The Pentagon is allowing UnitedHealthcare more time to fix chronic delays in the insurer's handling of referrals and authorizations for medical treatment of active-duty and retired military families in the western U.S.
The problems stem from a huge volume of requests to UnitedHealthcare's call centers in Colorado Springs, Colo., and Phoenix, Ariz., since the health insurer took on a massive new contract in April.
As a result of the delays, the Department of Defense is waiving a requirement that patients affected in the western region do not need authorization before getting specialty care. Ordinarily, a referral from a primary care provider would have to be approved by the insurer before a patient could get specialty care.
The initial waiver for specialty-care authorizations started in April, has been extended twice, and currently lasts through July 2, according to the Department of Defense TRICARE website.
Starting April 1, UnitedHealthcare has been a sort of third-party administrator for the $20 billion the federal government spends during a five year period on health care for active-duty and retired military in the western U.S. It means about $1.4 billion in revenue over the course of the five-year contract for UnitedHealthcare's Military & Veterans Services business unit, which processes claims, manages costs and risk as well as detecting fraud and abuse.
UnitedHealthcare manages a 21-state TRICARE West contract that includes 2.9 million beneficiaries in Alaska, Arizona, California, Colorado, Hawaii, Idaho, Iowa except for Rock Island Arsenal area, Kansas, Minnesota, Missouri except for the St. Louis area, Montana, Nebraska, Nevada, New Mexico, North Dakota, Oregon, South Dakota, portions of Texas including El Paso, Utah, Washington and Wyoming.
The problem is a call center capacity issue, though UnitedHealthcare hasn't been penalized by the defense department yet, and it is too soon to know if it will have an affect on second quarter earnings, said Ana Gupte, an analyst with Dowling & Partners Research in Farmington who researches health insurers.
UnitedHealthcare has not said if it will hire more people at its call centers in Colorado and Arizona to handle the surplus of work that came with the new contract.
"United Healthcare has made real, measurable progress in many aspects of its TRICARE West Region contract, working collaboratively and effectively with the TRICARE West Region Office and the Military Treatment Facilities," a spokesman for the insurer, Bruce Jasurda, said in a prepared statement. "To enable TRICARE beneficiaries to continue to receive timely and necessary access to care, the waiver for referral for specialty care for TRICARE Prime beneficiaries in the West Region has been extended through July 2, 2013."
UnitedHealthcare is part of UnitedHealth Group of Minnetonka, Minn., which employs about 4,200 people in Connecticut. The TRICARE West delays are not related to the insurer's work in Connecticut, Jasurda said.