The Defense Health Agency is proposing to cut the number of Tricare regions from three to two, a cost-savings plan that would sharply increase competition for the next round of lucrative Pentagon health care contracts.
According to a draft solicitation for Tricare contracts released online Monday, the Defense Department plans to change the contract regions from the current configuration of North, South and West regions to just East and West regions.
Companies would be allowed to bid for both regions but could win only one contract; according to Pentagon documents, no single company would be selected to manage both regions.
The Pentagon plans to award the next generation of Tricare contracts in 2017 — agreements worth billions of dollars over the expected five-year contract period. The contract solicitation is expected to be released next year.
The draft request for proposal, or RFP, does not include estimates on the contracts' worth, but they are likely to be significantly higher than the most recent Tricare contracts, which were valued at up to $55 billion over five years.
Currently, Humana Military Healthcare Services manages Tricare South, Health Net Federal Services oversees Tricare North and UnitedHealthcare Military & Veterans has responsibility for Tricare West.
If the contract solicitation does reduce the number of regions, competition for the new contracts will be more cutthroat than the last round — and that round was itself particularly ugly, with multiple bid protests that drew out the process.
The path those companies took to running the Tricare regions was anything but smooth: The most recent contract process began in July 2009, with the North region contract going to Aetna, the South region contract awarded to UnitedHealth Military & Veterans Services and the West region going to TriWest Healthcare Alliance.
But HealthNet Federal Services, which originally held the North region contract, protested and eventually won the contract for that region while Humana, which held the South region, also protested and won back the contract.
A protest of that decision then was filed by UnitedHealth that was denied by the Government Accountability Office, after which the company made a case that it should be able to compete for the West region contract.
The government agreed, and in a follow-on competition for the West region, UnitedHealthCare won the contract in March 2012.
DoD released a draft request for proposal on FedBizOpps.com, asking interested health care companies to read the planned requirements and comment on them by Dec. 8.
Should the Tricare regions be combined, the East region would consist of Alabama, Arkansas, Connecticut, Delaware, District of Columbia, Florida, Georgia, Illinois, Indiana, the Rock Island Arsenal area of Iowa, Louisiana, Maine, Maryland, Massachusetts, Michigan, Mississippi, parts of Missouri, New Hampshire, New Jersey, New York, North Carolina, Ohio, Oklahoma, Pennsylvania, Rhode Island, South Carolina, Tennessee, east Texas, Vermont, Virginia, West Virginia and Wisconsin.
The West region would encompass Alaska, Arizona, California, Colorado, Hawaii, Idaho, Iowa, Kansas, Minnesota, Missouri except St. Louis, Montana, Nebraska, Nevada, New Mexico, North Dakota, Oregon, South Dakota, western Texas, Utah, Washington and Wyoming.
Patricia Kime is a senior writer covering military and veterans health care, medicine and personnel issues.
