Will Competitive Bidding Chase Provider Out? Clearwater, Fla. Medicare beneficiaries serviced by Lincare Holdings are worried the respiratory company will pull out of Polk County, Fla., because of the competitive bidding demonstration project. That move could leave up to 1,000 oxygen patients scrambling for a new provider when the project begins Oct. 1.

"Customers have contacted us," acknowledged Richard Butler, Lincare's corporate compliance officer. Beneficiaries calling the Lincare location in Lakeland, Fla., are referred to Butler. "We are concerned." He did not say whether the company will withdraw from Polk County, and by press time in mid-August, Lincare officials had not formulated a response.

Lincare is not one of the 13 winning bidders chosen to provide oxygen service within the Polk County demonstration area, so it cannot add new patients. Under the competitive bidding rules, it will retain existing patients only if it accepts the winning allowable for reimbursement. The winning oxygen allowable is an 18 percent reduction from current rates.

Juanita Widen, a local grassroots ombudswoman affiliated with NAMES, said she has spoken with beneficiaries who say Lincare representatives told them that the company will not accept the lower reimbursement rates because it refuses to lower its standards.

"And if Lincare pulls out," Widen said, "I'm concerned about some of these small providers going from $500,000 annual sales to a $3 million company overnight. I know very few companies that can grow that fast and maintain good service."

Because Lincare is the leading oxygen provider in the area, its withdrawal could result in a challenging scenario for HCFA, which is responsible for ensuring all beneficiaries' access to health care during the project. However, a HCFA spokesman said the project will have enough providers to compensate for those leaving the area and that rules exist for an orderly transition of patients.

In other news, Lincare, despite another 5 percent oxygen reimbursement cut this year, announced an increase in net income and revenue for the second quarter and six months ended June 30.

Quarterly net income was $24.8 million, or 42 cents a share, up from $20.7 million, or 35 cents a share, for the same period in 1998. Revenue for the quarter jumped 20 percent to $143 million, from $119.5 million for the same period the previous year.

For the six months ended June 30, net income was $48.3 million, or 82 cents a share, compared with $38.9 million, or 66 cents a share, for the first half of 1998.