“Secret Shopper” Calls = Dozens of Termination Letters! Here’s What You Need To Know

Posted on in HME Government Issues

TerminationBy: Mark Higley, VGM Regulatory HME providers with competitive bidding contracts beware! The Competitive Bidding Implementation Contractor (CBIC)’s Elaine Garrick has issued termination letters to dozens of HME companies due to their failure to properly respond to “secret shopper” calls initiated by her department’s regional liaisons. I’ve linked an actual termination letter — and I urge ALL home medical equipment companies with contracts to read it closely — which provides detail of the department’s authority, its rationale, and logs of the “secret shopper” results and the various contacts initiated between the CBIC and the HME. This letter includes appeal rights and correction action procedures, and, should these actions/appeals be deemed unsatisfactory and/or untimely by the contractor, a summary of the “penalties of termination” to the contract. Somewhat simply stated, many HMEs are ostensibly replying to the secret shopper in a manner which suggests the company cannot or will not (and/or on a timely basis) fulfill a referral for a particular product in a particular ZIP code. “We don’t serve that county” or “we don’t offer liquid oxygen” or “we can’t help you find another supplier that offers that brand” are some of the reasons given. You get the idea. Let me be clear: These termination letters have been received by the smallest of HMEs up to the top tier of large regional players. No contract awardee is exempt from scrutiny due to, for example, a “clean” billing history or the size of its operations. And, yes there is the opportunity/option to submit a timely corrective action plan (“CAP” – see text below for additional detail) to the CBIC, as some suppliers have already enacted, and their contracts were not terminated. Beware! These same HME companies received follow-up “secret shopper” calls in the weeks subsequent to the submission of an acceptable CAP. And guess what? Two of them had branch offices offer again a reply to the effect of “we don’t do scooters, but we can offer standard wheelchairs” — and were AGAIN terminated. (There is an additional appeal process of which I will include at the end of this post.) My point: A “corrective action plan” cannot just be a template provided by an industry consultant (including some attorneys). The company MUST initiate training to ALL staff that might interact with a referral source. All employees should read the actual competitive bidding contract issued to the company. Detailed information is available at Specific and confidential questions or concerns may, as always, can be directed to me. The actual letter is available by the link above; here are some highlights (the actual supplier has been de-identified as “Home Care Company”) from the termination letter:

