CMS Issues Clarification on Surety Bond Requirements for Physicians

Date: September 11, 2009

There has been considerable confusion about Medicare’s requirement for Surety Bonds for DMEPOS, and how this requirement will affect those practices dispensing post-cataract eyeglasses. We have finally received clarification from CMS. The following was provided by ASCRS/ASOA, and has been posted on the National Supplier Clearinghouse FAQ website (http://www.palmettogba.com/Palmetto/Providers.nsf/files/suretybondfaqs09102009.pdf/$FIle/suretybondfaqs09102009.pdf).

Q: How does an optometrist or ophthalmologist who dispenses eyeglasses qualify for the physician exemption?

A: An optometrist or ophthalmologist who dispenses eyeglasses can qualify for the physician exemption if the glasses are furnished only to his/her own patients as part of his/her own service. For purposes of this exemption, a “patient” is someone who, for instance, receives an eye exam or other diagnostic test from the physician prior to receiving the glasses. The term “patient” does not include, however, a person who walks into the physician’s office with a prescription for glasses that was issued by another physician and simply receives the glasses without any sort of examination or test being furnished.

The same general principle applies to an enrolled optical center owned by an optometrist or ophthalmologist. The center can qualify for the physician exemption only if: (1) the shop and the physician’s practice are under/within the same TIN and business structure (e.g., part of the same corporation), and (2) the glasses are furnished only to the optometrist/ophthalmologist’s own patients as part of his/her own service. The term “patient,” again, would not include a person who enters the optical center with a prescription for glasses that was issued by another physician and simply receives the glasses without any sort of examination or test being performed by the optical center.

This is consistent with our advice to clients and the Final Rule published in May. In order to qualify as exempt from the Surety Bond requirement, the practice must provide post-cataract eyeglasses only to its own patients. “Own patients” have been defined as those who receive some professional service from the physician in the practice prior to receiving the glasses.

What has not been clear in the past is that the optical dispensary must be part of the same business structure (e.g., corporation) and under the same tax ID number. This may be a problem for some dispensaries that have been set up as separate entities.

Unless you specifically qualify for the exemption, you must get a Surety Bond before October 2, 2009. According to the CMS web site:

You should contact one of the sureties identified on the U.S. Department of Treasury’s “Listing of Certified (Surety Bond) Companies;” the Web site for this listing is www.fms.treas.gov/c570/c570_a-z.html. For purposes of the surety bond requirement, these sureties are considered “authorized” sureties, and are therefore the only sureties from which a bond may be obtained.

If you are required to get a Surety Bond and fail to do so, your optical dispensary will have its Medicare supplier number suspended and your claims for post-cataract eyeglasses will not be paid. You will be required to re-apply for a new supplier number, and any post-cataract eyeglasses dispensed until that number is issued cannot be billed to Medicare by you or by the patient.

Finally, some practices will decide that the requirements for Medicare coverage of post-cataract eyeglasses are too onerous, and that the revenue from this segment of the business is not sufficient to justify the cost and aggravation. Your dispensary can choose to dis-enroll from Medicare without affecting the Medicare status of the practice. If you are interested in pursuing this avenue, and would like to discuss ways to make the transition comfortable for yourself and your patients, please contact us at your convenience

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