TriWest protests process that ended with it losing $20B contract
Stars and Stripes March 27, 2012
WASHINGTON — The contractor that handles civilian health care providers for 2.9 million Tricare beneficiaries in 21 states is protesting the Department of Defense’s decision to award the contract to another bidder, saying the process was not fair.
David McIntyre Jr., president and CEO of TriWest Healthcare Alliance, said the protest “does not have to do with our disappointment” in losing the contract, but rather what he says are two major problems with the bid process.
TriWest has been the Tricare West Region contractor — helping operate the health system through administrative support and creating a network of civilian health care providers — since 1996. The West Region includes Alaska, Arizona, California, Colorado, Hawaii, Idaho, Iowa, Kansas, Minnesota, Missouri, Montana, Nebraska, Nevada, New Mexico, North Dakota, Oregon, South Dakota, Utah, western Texas, Washington and Wyoming.
TriWest was awarded the contract again in July 2009, but UnitedHealth Military & Veterans Services filed a protest, which re-opened that bid process. In September, TriWest was ordered to pay a $10 million fine to settle a whistleblower lawsuit, in which four employees said the company had illegally kept savings it generated working on the contract. Earlier this month, UnitedHealth was awarded the contract worth an estimated $20 billion.
McIntyre said his company was told they had submitted the lowest bid, but the decision was based on best value for the work. TriWest was prepared to “dust ourselves off” and determine the best way to move forward, likely shuttering the company.
But company representatives went to a debriefing with the government about the process and learned what McIntyre called “disturbing information about how the process itself was conducted.”
First, McIntyre said, the government did not account for several hundred million dollars’ worth of discounts that was included in TriWest’s bid. Second, he said, the government did not fully examine UnitedHealth’s track record.
As part of the bid process, companies are required to submit their five largest accounts, which McIntyre said serve as references. TriWest also included other information about its record, including the whistleblower lawsuit, and “were told that we had rated the highest category of past performance,” McIntyre said.
However, McIntyre contends that the bid evaluators only checked UnitedHealth’s five largest accounts and did not probe any deeper into their history.
“I would hope we would not buy body armor in such a fashion,” he said. “Had they done an appropriate and reasonable buyer’s check, then we believe the outcome may have been very different.”
McIntyre’s 9-year-old son was able to find potential problems just by doing a Google search, he said, including “massive fines” levied against the company in the past. Additionally, he said, doctors have contacted TriWest, “expressing significant concern about the behavior and track record of [UnitedHealth] in the marketplace.”
If the contract transfers from TriWest to UnitedHealth, beneficiaries whose health-care providers are not part of the UnitedHealth network will have 10 months to find a new doctor. Tricare spokesman Kevin Dwyer said it is too early to know how many beneficiaries will see a direct impact of the switch.
However, all transition activities will be put on hold while the protest is examined. TriWest filed its protest Monday evening, and this type of dispute is generally adjudicated within 100 days.
TriWest is owned by 18 nonprofits but is not itself a nonprofit.
“We don’t make a lot of money because our objective is not to make a lot of money,” McIntyre said, but “we’re not broke.”
If the protest is not successful, McIntyre said TriWest would “responsibly convert” remaining contracts and business to a company they trust.
“We will not leave anyone at the side of the road,” he said.