TriWest Wins GAO Decision on $65B Tricare Contract That Covers Half of US

Tech. Sgt. Thesia Westmoreland, non-commissioned officer in charge of pharmacy operations
Tech. Sgt. Thesia Westmoreland, non-commissioned officer in charge of pharmacy operations with the 72nd Medical Support Squadron, pulls medications to fill prescriptions at the 72nd Medical Group Pharmacy. (Kelly White/U.S. Air Force)

The Government Accountability Office has upheld the Defense Department's selection of TriWest Healthcare Alliance to manage the Tricare health program's western region -- a contract worth $65 billion -- rejecting Health Net Federal Services' second protest over the decision.

The GAO, the federal agency responsible for investigating contract awards and bid protests, made the decision on Aug. 4 to give TriWest the contract covering roughly half of the country, but has published few details. The agency announced on its website that it will review the decision for public release and post a redacted version once that process is complete.

Regardless, Health Net Federal Services, a subsidiary of Centene Corp., plans to mount a legal challenge over the decision in the U.S. Court of Federal Claims, a company spokeswoman told in an email Monday.

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"Health Net Federal Services ... disagrees with the Government Accountability Office's decision to deny our protest of the Tricare West Region Contract for T-5, the next generation of Tricare contracts," Health Net said in a statement.

TriWest, a consortium of nonprofit Blue Cross Blue Shield plans and university hospital systems, is no stranger to the Tricare West Region -- the western half of the continental U.S., as well as Alaska and Hawaii -- having managed the contract from 1996 to 2013. It currently manages the Department of Veterans Affairs Community Care Network in the western U.S. and Hawaii.

The GAO announcement affects health care for 4.5 million Defense Department beneficiaries in 26 states. Under the new contract, 1.5 million beneficiaries in Arkansas, Illinois, Louisiana, Oklahoma, Texas and Wisconsin will shift from the Tricare East Region to the West, and all 4.5 million beneficiaries in the West Region will switch from Health Net to TriWest.

In a statement Monday, David McIntyre, TriWest's co-founder, president and CEO, said he looks forward to implementing the new contract, known as the Tricare Next-Generation, or T-5, contract worth up to $65 billion "once Health Net/Centene has decided it is finished challenging the government's award decision."

"We are humbled to be recognized as a leader in managed care and proud to serve those most deserving of the best quality in health care services," McIntyre said.

It is unclear how the suit will affect the timeline of the contract, which originally was expected to begin Jan. 1, roughly one year after the awards were announced in December 2022.

A spokesman for the Defense Health Agency said Tuesday that the agency is preparing to release a statement regarding the decision.

Meanwhile, Humana Military, which currently oversees the Tricare East Region, will remain as that regional contractor, responsible for nearly 5 million beneficiaries in 24 states. That contract is worth up to nearly $71 billion over nine years.

The Tricare health program provides private health care treatment, referrals, customer service, claims processing and other support services to roughly 9.6 million beneficiaries, including active-duty personnel, some members of the reserve and National Guard, military retirees and family members.

In May, Health Net Federal Services filed a second protest against the DoD's selection of TriWest, having filed one earlier in the year that prompted the Defense Department to withdraw its December decision to reevaluate it.

After examining the contract selection records, the DoD announced April 20 that it had upheld its decision in choosing TriWest, paving the way for Health Net to file a protest with the GAO.

At the time, Health Net officials told they filed the protest because they believe they have done a good job with their past Tricare contracts and they had concerns about TriWest's business model.

-- Patricia Kime can be reached at Follow her on Twitter and Threads @patriciakime

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