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TriWest loses Pentagon health contract after $10M fraud fine

WASHINGTON – The military awarded an estimated $20 billion contract Friday to UnitedHealth Military and Veterans — just months after TriWest Healthcare Alliance, which has held the contract since 1996, paid a $10 million fine to settle a Justice Department suit.

Previously, TriWest, a consortium of non-profit groups in the West, had served as one of three main contractors for Tricare, the Pentagon's health care program. The contract for the 21-state region was TriWest's only contract.

The Defense Department asked for new bids after UnitedHealth Group argued that Tricare chose contractors that promised to negotiate discounts with health providers at levels below Medicare. That, they said, forced contractors to focus on low costs rather than quality care.

UnitedHealth Military and Veterans is part of UnitedHealth Group.

In September, TriWest was ordered to pay $10 million after a whistle-blower lawsuit said the company "systematically defrauded" Tricare by not passing on savings to the government gained through negotiations with health care providers; by pushing through large numbers of claims without checking them for errors to avoid late fees; and by paying for ineligible beneficiaries, non-covered services, unknown services and services paid for by another provider.

In one case, a beneficiary became ineligible for Tricare in 2004, but TriWest billed Tricare $370,000 for a claim filed in 2006.

TriWest argued that they aren't required to negotiate lower costs and that they did it at their own expense, and that they saved the Defense Department $7 million when they did pass on those savings.

In a statement, company officials said they would use the lawsuit as an opportunity to address the issue of not passing savings on to the government.

Tricare is split into three regions. The other two contractors, Humana and Health Net, have no similar Justice Department cases on their records, agency statistics show.

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