Hu­mana, Cen­tene land mul­ti­year mil­i­tary con­tracts

Modern Healthcare - - LATE NEWS - —Bob Her­man

The U.S. De­fense Depart­ment is shuf­fling the in­sur­ance play­ers in the Tri­care pro­gram, which pro­vides health­care cov­er­age for U.S. mil­i­tary mem­bers and their fam­i­lies.

Last week the depart­ment awarded mul­ti­year con­tracts worth $58 bil­lion to Hu­mana and Cen­tene Corp. to man­age the cov­er­age, sur­pris­ingly boot­ing in­cum­bent health in­surer Unit­edHealth­care in the process.

Hu­mana’s five-year deal, which con­sists of five one-year op­tions, is es­ti­mated to cost fed­eral tax­pay­ers $40.5 bil­lion. Cen­tene and its newly ac­quired Health Net will re­ceive $17.7 bil­lion over five one-year con­tract pe­ri­ods.

In 2014, the De­fense Depart­ment and De­fense Health Agency de­cided to al­ter the struc­ture of the pro­gram. In­stead of di­vid­ing it into three re­gions ( North, South and West), the gov­ern­ment wanted to con­sol­i­date to two cov­er­age ar­eas (East and West).

Hu­mana, which had man­aged the South re­gion, will now pro­vide cov­er­age for 6 mil­lion Tri­care mem­bers in the new 32-state East re­gion, es­sen­tially ab­sorb­ing most of Unit­edHealth­care’s mem­bers. Cen­tene will gain the 21-state West re­gion, which cov­ers about 3.4 mil­lion peo­ple. Iowa, Mis­souri and Texas will in­clude both com­pa­nies.

The con­tracts are ex­pected to be­gin April 2017, pend­ing the ap­peals process.

Unit­edHealth­care spokesman Bruce Ja­surda said the com­pany is “eval­u­at­ing next steps.” In 2015, it had about 3 mil­lion Tri­care mem­bers and the con­tract brought in an es­ti­mated $650 mil­lion in rev­enue.

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