Tricare beneficiaries across 21 western states won't know for another three months whether TriWest health care Alliance will continue to administer their health care benefit beyond March of next year.
After 16 years, TriWest lost its latest bid to continue to run the Tricare West Region under a third generation support contract, this one worth an estimated $20.5 billion over almost six years.
Defense Department officials awarded the contract instead to a company new to Tricare users, a subsidiary of UnitedHealth Group, Inc., of Minnetonka, Minn., the nation's largest health-insurance entity.
TriWest, however, is protesting that award to the Government Accountability Office. GAO has 100 days, until early July, to decide whether the contract was awarded properly or if it should be reversed or re-bid.
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David J. McIntyre Jr., TriWest's president and chief executive officer, said Tuesday the challenge is based on two issues. One is that contract officials "disregarded several hundred million dollars" in discounts that TriWest had guaranteed. Even ignoring those discounts, said McIntyre, the government has conceded TriWest's bid was lower than its rival's.
TriWest also argues that UnitedHealth was judged to offer "best value" based only on a review of its performance on its five largest accounts, and not on a broader review of problems raised by providers or beneficiaries that resulted over the years in legal judgments and hefty fines.
"Do a Google search like my nine-year-old [son] did of this other entity. I mean you have to wonder: With that lengthy list of items, of not delivering on their commitments, of being fined [and] I mean massive fines, not just one but a whole lot of them -- whether that really merits being rated at the top category of past performance," McIntyre said.
Before awarding the contract, officials "never bothered to go to the public market space to figure out what might be out there. They didn't contact other entities (UnitedHealth) performs work for. They didn't contact the insurance commissioners in the states that they operate in," he said.
McIntyre compared it to "buying a house without an inspection. This process should be about thoroughly reviewing not only bid information - i.e., the rèsumè - but the backgrounds of the parties bidding. I would hope that we would not buy body armor in such a fashion. And, in our opinion, we certainly shouldn't be buying health care, which is the military family's body armor, in such a fashion."
In July 2009 UnitedHealth won the South Region contract and TriWest the West contract. But Humana, the incumbent contractor for the South, filed a protest and in February 2011 GAO reversed UnitedHealth's award. After UnitedHealth lost its final protest of the South contract last July, its challenge of the West contract award to TriWest became "live."
Tricare decided to reopen bidding on UnitedHealth's argument that too much weight had been given TriWest's promise to negotiate discounts below Medicare levels and not enough on quality of care. By last September, TriWest appeared more vulnerable when it agreed to pay $10 million to settle whistle-blower claims the company had failed to pass along to the military certain discounts it had negotiated with providers.
The West region serves almost 2.9 million beneficiaries across Alaska, Arizona, California, Colorado, Hawaii, Idaho, Iowa, Kansas, Minnesota, Missouri, Montana, Nebraska, Nevada, New Mexico, North Dakota, Oregon, South Dakota, Utah, Washington, Wyoming and western Texas.
McIntyre said he understands UnitedHealth intends to serve this population with a network of providers about 80 percent the size of TriWest's network of almost 180,000. TriWest, meanwhile, would go out of business.
Matt Stearns, spokesman for UnitedHealth Military & Veterans Services, the business unit that would service the West Region, declined to comment on specifics of McIntyre's "unfortunate" reaction.
"It's typical for an incumbent who has lost an award to claim the process is unfair. But the unfounded public assertions will only cause beneficiary and provider confusion," Stearns said.
UnitedHealth, Stearns said, "has the nation's largest provider network, providing access to hundreds of thousands of physicians and health care providers nationwide. Now, I understand that is not completely analogous to the Tricare program. But it shows that we have the resources and the breadth and depth to provide the families of Tricare West with access to quality health care."
He pointed to a recent Fortune Magazine survey of business executives, directors and analysts that listed UnitedHealth as the most admired and innovated company in the health insurance business. He added that the New York state insurance regulator recently said the company is a "leader in trying to protect consumers" and is committed to transparency.
Joyce Raezer, executive director of National Military Family Association, said she is nervous to read forecasts by Tricare officials of a "seamless" transition to the new contractor for the West region.
"I've seen enough of these to be worried about every transition," Raezer said. Any shift in Tricare contractors creates problems.
"If a military spouse is six months pregnant next spring and her provider says, 'I am not going to be in UnitedHealth's network' that becomes a problem. Now it can be solved. But to that spouse, at that time, it's a problem. And if her husband is deployed it becomes a bigger problem."
With every new Tricare contract, she said, some families are forced to find different physicians or to change health care facilities.
"You never have 100-percent provider match from one contractor to another. They build their own networks. So you are going to have some beneficiaries -- probably more in some areas than in others -- have to change providers. On an individual level that can be traumatic."
Raezer echoed the comments of several advocates for beneficiaries in calling TriWest "a really good citizen in the military community." Its support of charities and of organizations like NMFA would be missed, Raezer said. She said she was speaking on behalf of NMFA. But she also revealed she is a member of TriWest's Executive Advisory Board, a non-paid panel of retired officers, spouses and executives that advises TriWest on customer issues.