their enrollment or even revoke it. CMS may further do so if it considers that any of the affiliations or events pose a substantial risk to the integrity of federal health programs. A number of other instances in which CMS may deny, revoke or terminate an enrollment are also listed.
Changes to reenrollment and reapplication bars
As a further measure against system abuses, the rule also proposes a number of significant changes to Medicare reenrollment bars. One of them would be to increase the maximum amount of years of reenrollment bars from three to 10. CMS has said, though, that the maximum “would be reserved for egregious cases of fraudulent, dishonest or abusive behavior.”
Under the rule an additional reenrollment bar of a further three years (even when exceeding the maximum) would be placed on those individuals who attempt to circumvent an already existing reenrollment bar that they are subject to.
Finally, a 20-year reenrollment bar is envisioned for those providers who have their enrollment revoked for a second time.
CMS also proposes an increase in reapplication bars to a maximum of three years in instances where applications include false or misleading information or provide information selectively.
Increased CMS authority to reject DMEPOS bonds
One of the important provisions of the rule is that it provides for greater CMS authority in rejecting providers’ Medicare surety bonds. This would apply to instances in which a provider’s surety has failed to submit a payment to the CMS as part of the surety bond requirement.
According to the proposal, in these instances the supplier would have to obtain a new DMEPOS bond by a different surety to keep their enrollment or to be able to apply for one.
Under the rule, CMS could also reject all bonds by a surety, even those supplied by an unrelated provider, if the surety fails to fulfill its obligations. A caveat to this rule does include that CMS may investigate the circumstances and the reason for failure to pay before rejecting a particular bond or all bonds issued by that surety.
Welcome amendments?
As a Medicare provider, what do you think of the proposed rule? Do you see it as a way to counter abuses to the program or do you think it places too heavy burdens on providers? Let us know in the comments, we’d love to hear your thoughts.
Frequently Asked Questions
What was the primary goal of the proposed CMS surety bond changes?
The primary goal of the proposed CMS rule was to strengthen program integrity across Medicare, Medicaid, and CHIP by reducing fraud, abuse, and improper billing. CMS sought to accomplish this by increasing transparency around provider affiliations, expanding enrollment oversight, and tightening controls around surety bond acceptance and enforcement.
How would the new affiliation disclosure requirements affect providers?
Providers would be required to disclose a broader range of current and past affiliations with individuals or entities that experienced adverse regulatory events, such as unpaid program debts, enrollment revocations, or payment suspensions. Failure to fully disclose these relationships could result in enrollment denial or revocation, even if the provider itself had not engaged in misconduct.
What expanded authority would CMS have over Medicare enrollment under the proposal?
CMS would gain greater discretion to deny or revoke enrollment if it determines that a provider’s affiliations or history pose a “serious risk” to federal healthcare programs. This authority would allow CMS to act proactively, rather than waiting for misconduct to occur after enrollment.
How would reenrollment and reapplication bars change under the proposed rule?
The proposal significantly lengthens reenrollment bars, increasing the maximum from three years to up to ten years in severe cases, with potential 20-year bars for repeat revocations. Reapplication bars could also extend up to three years when applications contain false, misleading, or selectively disclosed information.
Why are surety bonds specifically impacted by the proposed CMS changes?
CMS proposed expanded authority to reject Medicare surety bonds, particularly DMEPOS bonds, if a surety fails to meet payment obligations. In some cases, CMS could reject all bonds issued by a surety, even those for unrelated providers, increasing scrutiny on both providers and bonding companies.
How could these changes affect legitimate Medicare providers?
While aimed at preventing abuse, the proposed rules could increase compliance costs, underwriting complexity, and administrative burdens for legitimate providers. More extensive disclosures, longer penalties, and stricter bond acceptance standards may make it harder for compliant providers to enroll, re-enroll, or maintain coverage.
Do the proposed rules eliminate the use of surety bonds in Medicare programs?
No, the rules do not eliminate surety bonds. Instead, they reinforce their role as a compliance and financial safeguard, while giving CMS greater authority to reject bonds that fail to adequately protect federal healthcare programs.
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What These Proposed Surety Bond Changes Mean Going Forward
The proposed CMS rule represents a significant shift in how Medicare, Medicaid, and CHIP providers are evaluated, enrolled, and monitored—particularly when it comes to surety bonds and financial accountability. By expanding disclosure requirements, increasing enrollment enforcement authority, and tightening bond acceptance standards, CMS aims to close gaps that have allowed abuse to occur. At the same time, these changes introduce new layers of complexity and risk for legitimate providers who must now navigate stricter scrutiny, longer penalties, and more demanding compliance expectations.
For providers and suppliers, the takeaway is clear: surety bonds are no longer a routine checkbox—they are becoming a critical compliance instrument subject to deeper review and higher standards. Understanding how underwriting decisions, affiliation disclosures, and bond issuer performance affect enrollment status is essential to avoiding delays, denials, or unexpected enforcement actions.