CMS Bond (Medicare Accountable Care Organization Bond - HHS)

Bond Penalty: Fixed by U.S. Department of Health & Human Services

An entity that wishes to participate in to a Medicare Shared Savings Program or Center for Medicare and Medicaid Innovation Center model must post a CMS surety bond with the United States Department of Health and Human Services (DHS). The surety obligation is ostensibly one of compliance however there are strict financial guarantees within the provisions of the bond form. The CMS has clearly defined the financial assurance requirements of those participants.

Per the CMS, "To be eligible to participate in a two-sided risk model (the Track 1+ Model, Track 2, or Track 3), an ACO must demonstrate that it has established an adequate repayment mechanism. These ACOs must demonstrate that they would be able to repay shared losses incurred at any time within the agreement period, and for a sufficient period of time following the end of each agreement period (herein the "tail period") to permit CMS to calculate the amount of any shared losses that may be owed by the ACO and to collect this amount from the ACO.

For Track 2 and Track 3 ACOs, the repayment mechanism must be equal to at least one percent (1%) of the ACO's total per capita Medicare Parts A and B fee-for-service expenditures for its assigned beneficiaries, as determined based on expenditures used to establish the ACO's benchmark (§ 425.204(f)). Under the Track 1+ Model, the ACO's composition will determine the ACO's eligibility for either a benchmark-based or revenue-based loss sharing limit.1 For Track 1+ Model ACOs eligible for a benchmarkbased loss sharing limit, CMS will apply a repayment mechanism estimation methodology similar to that used for Tracks 2 and 3 (based on 1 percent of estimated benchmark expenditures). For Track 1+ Model ACOs eligible for a revenue-based loss sharing limit, the repayment mechanism must be equal to at least 2 percent of ACO participants Medicare fee-for-service revenue (total Parts A and B fee-for-service revenue). If this repayment mechanism amount based on ACO participant Medicare revenue exceeds the repayment mechanism amount for the ACO based on benchmark expenditures, then the amount will be capped at 1 percent of the ACO's total per capita Medicare Parts A and B fee-for-service expenditures for its assigned beneficiaries, as determined based on expenditures used to establish the ACO's benchmark." (DHS/CMS 2018)

"The CMS surety bond should be issued from a company included on the U.S. Department of Treasury's List of Certified Companies (T-List). The bond must contain the following provisions:

  • A statement that the surety is liable for assessments that occur during the term of the bond.
  • A statement that the surety will remain liable for any and all indebtedness of the Principal to the Obligee which accrued prior to the effective date of a cancellation or termination of the bond.
  • The surety's name, street address or post office box number, city, state, and ZIP code.
  • A statement naming the ACO as the Principal, CMS as the Obligee, and the surety (and its heirs, executors, administrators, successors and assignees, jointly and severally) as surety.
  • Assurance that the surety will notify CMS promptly in writing if there is a lapse in the surety bond coverage or a change in the amount of the bond.
  • A statement that the surety will notify CMS 90 days in advance of cancellation or termination of the bond.

Certain Medicare Shared Savings Program (Shared Savings Program) Accountable Care Organizations (ACOs) must establish a repayment mechanism to assure CMS that they can repay losses for which they may be liable upon reconciliation for each performance year."

(DHS/CMS 2018) Further information regarding financial assurance may be directed to:

Centers for Medicare & Medicaid Services
CM/Performance-Based Payment Policy Group
7500 Security Boulevard
Desk Location: C5-15-06
Mail Stop: C5-15-12
Baltimore, MD 21244
Phone: 410-786-5604
Email: sharedsavingsprogram@cms.hhs.gov

CMS shared savings program surety bond / Innovation Center surety bond penalties can be large. This class of bond is carefully underwritten and generally offered only to those applicants that demonstrate significant financial strength as determined through analysis of properly audited financial statements. Lack of appropriate capital, equity and seasoning will disqualify applicants absent the support of independent collateral security. We offer immediate of your CMS bond request. Surety One, Inc. specializes in the underwriting of difficult and high value risks. We offer DMEPOS bonds, home care organization bond and miscellaneous surety guarantees for medicaid/medicare operators in all states, Puerto Rico and U.S. Virgin Islands.

Surety bond application review and quoting are free of charge. There is no obligation to purchase.

What We Need From You

Additional Attachments

  • Audited financial statements for most current three year period
  • CMS Audit Report