CareFirst to lay off 134 workers in data entry

CareFirst BlueCross BlueShield will lay off 134 employees as it outsources data-entry work for claims, the company confirmed yesterday.

"It's never a happy decision, but this is for the benefit of our members," said Jeffery W. Valentine, a CareFirst spokesman. He said the outsourcing would save $7.6 million a year, which would result in better pricing for customers.


About half of the workers will be offered positions with Affiliated Computer Services Inc., the company that will assume the job of scanning and keyboarding claims data.

The layoffs come as CareFirst has announced a new focus on its nonprofit mission. The company told legislators last week it would forgo $60 million in profits to hold down premiums and would spend $8.7 million on efforts to improve medical quality and reduce disparities in health care.


"We will not be driven by the bottom line to the extent the company was previously," Michael R. Merson, CareFirst's board chairman, told lawmakers last week.

Del. John A. Hurson, chairman of the Health and Government Operations Committee who has been pressing CareFirst on its performance as a nonprofit, stepped up his criticism yesterday.

"I can't understand every business decision they make, but given the level of reserves this company has - which are well in excess of what any national indicator says their needs are - they must be very careful in justifying things that leave more people without health insurance, such as their [laid-off] employees," said Hurson, a Montgomery County Democrat.

CareFirst had reserves of about $900 million at the end of 2003 (including its Maryland and District of Columbia subsidiaries), according to insurance regulators.

Valentine said the charitable efforts made it more important for the insurer to cut administrative costs. "If we're going to reduce our earnings, our margin is that much less," he said. "To the degree we can reduce administrative overhead, we're making sure we will be there for our members."

CareFirst has 3.2 million members and about 6,200 employees.

Valentine said 96 of the jobs to be eliminated are at CareFirst's Owings Mills headquarters, and the balance are in Washington. The contract with ACS begins April 1.

He said 66 employees would be offered "comparable" permanent jobs with ACS. The other 68, he continued, will be offered "short-term" jobs for a period of months with ACS during the transition, then would be given severance.


The ACS jobs will be at 100 S. Charles St. in Baltimore, in space the contractor will be subleasing from CareFirst. CareFirst has other operations in that building. Based in Dallas, ACS provides a variety of outsourced information technology services to companies and governments, including other Blue Cross plans.

Valentine said he did not know if the ACS jobs would have pay and benefits comparable to CareFirst's. ACS officials could not be reached for comment yesterday.

CareFirst has a committee studying other ways to trim administrative costs, Valentine said, but he was not aware of any other outsourcing plans.

He said the work of scanning and keyboarding claims data was a good target for savings in part because the volume of paper claims is declining. A decade or so ago, CareFirst received all its claims on paper. Now, most doctors and hospitals bill electronically. Of 27 million claims processed last year, according to company figures, only 25 percent were on paper.

Sun staff writer David Nitkin contributed to this article.