Losers Unite: Debt-ridden Orlando Company Lands Medicare Contract

Heard enough Medicare horror stories? Here's another chapter in the making.

The federal Centers for Medicare and Medicaid Services announced Tuesday that Rotech Healthcare was awarded 17 contracts for service.

That's good news for the Orlando company, but potentially precarious for the public purse, warns the Accredited Medical Equipment Providers of America, a Miami-based trade association.

Rotech, in a 10-Q filing with the Securities Exchange Commission on May 10, reported it had $514.6 million of long-term debt outstanding and that "there can be no assurance that we will be able to refinance any of our debt."

The filing went on to consider "alternatives in restructuring our business and our capital structure, including filing for bankruptcy protection."

"This again shows that Medicare is only looking at the lowest bids and not a company's ability to stay in business while attempting to provide products and services to the elderly," said AMEPA vice president Jack Marquez.

"CMS stated that all suppliers who are offered contracts went through a thorough vetting process, and met financial standards, but how low can those standards be when they offer 17 contracts to a company with reported cumulative losses of $267 million and $514 million in debt, all of which is due and payable by April 2012, 15 months into a three-year contract?"

Good question.