Highmark Unit Loses Military Dental Program Contract to MetLife

The U.S. Government Accountability Office has upheld a Department of Defense contract award of the TRICARE dental coverage program to Metropolitan Life Insurance Co., and denied a protest of that award by a unit of Highmark Inc.

United Concordia Cos. Inc., a unit of Pittsburgh-based Highmark, protested the contract award to MetLife, challenging various aspects of the agency's source selection decision, including its evaluation of proposals under price evaluation factors, according to the GAO.

The award included a base year and five one-year options. If all options are exercised, the total contract amount is $1.9 billion, TRICARE said earlier this year.

United Concordia held the dental program contract for 15 years. Dental coverage under the new contract starts Feb. 1, 2012, after a 12-month transition from United Concordia.

MetLife (NYSE: MET) acknowledged United Concordia filed a protest with the federal court of claims. MetLife said it looks forward "to the resolution of the protest so that we can complete the important work necessary to deliver dental benefits to eligible members of the armed services and their dependents."

United Concordia expects to serve as the TRICARE dental program contractor through midyear 2012, or when the new contractor takes over, it said in a statement.

More than 1.9 million beneficiaries buy dental coverage through TRICARE. "New business opportunities established this year, independent of the TPD contract, are creating significant business growth for United Concordia, offsetting the impact of the TDP contract transition in 2012," United Concordia said.

Last month, UnitedHealth Group (NYSE: UNH) won a protest of a health-services contract worth about $17 billion over about five years, convincing the Pentagon to reconsider its decision to award the contract to TriWest Healthcare Alliance.

The protest, lodged by UnitedHealthcare's military and veterans business, centered upon the 2009 award of a TRICARE West region contract. The West region, one of three TRICARE regions, provides health benefits to more than 2.7 million active and retired members of the military and their families in 21 Western states.

The protest of the West region is separate from a similar protest UnitedHealth lodged against the TRICARE South region contract (BestWire, March 3, 2011). UnitedHealth had won the Southern region contract, but the Defense Department subsequently gave the $23.5 billion contract to Humana Military Healthcare Services (BestWire, March 3, 2011).

Highmark Inc. currently has a Best's Financial Strength Rating of A (Excellent). United Concordia Cos. Inc. currently has a Best's Financial Strength Rating of A- (Excellent). Metropolitan Life Insurance Co. currently has a Best's Financial Strength Rating of A+ (Superior).

(By Fran Matso Lysiak, senior associate editor, BestWeek: fran.lysiak@ambest.com)