Highmark’s board of directors agreed to divest its Medicare claims administrator as part of its strategy to acquire West Penn Allegheny Health System.
Late News: As part of deal, Highmark to divest Medicare administrator
Highmark reached a deal to sell its subsidiary Highmark Medicare Services to the Blue Cross and Blue Shield of Florida subsidiary Diversified Service Options. David O’Brien, executive vice president at Highmark, told reporters as the deal was announced that federal officials’ concerns about potential conflicts of interest prompted the sale.
Owning providers and paying them through an owned subsidiary would cause the CMS “heartburn,” O’Brien said. Terms of the deal were not disclosed. O’Brien said Highmark Medicare Services’ operations totaled $100 million in annual revenue and income of $1 million to $2 million. The deal is expected to close around Jan. 1. O’Brien said Highmark approached the CMS about the insurers’ strategic direction. Highmark officials believed the federal agency’s concerns would inhibit growth for the Medicare claims administrator.
The deal would increase business volume for Diversified Service Options, which would help the company provide more cost-effective claims administration, Sandy Coston, CEO of Diversified Service Options, said in a news release announcing the deal.
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