Health Net Protests $65.1 Billion Tricare Contract Award

Health Net Federal Services, the company that provides health services to military beneficiaries in Tricare's West Region, is protesting the Defense Department's decision to replace the company with an award of the next-generation Tricare contract to TriWest Healthcare Alliance.

The company filed the bid protest in mid-January after receiving a background briefing from the Defense Department on its decision. Health Net declined to comment Wednesday on the protest or the reasons behind it..

Under the next-generation Tricare contracts, known as the T-5 Managed Support Contracts, roughly 1.5 million beneficiaries in Arkansas, Illinois, Louisiana, Oklahoma, Texas and Wisconsin are slated to shift to the West Region, which currently serves nearly 3 million beneficiaries.

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The contract is worth up to $65.1 billion over 9 years beginning in 2024. The selected contractor, TriWest, oversaw the West Region from 1996 to 2013, and also is responsible for the Department of Veterans Affairs' Community Care Network in the western United States and Hawaii.

Health Net Federal Services has managed the West Region since 2018 and overseen some portion of the Tricare portfolio for more than 25 years.

In the past, bid protests have resulted in delayed contract starts, problems with patient enrollment and provider payments, and delays in care.

In 2012, the selection of United HealthCare, 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.

Four years later, when the DoD consolidated the number of Tricare regions from three to two, it awarded contracts to Humana Military for the East Region and Health Net Federal Services for the West.

But United HealthCare, which had been managing the Tricare West contract, proved difficult in the transition, providing little assistance to incoming Health Net, resulting in a backlog of referrals, provider change requests and payment updates that required a freeze in enrollments and swaps between plans.

Payment information for more than 224,000 beneficiaries was lost and more than 15,000 patients were kicked out of Tricare. Providers also experienced a rough transition, with payment delays and incorrect reimbursements, according to a 2019 Government Accountability Office report.

When the DoD announced the selection of TriWest and Humana Military to manage the Tricare regions in December, officials said the Defense Health Agency had learned its lessons and beneficiaries should see minimum disruption.

"Defense Department leadership and the incumbent managed care support contractors are dedicated to managing a smooth transition to the new managed care support contractors," then-DHA Director Lt. Gen. Ronald Place said in a statement.

The Government Accountability Office is reviewing Health Net's bid protest with a decision expected by April 27, according to the GAO's website.

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

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

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