Six Million Beneficiaries To Get New Tricare Contractors

Six million military healthcare beneficiaries, those who live in TRICARE’s North and South regions, will have new managed care support contractors and claim processors to deal with by April of next year.

In a surprise development, two of three current TRICARE contractors — Health Net Federal Services and Humana Military Healthcare Services — lost to rival firms in their bids to handle next-generation support contracts.  The three contracts are worth a total of $55.5 billion over five years.

Support contractors are critical to how beneficiaries perceive benefits.  They run TRICARE’s triple option of managed care (TRICARE Prime), preferred provider network (TRICARE Extra) and fee-for-service insurance (TRICARE Standard).  Contractors build and manage provider networks, and control care referrals, enrollment, claims processing and customer service.

Aetna Government Health Plans of Hartford, Conn., will take over from Health Net in the North Region for three million beneficiaries in Connecticut, Delaware, District of Columbia, Illinois, Indiana, Iowa (Rock Island Arsenal area only); Kentucky (except Fort Campbell area); Maine, Maryland, Massachusetts, Michigan, Missouri (St. Louis area only); New Hampshire, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, Vermont, Virginia, West Virginia, and Wisconsin.

UnitedHealth Military & Veterans Services of Minnetonka, Minn., will take over the South Region from Humana.  Its 2.9 million beneficiaries live in Alabama, Arkansas, Florida, Georgia, Kentucky (Fort Campbell area only), Louisiana, Mississippi, Oklahoma, South Carolina, Tennessee, and Texas (excluding areas of Western Texas).  UnitedHealth also will administer the Continued Health Care Benefit Program which provides premium-based transition health coverage to beneficiaries who lose military benefits.

TriWest Healthcare Alliance of Phoenix, Ariz., will remain TRICARE’s support contractor for 2.7 million beneficiaries in the West Region.  Here’s a link to more information on the new contracts:

It won’t be known for another week or two whether losing bidders will file official protests.  Barring any legal delays, health care delivery under the new contracts will begin April 1 after a ten-month transition.

Joyce Wessel Raezer, director of government relations for the National Military Family Association (NMFA), said this dramatic shift in contractors, affecting two-thirds of beneficiaries, was unexpected and creates uncertainties in a military community already under enormous stress.

“We were thinking maybe one incumbent would go, because you don’t want to have such big contracts in a small group [of firms] forever.  But the idea that two would go?  Looking at how this might affect military families, I’m a little nervous,” Raezer said.

Under current contracts, the TRICARE system “matured and became a source of stability in a very unstable time,” Raezer said.  Any big complaints today involve base clinics and hospitals, “not the contractor side,” she added.

TRICARE officials say the new contracts will ensure a smooth transition with no decline in quality of care or services.  Military treatment facilities will still be the center of the system, the first choice for patient care.  But incentives are designed to improve contractor performance, the quality of clinical care and disease management, and encourage cost efficiencies.

TRICARE Prime and Extra still will be available in the areas surrounding existing military treatment facilities and at designated base-closure areas.  However, managed care networks now run more than 40 miles from a military treatment facility are expected to disappear.

By one estimated this could force up to 175,000 Prime users – all of them retirees, retiree spouses or survivors – to shift to use TRICARE Standard.   Standard users typically have higher out-of-pocket costs but also more freedom to choose their own health care providers.

TRICARE officials say they don’t know yet how many remote Prime Service Areas will end with the new contracts.  But the new contracts alone can’t be blamed for tighter controls on managed care.  TRICARE policy already requires beneficiaries who live more than a 30-minute drive from a military treatment facility, but less than 100 miles away, to get a waiver from the MTF commander and TRICARE region to remain in managed care.

“We knew there weren’t going to be as many Prime Service Areas,” said Raezer.  This shouldn’t impact active duty families who still will have access to TRICARE Prime Remote benefits.  A greater concern with turnover in contractors, she said, will be ensuring that change orders to current contracts that help the “most vulnerable” — wounded warriors, special needs children and chronically ill patients — don’t fall away in the transition.

She referred to a pilot program to allow autistic children to receive Applied Behavioral Analysis therapy from more care providers and an effort to hire more behavioral health experts to treat families under stress.

“And every contractor has developed some sort of system to support wounded service members in their region,” said Raezer.  “A lot of these initiatives weren’t in the RFP” — Request for Proposal — that Aetna and UnitedHealth answered to win their contracts.  So will these changes survive?

“I’m not saying they can’t do it but it needs a lot of attention at a very high level in the Department of Defense and a lot of coordination,” she said.

Raezer also worries about claim processing.  Humana and Health Net both have partnered with PGBA of South Carolina to process claims. The results have been “impressive,” she said.  “They are getting providers to file electronically.  There is a short turnaround.”  Complaints about inaccurate payments, once a “huge issue,” aren’t heard much anymore, she said.

Aetna and UnitedHealth, which process claims in house, are promising TRICARE beneficiaries no drop in quality of service.

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