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UnitedHealth wins 5-year Tricare contract

The health plan bests longtime contractor TriWest Healthcare Alliance after an appeal and re-bid.

By — Posted April 4, 2012

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The country’s largest private health plan is getting bigger, by nearly 3 million members and $1.4 billion in income during the next five years, thanks to a contract to administer Tricare benefits for active and retired service members and their families. It’s not clear what the change in contractors will mean to Tricare network physicians.

After losing out on its bid for the contract in 2009, Minnetonka, Minn.-based UnitedHealth Group will take over administering Tricare in the 21-state West region. United won out over the current contractor, TriWest Healthcare Alliance, after the Dept. of Defense rebooted the bid process.

UnitedHealth Group announced the win March 19. United will take over administering benefits in April 2013.

The West region includes Alaska, Arizona, California, Colorado, Hawaii, Idaho, Iowa, Kansas, Minnesota, Missouri, Montana, Nebraska, Nevada, New Mexico, North Dakota, Oregon, South Dakota and parts of Texas and Utah, Washington and Wyoming, home to nearly 3 million beneficiaries.

TriWest Healthcare Alliance, which is owned by a group of Blues plans and health systems, has held a Tricare contract since 1996, first for a former Central region, then since 2004 for the West region.

It wasn’t immediately clear whether TriWest would be allowed to or would take the opportunity to appeal the latest contracting decision. The company notified its members and network physicians March 16 that it had not been awarded the new contract.

“We will learn more at the government’s upcoming debriefing meeting and, at that time, we will seek to ascertain whether it was appropriate and fair and determine our future course of action,” a March 21 company news release said.

Now that United is taking over the West region, it will have to ramp up its operation so that it is ready to serve 3 million new people in a little more than a year’s time.

United spokesman Matt Stearns said in a statement that the company is “grateful for the opportunity” but declined to say more about how the company will build its network of physicians and hospitals, or what Tricare network physicians in the West region should expect in the months leading up to the contractor change.

United’s win comes after it lost the South region contract. United had won it in 2009, but then lost it after a successful appeal by Humana. United mounted a public relations campaign arguing that Humana’s promise to guarantee below-Medicare discounts on care would push payments to physicians so low that it could threaten Tricare beneficiaries’ access to physicians. It later sued the Dept. of Defense regarding its handling of the South region contract. United dropped the lawsuit in 2011.

Although the latest Tricare contracts were highly sought, Tricare managed care contracting won’t pay as much during this current five-year period as it has in the past. United’s West region contract stipulates that Tricare will allow $20.4 billion in spending on health benefits in the region over five years, and United will earn $1.4 billion by processing the claims and managing the regional network during that time.

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