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CareFirst won't seek to renew Medicare-claims pact


CareFirst BlueCross BlueShield will not seek to extend a Medicare claims-processing contract that ends Sept. 30, placing 103 jobs in question.

CareFirst notified the employees, who work in Timonium, yesterday. Jeffery W. Valentine, a CareFirst spokesman, said some might be hired by the contractor that replaces CareFirst. Others would be given priority for other positions with the insurer, including jobs that will be created as the company gears up to offer the new Medicare prescription-drug coverage.

Those who don't find other jobs would be given severance payments, Valentine said.

Valentine said he could not discuss CareFirst's reasons for not seeking to renew its contract until the company's board approves the decision.

Peter Ashkenaz, a spokesman for the federal Centers for Medicare and Medicaid Services, said that the agency had been told by CareFirst that it didn't plan to continue and that the agency was in the process of seeking a new contractor. He said CMS recommends that a new contractor hire employees from the old one.

CareFirst has been one of 25 insurers serving as a CMS intermediary. In that role, it processes Medicare hospital and skilled nursing home bills from Maryland and the District of Columbia. In fiscal 2004, CareFirst processed 2.5 million claims under the contract, paying out $4.3 billion in Medicare funds, according to CMS. CareFirst will be paid $10.4 million in the current fiscal year to process claims.

Ashkenaz said CMS is changing the way it contracts with intermediaries to a more competitive selection process. CareFirst would not have been subject to the change this year, he said, but would have been eventually.

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