BlueCross BlueShield of S.C. to Buy Cigna Government Services

COLUMBIA, S.C. — BlueCross BlueShield of South Carolina
has signed an agreement to purchase Cigna Government Services as
part of a strategy to build on its government business line, a
spokesperson for the giant insurer confirmed March 28. The sale is
expected to close in late April.

“CGS will probably undergo a name change,” said Elizabeth
Hammond, a spokesperson for BCBS of South Carolina, “but otherwise
will continue to operate with all its current 850 employees and
management in its current locations in Nashville, Tenn., and High
Point, N.C.”

CGS, a subsidiary of Philadelphia-headquartered Cigna, would
become a wholly owned subsidiary of S.C. BlueCross.

“It’s a good fit,” Hammond said. “Both BlueCross and CGS and its
predecessor companies have worked for Medicare since its
inception.”

CGS holds the current five-year contract as the DME MAC for
Jurisdiction C, which includes 15 southern states, Puerto Rico and
the U.S. Virgin Islands. The $144 million contract was originally awarded to Palmetto
GBA in 2006, but after a protest, CGS was eventually awarded the contract
and took over as the DME MAC in 2007.

On Nov. 30, 2010, CMS issued a solicitation for DME MAC
Jurisdiction C and said it expects to award the new contract in
August of this year.

CGS currently processes and pays claims for 14 million Medicare
beneficiaries and over 100,000 providers and suppliers in the
jurisdiction, according to a spokesperson for Cigna. As of March
2010, the area included 35,804 Medicare DME suppliers.

CGS also serves Medicare providers in Idaho and North Carolina
through two Part B contracts, and beginning in May, will expand to
16 additional states as it provides a variety of claims and
customer services for hospitals, physicians and home health and
hospice providers as part of its new A/B MAC Jurisdiction 15
Medicare contract.

With its acquisition, CGS would become part of BlueCross’
government services division, which includes PGBA, InStil Health
Insurance Co., Palmetto GBA and Trailblazer Health Enterprises.
Together, the four companies hold 36 contracts related to Medicare,
the TRICARE military health plan, and the U.S. Department of
Justice’s Bureau of Prisons health coverage. Their work encompasses
information systems, claims processing, customer service and
payment safeguard functions.

“Overall, under the S.C. BlueCross umbrella, we comprise more
than 40 companies involved in insurance,” Hammond said.

Cigna decided to sell the CGS subsidiary because it no longer
aligns with the company’s core business as a health services
company. “Cigna is focusing on those businesses that are part of
our core strategy to go deep, go individual, and go global,” the
spokesperson said.