Speculative bidders begin 'hawking' their businesses

Friday, March 22, 2013

No sooner had providers begun accepting Round 2 contracts than one alarming trend became apparent: Some providers were awarded contracts that they have no ability to service.

Premier Home Care received an inquiry letter from a broker representing a company that accepted contracts and is looking to sell. With one location and about $1.6 million in annual sales, the provider managed to get offered 60 contracts in 40 areas.

“They put that in and CMS approved it?” said Wayne Knewasser, vice president of government relations for the Louisville, Ky.-based provider. “CMS (is supposed to) evaluate the net worth of a company and its expertise and area coverage, but it allowed them to go willy-nilly and bid on areas that they aren’t in or even near. It’s a sad state of affairs.”

Even more troublesome: There may not be takers, at least for now, says one broker who contacted the four nationals—Lincare, Apria, Rotech and American HomePatient—on behalf of a provider in the Midwest with a similar story.

“He shouldn’t have won the contracts—he shouldn’t have even bid on them,” said the broker.

The broker’s experience matches what another industry source told HME News.

“There are certain speculative bidders with little to no experience with certain products or in many CBAs that have already started hawking their businesses in an attempt to sell them quickly and therefore never service those CBAs on which they bid,” said the provider.