The U.S. Government Accountability Office (GAO) has let a military dental plan contract award stand.
The GAO has upheld a decision by the TRICARE Management Activity agency at the U.S. Department of Defense to award a $3.1 billion TRICARE dental plan contract to a unit of MetLife Inc., New York (NYSE:MET), rather than to United Concordia Companies Inc., Harrisburg, Pa., a unit of Highmark Inc., Pittsburgh.
TRICARE is a program that provides health coverage for military personnel, military dependents and military retirees who get medical care outside the military and veterans health care systems.
United Concordia has been the TRICARE dental program provider for 15 years.
The new TRICARE dental contract would have provided dental coverage for 2 million TRICARE dental program enrollees for a 12-month base period and 5 1-year option periods.
TRICARE managers reasonably determined that the MetLife provider network was larger and better for meeting TRICARE needs than United Concordia’s network, the GAO says in an explanation of the TRICARE dental contract ruling.
It was also reasonable for the agency to look at the dental carriers’ past contracts, including the magnitude and scope of the services previously performed, officials say.
United Concordia had offered to provide dental coverage for a total of $3.2 billion. It argued that MetLife may have been unrealistic about some of the components used to come up with its price estimate. The GAO found that TRICARE managers had used adequate methods to analyze the price estimate.
United Concordia says in a statement that it is disappointed that the company’s protest was not successful but will do its best to provide high-quality service during the transition period, which will last until mid-2012.
New business outside the TRICARE contract has helped offset the effects of the loss of the TRICARE contract on United Concordia’s overall operations, the company says.
“United Concordia remains one of the largest dental carriers in the world with a very vibrant, growing commercial and government business,” the company says.