Texas Medicaid Provider Bonds

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Surety Bond Professionals is a family-owned and operated bonding agency with over 30 years of experience. With access to a broad range of surety markets, our expert agents are ready to assist with all your Texas Medicaid Provider bond needs.

What Are They?

Under Title 1 of the Texas Administrative Code, the Texas Health and Human Services Commission (HHSC) requires health care providers to purchase a $50,000 Texas Medicaid Provider surety bond before they can participate in the Texas Medicaid program or Children’s Health Insurance Program. The bond serves as a health care provider’s guarantee to abide by all HHSC rules and regulations governing the Medicaid program. It also provides financial protection for the state in the event of a provider’s unlawful conduct, such as overbilling Medicaid or failing to remit overpayments to HHSC.

Who Needs Them?

The Texas Medicaid bonding requirement applies not only to physicians and other health care providers, but also to suppliers of durable medical equipment (DME) and ambulance services not operated by a government entity. Providers with multiple locations must purchase a separate $50,000 bond for each location. A Texas Medicaid Provider bond must be renewed annually in order for the provider to continue participating in the Texas Medicaid or Children’s Health Insurance program.

Speak with a Surety Bond Professionals agent today to discuss your bonding needs.

How Do They Work?

There are three parties to a Texas Medicaid Provider surety bond agreement, which is a legally binding contract:

  • The “obligee” requiring the bond is HHSC.
  • The “principal” required to purchase the bond is the health care provider.
  • The “surety” is the surety company underwriting and approving the bond.

The terms of the surety bond agreement identify the rules and regulations the principal must comply with in order to avoid claims against the bond. Any violation that results in a financial loss by HHSC can result in a claim that must be paid if the surety finds it to be valid and is unable to negotiate an amicable settlement.

That doesn’t mean that the principal needs to come up with the full amount of the claim immediately. At the time the surety agrees to issue a Texas Medicaid Provider bond, the agency establishes a line of credit for the principal and uses that to pay valid claims on behalf of the principal. Paying a claim creates a debt that the principal must repay to the surety because it’s the principal, not the surety, that bears full legal responsibility for paying claims.

What Do They Cost?

Surety bonds are sold on a premium basis, with the annual premium for the bond being a small percentage of the required bond amount. The surety determines what that percentage, the premium rate, will be on a case-by-case basis, taking into account the principal’s personal credit score and business financial strength. The surety’s main concern is the likelihood of timely repayment for claims payments made on the principal’s behalf, so a principal with good credit will pay a much lower premium rate than one with bad credit. With a credit score of 700 or above, the annual premium should be in the range of 1% to 3% of the $50,000 bond amount.

Get a Quote

Our surety bond professionals will get you the Texas Medicaid Provider bond you need at a competitive rate.