Air Force veteran Michelle Linn worries that her two teenage boys will lose access to an autism treatment center because UnitedHealth Group Inc. (UNH) has been slow to pay the provider.
The nations biggest insurer took over a $20.5 billion contract to coordinate military health services on April 1. Since then, providers and beneficiaries have cited long delays in medical care and payments. It has been one fiasco after another, said Linn, who lives in Colorado Springs, Colorado.
UnitedHealths poor performance prompted a rebuke from the Defense Department, which accused the company of failing to comply with its contract and risking the health of active-duty military, retirees and their families. The failures blemish the insurers reputation and may hurt the companys ability to win more government contracts, said Sheryl Skolnick, a Stamford, Connecticut-based analyst at CRT Capital Group LLC.
The egg on their face is pretty thick and its bright yellow, said Skolnick, who has a buy rating on UnitedHealth. The expectation was they would execute this flawlessly. It was a real stunner to see the headline that the Pentagon wasnt happy.
It would be difficult for defense officials to award another contract to Minnetonka, Minnesota-based UnitedHealth unless the company quickly fixes the snags, Skolnick said in a phone interview.
UnitedHealth cracked the U.S. military market with the contract, awarded in March 2012. The Pentagon spent almost $61 billion on health care during the year that ended Sept. 30, 2012, said Wayne Plucker, a global industry manager at Frost & Sullivan, a consulting and market research firm based in Mountain View, California.
The Colorado Springs area, home to Fort Carson, Peterson Air Force Base and the U.S. Air Force Academy, is part of the 21-state western coverage area under the contract for the militarys Tricare health program. Other states covered in the contract include California, Hawaii, Minnesota and Arizona.
Jonathan Woodson, assistant secretary of defense for health affairs, will hold a telephone conference call today with Fort Carson health facility officials to discuss unresolved issues and challenges caused by the transition to UnitedHealth, Cynthia O. Smith, a Defense Department spokeswoman, said in a phone interview.
Bruce Jasurda, a UnitedHealth spokesman, said the company has conducted extensive training of its staff to ensure consistent processing. Patients have complained of delays as the contractor has struggled with a backlog in specialty-care referrals and authorizations for medical services.
The queue of pending referrals and authorizations have been largely eliminated, Jasurda said in an e-mail.
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UnitedHealth’s Pentagon Failure Seen Risking Future U.S. Awards