DOD boots UnitedHealthcare from TRICARE contracts worth $58B

The U.S. Department of Defense unexpectedly dumped insurance giant UnitedHealthcare when it inked separate five-year contracts last Thursday with Humana and Health Net to manage TRICARE.

Minnetonka, Minn.-based UnitedHealthcare managed care for TRICARE's West Region since 2012, according to Military Times. Complaints surfaced about the insurer delaying provider payments and not resolving patient issues in its first year, though few complaints were filed since 2013.

In light of the Pentagon's announcement, a UnitedHealthcare spokesperson told Military Times the insurer was "evaluating the next steps and looks forward" to the department's explanation.

In addition to the contract changes, TRICARE consolidated its North, South and West Regions into two — East and West — with the East representing eastern states and areas and the West including western states and areas. The East Region combines former North and South Regions in an effort to streamline management and reduce administrative costs.

Companies were allowed to bid for more than one contract, but could only win one. No single company would be selected to manage both deals.

Louisville, Ky.-based Humana previously provided managed care to 3.1 million in TRICARE's South Region, which will grow to about 6 million in the reassigned East Region. Humana's contract is valued at about $40.5 billion.

Rancho Cordova, Calif.-based Health Net, a subsidiary of St. Louis-based Centene, previously managed care for beneficiaries in the North Region and will shift to the West Region. Health Net's contract is valued at about $17.7 billion.

The TRICARE contracts are some of the biggest spending agreements the Pentagon awards, according to Military Times. Congress is currently considering a number of changes to military insurance policies, including raising beneficiaries' annual fees and streamlining provider arrangements. Members of both the House and the Senate will continue to debate the Military Health system this fall.

TRICARE has 9.4 million beneficiaries. Under the new contracts, healthcare delivery will begin 2017. 

More articles about payer issues:
Providence Health Plan drops 11,000 members
BCBS of North Dakota launches Blue Alliance pay-for-performance program
Alabama physicians prepare for Medicaid cuts


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