TriWest Resolves Civil Lawsuit

Improves Claims Processing, Reimburses Government and Continues to Provide Much-needed Care to Military Families

PHOENIX, Sept. 9, 2011 /PRNewswire/ -- TriWest Healthcare Alliance announced today that it has resolved a civil lawsuit with the Department of Justice concerning the company's application of "Letters of Agreement" (LOA), and has implemented processes to ensure better handling of LOAs in the future.

In response to the settlement, TriWest President and Chief Executive Officer, David J. McIntyre, Jr., released the following statement:

"TriWest proudly maintains a network of over 170,000 healthcare providers to serve the needs of 2.9 million Active Duty military, retirees and their families in the TRICARE West Region. On rare occasions, a TRICARE patient needs care provided by a specialist who is not otherwise available. In order to get TRICARE beneficiaries access to this care, TriWest voluntarily negotiates Letters of Agreement (LOA) with these and other providers at its own expense. These agreements generally result in the provider accepting a reduced rate of payment for the service provided. By negotiating LOAs, which are not required by the TRICARE contract, TriWest has saved the Department of Defense approximately $7 million, while making much-needed care available to beneficiaries.

However, in the course of reimbursing some providers for this care, some LOA discounts were not achieved because LOAs (which are unique agreements generally focused on an individual patient), were difficult to process through TriWest's highly automated system that processes more than 10 million claims totaling nearly $2 billion in provider payments annually. As a result, some providers were paid the normal TRICARE rate instead of the lower, negotiated LOA rate.

When this issue was brought to the attention of TriWest leadership, we commenced an audit and identified unrealized LOA discounts of approximately $3.5 million over a six-year period – a small fraction of the nearly $15 billion in claims paid during the same time period. Though TriWest realized no financial gain from this, the unrealized discounts did cause a loss to the government. TriWest has agreed to compensate the government in addition to the reimbursement.

While no one likes mistakes, TriWest has used this as an opportunity to refine and sharpen our approach to the handling of LOA claims. Going forward, TriWest is voluntarily implementing the following preventive measures for LOA claims: (1) an annual independent third party audit of LOA claims; (2) supports standard for claims processing accuracy; and (3) an annual performance guarantee to ensure that the government gets the benefit of our self-imposed standard. These steps will enable us to continue to use this critical—but not always used—tool in the TRICARE program to meet the healthcare needs of those we are honored to serve by providing access to the care delivered by these committed providers, while also being the very best stewards of taxpayer's resources."

About TriWest

TriWest Healthcare Alliance partners with the Department of Defense to do "Whatever It Takes" to support the healthcare needs of 2.9 million members of America's military family. A Phoenix-based corporation, TriWest provides access to cost-effective, high-quality health care in the 21-state TRICARE West Region. Follow us on Twitter and Facebook, or visit for more information.

SOURCE TriWest Healthcare Alliance