Diversified Service Options (DSO), a wholly-owned subsidiary of Blue Cross and Blue Shield of Florida Inc. and the holding company for First Coast Service Options (FCSO), has reached an agreement to acquire Highmark Medicare Services (HMS), a subsidiary of Pittsburgh-based Highmark Inc.
DSO and HMS are both Medicare Administrative Contractors, with DSO holding the contract to provide service for Jurisdiction 9 (serving Florida, Puerto Rico and the U.S. Virgin Islands) and HMS holding the contract for J12 (serving Pennsylvania, New Jersey, Maryland, Delaware and the District of Columbia). When combined, the two DSO companies will serve Medicare beneficiaries in five states, two U.S. territories and the District of Columbia.
"Both FCSO and HMS have excellent reputations in the government-sponsored healthcare industry," said Sandy Coston, CEO of DSO and FCSO in a press release. "This acquisition will allow DSO to dramatically increase our business volume which will be of great benefit in providing more cost-effective services for our Medicare claims administration business. We expect both FSCO and HMS to continue to deliver high quality services to which our customers are accustomed."
Once the deal is closed, expected on or about Jan. 1, HMS and FCSO will continue to operate as separate, independent organizations, as wholly-owned DSO subsidiaries.
"This is certainly a big change for the HMS organization, but one that will be very positive for the company and our employees," said Patrick Kiley, president of HMS in a statement. "In the long-term we will continue to look to grow our government business."
"This change was prompted by Highmark's provider strategy," said David O'Brien, executive vice president at Highmark Inc. "The decision was a difficult one but one which best positions HMS to maintain its current business and pursue its government business growth strategy."