UnitedHealthcare has announced that it is suing the U.S. Department of Defense over its award of the TRICARE South Region health care administrative services contract valued at $23.5 billion to Humana Inc.
Filed in the U.S. Court of Federal Claims, UnitedHealth's lawsuit follows a recent decision by the U.S. Government Accountability Office to uphold the DoD's award of the contract to Humana, rejecting UnitedHealth's protest of that award (BestWire, June 15, 2011). TRICARE is the health insurance program for active-duty and retired military service members and their families.
The deficiencies in the contracting process were too "significant for the Department of Defense to proceed with implementing this contract as it stands," said Lori McDougal, chief executive officer of UnitedHealthcare's military health division, in a statement. "The Pentagon disregarded its own stated goals for this contract, and military families' access to quality health care in the South will be put at risk as a result."
According to UnitedHealth, a recent report from the GAO explored access to health care under TRICARE and found that low reimbursement rates have made it more difficult for beneficiaries in this program to find providers. UnitedHealth sites poor performance by Humana Military Healthcare Services, a unit of Humana (NYSE: HUM), as it has been the DoD contractor administering the program since 1996, according to InsuranceNewsNet.The new five-year federal contract, is scheduled to begin on April 1, 2012, and will cover health care services for 3 million active-duty and retired military service members in the 10-state area that comprises the South region, the company previously indicated.
This contract award has had its share of twists andf turns as Humana Military had filed a protest in July 2009 over the contract being originally awarded to UnitedHealth Military & Veterans Services, a unit of UnitedHealth (NYSE: UNH). Because the contract had been held by Humana, the move prompted the GAO to re-evaluate existing proposals, and also enabled Humana Military to submit a revised final proposal. As a result, in February 2011, DoD's TRICARE Management Activity reversed its selection of UnitedHealthcare and retained Humana Military.
Interestingly, In April, UnitedHealth won a protest of a medical-services contract worth about $17 billion over about five years, convincing the Pentagon to reconsider its decision to award the contract to TriWest Healthcare Alliance. The protest centered upon the 2009 award of the TRICARE West region contract.
In its latest statement, UnitedHealthcare said the Pentagon has indicated it is "inviting offerors to guarantee cuts in payments to doctors and hospitals in the TRICARE West network."
In July 2009, TriWest Healthcare was awarded the five-year contract, which at that time was valued at about $16 billion. In that round of award decision, TriWest Healthcare, was the only incumbent the Department of Defense renewed. The contract is for the 21-state West region and covered nearly 2.7 million military personnel and their dependents, Blue Shield said at that time.
TRICARE Benefits
TRICARE offers comprehensive, affordable health coverage with several health plan options, a robust pharmacy benefit, dental options and other special programs.
Medical CoverageTRICARE provides comprehensive coverage for all beneficiaries to include:
- Outpatient visits
- Hospitalization
- Preventive services
- Maternity care
- Immunizations
- Mental/Behavioral health
