Published: Saturday, November 21, 2009
Health care contracts draw scrutiny
Aetna Government Health Plans of Hartford, Conn., appears to have gained an unfair advantage in competing for a $16.7 billion contract by hiring a former chief of staff at Tricare headquarters to help draft a 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 after with continued access to his old e-mail account.
In a 36-page decision, GAO upheld Health Net’s protest of the north region’s contract award to Aetna, advising the Tricare Management Activity in Falls Church, Va., to conduct a new review of the bids and make a new decision.
Just last month, 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.
GAO brought a heavier hammer down on the Aetna contract. Though it doesn’t allege that procurement integrity law was broken, GAO said contracting agencies have an obligation “to avoid even the appearance of impropriety” in government procurement. This time it failed.
If the management authority’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,” 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.
Health Net is the contractor for the 22-state north region, serving 3 million military healthcare beneficiaries. It filed its protest in August, a month after the announced award went to Aetna.
Appearance of impropriety was just one of six reasons GAO cited for upholding the 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.
Steven Tough, president of Health Net, said the alleged conflict of interest is perhaps the most significant reason for the management agency to decide in the next 60 days whether to overturn the award to Aetna.
GAO had bracing criticism for the contracting officer. Even though the “record demonstrates” that the former chief of staff had access to Health Net proprietary information, no “consideration of the issue” was shown by the contracting officer, it reported.
The decision doesn’t name the former chief of staff. Tricare sources said it is retired Air Force Col. Charles Wolak, now Aetna’s chief of field operations. GAO said the officer was chief of staff at TMA from early 2005 until March 2007, when he became “source selection authority” or top contracting officer for the Tricare-for-Life claims processing contract.
A draft request for proposals for next generation support contacts was released in June that year. A final request went out in March 2008. The former chief of staff began work for Aetna on Nov. 19, 2007, and “the very next day,” GAO said, “he began working on ‘certain projects’ related to” Aetna’s bid on the Tricare contract.
Aetna told GAO that the new employee worked principally on portions of their bid dealing with beneficiary satisfaction and customer service. He was not involved in proposal pricing. But GAO said Aetna had no firewall in place to limit such participation, and Aetna’s policy of destroying documents in connection with preparing bid proposals prevented further confirmation.
Aetna released a statement saying it “believes it made a very strong proposal for the Tricare contract and ... feels confident that Aetna acted appropriately at all times.”
To comment, e-mail milupdate@aol.com.
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 after with continued access to his old e-mail account.
In a 36-page decision, GAO upheld Health Net’s protest of the north region’s contract award to Aetna, advising the Tricare Management Activity in Falls Church, Va., to conduct a new review of the bids and make a new decision.
Just last month, 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.
GAO brought a heavier hammer down on the Aetna contract. Though it doesn’t allege that procurement integrity law was broken, GAO said contracting agencies have an obligation “to avoid even the appearance of impropriety” in government procurement. This time it failed.
If the management authority’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,” 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.
Health Net is the contractor for the 22-state north region, serving 3 million military healthcare beneficiaries. It filed its protest in August, a month after the announced award went to Aetna.
Appearance of impropriety was just one of six reasons GAO cited for upholding the 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.
Steven Tough, president of Health Net, said the alleged conflict of interest is perhaps the most significant reason for the management agency to decide in the next 60 days whether to overturn the award to Aetna.
GAO had bracing criticism for the contracting officer. Even though the “record demonstrates” that the former chief of staff had access to Health Net proprietary information, no “consideration of the issue” was shown by the contracting officer, it reported.
The decision doesn’t name the former chief of staff. Tricare sources said it is retired Air Force Col. Charles Wolak, now Aetna’s chief of field operations. GAO said the officer was chief of staff at TMA from early 2005 until March 2007, when he became “source selection authority” or top contracting officer for the Tricare-for-Life claims processing contract.
A draft request for proposals for next generation support contacts was released in June that year. A final request went out in March 2008. The former chief of staff began work for Aetna on Nov. 19, 2007, and “the very next day,” GAO said, “he began working on ‘certain projects’ related to” Aetna’s bid on the Tricare contract.
Aetna told GAO that the new employee worked principally on portions of their bid dealing with beneficiary satisfaction and customer service. He was not involved in proposal pricing. But GAO said Aetna had no firewall in place to limit such participation, and Aetna’s policy of destroying documents in connection with preparing bid proposals prevented further confirmation.
Aetna released a statement saying it “believes it made a very strong proposal for the Tricare contract and ... feels confident that Aetna acted appropriately at all times.”
To comment, e-mail milupdate@aol.com.
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