AHCA releases winners in Fla. competitive bidding project

Sunday, June 30, 2002

TALLAHASSEE, Fla. - The administrator of the Medicaid program released its "notice of intent to award" bids for oxygen equipment and supplies and hospital beds to five providers last month.

Initially, the Agency for Health Care Administration (AHCA) announced that it intended to award bids to Rotech, Mercury Medical, Care Med Respiratory Services and Central Medical Equipment. Rotech and Central Medical Equipment were the big winners, with Rotech collecting bids for six of the 11 regions and Central Medical Equipment collecting bids for three regions. Mercury Medical and Care Med Respiratory Services collected one bid each. (Lincare, which submitted bids for 10 of the 11 regions, came up empty.)

Just hours after the notice was released, however, AHCA released another statement suspending the three bids it intended to award to Central Medical Equipment for regions 9, 10 and 11. Weeks later, AHCA released a third statement awarding two of Central Medical Equipment's three bids to All-Med Services of Florida (regions 9,11). The third bid was awarded to Medical Decision Services (region 10).

According to AHCA's communications director, the agency suspended Central Medical Equipment's bids after learning that the owner of Central Medical Equipment, Osvaldo de La Redrajo Jr., is reportedly having his Medicare and Medicaid licenses yanked at another business he owns, Professional Health Systems.

"It's my understanding that he failed to serve clients [at Professional Health Systems]," said Bruce Congleton. "He didn't provide what it is that they're supposed to provide there."

When asked whether AHCA checked the backgrounds of providers submitting bids for the project, Congleton said: "We did backgrounds on companies but not on owners."

Attempts to reach Redrajo at Central Medical Equipment were not successful.

As many providers feared, in more cases than not, AHCA placed more emphasis on cost savings in awarding the bids (See graphic this page). For region 1, for instance, Pediatric Services of America (PSA) and Sacred Heart Health Systems garnered the highest technical scores, 3.66, but Rotech Medical, which had a technical score of 3.36, won the bid. While PSA and Sacred Heart demonstrated cost savings of $28,741 and $60,286, respectively, Rotech demonstrated savings of $96,457.

Joan Cross, president of the Florida Association of Medical Equipment Services (FAMES) said the association isn't ready to throw in the towel, though. They're waiting for a decision from an administrative law judge on a lawsuit the association has filed to put the brakes on the project (See story, page 12),

"[The awards] don't mean too much - yet," Cross said. "They're not signing contracts with the winners until June 28. Until then, [AHCA and the winning bidders] will be going over financials and negotiating prices."

The discount that the winning bidders have promised AHCA won't be released until those contracts are signed. It's been rumored that it's as high as 25%. That a company can slash its rates by that much amazes some providers.

"I don't know anyone who has a 25% margin on any Medicaid business," said Joe Sansone, president of Pediatric Services of America in Norcross, Ga. "Our bid was 4% or 5% the current Medicaid allowable. We said, 'This is all we can live with. If someone can do better than that, let them do it.'" HME