The second-place bidder in the largest CHAMPUS contract ever awarded has withdrawn a protest and will join the network of the winning bidder.
Western HealthCare Alliance, a joint venture of Samaritan Health System and HealthPartners of Southern Arizona, had filed a protest with the General Accounting Office, Congress' investigative arm. That came shortly after CHAMPUS, the Civilian Health and Medical Program of the Uniformed Services, announced that Triwest Healthcare Alliance had won the contract.
Triwest, comprising 11 Blue Cross plans, two university hospitals and a management company, in June won a five-year, $2.3 billion contract to cover military retirees and dependents in 15 Rocky Mountain and Great Plains states.
Both Triwest and Western are based in Phoenix. Triwest is closely affiliated with Blue Cross and Blue Shield of Arizona. The other bidder on the contract was Foundation Health, which placed a distant third.
The contract is part of the CHAMPUS effort to move beneficiaries into its Tricare managed-care program. Some 750,000 beneficiaries will have access to an HMO, PPO or indemnity plan under Tricare.
Dan Green, Samaritan vice president, declined to give the grounds for the protest or describe the financial terms of the settlement with Triwest. The protest would have consumed a lot of time and money without any assurance of success, he said. Instead, it made more sense for Samaritan and HealthPartners to enter Triwest's provider network and serve the 120,000 CHAMPUS beneficiaries in Arizona.
David J. McIntyre Jr., president of Triwest, said protests of government contract awards are common. "Virtually every major federal procurement in the last decade has been followed by a bid protest by at least one of the losing competitors. (Such protests are) an obscenely expensive proposition."
Sources at Samaritan said the protest had a good chance of succeeding, but the system leadership was preoccupied with other strategic concerns, notably a possible venture with Columbia/HCA Healthcare Corp.
The source, who asked not to be identified, said the Samaritan and Triwest bids scored the same on technical factors, but Samaritan's was $25 million lower in cost. The Tricare decisionmaking process was "a mystery," the source alleged.
McIntyre said Triwest won the contract under a "best value" methodology. "That takes into account not just price but the quality of what's been put on the table, the technical capability of the entities to carry out what they're going to do, and other factors. The price on the tag might not be the full price at the end of the day," he said.
With the loss of the CHAMPUS contract, Western HealthCare Alliance is being decommissioned and its 13 employees redeployed or laid off. It signals the end of Samaritan's attempt to do direct contracting on a regional basis.