Current TRICARE contracts extended

By Tom Philpott: CNJ columnist

Six million military health care beneficiaries learned last July that their TRICARE support contractor would be changing on April 1, 2010, because those companies that run TRICARE’s North and South Regions had lost in competing for the next generation of contracts.

But what a difference six months makes.

Government auditors concluded last November that the winning bids, for contracts worth a combined $38 billion over five years, were mishandled and the winning bids might have been less competitive than first judged.

By mid-December TRICARE officials had reviewed the audits, accepted the findings and vowed “corrective action.” Meanwhile, officials decided the current TRICARE contracts will be extended through at least March 31, 2011.

For the six million beneficiaries impacted, the extension means no contract-driven shift in health care providers, and no need to change telephone numbers or web addresses to make medical appointments.

The TRICARE Management Activity’s (TMA) acceptance of all findings by the General Accountability Office is not good news for Aetna Government Health Plans of Hartford, Conn. GAO found six reasons to sustain the protest filed by current North Region contractor, Health Net Federal Services of Rancho Cordova, Calif. The most serious was the appearance of impropriety and unfair advantage gained when Aetna hired a former chief of staff at TMA and used him to help draft their bid package.

The officer had had access to proprietary information on Health Net not only before he left government but while working for Aetna, GAO said, because he was able to view sensitive documents through his old TRICARE e-mail account. Health Net executives hope the corrective action TMA takes for North Region is to award them the contract. Health Net was Aetna’s only competitor in the bidding process.

TriWest Healthcare Alliance of Phoenix, Ariz., will remain support contractor for 2.7 million beneficiaries in the West Region. That award was not challenged but TriWest’s current contract is being extended until next March too, when presumably new five-year contracts will take effect across the TRICARE system.

Steven Tough, president of Health Net, said the contract extension “should provide a significant amount of comfort to all those we serve in the North Region [and] to personnel at military treatment facilities and the providers who work so closely with us.”

In Tough’s view, the right thing is to Health Net the contract.

Health Net has been involved in TRICARE since its start in 1995 and before that with its predecessor, the CHAMPUS Reform Initiative. Architects of national health reform, Tough said, could use TRICARE as a model for reform nationwide.

A worry for analysts is TRICARE’s steadily rising costs. But Tough said much of that is due to the “ebb and flow” of deployments in wartime and how TRICARE civilian provider networks “flex” to care for beneficiaries when personnel depart from military clinics and hospitals. That’s occurring now in North Region, Tough said, for the Haitian tragedy with personnel leaving Bethesda Naval Medical Center, Md., and the naval hospital in Norfolk, Va.