UnitedHealthcare protests reversal of contract award
UnitedHealthcare’s military division recently filed a formal protest with the Government Accountability Office over the Department of Defense’s decision to reverse UnitedHealthcare’s award of the TRICARE South Region contract to provide health benefits to 3 million active and retired members of the uniformed services and their families.
On July 13, 2009, the Defense Department’s TRICARE Management Activity awarded UnitedHealthcare its South Region contract, covering 11 states from Florida and South Carolina to Texas, and part of Kentucky. The incumbent contractor then filed a protest with the GAO. On Feb. 25, 2011, after 20 months and 13 amendments to its original solicitation, TMA reversed its selection of UnitedHealthcare and, instead, retained the incumbent, Humana Military Healthcare Services.
Over the course of a two-year delay, the government has foregone concrete economic benefits from choosing a new contractor while the incumbent has benefited. During the delay, the incumbent changed its bid and guaranteed significant discounts going forward in what it would pay doctors and hospitals in Humana’s TRICARE network. UnitedHealthcare believes these discounts would pay providers significantly below what doctors and hospitals are paid in the Medicare system. UnitedHealthcare believes these terms could ultimately harm the TRICARE South Region health care system.
According to standard procedures, the protest filing will trigger a statutory stay of the award.
The TRICARE system administers healthcare plans for 9.6 million beneficiaries worldwide as a vital supplement to the military health system. The TRICARE South Region contractor would administer the health plan for beneficiaries in Alabama, Arkansas, Florida, Georgia, Kentucky (only in the Ft. Campbell area), Louisiana, Mississippi, Oklahoma, South Carolina, Tennessee and Texas (excluding the El Paso area).
UnitedHealthcare won the South Region contract in 2009 as part of the Department’s intention to create “TRICARE Third Generation,” or T-3, an effort to deliver “the best possible overall health care at the best value, improving clinical quality and disease management while incentivizing cost efficiencies and excellent performance by the contractors.” TRICARE set out to implement T-3 through an equitable bidding process that was intended to increase innovation and competition. The incumbent has been an administrator of the TRICARE contract since 1996.