A subsidiary of health insurer CIGNA that employs 1,000 people in Nashville has lost a contract under which it processes and pays claims to Medicare, mostly from doctors.

CIGNA Government Services isn't saying how many local jobs could be affected when Birmingham, Ala.-based Cahaba Benefit Administrators LLC takes over the work later this summer.

But at least one observer said some layoffs could occur at the insurer's offices in MetroCenter.

"In this economy, it would be quite difficult for them to absorb … unless they can win another contract quickly and retain these employees," said Jane DuBose, health plan research director with HealthLeaders-InterStudy here.

The federal contract covers processing and payment of claims from hospitals as well as doctors and ambulance services in Alabama, Georgia and Tennessee. Medicare's overseer has been consolidating contractors to improve oversight and better manage costs.

CIGNA partnered in its bid with health insurer BlueCross BlueShield of Tennessee's Riverbend subsidiary, which currently processes claims from hospitals in Tennessee. Losing bidders such as CIGNA can appeal contract awards.

Company disappointed
John M. Kelly, a spokesman, said the company was disappointed but declined to comment on its plans. "We'll continue to operate business as usual throughout the transition period," he said.

Kelly said CIGNA would continue processing Medicare claims here from suppliers of medical equipment such as wheelchairs, including from 17 Southern states, under a contract it won last year. Afterward, it added more than 200 employees here.

Mary Thompson, a spokeswoman for Chattanooga-based BlueCross, said about 160 Riverbend employees handle the work processing claims from hospitals statewide.

She said it's too early to discuss what the contract loss might mean.

Return to In the News

Tennessean.com