[Code of Federal Regulations]
[Title 42, Volume 3]
[Revised as of October 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 42CFR489.66]

[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. 489.66  Additional requirements of the surety bond.

    The surety bond that an HHA obtains under this subpart must meet the 
following additional requirements:
    (a) The bond must guarantee that within 30 days of receiving written 
notice from CMS of an unpaid claim or unpaid civil money penalty or 
assessment, which notice contains sufficient evidence to establish the 
Surety's liability under the bond, the Surety will pay CMS, up to the 
stated amount of the bond--
    (1) The full amount of any unpaid claim, plus accrued interest, for 
which the HHA is responsible; and

[[Page 957]]

    (2) The full amount of any unpaid civil money penalty or assessment 
imposed by CMS on the HHA, plus accrued interest.
    (b) The bond must provide the following:
    (1) The Surety is liable for unpaid claims, unpaid civil money 
penalties, and unpaid assessments that are discovered when the surety 
bond is in effect, regardless of when the payment, overpayment, or other 
event giving rise to the claim, civil money penalty, or assessment 
occurred, provided CMS makes a written demand for payment from the 
Surety during, or within 90 days after, the term of the bond.
    (2) If the HHA fails to furnish a bond meeting the requirements of 
this subpart F for the year following expiration of the term of an 
annual bond, or if the HHA fails to submit a rider when a rider is 
required to be submitted under this subpart, or if the HHA's provider 
agreement is terminated, the last bond or rider, as applicable, 
submitted by the HHA to CMS, which bond or applicable rider meets the 
requirements of this subpart, remains effective and the Surety remains 
liable for unpaid claims, civil money penalties, and assessments that--
    (i) CMS determines or imposes on or asserts against the HHA based on 
overpayments or other events that took place during or prior to the term 
of the last bond or rider; and
    (ii) Were determined or imposed during the 2 years following the 
date the HHA failed to submit a bond or required rider or the date the 
HHA's provider agreement is terminated, whichever is later.
    (c) The bond must provide that the Surety's liability to CMS under 
the bond is not extinguished by any action of the HHA, the Surety, or 
CMS, including but not necessarily limited to any of the following 
actions:
    (1) Action by the HHA or the Surety to terminate or limit the scope 
or term of the bond. The Surety's liability may be extinguished, 
however, when--
    (i) The Surety furnishes CMS with notice of such action not later 
than 10 days after receiving notice from the HHA of action by the HHA to 
terminate or limit the scope of the bond, or not later than 60 days 
before the effective date of such action by the Surety; or
    (ii) The HHA furnishes CMS with a new bond that meets the 
requirements of this subpart.
    (2) The Surety's failure to continue to meet the requirements of 
Sec. 489.64(a) or CMS's determination that the surety company is an 
unauthorized Surety under Sec. 489.64(b).
    (3) Termination of the HHA's provider agreement.
    (4) Any action by CMS to suspend, offset, or otherwise recover 
payments to the HHA.
    (5) Any action by the HHA to--
    (i) Cease operation;
    (ii) Sell or transfer any asset or ownership interest;
    (iii) File for bankruptcy; or
    (iv) Fail to pay the Surety.
    (6) Any fraud, misrepresentation, or negligence by the HHA in 
obtaining the surety bond or by the Surety (or by the Surety's agent, if 
any) in issuing the surety bond, except that any fraud, 
misrepresentation, or negligence by the HHA in identifying to the Surety 
(or to the Surety's agent) the amount of Medicare payments upon which 
the amount of the surety bond is determined will not cause the Surety's 
liability to CMS to exceed the amount of the bond.
    (7) The HHA's failure to exercise available appeal rights under 
Medicare or to assign such rights to the Surety.
    (d) The bond must provide that actions under the bond may be brought 
by CMS or by CMS's fiscal intermediaries.
    (e) The bond must provide the Surety's name, street address or post 
office box number, city, state, and zipcode to which the CMS notice 
provided for in paragraph (a) of this section is to be sent.

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