In a surprise move, the Defense Department has spurned Aetna Government Health Plans and awarded Health Systems International's QualMed HMO a $2.5 billion, five-year contract to cover military dependents and retirees in California and Hawaii.
When QualMed takes the contract from Aetna in October, it will be the third managed-care company in 20 months to cover the 700,000 beneficiaries of the Civilian Health and Medical Program of the Uniformed Services, or CHAMPUS, in those two states. Aetna began running the program in 1994.
Aetna won the contract in 1993 from Foundation Health Plans, which had operated the project since 1988. But the losers in the 1993 bid protested, and the Pentagon later reopened the contract.
QualMed's selection marks the transition of the California-Hawaii managed-care program from a demonstration project, called the CHAMPUS Reform Initiative, to Tricare, a full-scale managed-care program set to go nationwide by mid-1997.
Military beneficiaries in Washington state and Oregon already are receiving care under a Tricare contract that began in March. The Pentagon is scheduled to announce two other Tricare contract awards by the end of the year, covering beneficiaries in Texas and the Southeast.
But some said the transformation from a demonstration project to a full-scale managed-care system will involve some changes that might prove unpopular with beneficiaries.
Among them will be increased cost sharing for all beneficiaries and enrollment fees for military retirees, as well as a change from networks of independent practitioners under Aetna to clinic-based HMOs.