TRICARE contractor drops challenge to award

The company that provides health care to millions of service members and their families in the western region of the country dropped its challenge to the government’s decision not to renew its contract.

“It is with mixed emotions that we make this decision; however, continuing to challenge the government’s decision will not bring an end to the uncertainty that has plagued this program for the last three years and will only drive up the costs for all involved,” said David McIntyre Jr., president and chief executive officer of TriWest Healthcare Alliance, in a July 13 letter to customers posted on the company’s website.

TriWest’s current TRICARE contract runs through March 31, 2013. UnitedHealth Military and Veterans Services, which is part of UnitedHealth Group, is set to begin managing the program in April 2013.

According to a report in Bloomberg News, TriWest has 1,700 employees, and McIntyre has said the company probably will shut down as a result of losing the lucrative government contract.

TriWest Healthcare Alliance lost its bid protest over the Defense Department’s March decision to award a $20.4 billion contract to UnitedHealth Group to manage TRICARE, the military’s vast health care system. The Government Accountability Office, which rendered the decision, said Defense’s evaluation of the contract award to UnitedHealth was reasonable and rejected TriWest’s protest on all counts.

TRICARE covers 2.9 million active-duty and retired service members and their families, and Phoenix-based TriWest has managed the program in the West for more than a decade. Defense in 2009 re-awarded the TRICARE contract to TriWest, but UnitedHealth Group protested that decision, which led the department to reissue its solicitation for bids.

TriWest expressed concerns with the contract award to UnitedHealth, arguing that UnitedHealth did not have experience in military health care management and the company would not offer the best value to enrollees. TriWest’s contract bid was lower than UnitedHealth’s.

“UnitedHealth Military and Veterans Services is honored to be able to put our expertise and experience to work on behalf of TRICARE West beneficiaries, and we look forward to working with the Defense Department and the incumbent contractor to ensure a smooth transition for service members, retirees and their families,” Lori C. McDougal, chief executive officer of UnitedHealth Military and Veterans Services, said in a statement. “We are committed to working with the Department of Defense to ensure beneficiaries have access to cost-effective, quality and innovative care.”