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Round 2 Recompete: A new wave of “secret shopper” calls (and what you need to know) By Mark Higley

It’s déjà vu – all over again.

Some readers may recall last year I wrote about the subject in a VGM blog. The article started out, “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 linked an actual termination letter and urged all home medical equipment providers with contracts to read it closely. The letter provided details of the department’s authority, its rationale, logs of the “secret shopper” results and the various contacts initiated between the CBIC and the HMEs. The letter included 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.

Secret Shopper Calls – They’re Back

Well, the “secret shopper” calls are back and perhaps not unexpectedly. They began two weeks ago and are applicable to the July 1 contracts.

Some history: Almost two years ago CMS told lawmakers during a briefing that it was investigating reports that some contract suppliers were not servicing their entire bid areas. Although the briefings were closed to the public, industry stakeholders heard that CMS told lawmakers it’s using “secret shoppers” to see if contract suppliers are unwilling to service Medicare beneficiaries that are living in more rural areas. “When that happens, (CMS) begin(s) education,” said Seth Johnson, vice president of government affairs for Pride Mobility. “If the supplier remains out of compliance, (CMS) may ultimately terminate the contract.” CMS held the briefings for Senate staff and staff of the Energy and Commerce and Ways and Means committees.

Many HMEs were ostensibly replying to the secret shopper in a manner which suggested 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” were some of the reasons given.

These Round 2 termination letters were received by the smallest of HMEs up to large regional players.

Majority of Reports: Out-of-State Bid Winners

This time around – and as you might expect – the majority of the reports we received were to companies with contracts outside their geographic location. Take a look at virtually any area of the country on the Medicare Supplier Directory for a competitive bid item. About half of the contracts are out of state. Many contractors are more than 1,000 miles away from the service ZIP code. (This issue was addressed in the original Final Rule via comments something to the effect of “not restricting contractor geographic location allows more competition in the program.” The matter of “appropriate patient care” was not, and I am sure there is ongoing debate among the industry contractors and non-contractors, but beyond the scope of this article.) In any case, the secret shopper inquired as to the availability and timeliness of delivering a competitive bid item. The HME companies that were “caught” received a follow-up call from the CBIC indicating a requirement to submit a timely corrective action plan or “CAP.”

I recall two years ago that the CBIC initiated follow-up secret shopper calls to the same companies subsequent to the submission of an acceptable CAP. And, some of them failed again; that is, the staff at the original office was either not appropriately trained and/or the CBIC contacted another (branch) office. This resulted in a termination letter and the need to appeal.

Click here to view an actual termination letter. The supplier has been de-identified.

To date, I’ve seen no termination letters for this Round. But, the calls are continuing. Bottom line: it’s time to “coach” staff members who answer your phone or otherwise interact with your referral sources now.

If you have any questions regarding this matter or others, I am here to help. Feel free to contact me via my office line, 888-224-1631, cell phone 319-504-9515 or email, mark.higley@vgm.com.