Health Net Out as TriWest Prevails in Lawsuit to Claim Tricare West Region Contract

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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)

A federal judge has ruled in favor of TriWest Healthcare Alliance in a contract dispute over health services under the next generation of Tricare contracts, paving the way for the health care company to take over management of the Tricare West Region by the end of the year.

In a decision handed down Jan. 31, Judge Ryan Holte of the U.S. Court of Federal Claims ruled against Health Net Federal Services, the current Tricare regional manager, in a lawsuit filed in August by the company against the Defense Department for awarding the next-generation contract, worth up to $65 billion over nine years, to TriWest.

The decision brings a close to a fight that lasted more than 13 months and affects 4.5 million military health care beneficiaries, including active-duty personnel, their families and retirees who use Tricare Prime or Tricare Select in 26 states.

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A timeline for completion of the turnover has not been published. A spokeswoman for Health Net Federal Services said the company expects to provide care and services to Tricare beneficiaries through the end of the year.

When TriWest was awarded the contract in December 2022 for the next iteration of Tricare, known as T-5, Health Net filed several protests against the decision, arguing that TriWest did not have an existing Tricare network in place and would face technical challenges that could disrupt patient care.

After losing those protests, Health Net filed a claim in federal court, arguing largely the same case.

In its defense, TriWest said it would rely on the network it manages as the primary regional contractor in the West for the Department of Veterans Affairs' Patient-Centered Community Care program to provide patient care and would augment that network with subcontractors from major health networks across the region.

The reasons for Holte's decision had not been made public as of publication. The court proceedings were closed and the opinion and order were sealed but may be made public at a later date.

The Defense Health Agency, which is responsible for overseeing the Tricare health program for the Defense Department, and TriWest did not respond to requests for comment on the decision by publication.

The handover originally was set to begin last August. In a press release Thursday, Health Net executives pledged to work with the Defense Health Agency to ensure a smooth transition for beneficiaries over the course of the year.

"Our close collaboration with providers in our network and the DHA has enabled us to provide the highest quality of health care to our nation's service members and their families," Health Net Federal Services President and Chief Executive Officer Kathleen Redd said in a statement.

"We take great pride in the innovation we've sparked during the remarkable journey we've had with Tricare, and we remain dedicated to providing exceptional health care to the people we proudly serve through the end of our current contract," Redd said.

TriWest is a consortium of nonprofit Blue Cross Blue Shield plans and university hospital systems. It managed the Tricare West Region, which includes the western half of the continental U.S., as well as Alaska and Hawaii, from 1996 to 2013 before losing the contract to UnitedHealth, which subsequently turned it over to Health Net Federal Services in 2018.

Under the new contracts, Humana Military will retain its role as manager of the Tricare East Region, responsible for nearly 5 million beneficiaries in 24 states. That contract is worth up to nearly $71 billion over nine years.

Also under the contracts, 1.5 million Tricare beneficiaries who live in Arkansas, Illinois, Louisiana, Oklahoma, Texas and Wisconsin will shift from the East Region to the West Region.

Related: In Reversal, Defense Department Now Wants to Bring Tricare Beneficiaries Back to Military Health System

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