  Re: Termination for Contract Number: 00-1234567 Dear Authorized Official:
  • This letter is to notify you that the Centers for Medicare & Medicaid Services (CMS) is terminating Home Care Company, Inc.’s entire Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) competitive bidding program Round 2 contract for all competitively bid items in all competitive bidding areas (CBAs) for which Home Care Company, Inc. has been awarded a contract. Through our monitoring and enforcement of the DMEPOS competitive bidding program, we determined that Home Care Company, Inc. is in breach of Articles IV and VII of the DMEPOS competitive bidding contract for refusing to furnish all items in your contract throughout the CBA and failing to cooperate fully with CMS and the Competitive Bidding Implementation Contractor (CBIC) to resolve issues that pertain to Home Care Company, Inc.’s performance under the contract. The specific Round 2 competitive bidding contract articles that have been breached by Home Care Company, Inc. are listed below.
  • Specifically, CMS has determined that Home Care Company, Inc. is in breach of Article IV.A of the Round 2 contract by not furnishing all competitively bid items throughout the entire CBA, which is listed in Attachment A of the Round 2 contract. In addition, we have determined that Home Care Company, Inc. is in breach of Article VII of the Round 2 contract by failing to promptly resolve the contract performance issues CMS and the CBIC identified in prior communications and for repeatedly indicating that Home Care Company, Inc. will not or cannot fully perform under the contract. Appendices A, B, and C of this letter summarize details concerning the underlying violations.
  • Pursuant to 42 C.F.R. §414.423, CMS is providing notice that it will terminate Home Care Company, Inc.’s Round 2 contract effective July 27, 2015, unless a corrective action plan (CAP) or a hearing request is received within 30 calendar days of the date of this letter. If Home Care Company, Inc.’s contract is terminated, Medicare will not reimburse Home Care Company, Inc. for furnishing any competitively bid items in any CBA for which it is awarded a Round 2 contract for dates of service on or after the date the contract is terminated. For that reason, if Home Care Company, Inc.’s contract is terminated 42 C.F.R §414.423(1)(2) requires you to inform affected beneficiaries who currently rent or purchase these items that Home Care Company, Inc. is no longer a contract supplier and that the beneficiaries must obtain the items from a contract supplier in order for Medicare to pay. Unless you are appealing this termination, i.e., submitting a CAP or a hearing request, Home Care Company, Inc.’s notification to beneficiaries must be completed within 15 calendar days of termination as set forth in regulation. If Home Care Company, Inc. is picking up rental equipment, the pick-up and delivery must be coordinated with the beneficiary and the new contract supplier, and should occur on or after the anniversary date of the initial delivery (see the “Transitioning a Competitive Bidding Beneficiary to a Contract Supplier after Program Implementation” fact sheet in Appendix D for more information).
  • Appeal Rights: Under 42 C.F.R. §414.423, CMS established an appeals process for all suppliers that receive a notice of contract termination. Under this process, CMS is allowing you the option to submit a corrective action plan (CAP) as set forth in 42 C.F.R. §414.423(d).If you choose to submit a CAP, it must include the following:
    1. A plan to eliminate all the deficiencies identified in this notification
    2. Timeframe(s) by which the components of the CAP will be implemented (e.g., timeframes for appealing National Supplier Clearinghouse decision/reactivating PTANs and servicing beneficiaries in all CBAs).
If CMS determines the CAP is acceptable and is appropriately implemented to correct the breaches under the contract, Home Care Company, Inc.’s contract will not be terminated. If CMS determines that the CAP is not acceptable or Home Care Company, Inc. does not implement an acceptable CAP, Home Care Company, Inc. will receive a subsequent notice that its contract will be terminated within 45 calendar days of the date on that notice. You may also request a hearing, as set forth in 42 C.F.R. §414.423(d), before an independent hearing officer who was not involved with the original recommendation to terminate Home Care Company, Inc.’s contract. A hearing may be requested when a contract supplier receives either:

(1) A notice of termination, or (2) A notice that the CAP is not acceptable.

