May 3 (Bloomberg) -- The Pentagon rebuked UnitedHealth Group Inc., the nation’s largest insurer, after military families began experiencing long delays getting medical-care referrals from the company.
The backlogs occurred almost as soon as Minnetonka, Minnesota-based UnitedHealth took over a contract, valued as much as $20.5 billion, from TriWest Healthcare Alliance Corp. It assumed responsibility on April 1 for the western region of the military’s health-care system, known as Tricare.
UnitedHealth’s “failure to meet contractor requirements” has prevented a large number of beneficiaries in one Tricare health plan from obtaining timely access to specialty care, Jonathan Woodson, assistant secretary of defense for health affairs, said in a memo yesterday to other military leaders.
Woodson, calling the situation “extraordinary,” said the Pentagon stepped in to grant a temporary waiver so the plan’s members in the western region could get specialty care without UnitedHealth’s authorization and not incur penalties.
The affected beneficiaries are in the so-called 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 has waived that charge and the contractor authorization through May 18, according to Woodson’s memo.
The delays are occurring because UnitedHealth has received requests for referrals and care authorizations that “far exceeded the norms” since it took over the contract, said Bruce Jasurda, a spokesman for the company.
“The increased volume was driven largely by people asking whether previously authorized referrals and authorizations were still valid, resulting in large numbers of duplicate referrals in the system,” Jasurda said in a phone interview. The company “understands the issues we need to improve on, and we are taking aggressive action.”
UnitedHealth has deployed additional staff to help process the increased number of requests, he said. It hopes to have the issues resolved in about a month, Jasurda said.
There are 1.6 million Tricare Prime beneficiaries in the region served by UnitedHealth, Kevin Dwyer, a spokesman for the military health program, said in an e-mail. They include active-duty military, retirees and their families in 21 states, including California, Idaho, Hawaii and Colorado.
U.S. Representative Doug Lamborn, a Colorado Republican, said in a letter to Defense Secretary Chuck Hagel yesterday that health-care providers in his state are facing “unexpected and dramatic reductions in their workload” because of the backlog in referrals. He also blamed UnitedHealth.
“They claimed to be aware of the problem and doing what was necessary to get on top of the problem,” Lamborn said in a phone interview. “There seemed to be a disconnect from the reality on the ground.”
Most of the complaints came from providers, he said. “They are the ones that are on the edge financially, in some cases,” Lamborn said.
Scott Celley, a TriWest spokesman, declined to comment on the issues with UnitedHealth.
TriWest, which coordinated care for military beneficiaries for more than 16 years, got almost all of its revenue through the contract. The company’s chief executive officer, David McIntyre Jr., said last year it would probably shut down if it lost the contract.
The company lost a protest it filed last year with the U.S. Government Accountability Office, which arbitrates contract disputes. It had claimed the Pentagon didn’t pay enough attention to UnitedHealth’s past performance issues when it awarded the contract.
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