- The U.S. Department of Defense (DoD) has rattled the industry in opting to oust incumbent insurance provider UnitedHealthcare from its new round of contracts to manage the Tricare program, Modern Healthcare reported.
- The $58 billion worth of contracts for Tricare, a component of the DoD's Military Health System for veterans and families, went to Humana and Centene.
- Humana, which previously served a smaller share of Tricare members, will absorb the majority of those that were formerly served under UnitedHealthcare.
The decision last week provided a positive boost to Humana just as the U.S. Department of Justice moved to block Humana's pending merger with Aetna, and the insurer announced plans to leave most of ACA exchanges in 2017. Despite the hit of the federal lawsuit, Humana stock showed no sign of suffering after that announcement, closing up 8.23% Thursday, the strongest of all four insurers impacted by the DOJ decision.
The DoD contract provides Humana a five-year deal worth $40.5 billion, while Centene received a deal worth $17.7 billion.
The contract changes came with a consolidation of Tricare's health coverage regions, which have been reduced from three (North, South and West) to just two (East and West). Humana previously managed the South region and will now manage the new 32-state East region with six million members, as Modern Healthcare reported. Centene, meanwhile, received the 21-state West region with 3.4 million members, and the two companies both will be involved in Iowa, Missouri and Texas.
UnitedHealthcare is reported to be “evaluating next steps” though an appeal was not specifically floated. The company is losing 3 million Tricare members from a contract that had been worth about $650 million in annual revenue, Modern Healthcare reported.