Therefore, given this termination notice, an authorized official for Home Care Company, Inc. must submit either (1) a CAP or (2) a written request for a hearing (in lieu of a CAP), to the CBIC within 30 calendar days from the date of this termination letter to the following address: Palmetto GBA Competitive Bidding Implementation Contractor Attn: Contract Appeal 2743 Perimeter Pkwy Ste 200-400 Augusta, GA 30909-6499 If you have any questions, please call the CBIC customer service center toll-free at 877-577-5331 between 9 a.m. and 5:30 p.m. prevailing Eastern Time, Monday through Friday. Sincerely, Elaine Garrick Program Manager Competitive Bidding Implementation Contractor Enclosure(s): Appendix A: Home Care Company, Inc.’s Secret Shopper Call (SSC) Results Appendix B: Home Care Company, Inc.’s Authorized Official (AO) Contact Log Appendix C: Home Care Company, Inc.’s Authorized Official (AO) Email Contact Log Appendix D: Fact Sheet
  • Appendix A: Home Care Company, Inc.’s Secret Shopper Call (SSC) Results
Date SSCType PTAN CBAIPC Findings ContractViolation(s)
8/27/2014 Initial 1234567890 Round 2 CBA/ Standard Wheelchairs, Scooters, and Accessories Issue 1: Do they provide a wheelchair?Findings: Yes.Issue 2: Do they provide deliver to the beneficiary’s zip-code?Findings: No.Issue 3: Do the) offer to take your information to deliver to you in-person or via shipment?Findings: No.Issue 4: Do they bill Medicare? Findings: Yes.Issue 5: Do they offer to assist in locating a supplier who can provide your brand? Findings: The customer service representative (CSR) stated they didn’t have any idea of other suppliers. Article IV.AViolation·-Does not service entire CBA
  • Appendix B: Home Care Company, Inc.’s Authorized Official (AO) Contact Log
Date/Time Call Summary Call Details
08/28/2014 CBL contacted AO and left message regarding the SSC findings. On August 28,2014, the Competitive Bidding Liaison (CBL) contacted Home Care Company, Inc.’s AO, John Doe regarding a non-compliant secret shopper call. The CBL left a voice message as Mr. Doe was not available. The CBL immediately followed up the voicemail with an email (see Appendix C).
08/29/2014 AO contacted CBL. Per AO request, CBL contacted Compliance Officer to discuss SSC findings. On August 29, 2014, the CBL received call requesting they contact the Compliance Officer, Mr. Smith. The CBL contacted Mr. Smithand provided the SSC details and the non-compliant findings. The CBL also educated on the Supplier and Quality Standards, in which contract suppliers are required to deliver all items in the product category to which they have been awarded a contract to the entire CBA where they won a bid. In addition, the CBL addressed that if they were unable to assist, they should be able to recommend the beneficiary to another contract supplier who can provide the equipment to the beneficiary. Mr. Smith understood and stated he would take care of the issue.
Appendix C: Home Care Company, Inc.’s Authorized Official (AO) Email Contact Log From: DMEPOS Competitive Bidding Implementation Contractor (CBIC) Sent: Thursday, August 28, 2014 1:40 PM To: [email protected] Subject: Competitive Bidding program Non-compliance finding Good Afternoon Mr. Doe, This is a follow up e-mail to the voice message I left you in regards to the non-compliance findings for your Round 2 CBA Competitive Bidding Area location for the product category: Hospital Beds and Accessories. On August 26, 2014, I conducted a Secret Shopper call, as part of CMS’s monitoring program to your location and requested a Hospital Bed. Your office was found to be non-compliant. Under Article IV, Part A of your contract; The Contract Supplier shall furnish all items in the product category indicated in Attachment A throughout the entire CBA(s) listed in Attachment A in accordance with 42 CFR §414.408 and §414.422. Please see the attached documents which outline the guidelines for your contract with CMS. Please let me know if I can be of further assistance. Thank you, DMEPOS Competitive Bidding Implementation Contractor (CBIC) CBIC Liaison-Round 2 CBA #1 Round 2 CBA #2 (800) 800-8000 (T) • (800) 800-8001 (F)
  Lastly, as noted above, there is an appeal process in addition to the corrective action plan. (Note: Legal counsel is strongly recommended…) Here is an excerpt from an actual case: What is the difference between filing an appeal vs. submitting a CAP? Why do we elect to submit a CAP as opposed to filing an appeal? It’s not an “appeal” but rather a “hearing.” The purpose of a CAP is to correct the issues that the CBIC has identified. The purpose of the hearing is to give the supplier the opportunity to show that it is NOT in violation of the contract (burden of proof on the supplier). The final decision of a hearing is binding. If the CBIC decides that the CAP is not acceptable, the supplier may still request a hearing. Unless the supplier is absolutely certain that it did not violate its contract in any way, the CAP is preferable because it gives us a second bite at the apple in the event that the CBIC determines the CAP is not acceptable, whereas the hearing is final. See generally, 42 CFR 424.423. Do the letters that our clients have received thus far say that the contract HAS BEEN terminated pending an appeal or CAP? Or do the letters say that the contract WILL BE terminated at future date unless an appeal or CAP is submitted? “Pursuant to 42 CFR 424.423, CMS is providing notice that IT WILL TERMINATE [Supplier’s] Round 2 contract effective [DATE], unless a corrective action plan (CAP) or a hearing request is received…”
  Bottom line: It’s time to “coach” those that answer your phone or otherwise interact with referral sources now. Secret shopper calls will continue, and I am here to help. Good luck! My contact info: Mark Higley (O) 888-224-1631 (C) 319-504-9515 [email protected]