The Health and Human Services Department has asked Congress to let it abolish an office that handles Medicare claims for a small number of health care providers and turn the job over to a private contractor.

HHS has promised Congress that the 240 people who now work in the Office of Direct Reimbursement won't lose their jobs when it is phased out. Daniel Bourque, deputy administrator of the Health Care Financing Administration, said that instead they will be shifted to other parts of the agency.

HHS generally uses health insurance groups such as Blue Cross as "intermediaries" to handle claims for Medicare payments. However, a small percentage of the 12,800 groups providing Medicare services prefer to deal directly with the government, and ODR handled their payments.

Bourque said that the ODR provided services to only 200 hospitals, 40 skilled nursing facilities, 480 home health agencies, 70 health maintenance organizations, 380 federal hospitals, 21 clinics and agencies furnishing physical therapy services and seven kidney dialysis facilities.

The HHS proposal has been opposed by home health groups, which fear that it would leave them "no other place to go" if they can't get along with their intermediary, one representative said. Now they can shift to ODR if they have problems.