Pacific edition, Saturday, August 14, 2009

Transition to new managed-care support contractors for six million Tricare beneficiaries across 30 states has been halted while the Government Accountability Office reviews protests filed by losing bidders.

Tricare Management Activity (TMA) announced last month that Aetna Government Health Plans of Hartford, Conn., won the contract competition and would be taking over the North Region contract from Health Net Federal Services. Since then Health Net has filed two protests with GAO over loss of the contract with potential value of $16.7 billion in revenue over five years.

TMA also announced that UnitedHealth Military & Veterans Services of Minnetonka, Minn., would take over the South Region from Humana Military Healthcare Services. But Humana too is protesting the award, potentially worth $21.9 billion.

The protests, filed in late July, led to "stop work" orders on the two contracts until GAO rules on the protests. It does so routinely within 100 days. That delay, combined with the required 10-month transition, means new contracts for the North and South regions will not take effect before the fall of 2010. Until then, current contracts are being extended so beneficiaries should see no change to services or their provider networks.

Anxiety among beneficiaries is high, however, based on volume and contents of e-mails sent to Military Update after award announcements.

"Here we go again," wrote retired Air Force Lt. Col. Garry Fincher. "As soon as you get familiar with a health care system and enjoy good service and quick responses to your inquiries, the government changes the system. I am disappointed Humana is no longer going to be our Tricare provider."

A Fincher family member will be receiving chemo treatments through the planned transition period, leaving the retiree worried that continuity of care will suffer or their doctor will opt of the managed care network.

"But, again, we have no recourse but to swallow hard," Fincher said.

Interviews with the presidents of the two companies on the cusp of losing these valuable contracts reinforced the notion that disruption of services will be inevitable for many patients.

"I think our protest will be successful," said Dave Baker, president and chief executive officer of Humana Military Healthcare Services. "But if I’m wrong and the new contractor actually takes over, there will be some changes" including to composition of provider networks.

"Networks that we spent 13 years building, our new contractor will have a 10-month period to build," said Baker. "And so those beneficiaries that are used to going to a certain provider, as a network provider, may not have that opportunity going forward."

"We can all speculate on what might happen. Obviously none of us will know for sure," said Steven Tough, president of Health Net Federal Services. "But in the event transition occurs there’s probably going to be some level of disruption. There has to be."

Tough noted that his company has been providing managed care to military beneficiaries for 21 years, since the Defense Department launched a forerunner to Tricare, the CHAMPUS Reform Initiative, in 1988.

He said it’s more difficult to build provider networks for Tricare than for commercial networks because Tricare physicians have to be signed to contracts. That isn’t always needed when building commercial networks.

"Providers have choices, that’s the truth of the matter," Tough said. "They don’t really have to participate … There are going to be a lot of providers who have an interest and a lot who, for whatever reason, may not have an interest."

The managed care support contracts have no impact on Tricare for Life, the robust supplement to Medicare so prized by elderly beneficiaries.

TMA officials said the new contracts will use financial incentives to "encourage exceptional customer service; high quality care; detection of fraud, waste, and abuse; increased electronic claims processing; better program management, improved preventive care and cost savings."

But TMA conceded Tricare Prime, the managed care option, "may be discontinued" in some areas. By one estimate, up to 175,000 retirees and surviving spouses could be forced to use more costly Tricare options.

Humana, for example, offered Prime throughout its 10-state region. New contracts require Prime coverage only within 40 miles of a base or base closure site. Bidders still were free to offer Prime outside those areas, Baker said, "but they would not receive any positive rating for that in the selection process."

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