TRICARE’s Next Generation Contracts: T-5

INSIGHTi

TRICARE’s Next Generation Contracts: T-5
Updated February 21, 2024
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 enacted 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,
• 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;
• 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 1-year option periods for health care delivery;
• transition-out activities (18 months); and
• an optional 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 (HNFS), the current TRICARE West contractor under the T-2017 contracts,
filed a bid protest with the Government Accountability Office (GAO) on January 17, 2023. DOD
reportedly rescinded its initial contract awards and “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. HNFS filed a second bid protest, which GAO denied on August 4, 2023,
then filed a bid protest with the U.S. Court of Federal Claims on August 8, 2023. The court originally
denied the bid protest on January 31, 2024 and DOD reportedly began work on contract transition
activities.
Figure 1 depicts estimated T-5 contract milestones, from 2019 through 2034, with all options exercised.

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Figure 1. DHA T-5 Acquisition Timeline

Source: CRS graphic based on emails with DHA officials, September 2020; SAM.gov, Notice of Solicitation: HT9402-20-R-
0005, “Request for Proposals TRICARE Managed Care Support (T-5)”; DOD, “DoD Awards $136 Bil ion TRICARE
Managed Care Support Contracts,” December 22, 2022; GAO, “Health Net Federal Services, LLC (HT9402-20-R-0005),”
February 9, 2023, and August 4, 2023; DHA, “Defense Health Agency Reaffirms Award of TRICARE West Region
Contract to TriWest Healthcare Alliance”; and Court Listener, “Health Net Federal Services, LLC v. USA,” accessed
February 9, 2024.
Note: Dash line = hypothetical milestone dates.
DHA evaluation of T-5 contract bids
DHA assessed bids for four factors that represent the 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.
Considerations for Congress
Congress may consider the following lines of inquiry to oversee DHA’s transition to the T-5 contracts.
• In December 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.” What lessons did DHA learn
during the T-5 acquisition process that can be used to improve the procurement process
for the next iteration of TRICARE contracts?
• DHA intends to shift six states (Arkansas, Illinois, Louisiana, Oklahoma, Texas, and
Wisconsin) from the TRICARE East region to the TRICARE West region under the T-5
contract. Will DHA describe, in the congressionally directed report on “T-5 Contract
Awards,” their plans to ensure beneficiaries, including those in these states, receive
seamless and timely access to quality care during the contract transition process?

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Author Information

Bryce H. P. Mendez

Specialist in Defense Health Care Policy




Disclaimer
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