UnitedHealth May Have to Pay for Care Delays, Pentagon Says

The U.S. Defense Department may ask UnitedHealth Group Inc. (UNH) to reimburse the government after military families experienced long delays getting medical-care referrals.

A $20.5 billion contract the nation’s largest insurer took over on April 1 includes “provisions for the recovery of costs due to poor performance,” said Austin Camacho, a spokesman for the Pentagon’s health-care system, known as Tricare.

He declined in an e-mail to specify the amount it might seek or a timetable for the decision.

Defense Department and officials of Minnetonka, Minnesota-based UnitedHealth will hold meetings to ensure the company “has full understanding of and accountability for its poor performance,” Camacho said. “And it must make significant progress to resolve all issues.”

The Pentagon’s assistant secretary for health affairs, Jonathan Woodson, rebuked UnitedHealth in a memo last week for delays in getting military members and their families referrals and authorizations for specialty medical care. He called the situation “extraordinary.”

UnitedHealth Backlog

Defense officials have granted temporary waivers so the plan’s members in the western region served by UnitedHealth can get specialty care without the contractor’s authorization and not incur penalties, the memo said.

The contract represents UnitedHealth’s first foray into the military health market. The company wrested the work from TriWest Healthcare Alliance Corp., which had provided military health services for more than 16 years.

UnitedHealth is working with the military to address the issues, Bruce Jasurda, a UnitedHealth spokesman, said in an e-mail.

Jasurda said last week that the delays were caused by requests for referrals and care authorizations that “far exceeded the norms” since it took over the contract. The company has deployed additional staff to address the backlog, he said.

The delays affected beneficiaries in the Tricare Prime program, a plan in which participants are assigned a primary-care manager responsible for referring patients to specialists for necessary services.

Those referrals require authorization from the contractor. Participants who don’t obtain that approval are normally subject to a fee. The Pentagon (USBODEFN) has waived that charge and the contractor authorization through at least May 18, according to Woodson’s memo.

There are 1.6 million Tricare Prime beneficiaries in the region served by UnitedHealth (UNH). The contractor is responsible for coordinating care for active-duty military, retirees and their families in 21 states, including California, Hawaii and Colorado.

-- Editors: Stephanie Stoughton, Bernard Kohn

To contact the reporter on this story: Kathleen Miller in Washington at Kmiller01@bloomberg.net

To contact the editor responsible for this story: Stephanie Stoughton at sstoughton@bloomberg.net

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