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Centene Corp. loses $65B defense health contract

Centene said in a statement that "we are disappointed by the DHA's decision."
Centene's headquarters in Clayton.

CLAYTON, Mo. — The U.S. Department of Defense on Thursday bypassed Centene Corp. (NYSE: CNC) in awarding $136 billion in contracts for the health insurance provided to active-duty military members, a blow to the Clayton giant and St. Louis' largest public company by revenue, which has long held some of the work.

The Defense Health Agency said it was awarding the TRICARE contract for its west region to TriWest Healthcare Alliance of Phoenix, owned by Blue Cross Blue Shield nonprofits including Blue Shield of California, Regence Blue Shield and BCBS of Arizona, along with the University of Colorado Hospital Authority and the University of New Mexico Hospital.

The $65.1 billion contract, held by Centene for years through its Health Net Federal Services subsidiary, includes a 12-month transition-in period plus eight one-year option periods, a Defense Department spokesman said. The west includes 1.5 million beneficiaries in Arkansas, Illinois, Louisiana, Oklahoma, Texas and Wisconsin.

Centene said in a statement that "we are disappointed by the DHA's decision."

"We have a debriefing scheduled with the DHA in early January and have requested details to which we are entitled under the government's procedure rules," it said. "Following receipt of this information, we will be in a position to determine our options regarding the Agency's decision."

Centene this year lost another major award, when the California Department of Health Care Services announced in August its intent to award contracts for Medicaid managed care contracts to Centene’s subsidiary, Health Net of California Inc., in nine counties but not in others, including Los Angeles and Sacramento counties. Centene is preparing to take legal action if a California state agency rejects its protest over how bidders were chosen. And Centene, which has had a stagnant stock price this year, has grappled with allegations of improper Medicaid billing to states. It's set aside $1.1 billion to resolve the claims, which are now also the subject of a shareholder lawsuit against ex-Centene executives.

Responding to Thursday's decision, TriWest said in a statement that several entities were also assisting it with the work: Accenture, Blue Health Intelligence, BizFlow, Cognitive Medical Systems, eviCore, EXL, FindHelp, HealthSparq, IBM, MDLIVE, MyRevelations, Omada, PsychArmor, PGBA, Signature Performance and Wells Fargo.

It also said it previously held TRICARE contracts with the Defense Department for 17 years, beginning in 1996 through 2013, also in the western U.S.

Click here to read more of the story on the St. Louis Business Journal website. 

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