Claims processing contract endingBlue Cross Blue Shield of Minnesota has officially notified health care provider First Solutions it will soon stop using its claims processing center in Two Harbors. At least 40 people will likely be out of work by April 30.
Blue Cross Blue Shield of Minnesota has officially notified health care provider First Solutions it will soon stop using its claims processing center in Two Harbors. At least 40 people will likely be out of work by April 30.
Joyce Mireault, vice president of health management and marketing for First Solutions, said the decision was “not news to us.” She said Blue Cross had warned the company last year that it planned to end its vendor contract in 2010. “It was a question of April or this summer,” Mireault said.
First Solutions CEO Terry Jacobson visited the Two Harbors center last Thursday to deliver the news that layoffs would come sooner than later. The company is based in Duluth. Employees have been asked to not speak publically about the layoffs.
Blue Cross had until last Friday to offer First Solutions a timeline.
First Solutions runs several clinics and pharmacies in the region, including a pharmacy in Silver Bay, and also does claims and other administrative duties for insurance companies. It once owned the clinic in Two Harbors but it was sold to Lake View memorial Hospital.
Until the end of last year, it also ran First Plan of Minnesota, considered the state’s first HMO. It got its start in Two Harbors. First Plan, now First Solutions, had been a subsidiary of Blue Cross Blue Shield from 1986 until the death of the HMO in December.
Mireault said Blue Cross gave notice it would likely end its contract with the Two Harbors center. She said employees have always known that the contract was tenuous at best the past 10 years. “There were no long-term promises there,” she said.
First Solutions owns the claims center building in Two Harbors and is scrambling with local business leaders and economic groups to find a business for the center. Mireault said it is “highly wired” to handle complex telecommunications and it comes with a skilled workforce. She said the Two Harbors employees were lauded by Blue Cross for their high production and ability to process complex forms.
There has been some interest the past six months in the building, Mireault said, “but it’s a matter of timing” considering the poor state of the economy.
She said there would be training money available for employees should a different kind of company come in. For now, there is little room for those employees to transfer to other First Solutions jobs.
Two Harbors processed Blue Cross and First Plan claims. First Solutions had hoped to ramp up its contracts outside of Blue Cross to keep its employees busy. It’s expected that First Solutions will have to find another partner to stay in the health insurance market. It is deemed too small to compete with larger players like Blue Cross.
First Solutions evolution
The company began in 1944 as Community Health Center out of Two Harbors. In 1974, it was recognized by the Minnesota Department of Health as the state’s first not-for-profit health maintenance organization. In 1986, the company became an affiliate of Blue Cross Blue Shield of Minnesota. In 1995, the company changed its name to First Plan of Minnesota. It became First Solutions in 2007. In the fall of 2009, it was announced that the HMO would cease in December, ending the affiliation with Blue Cross Blue Shield.