TriWest has decided not to challenge Tricare's decision to award a contract to UnitedHealth, making the company's future uncertain and potentially causing ripple effects throughout the industry.
After losing the contract it held for 16 years to administer health insurance for the Department of Defense's Tricare program last year, TriWest protested the decision to the Government Accountability Office, which arbitrates contract disputes. However, the GAO dismissed the challenge, leaving TriWest to decide whether to file a lawsuit over the contract in the U.S. Court of Federal Claims, Bloomberg reported.
"It is with mixed emotions that we make this decision," TriWest CEO David McIntyre said in a letter to customers. "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."
As a result of its decision, TriWest, which manages healthcare for military members, retirees and their families in 21 western states for Tricare, is unsure of the company's future because the Tricare contract was its only revenue source, Federal News Radio reported. "We're not at a point where we know what the ramifications will be," TriWest spokesman Scott Celley said.
The effects could be visible beyond the company. For instance, TriWest subcontractor WPS Health Insurance, which handles claims processing, notified workers in its Wisconsin office that TriWest's contract loss could lead to job losses. "If we don't have the contract, we won't have the work to sustain that workforce," Brian Brugger, a senior vice president for the WPS, told Bloomberg.
TriWest, which employs 1,700 people, has committed to fulfilling the remainder of its Tricare contract ending next March. TriWest and Department of Defense officials will decide how to best transition the contract to UnitedHealth, the Arizona Republic reported.