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GAO faults Pentagon, not contractor, for Tricare West Region problems

Jun. 19, 2014 - 12:40PM   |  
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The blame for the rough transition last year between health management companies in the Tricare West Region falls squarely on the Defense Department, according to the Government Accountability Office.

In an analysis of the changeover of contractors TriWest Healthcare Alliance and UnitedHealth Military & Veterans Services, GAO found that the Tricare Management Activity — the Pentagon’s health program administrator at the time — failed to provide adequate guidance and oversight to UnitedHealth, resulting in customer service problems and delays in care.

“[Government officials] provided insufficient oversight of the West region’s contractor transition because they took limited action in response to the concerns they identified and did not resolve their concerns promptly,” GAO officials wrote.

Problems such as delays in specialty care referrals and payments to providers began nearly immediately after UnitedHealth assumed management of the 21-state Tricare West Region in April 2013.

The concerns were so pervasive that the Pentagon took the unprecedented step of waiving referral authorization requirements for beneficiaries on Tricare Prime in the region — at a cost of more than $1 million to the government, according to GAO.

To pinpoint the source of the issues, Sens. Patty Murray, D-Wash., and Mark Begich, D-Alaska, asked GAO to examine the contract transfer. According to the report released Wednesday, GAO determined that while UnitedHealth seemed woefully unprepared to meet its contract demands, TMA largely was to blame because it failed to provide UnitedHealth with an adequate plan.

According to GAO, TMA presented both contractors with documents to guide the transition, neither longer than seven pages. TMA eventually supplied a more detailed 140-page document but still did not provide enough specifics to UnitedHealth, GAO concluded.

The report said the government also:

■Provided differing transfer guidance to the two companies, resulting in problems with records transfers.

■Perceived it was unable to interfere and keep UnitedHealth accountable until the company actually began to miss performance goals.

■Felt obligated to give UnitedHealth a $10 million transition payment without regard to the company’s performance, missing an opportunity, “either positive or negative,” to encourage better performance.

The government watchdog agency made several recommendations on future contract transfers, including improved communication among all parties and better oversight and guidance.

In response to the report, Pentagon officials took issue with two points: the assertion that TMA’s guidance contributed to health care delivery problems and that TMA had never overseen the changeover to a new contract manager.

Dr. Jonathan Woodson, assistant secretary of defense for health affairs, said GAO confused the failure to transfer records between the companies with UnitedHealth’s inability to develop an adequate network of doctors that caused delays in care.

“It is the sole responsibility of the incoming contractor” to build its network, Woodson wrote.

He also noted that Tricare has handled major contract transitions before, including the transfer and subsequent loss of the Tricare North Region contract by Sierra Military Health and the changeover of several contractors when Tricare consolidated from 12 regions to three.

But UnitedHealthcare is the first new company to take over a Tricare contract since the military health system was consolidated in 2004.

United Healthcare initially was awarded the contract for the Tricare South Region in 2009 but that decision later was overturned. The company then filed a protest with DoD over its award of the Tricare West region contract, worth up to $21 billion, to TriWest.

UnitedHealthcare won the argument and the contract was reconsidered, with UnitedHealthcare eventually winning the bid, ousting TriWest from the role it held for 17 years.

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