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RULE §352.15 Surety Bond Requirements

Published: 2015

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(a) A surety bond may be required for each enrolled
location pursuant to the requirements of this section if:
  (1) a provider or type of provider has been identified
by federal or state agencies to have a significant history of, or
potential for, fraud, waste, or abuse; or
  (2) HHSC, in its sole discretion, has determined that
a provider, based on the provider's conduct, including falsifying
information or any material misrepresentation, will be subject to
this requirement.
(b) If a surety bond is required, a provider must maintain
a current surety bond to continue participation in Medicaid or CHIP.
(c) HHSC or its designee will not reimburse a provider
for items or services furnished during a period in which the provider
does not have a current surety bond, if a surety bond is required.
(d) An entity operated or administered by a federal,
state, local, or tribal government agency is exempt from the requirements
of subsection (a) of this section if, during the preceding five years,
the entity has not had any uncollected overpayments associated with
Medicaid or CHIP.
(e) A surety bond required pursuant to this section
  (1) include a statement that the surety company issuing
the bond:
    (A) is licensed by the Texas Department of Insurance;
    (B) maintains a valid Certificate of Authority with
the United States Department of Treasury in accordance with 31 U.S.C.
§§9304 - 9308 and Title 31 of the Code of Federal Regulations
parts 223, 224, and 225 as a surety;
  (2) state on the face of the bond the Parties, to include:

    (A) the provider as Principal;
    (B) HHSC as Obligee; and
    (C) the surety company (and its heirs, executors, administrators,
successors, and assignees, jointly and severally) as Surety; and
  (3) include an effective date and expiration date for
the bond.
(f) The amount of the surety bond must be no less than
(g) The surety bond must provide that:
  (1) the Surety is liable for uncollected overpayments
determined to have occurred during the term of the bond, regardless
of when the overpayments are discovered;
  (2) the Surety remains liable:
    (A) for an additional two years after the date of expiration
of the bond for overpayments that occurred during the term of the
bond, if the provider fails to furnish a new, updated, or renewed
bond that meets the requirements of this section; and
    (B) for an additional two years after the date the
provider's participation is terminated for services provided during
the bond period, if HHSC or its designee terminates the provider agreement;

  (3) the Surety's liability to HHSC is not affected,
diminished, or concluded by:
    (A) any action by the provider or the Surety to terminate,
reduce, or limit the scope or term of the bond;
    (B) any action by the provider to:
      (i) cease operation;
      (ii) sell or transfer any assets or ownership interest;
      (iii) file for bankruptcy; or
      (iv) fail to pay the Surety; or
    (C) the provider's failure to exercise available appeal
rights under Medicaid or CHIP;
  (4) the Surety's liability may be terminated only if:
    (A) the Surety furnishes HHSC with written notice of
its intent to terminate the bond no later than 30 days before the
effective date of termination; or
    (B) the provider furnishes HHSC with a new bond that
meets the requirements of this section; and
  (5) the Surety guarantees that upon receipt of written
request for payment by HHSC or its designee, the Surety will reimburse
Medicaid or CHIP the amount in the request up to the stated amount
of the bond.

Source Note: The provisions of this §352.15 adopted to be effective December 31, 2012, 37 TexReg 9899