UnitedHealth's $20B Tricare contract upheld--for now

UnitedHealth can move forward with its $20.5 billion contract to administer health coverage for Tricare after the Government Accountability Office (GAO) dismissed TriWest's challenge to the contract.

In awarding the Tricare contract to UnitedHealth, the Department of Defense (DoD) snubbed TriWest, which had been administering Tricare benefits for 16 years. TriWest then protested the contract decision to the GAO, which arbitrates contract disputes, claiming its bid was less expensive than UnitedHealth's.

The GAO, however, found the DoD's "evaluation was reasonable and denied TriWest's protest on all counts," Ralph White, the GAO's managing associate general counsel for procurement law, told Bloomberg.

UnitedHealth is scheduled to assume the contract next April, saying it looks forward to working with the Pentagon and TriWest "to ensure a smooth transition for service members, retirees and their families," Lori McDougal, chief executive officer of the UnitedHealth unit that will handle the contract, told Bloomberg. "We are committed to working with the Department of Defense to ensure beneficiaries have access to cost-effective, quality and innovative care."

But TriWest may not be ready to concede defeat. In response to the denial, TriWest CEO David McIntyre said the GAO failed to conduct a reasonable evaluation of UnitedHealth's bid or consider that UnitedHealth has no experience with military contracts. He added that switching to UnitedHealth would disrupt coverage and lose money, USA Today reported.

"There are options that remain," TriWest spokesman Scott Celley told Bloomberg.

Although Celley wouldn't provide details about the company's next moves, McIntyre said in a statement that the company would discuss the GAO decision with its owners and counsel to determine which options, including filing a lawsuit with the U.S. Court of Federal Claims, it will take.

To learn more:
- read the Bloomberg article
- see the USAToday article
- check out the TriWest statement

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