MILITARY UPDATE: Agency suggests new bid for Tricare contract

Aetna Government Health Plans of Hartford, Conn., appears to have gained an unfair advantage in competing for Tricare’s North Region support contract, valued at $16.7 billion, by hiring a former chief of staff at Tricare headquarters to help the company draft its winning proposal.

The Government Accountability Office, the auditing arm of Congress, said the chief of staff had access to proprietary information on Aetna’s rival, Health Net Federal Services of Rancho Cordova, Calif., before leaving government, and also while working for Aetna because he continued to have access to sensitive documents through his old Tricare e-mail account.

In a 36-page decision, the GAO upheld Health Net’s protest of the contract award to Aetna, advising the Tricare Management Activity in Falls Church, Va., to conduct a new review of bids and make a new decision, taking into account what their auditors found.

Last month, the GAO also sustained Humana Military Healthcare Services’ protest of Tricare’s $21 billion support contract award for its South Region to UnitedHealth Military & Veterans Services of Minnetonka, Minn. That decision said the contracting officer did not adequately weigh the value of fee discounts Humana has negotiated with health care providers in judging future costs relative to competitors. The GAO said TMA should reevaluate the proposals and make a fresh decision.

The GAO brought a heavier hammer down on the Aetna contract. Though it doesn’t allege that procurement integrity law was broken, the GAO said contracting agencies like TMA have an obligation “to avoid even the appearance of impropriety” in government procurement.

If TMA’s own investigation confirms the alleged unfair competitive advantage, Aetna could be excluded from the competition, “thereby leaving Health Net as the only viable awardee,” the GAO said.

Tricare support contractors build and manage huge civilian health care provider networks for military beneficiaries who don’t have access to on-base health care. The companies handle Tricare enrollments, process claims, provide customer service and coordinate specialty care.

Health Net is the current Tricare contractor for the 22-state North Region, serving three million military health care beneficiaries. It filed its protest in August, a month after the announced award went to Aetna.

Appearance of impropriety was one of six reasons the GAO cited for upholding the Health Net protest. Other errors were committed by Tricare and its unnamed contracting officer, which included failure to “reasonably evaluate” Aetna’s past performance information and to “perform a reasonable price/cost realism assessment” of Aetna’s significantly lower bid.

The GAO had bracing criticism for the contracting officer. Even though the “record demonstrates” that the former chief of staff at TMA had access to Health Net “proprietary information,” no “consideration of the issue” was shown by the contracting officer.

Aetna released a statement saying it can’t know what action the Department of Defense may take in response to the GAO decision. But the company “believes it made a very strong proposal for the Tricare contract and … feels confident that Aetna acted appropriately at all times.”

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