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Medicaid Surety Bond

Surety bonds are an important part of business for any company that does business with Medicaid. Businesses that collect payments from Medicaid are required to get a Medicaid surety bond. Similarly, a business that bills Medicare will need a Medicare surety bond. In fact, it can be impossible to receive payments without one of these surety bonds. It will also be impossible to keep receiving payments without keeping the bond active and in good standing. Bonds are very important for businesses that bill Medicaid or Medicare, so it's essential to know how they work. This page covers the basics.

What is a Medicaid Surety Bond?

A Medicaid surety bond, like all surety bond types, protects one party from misconduct by another party. In this case, Medicaid may file a claim against the bond if a company billing Medicaid commits fraud and improperly seeks payments.

There are three parties involved in any surety bond agreement.

• The principal must obtain the bond and pay for claims filed against it.
• The obligee creates the bond requirements and may file claims for damages if those requirements are not met.
• The surety issues a bond to the principal. If the principal can't or won't pay a claim to the obligee, the surety agrees to pay, but the principal must repay that debt later.

How Does a Medicaid Surety Bond Work?

Take a DMEPOS Medicare bond as an example. Companies that provide durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) and bill public health services for those costs will need to get a surety bond. That bond holds them financially liable for inflated or unnecessary costs they bill to Medicare.

After receiving a claim, the surety that underwrites the bond will launch an investigation to determine whether the claim has merit. If so, the surety immediately pays the claim in full. Since it does not have liability for that claim, however, the DMEPOS provider with the bond must repay the surety the full claim amount plus interest and fees. If the provider does not pay, they could be subject to lawsuits or face collections.

Who Needs a Medicaid Surety Bond?

As a general rule of thumb, any organization that bills Medicaid or Medicare for services will need one of these bonds. There may be exceptions, and the requirements can vary across states. However, the government has an obvious incentive to ensure they pay accurately, and surety bonds help accomplish that by holding someone accountable for misconduct.

That explains why surety bond requirements are common for most providers who work with Medicaid and Medicare. As mentioned earlier, these bonds are vital for a business, so it's important to meet any bond requirements without delay. Count on Viking Bond Service to make that easy.

What Does a Medicaid Surety Bond Cost?

The cost of a surety bond depends first on the size of that bond. This is based on the maximum amount the surety commits to paying in the event of settling a claim. States set bonding requirements and decide how large a bond a business must obtain – the cost of that bond will be a small percentage of the total size.

Credit standing determines the exact cost. Bond seekers with poor credit will pay more and could even have their bond application rejected. However, that doesn't have to be the case with Viking Bond Service! Our Bad Credit Surety Bond Program helps people overcome their credit issues and meet their bond requirements.

Must You Renew a Medicaid Surety Bond?

A business that needs a surety bond before receiving Medicaid or Medicare payments will need to keep that bond active for as long as they keep receiving payments. That means many providers have bonds for years, decades, or their entire time in business.

Bonds expire after a set term – usually 12 months – and the bondholder must undergo a new credit check before renewing. Changes in credit over the previous year could raise or lower bond prices. With that in mind, it's always smart to budget for bond renewals in advance. Otherwise, loss of bond coverage could throw a business into turmoil.

Viking Bond Service – Medicaid Surety Bonds in All 50 States

We are a nationwide surety agency with years of experience helping Medicare and Medicaid providers meet their bonding requirements. Curious how much a Medicaid or Medicare surety bond would cost? Request a quote at any time – it costs nothing and comes with no obligations. We are also happy to answer your questions if you contact us or call 1-888-2-SURETY (1-888-278-7389).