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.