More Than a Million Tricare Users Must Switch Managers After Massive Contract Decision

Tricare beneficiaries in the West Region will get a new managed care contractor in 2024 under a major contract award to TriWest Healthcare Alliance, the Pentagon announced Thursday.

Humana Military and TriWest Healthcare Alliance were awarded contracts to manage the Defense Department's Tricare health program that altogether could be worth up to $136 billion over a nine-year period, the announcement stated.

With the new contracts, set to begin in 2024, the Defense Health Agency also will shift six states from the East to the West Region, meaning that beneficiaries who live in those states will move from Humana to TriWest.

Read Next: Retirees to Get a Second Chance to Enroll In or Opt Out of the Survivor Benefit Plan

The DoD said the change will allow a more equitable balance of the beneficiary population, with roughly 1.5 million beneficiaries in Arkansas, Illinois, Louisiana, Oklahoma, Texas and Wisconsin making the move.

The Tricare health program manages private health care treatment, referrals, customer service, claims processing and other support services to roughly 9.6 million beneficiaries, including active-duty personnel, some members of the Reserve and National Guard, military retirees and family members.

According to the contract announcement, Humana Military will retain its role as managed care support contractor for the Tricare East Region in a deal worth up to $70.9 billion while TriWest, which managed the West Region from 1996 to 2013, received the $65.1 billion contract to again oversee the West Region.

Ousted in the selection process was HealthNet Federal Services, which has managed the Tricare West Region since 2018 and has overseen some portion of the Tricare portfolio since 1996.

Whether HealthNet will protest the decision has yet to be determined. Company officials said in a statement to Military.com that they have a debriefing scheduled with DHA in January and have asked for details about the decision.

"We are disappointed by DHA's decision. ... We have requested details to which we are entitled under the government's procurement rules. Following receipt of this information, we will be in a position to determine our options regarding the Agency's decision," they wrote.

The Tricare program dates to 1994 when the DoD announced it would implement a nationwide managed care program to provide civilian health benefits for non-military beneficiaries.

In its press release Thursday, the Pentagon said the new contracts, known as the T-5 Managed Support Contracts, should provide improved service for beneficiaries and a seamless transition.

Historically, however, this hasn't been the case.

In 2016, when the Defense Health Agency consolidated its Tricare regions from three to two, it awarded the contracts to Humana Military for the East Region and Health Net Federal Services in the West.

United Healthcare, which lost the Tricare West contract, proved difficult in the transition, providing little assistance to incoming HealthNet that resulted in a backlog of referrals, provider change requests and payment updates that required a need to freeze enrollments and swaps between plans.

Payment information for more than 224,000 beneficiaries was lost, resulting in 15,000 patients being kicked out of Tricare, and providers experienced a rough transition as well with payment delays and incorrect reimbursements.

An investigation by the Government Accountability Office into the bungled transition faulted the Defense Health Agency for a lack of guidance and oversight of the process.

The previous contract award also was fraught with issues. The selection of a contract provider that never before had served military beneficiaries got off to a rocky start, with delayed payments to providers and patients complaining of unresolved issues.

DHA Director Lt. Gen. Ronald Place said the agency has learned its lessons and patients should experience few problems.

"Tricare is moving into a new era, making use of the lessons learned in the first three contract phases," Place said in a press release. "Defense Department leadership and the incumbent managed care support contractors are dedicated to managing a smooth transition to the new managed care support contractors, with minimum disruption to our beneficiaries."

Place said the new contracts aim to improve the "beneficiary experience" by allowing patients to transfer specialty care referrals when they move, regardless of the region where they relocate.

The contracts also call for better customer service, requiring the regions to reduce the average speed to answer calls to 20 seconds and improve problem-solving on a first call to meet the industry standard of 85%.

And they require improved coordination between military treatment facilities and private care, including interoperability through an exchange with the DoD's electronic medical record system, MHS Genesis.

"We listened to our beneficiaries about what impacts their experience of care and addressed many of those concerns in T-5," said Place.

Officials with Humana Military said they were honored to have been chosen to continue serving 4.6 million military beneficiaries in 24 states and Washington, D.C.

"This is an incredible opportunity to take innovative, patient-focused care to the next level for beneficiaries and the military health system as a whole," Sue Schick, segment president for group and military business at Humana, said in a press release.

TriWest, which currently manages the Department of Veterans Affairs Community Care Network in the West and Hawaii, will provide Tricare services to beneficiaries in 26 states.

"At TriWest, it has been our privilege to serve the health care needs of the military and Veteran communities for more than 26 years," TriWest Healthcare Alliance President and CEO David McIntyre said in a release. "The goal of our company's non-profit owners, employees, our world class partners, and more than 740,000 health care professionals in our network who have stepped up to care for our nation's heroes is simple...to ensure that our work honors the sacrifices of those we are humbled to serve."

Blue Shield of California said Friday that with the award going to TriWest, roughly 1.8 million active-duty military members and their families would have access to its provider network as part of the deal.

Given that TriWest would hold both the DoD and VA private care health contracts for the area, patients would have an easier time transitioning their health care after they leave the service, depending on eligibility, noted Paul Markovich, president and CEO of Blue Shield of California.

"Our company's mission is to ensure all Californians have access to high-quality health care at an affordable price. Serving 1.8 million eligible active-duty military, veterans, and their families in communities across the state, through our collaboration with TriWest, is an important part of achieving our mission," Markovich said in a release.

-- Patricia Kime can be reached at Patricia.Kime@Military.com. Follow her on Twitter @patriciakime

Related: Two of DoD's Biggest Military Contracts Are Now Up for Grabs