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DoD Got 'Best Value' from New Tricare Contracts, Top Health Official Says

By Sgt. 1st Class Doug Sample
American Forces Press Service

WASHINGTON, Sept. 12, 2003 – The Defense Department got the "best value" for its money when new Tricare contracts were awarded in late August to three healthcare companies to manage care for more than 8 million military personnel and their family members, the Pentagon's leading health official said here Sept. 10.

During a meeting with reporters in his office, Dr. William Winkenwerder Jr., assistant secretary of defense for health affairs, said, "We've made a good program (Tricare) even better. The changes that we've implemented in this new set of contracts put customer satisfaction first."

DoD health officials announced Aug. 21 that Humana Military Healthcare Services, Louisville, Ky.; Health Net Federal Services, Rancho Cordova, Calif.; and TriWest Healthcare Alliance Corp, Phoenix, Ariz., were awarded the contracts for its managed care system.

According to a DoD press release, health care costs for these three contracts are estimated to range between $19.5 billion to $20.5 billion over the next five years. The new contracts will be phased in over the next year, and will replace seven contracts currently in place, according to the release.

Winkenwerder told reporters that Tricare is restructuring its managed care system. With the new contracts, Tricare is moving from the current 11 regions involving four companies that operate under seven contracts to three regions with three healthcare companies under three contracts.

Humana received a $2 billion contract for the Tricare South region. That region covers healthcare for beneficiaries in Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, Oklahoma, South Carolina, Tennessee and the eastern portion of Texas.

TriWest received a $2.1 billion contract for the Tricare West region, which covers Alaska, Arizona, California, Colorado, Hawaii, Idaho, Iowa, Kansas, Minnesota, Missouri, Montana, Nebraska, Nevada, New Mexico, North Dakota, Oregon, South Dakota, west Texas, Utah, Washington and Wyoming.

Health Net was awarded a $2.2 billion contract for the Tricare North region that includes Connecticut, Delaware, the District of Columbia, Illinois, Indiana, Kentucky, Maine, Maryland, Massachusetts, Michigan, New Hampshire, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, Vermont, Virginia, West Virginia and Wisconsin.

Sierra Military Health Services, Las Vegas, which had covered the Northeast, filed a formal protest Aug. 29 with the Government Accounting Office on its unsuccessful bid. A press release by the company stated that company representatives met with DoD health officials to discuss the evaluation process used to award the contract and the evaluation findings. "Subsequently, the company determined there were serious and material errors in the evaluation process and findings, warranting a formal protest," the release said.

Winkenwerder told reporters, "We were not surprised that there was a protest based on the size of these contracts and the importance to the bidders." And he added that healthcare services for beneficiaries will not be interrupted and, "will move forward."

Winkenwerder said the contracts were carefully evaluated based on several factors, such as clinical quality, customer satisfaction, past performance and price. These factors, he said, helped determine which contracts offered the "best value" to the government and its beneficiaries. He said cost is "least important in the 'best value' package."

Winkenwerder also announced that Navy Rear Adm. James A. Johnson has been appointed as the new Tricare West regional director. Johnson, a 37-year veteran, will be responsible for the administration of health care contracts in the west region; providing support to military medical facility commanders there; sustaining quality care, and improving customer satisfaction.

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