ELYRIA, Ohio — More than a third of the bid winners in the Round 1 rebid of competitive bidding have "questionable financial foundations," according to a new report from Invacare Corp.
Following its analysis of 359 suppliers awarded contracts by CMS, Invacare found that:
- 8.5 percent have credit limits of less than $10,000 (meaning they can buy very little product);
- 5.4 percent are on credit hold (meaning they cannot purchase any product);
- 6.7 percent are so far behind on their payments that their accounts have been turned over for collections or legal process (meaning they cannot purchase any product); and
- 14 percent have no account with the company (meaning they may be brand new and inexperienced firms).
"As the largest U.S. manufacturer of home medical equipment, this means that over one third of the firms that are authorized to provide Medicare beneficiaries home oxygen therapy, power wheelchairs, enteral nutrition, home care beds, CPAPs and RADs (respiratory devices), walkers and mail order diabetic supplies are in a precarious financial situation and are unlikely to be able to provide the medically necessary items and services over the three year contract period," Invacare said in a release.
As the industry's largest creditor, Invacare said its finance department requests two years of audited financial statements and also uses credit reporting agencies such as Dun & Bradstreet when evaluating a company's credit-worthiness. In contrast, the company said, CMS required only one year of unaudited financial statements from those who submitted bids in the Round 1 rebid. Neither did the agency require bidders to submit any reports from credit agencies.
When CMS announced the names of the bid winners in November, an agency release included this statement from CMS Administrator Dr. Donald Berwick: "Each of these contract suppliers has met our stringent standards, so beneficiaries can be assured they will receive their equipment and supplies from legitimate and quality suppliers at prices that are more in line with the current market."
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