INSIGHTi
TRICARE’s Next Generation Contracts: T-5
Updated April 21, 2023
The Department of Defense (DOD) administers a Military Health System (MHS) that provides health care
entitlements authorized in Title 10 of the U.S. Code (Chapters 55 and 56) and is organized under the
TRICARE program. The TRICARE program offers health care benefits to approximately 9.6 million
beneficiaries in DOD hospitals and clinics (i.e., military treatment facilities or MTFs) and through
networks of participating civilian health care providers. The Defense Health Agency (DHA) administers
the TRICARE program and contracts with several managed care support organizations to deliver health
care entitlements.
In recent years, Congress has demonstrated sustained interest in the MHS by enacting TRICARE reforms
(see Section 705 of the National Defense Authorization Act for 2017; P.L. 114-328) to require increased
access to care, improved health outcomes and health care quality, enhanced beneficiary experience, and
lower per capita costs. Many of these reforms are, or are in the process of being, integrated into the
TRICARE contracts. On April 15, 2021, DHA released a request for proposals (RFP) for the next
generation of TRICARE contracts, called T-5, which incorporate congressionally mandated reforms.
This Insight provides an overview of T-5, DHA’s acquisition strategy, and the timeline for awarding the
new contracts.
What is T-5?
DHA envisions that T-5 would supplement existing MTF resources with contracted networks of U.S.
health care providers to achieve an “integrated healthcare delivery system.” DHA intends to award one
T-5 contract for each of its two geographic regions (TRICARE East and TRICARE West). T-5 contract
awardees would perform tasks organized under a variety of categories, many of which existed in previous
iterations of TRICARE contracts, including
claims processing,
enrollment process management,
health care finder and referral services,
establishment and maintenance of adequate provider networks,
customer services for beneficiary network providers,
medical management, and
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clinical quality improvement programs.
The RFP outlines contract requirements that DHA anticipates using to address congressionally directed
reforms that stipulate value-based care and commercial health insurance best-practices. These
requirements include
“advanced primary care practices” (also called patient-centered medical homes) in
TRICARE networks;
“advanced care management” (predictive analytics and care collaboration tools to
manage patients with complex needs);
incentives to “motivate providers to invest in and adopt new approaches to care
delivery;”
partnerships with “high-performing, high-value” providers/facilities to serve as “Clinical
Centers of Excellence”;
alternative provider payment and reimbursement models; and
cooperation in future demonstration projects that contract with other health care
organizations (separate from T-5) to provide TRICARE benefits.
T-5 is to provide services for beneficiaries in the 50 states and District of Columbia. The TRICARE
Overseas Program contract (i.e., TOP-2021) offers services for beneficiaries residing in other U.S.
commonwealths and territories and outside the United States.
DHA’s acquisition strategy and timeline for T-5
DHA’s 2020 report to the Senate Armed Services Committee on the T-5 contract states the new contracts
are to “provide the best readiness of the military at the best price in an integrated system that is responsive
to beneficiary experience of care.” The RFP announcement states “full and open competitive source
selection, using best value trade-off procedures” will be used to award the contract. The T-5 contracts
have a potential 10-year performance period, including
transition-in activities (12 months);
eight option periods for health care delivery (1-year periods);
transition-out activities (18 months); and
if needed, a 6-month extension of services.
On December 22, 2022, DOD announced selectees and the estimated value of the T-5 contracts:
Humana Government Business, TRICARE East, ($70.9 billion), and
TriWest Healthcare Alliance, TRICARE West, ($65.1 billion).
Health Net Federal Services, the current TRICARE West contractor under the T-2017 contracts, filed a
bid protest with the Government Accountability Office (GAO) on January 17, 2023. GAO dismissed the
bid protest after DOD reportedly “elected to take corrective action to address concerns in the
procurement.” On April 20, 2023, DHA “reaffirmed the award of the TRICARE West region” to TriWest
Healthcare Alliance.
Figure 1 depicts estimated T-5 contract milestones, from 2019 through 2032, with all options exercised.
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Figure 1. DHA T-5 Acquisition Timeline
Source: CRS graphic based on email communication with DHA officials in September 2020; SAM.gov, Notice of
Solicitation: HT9402-20-R-0005, “Request for Proposals TRICARE Managed Care Support (T-5),” April 15, 2021; DOD,
"DoD Awards $136 Bil ion TRICARE Managed Care Support Contracts," press release, December 22, 2022; GAO Bid
Protest Decisions and the Docket, “Health Net Federal Services, LLC (HT9402-20-R-0005),” February 9, 2023; DHA,
“Defense Health Agency Reaffirms Award of TRICARE West Region Contract to TriWest Healthcare Alliance,” April 20,
2023.
Note: Dash line = hypothetical milestone dates.
DHA evaluation of T-5 contract bids
In evaluating submitted bids for the T-5 contracts, DHA assessed four factors that represent best value to
the government:
Technical Rating (how well the technical solution will meet the government’s
requirements) and Technical Risk Rating (how much risk the technical solution poses to
the contract’s schedule, cost, performance, or government oversight);
Past Performance (how well an offeror has conducted recent, relevant work);
Price/Cost to the government; and
Small Business Participation.
A single vendor may not be awarded T-5 contracts for both TRICARE regions.
Considerations for Congress
Congress may consider the following lines of inquiry to oversee DHA’s transition to the T-5 contracts.
On December 23, 2022, DHA issued an extension of the T-2017 contracts to no later than
June 2025. DHA stated, “several projects to support T-5 requirements development were
cancelled, disapproved, delayed, or reduced in scope, which negatively impacted T-5
outcomes and placed the acquisition schedule at risk.” Is DHA capturing lessons learned
during the T-5 acquisition process for application in the procurement of the next iteration
of TRICARE contracts?
What actions will DHA implement to ensure beneficiaries receive seamless and timely
access to quality care if there is an additional bid protest filed or potential litigation, and
during the contract transition process?
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The T-5 acquisition strategy summary states DHA’s plan to “seek any necessary
legislative relief” to implement further TRICARE reforms. What new authorities are
needed to make such reforms?
Author Information
Bryce H. P. Mendez
Analyst in Defense Health Care Policy
Disclaimer
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