[Code of Federal Regulations]
[Title 12, Volume 1]
[Revised as of January 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 42CFR489.65]

[Page 956-957]
 
                         TITLE 42--PUBLIC HEALTH
 
  CHAPTER IV--CENTERS FOR MEDICARE & MEDICAID SERVICES, DEPARTMENT OF 
                 HEALTH AND HUMAN SERVICES--(Continued)
 
PART 489--PROVIDER AGREEMENTS AND SUPPLIER APPROVAL--Table of Contents
 
              Subpart F--Surety Bond Requirements for HHAs
 
Sec. 489.65  Amount of the bond.

    (a) Basic rule. The amount of the surety bond must be $50,000 or 15 
percent of the Medicare payments made by CMS to the HHA in the HHA's 
most recent fiscal year for which a cost report has been accepted by 
CMS, whichever is greater.
    (b) Computation of the 15 percent: Participating HHA.
    The 15 percent is computed as follows:
    (1) For the initial bond--on the basis of Medicare payments made by 
CMS to the HHA in the HHA's most recent fiscal year as shown in the 
HHA's most recent cost report that has been accepted by CMS. If the 
initial bond will cover less than a full fiscal year, the computation of 
the 15 percent will be based on the number of months of the fiscal year 
that the bond will cover.
    (2) For subsequent bonds--on the basis of Medicare payments made by 
CMS in the most recent fiscal year for which a cost report has been 
accepted. However, if payments in the first six months of the current 
fiscal year differ from such an amount by more than 25 percent, then the 
amount of the bond is 15 percent of such payments projected on an 
annualized basis.
    (c) Computation of 15 percent: An HHA that seeks to become a 
participating HHA by obtaining assets or ownership interest. For an HHA 
that seeks to become a participating HHA by purchasing the assets or the 
ownership interest of a participating or formerly participating HHA, the 
15 percent is computed on the basis of Medicare payments made by CMS to 
the participating or formerly participating HHA in the most recent 
fiscal year that a cost report has been accepted.
    (d) Change of ownership. For an HHA that undergoes a change of 
ownership the 15 percent is computed on the basis of Medicare payments 
made by CMS to the HHA for the most recently accepted cost report.
    (e) An HHA that seeks to become a participating HHA without 
obtaining assets or ownership interest. For an HHA that seeks to become 
a participating HHA without purchasing the assets or the ownership 
interest of a participating or formerly participating HHA, the 15 
percent computation does not apply.
    (f) Exception to the basic rule. If an HHA's overpayment in the most 
recently accepted cost report exceeds 15 percent of annual payments, CMS 
may require the HHA to secure a bond in an amount up to or equal to the 
amount

[[Page 957]]

of overpayment, provided the amount of the bond is not less than 
$50,000.
    (g) Expiration of the 15 percent provision. For an annual surety 
bond, or for a rider on a continuous surety bond, that is required to be 
submitted on or after June 1, 2005, notwithstanding any reference in 
this subpart to 15 percent as a basis for determining the amount of the 
bond, the amount of the bond or rider, as applicable, must be $50,000 or 
such amount as CMS specifies in accordance with paragraph (f) of this 
section, whichever amount is greater.

[63 FR 313, Jan. 5, 1998, as amended at 63 FR 29655, June 1, 1998]