Apria dumps big MCO deal

Sunday, February 29, 2004

COSTA MESA, Calif. - Apria said good-bye to millions of dollars in business in January when it decided to no longer participate in the Gentiva CareCentrix managed care network.

The move could potentially open up new business opportunities for independent providers as CareCentrix looks for providers to replace Apria.

“What Apria did was smart,” said healthcare consultant Schuyler Hoss. “One of the problems we’ve seen over the years is people underbidding some of these managed care contracts with repercussions for the entire industry.”

“Sounds like Gentiva wasn’t paying enough money,” said another industry source. “It’s certainly not an unusual scenario for people to evaluate and eliminate managed care contracts, but when Apria does it with Gentiva, it’s a big scale contract.”

Prior to announcing its split with Gentiva, Apria adjusted its 2004 earnings and revenue to reflect reductions in Medicare reimbursement. Add to that its withdrawal from the CareCentrix network, and Apria now estimates revenue will grow by 5% to 7% in 2004, a sharp drop off from 2003’s 10% growth. Despite that anticipated reduction, the company still expects earnings to grow 7% to 9%, which is consistent with recent estimates.

Apria and Gentiva, the nation’s largest home health nursing company, had operated under an interim agreement since Dec. 31, 2003. Gentiva’s CareCentrix network includes about 1,900 providers who deliver a full range of HME services to 15+ managed care companies. Last spring, Gentiva President Al Perry told HME News that Apria provided most of the network’s DME and home respiratory services.

“When we say it is going to be a seamless transition, we really mean it,” said Gentiva spokesman David Fluhrer. “We require three types of providers for each service in each region. So if a provider drops out, we have at least two others to go back to in each region.”