HARTFORD, Conn., July 25, 1996 — Aetna (NYSE: ΑET) announced today it
will not renew its contracts with the federal Health Care
Financing Administration (HCFA) to administer the
Medicare Part A and Part B fee- for-service program.
Aetna instead will concentrate on growing its Medicare
managed care business, offering products through its
affiliated health maintenance organizations (HMOs).
Medicare managed care is one of the fastest-growing
segments of Aetna's health business.
Aetna's Part A intermediary and Part B carrier
contracts were to expire on September 30, 1996. In order
to enable Medicare beneficiaries, physicians and
providers to make the transition to new contractors with
the least amount of disruption, Aetna has agreed to
extend its contracts to September 30, 1997. All
operations are expected to be transferred by that date.
HCFA will negotiate agreements with other contractors
over the next several months to administer the Medicare
program for beneficiaries and providers in the
jurisdictions serviced by Aetna. Aetna will work closely
with HCFA and the replacement contractors during this
extension period to ensure a smooth and orderly
transition of business.
As a Part A fiscal intermediary, Aetna processes
Medicare claims for hospitals and other facilities. As a
Part B carrier, Aetna pays claims for physicians in nine
states -- Alaska, Arizona, Georgia, Hawaii, Nevada, New
Mexico, Oklahoma, Oregon and Washington.
"Leaving the Medicare administration business is
a difficult decision for us," said Reginald R.
Williams, head of Aetna's Medicare operations. "But
we have made a strategic decision that our future in this
business lies more in the direction of Medicare managed
care than in administering the traditional Medicare
fee-for-service business."
Aetna has consistently ranked among the top Medicare
contractors in terms of quality and efficiency. Aetna has
received many HCFA awards, including the Administrators
Citation this past June for "30 years of exceptional
service to the Medicare Program and its
beneficiaries".
