Texas Medicaid Provider Bond: A Comprehensive Guide

February 21, 2022

Texas Medicaid Provider Bond

This guide provides information for insurance agents to help their customers obtain a Texas Medicaid Provider bond

At a Glance:

  • Average Cost: Between $250 to $3,500 per year based on the applicant’s credit
  • Bond Amount: $50,000
  • Who Needs it: Texas Medicaid and CHIP providers are deemed to have the potential to commit fraud
  • Purpose: To ensure the Texas Health and Human Services Commission will receive compensation for financial harm if the Medicaid provider fails to refund any overpayments
  • Who Regulates Medicaid Providers in Texas: The Texas Health and Human Services Commission (HHSC)

Background

Texas statute 352.5 requires all Medicaid and CHIP providers operating in the state to enroll with the HHSC. The Texas legislature enacted the enrollment requirement to ensure that providers are reimbursed for services that are covered under the state’s Medicaid and CHIP programs. To ensure the HHSC receives compensation for any overpayments, providers that are deemed to have the potential to commit fraud must purchase and maintain a $50,000 surety bond to be eligible for enrollment.

What is the Purpose of the Texas Medicaid Provider Bond?

Texas requires certain Medicaid and CHIP providers to purchase a surety bond as part of the application process to enroll with the HHSC. The bond ensures that the HHSC will receive compensation for financial harm if the provider fails to abide by the regulations set forth in Texas statute 352.15. Specifically, the bond guarantees that the HHSC will be compensated if the provider does not refund overpayments and overpayments that have been received. In short, the bond is a type of insurance that protects the HHSC if the provider collects more in reimbursements than they actually earned.

Texas Medicaid Provider Bond Form

Texas Medicaid Provider Bond Form

How Can an Insurance Agent Obtain a Texas Medicaid Provider Surety Bond?

BondExchange makes obtaining a Texas Medicaid Provider bond easy. Simply log in to your account and use our keyword search to find the “Medicaid” bond in our database. Don’t have a login? Enroll now and let us help you satisfy your customers’ needs. Our friendly underwriting staff is available by phone at (800) 438-1162, email, or chat from 7:30 AM to 7:00 PM EST to assist you.

At BondExchange, our 40 years of experience, leading technology, and access to markets ensures that we have the knowledge and resources to provide your clients with fast and friendly service whether obtaining quotes or issuing bonds.

Is a Credit Check Required for the Texas Medicaid Provider Bond?

Surety companies will run a credit check on the owners of the Medicaid provider to determine eligibility and pricing for the Texas Medicaid Provider bond. Owners with excellent credit and work experience can expect to receive the best rates. Owners with poor credit may be declined by some surety companies or pay higher rates. The credit check is a “soft hit”, meaning that the credit check will not affect the owner’s credit.

How Much Does the Texas Medicaid Provider Bond Cost?

The Texas Medicaid Provider bond can cost anywhere between $250 to $3,500 per year. Insurance companies determine the rate based on a number of factors including your customer’s credit score and experience. The chart below offers a quick reference for the bond cost on the $50,000 bond requirement.

$50,000 Medicaid Provider Bond Cost

Credit Score Bond Cost (1 year)
680+ $250
650 – 679 $500
625 – 649 $750
600 – 624 $1,500
550 – 599 $1,875
525 – 549 $3,500

Who is Required to Purchase the Bond?

Texas statute 352.15 requires applicants for enrollment as a provider in the state’s Medicaid/CHIP programs to purchase a surety bond if:

  • The individual provider or the broader provider type has been identified by federal or state agencies as having a significant history of, or potential for, fraud, waste, or abuse
  • The HHSC has determined the provider must be bonded based on their conduct

To paraphrase Texas statute 352.3, a provider is an individual or business entity that performs health care services to individuals that are covered under the state’s Medicaid and/or CHIP program and receive reimbursements from the HHSC for providing these services.

How do Texas Medicaid Providers Enroll With the HHSC?

Medicaid providers in Texas must navigate several steps to enroll with the HHSC. Below are the general guidelines, but applicants should refer to the application form for details on the process.

Enrollment Period – Medicaid providers must revalidate their enrollment at least once every 5 years

Step 1 – Obtain a Business License or Accreditation

Providers must obtain a business license or accreditation that is specific to the type of services they provide. Providers should contact the HHSC for help determining which license/accreditation they must obtain.

Step 2 – Apply for a National Provider Identifier (NPI) Number

All providers must obtain an NPI number prior to submitting their enrollment application. Providers can apply for an NPI number online here.

Step 3 – Enroll as a Medicare Provider

Texas statute 352.13 requires providers to be enrolled with Medicare as a prerequisite to enrolling as a Medicaid provider. Providers can enroll with Medicare by submitting a completed application online here. The application must be accompanied by the following items:

Certain provider types do not have to enroll with Medicare. Providers should contact the HHSC to determine if they are exempt from this requirement.

Step 4 – Complete the Application

Providers should submit their completed application electronically through the Texas Medicaid & Healthcare Partnership. Depending on the provider’s enrollment type, they may need to pass an on-site inspection prior to receiving their enrollment.

Step 5 – Purchase a Surety Bond

After receiving the provider’s application, the HHSC will inform them of whether or not they must purchase and maintain a $50,000 surety bond

How do Texas Medicaid Providers Revalidate Their Enrollments?

The HHSC will contact the provider with instructions on how to renew their enrollment prior to its expiration date. Medicaid providers must revalidate their enrollment at least once every 5 years.

What are the Insurance Requirements for Medicaid Providers in Texas?

Texas does not require Medicaid providers to obtain any form of liability insurance as a prerequisite to enrolling with the HHSC. However, certain providers may need to obtain this insurance before obtaining a business license. Providers must purchase a $50,000 surety bond if:

  • The individual provider or the broader provider type has been identified by federal or state agencies as having a significant history of, or potential for, fraud, waste, or abuse
  • The HHSC has determined the provider must be bonded based on their conduct

How Do Texas Medicaid Providers File Their Bonds?

Medicaid providers should submit their completed bond form, including the power of attorney, electronically here. The surety bond requires signatures from both the surety company that issues the bond and from the Medicaid provider. The surety company should include the following information on the bond form:

  • Legal name and address of entity/individual(s) buying the bond
  • Surety company’s name and address
  • Bond amount
  • Date the bond goes into effect
  • Date the bond is signed

What Can Texas Medicaid Providers Do to Avoid Claims Against Their Bonds?

To avoid claims made against their bonds, Medicaid providers in Texas must:

  • Refund all overpayments received
  • Accurately report all Medicaid expenses

What Other Insurance Products Can Agents Offer Medicaid Providers in Texas?

Texas does not require Medicaid providers to obtain any form of liability insurance as a prerequisite to enrolling with the HHSC. However, certain providers may need to obtain this insurance before obtaining a business license. Bonds are our only business at BondExchange, so we do not issue any other types of insurance, but our agents often utilize brokers for this specific line of business. A list of brokers in this space can be found here.

How Can Insurance Agents Prospect for Texas Medicaid Provider Customers?

Texas conveniently provides a public database to search for active Medicaid providers in the state. The database can be accessed here. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.

2022-03-21T12:32:42-04:00