TRICARE awards a new healthcare contract with an eye toward lessons learned

Contracts/Awards

TRICARE awards a new healthcare contract with an eye toward lessons learned

TRICARE awarded a new contract and realigned its management regions for healthcare.

Alexandra Lohr

December 23, 2022 4:54 pm

3 min read

Military family members and retirees who use TRICARE will see changes to their healthcare starting in 2024. The Defense Health Agency (DHA) announced its new contract for TRICARE services on Dec. 22. The new contract for civilian health care, known as T-5, will start in 2024.

Humana Government Business and TriWest Healthcare Alliance Corporation will be the regional contractors, with Humana covering the TRICARE east region and TriWest providing coverage to the TRICARE west region.

The combined $138 billion contract will serve close to 10 million patients in the health network. With the new contract, the Defense Department replaces Health Net Federal Services with TriWest Healthcare in the western TRICARE region

The contractors work with DHA in providing health care, and combining the resources of the contractor and the military’s direct medical care system to provide health, medical and administrative support services to service members, retirees and eligible family members or dependents. While active duty servicemembers get direct, no cost health care, services for their dependents and for retirees are contracted to commercial healthcare providers. DHA said the new contracts will offer beneficiaries greater provider network flexibility, enhanced telehealth appointments, and more efficient referral transfers between the two regions.

Humana and Health Net won the contract for services in 2016 after a process that generated nine protests, all of which were eventually denied. DHA expected protests due to the large size of the contract. The agency had proactively asked the Government Accountability Office and other acquisition experts to look over the process prior to award in an effort to head off protests. DHA wanted to forestall problems after a 2009 contract award for TRICARE generated protests that delayed implementation of the contract for close to three years.

The contract was offered in a competitive bidding process, two bids submitted for each of the two regions.

In addition to a change of provider, the T-5 contract also makes a change to the makeup of the regions. The new boundaries of the two regions will move Arkansas, Illinois, Louisiana, Oklahoma, Texas and Wisconsin from the eastern to the western region. Those six states will bring about 1.5 million beneficiaries into TriWest Healthcare’s region.

“Moving these six states into the west region will create a more even balance to the TRICARE population each regional contractor manages. The move will also streamline processes and standards for both regions,” said a statement from TRICARE.

While some of the past changes to the program caused major problems for beneficiaries, TRICARE hopes that with a year built in for transition, this next change will offer a better experience. The transition period begins Feb. 1.

“Transition planning time is scheduled for one full year. This is to ensure healthcare delivery is ready for all 9.6 million beneficiaries on day one of the new contract,” TRICARE said.

In 2016, TRICARE moved from a three region administration to the two current regions. United Healthcare lost the region and failed to get the contract renewed. Problems riddled the ensuing rollout of the T-2017 contract. Patients reported being dropped from TRICARE rolls, having their payment information lost and seeing referrals backlogged. Adding to the confusion, DHA increased the cost of co-pays during that transition period.

The terms of the new contract are cost-plus-award-fee, firm-fixed-price and fixed-price type contract with the included 12-month transition period. It then moves to eight one-year option periods for healthcare delivery, plus a transition-out period. This contract also includes incentives and performance guarantees.

Military service organizations including Military Officers Association of America lobbied DHA last year to minimize disruptions to patients during the transition and make sure new contractors have adequate networks to care for beneficiaries. The group raised concerns that the contracts emphasized value-based service to the potential detriment of patients.