Rotech Healthcare accepts 17 CMS contracts in Round 1 Rebid of Medicare Competitive Bidding Program

Rotech Healthcare Inc. (OTCBB: ROHI) today announced that it has accepted 17 contracts awarded by the Centers for Medicare & Medicaid Services ("CMS") in the Round 1 Rebid of the national Medicare Competitive Bidding Program. The Round 1 Rebid included nine metropolitan statistical areas ("MSAs"). Only contracted suppliers can service Medicare patients for the competitively-bid product categories in these locations, with a few exceptions. The new contracts awarded in Round 1 have a three-year term and are scheduled to take effect on January 1, 2011. Rotech has accepted the following contracts:

“Not assuming any market share gains, the application of the new competitive bid rates to our existing patient base in these nine MSAs reduces our revenue by approximately $900,000 in the first quarter of 2011”

• 6 MSAs for oxygen supplies and equipment;
• 6 MSAs for enteral nutrients, equipment and supplies;
• 3 MSAs for CPAP, RADs and related supplies and accessories; and
• 2 MSAs for standard power wheelchairs, scooters and related accessories.

CMS continues to award contracts through September and, therefore, additional contracts may be awarded.

"We are pleased with our success in the Round 1 Rebid of the national competitive bidding program and we look forward to further growth and expansion of our existing presence in these initial cities," commented Philip L. Carter, Rotech's President and Chief Executive Officer. "The new payment rates for our six oxygen contracts averaged approximately 30% off the current applicable Medicare payment rates," Mr. Carter continued. "Not assuming any market share gains, the application of the new competitive bid rates to our existing patient base in these nine MSAs reduces our revenue by approximately $900,000 in the first quarter of 2011," he explained, adding that, "We believe, however, that our market share gains in the cities where we were awarded contracts will more than offset the reductions in reimbursement rates over time."