'Mystery' providers win competitive bids

Thursday, November 4, 2010

BALTIMORE - The HME industry has just begun to scrutinize the 356 providers who won competitive bids, but on first blush, the winners--a mixed bag of regional, local and national companies--seem to include a fair number of so-called "mystery" providers.

"There are some of the same winners from last time, but there are a whole lot of names that I haven't heard of and I've been here for 15 years," said Chris Rice, director of marketing for Diamond Respiratory Care in Riverside, Calif., which won contracts in all product categories except complex rehab (Group 2).

Rice is not alone. When John Shirvinsky looked at the list of providers who won in the Pittsburgh competitive bidding area (CBA), he nicknamed the providers he'd never heard of before "mystery winners."

"Who are these people?" said Shirvinsky, executive director of the Pennsylvania Association of Medical Equipment Suppliers.

By Shirvinsky's calculations, 58% of the branches that will serve the Pittsburgh CBA have out-of-state addresses.

This situation is reminiscent of what happened during the first round of competitive bidding, which CMS delayed in July 2008. At that time, the industry complained that: 1. Many providers had no experience in the product categories they won; and 2. Many also had no presence in the CBAs where they won.

But CMS believes it has tackled these concerns head on. When the agency announced the winners Nov. 3, it stated that 76% of the contracts went to suppliers already furnishing the items in the CBAs; and that 97% of the contracts went to suppliers with experience with the items they will be providing.

The agency also stated that all of the winners are in good standing with Medicare.

Despite those reassurances, the industry remains skeptical. As it did two years ago, Invacare plans to analyze the winners, said Cara Bachenheimer, senior vice president of government relations.

"When we did our analysis then, we found that 17% of the winners were companies that we were in active litigation with or that we were on credit hold with," she said. "We are poised to do the same type of analysis because folks on the Hill want to know what the make up looks like."