Blue Cross and Blue Shield of Maryland says it will drop a $12 million contract with the federal government to process Medicare bills from physicians.
The company last week cited financial reasons for its decision.
Under its Part B contract with the HCFA, Blue Cross processed Medicare claims from Maryland physicians and other suppliers, and screened the claims for fraud and error.
The Blues have a similar contract with the federal government to process Medicare claims from hospitals in the state. The insurer said it would continue to honor its Part A contract.
The decision to drop the Part B contract followed a cost analysis by the Blues that indicated the expenses involved in meeting terms of the agreement were greater than what federal government would pay.
"It would just cost us too much money to meet their requirements," said Blues spokeswoman Amy Levy.
Maurice Hartman, regional director for HCFA in Philadelphia, added that the federal government required the Maryland Blues to improve customer service procedures and enhance its electronic processing capability.
"They needed to improve their operations and they were making some improvements; they still had a ways to go," Mr. Hartman said.
Ms. Levy said the company estimated it would have cost about $5 million to meet the federal requirements.
"Our employees worked extremely hard and made much progress, but the required financial and human resources exceeded the company's limits," said William L. Jews, the Blues' president and CEO.