Maryland health insurance firms cut workers to save costs

By Neil Adler

Washington Business Journal

Updated: 8:00 p.m. ET Aug. 28, 2005



Two of Maryland's largest health insurers are slashing jobs.



CareFirst BlueCross BlueShield is laying off 103 workers because of its decision not to compete for renewal of a Medicare claims-processing contract that ends Sept. 30.



Meanwhile, Rockville-based Mid Atlantic Medical Services (MAMSI) and its parent company recently laid off about 80 Maryland employees to cut costs.



Insurance industry experts say the layoffs aren't a surprise.



"While employment reductions are not desirable, they are a result of a competitive marketplace as these carriers continue to fight for market share," says Maryland Insurance Commissioner Al Redmer.



Owings Mills-based CareFirst (www.carefirst.com) is hopeful that up to three-quarters of the affected workers could be hired by the new contractor.



Highmark officials are interviewing CareFirst workers -- claims handlers and customer-service representatives -- and could make some hires in the next few weeks . The new contract begins Oct. 1, says CareFirst spokesman Jeff Valentine.



CareFirst cut at least 200 jobs earlier this year as it continues to map out ways to reduce overhead while increasing its business. The insurer once employed 6,500, but the number is now about 6,000.



Revenue, though, increased to $4.98 billion in 2004, up from $4.64 billion a year earlier.



MAMSI cut 1 percent of its work force -- the company wouldn't provide an exact number -- "to fit a more efficient business model," says Beth Sammis, the senior vice president of corporate communications. MAMSI employs about 2,700 people at its Rockville headquarters and in offices in Frederick and Columbia.



MAMSI's parent, UnitedHealth Group, recently cut 53 jobs in Hunt Valley, according to the Maryland Department of Labor, Licensing and Regulation. Minneapolis-based UnitedHealth Group bought MAMSI (www.mamsi.com) in 2003 for nearly $3 billion.