MOUNTLAKE TERRACE — Premera Blue Cross will no longer process claims and offer related services for Medicare starting later this year, the insurer announced Monday.
The action, which takes effect Oct. 1, will mark the end of the health insurance company’s involvement with the Medicare and Medicaid programs, said Premera spokesman Chris Jarvis.
Earlier this month, Mountlake Terrace-based Premera said it was transferring services it provided for Medicaid and Basic Health patients to another insurance provider.
Under Medicare Part A, the federal government pays Medicare beneficiaries’ claims for hospitals and other facilities but uses private companies such as Premera to process the claims and perform other services.
There are nearly 50 companies nationwide that hold federal contracts to perform those services. Jarvis said Premera has handled about 1 percent of the Part A national workload.
With changes in Medicare that open contractors up to competitive bidding, however, Premera took a second look at its involvement, Jarvis said.
"We realized the way things were going, a company — to be competitive — had to have a much bigger Medicare Part A business than ours," he said.
Medicare Part A is not related to "Medigap," commercial coverage for seniors. Premera will continue to serve nearly 50,000 people with that type of coverage, according to the company.
Premera originally considered withdrawing as a Medicare contractor in 2002, but a federal inquiry into how the business was handling the Part A claims stalled that decision. The investigation looked into allegations that the insurer processed Medicare claims incorrectly and lied about it. Premera has denied any wrongdoing.
Jarvis said Premera will work with Medicare to make sure the shift of duties to another contractor goes as smoothly as possible for Part A patients and beneficiaries.
Additionally, the company also is working with the government and the Blue Cross Blue Shield Association to help the approximately 100 employees who work for Premera’s Medicare Part A department, said Judy Ellis, a vice president overseeing that operation.
Premera’s shifts away from Medicare and Medicaid services comes as the private nonprofit company is trying to win approval from state officials to convert into a for-profit, stockholder-held corporation. The plan is still under review by the state Office of the Insurance Commissioner.
Critics of the company’s proposed conversion point to Premera’s actions as proof that the insurer’s quest to become a for-profit operation will hurt patients in the long run.
"It’s ironic to me that these are things we and the insurance commissioner’s experts all said they would do," said Cassie Sauer, spokeswoman for the Washington State Hospital Association.
In an unrelated announcement on Monday, Providence Health Care of Eastern Washington said it will end health care contracts with Premera in the fall unless the insurer reaches an agreement "that balances access with affordability" for patients in the state’s rural eastern region.
Providence claims Premera is offering unfairly low reimbursements to Eastern Washington hospitals in order to subsidize the insurer’s operations in other parts of the state.
Reporter Eric Fetters: 425-339-3453 or fetters@heraldnet.com.
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