Maryland to seek reversal for Sierra

THE BALTIMORE SUN

The state's head of economic development said yesterday that he will push the Pentagon to reverse its decision not to extend a multibillion-dollar military health care management contract for Sierra Military Health Services Inc. The current contract expires in January and its loss could cost Baltimore 500 jobs.

Aris Melissaratos, secretary of business and economic development, said he hopes to organize a meeting between top Maryland politicians and Secretary of Defense Donald H. Rumsfeld.

"My emphasis is, 'Let's try to find a way to reverse this thing,'" Melissaratos said.

Though Melissaratos acknowledged that the chances of success are "minimal," he said he hoped to win some business for Sierra.

"I would think protests hardly ever result in a reversal. It is a ... function to allow the winners possibly to partner with the losers," he said.

Since 1998, Baltimore-based Sierra, which employs 750 people, 500 of whom work in the city, has managed the military's Tricare health care plan for 1.1 million active troops, retirees and dependents in 13 states, including Maryland, and the District of Columbia.

Melissaratos said Sierra received about $750,00 in state incentives for employee training, work force development and office space to locate in Baltimore. He said the state would try to get some of the money back if Sierra shuts down.

Sierra recently bid to have its management of the health plan extended through a larger, $2.2 billion contract covering 23 states and the District and about 2.8 million people after the Pentagon consolidated 12 regions into three.

But on Thursday, the Defense Department awarded that contract to Health Net Federal Services Inc, which is based in Rancho Cordova, Calif., and for 15 years has managed Tricare health programs for the Pentagon.

Humana Military Healthcare Services in Louisville, Ky., and TriWest Healthcare Alliance Corp. in Phoenix won the contracts for the other two regions.

Sierra executives and officials with the parent Sierra Health Services Inc. of Las Vegas will meet with Defense Department officials today in Aurora, Colo., for a discussion of why they lost the contract, said Peter O'Neill, head of public and investor relations for Sierra Health.

After the meeting, the company will decide whether to challenge the Defense Department's decision.

"We want to know the reasons behind it," O'Neill said. "Once we learn ... we will go back and regroup and we will figure out whether or not we will file a formal protest."

If Sierra protests, Melissaratos said, he will recruit a group to meet with the Defense Department that will include Maryland's two Democratic senators, Paul S. Sarbanes and Barbara A. Mikulski, and three of its U.S. representatives - Democrats Benjamin L. Cardin and Elijah E. Cummings, and Republican Roscoe G. Bartlett.

He said Gov. Robert L. Ehrlich Jr. will place a call to President Bush.

"I think that we need to ... find a way to support the protest and build momentum for reversing the decision," Melissaratos said.

Devika Koppikar, press secretary for Cummings, said the congressman would back any Sierra protest.

"Our legislative staff has been in touch with Sierra," Koppikar said. "We have been working with them. It is going to be a tremendous loss to the area."

Susan Sullam, Cardin's press secretary, said the representative "is going to do everything he can do to help them. The congressman believes they did present a quality job."

Mikulski, in a statement, said she was "very concerned that hundreds of Marylanders could lose their jobs" as a result of the decision, and that thousands of people in the state who rely on Tricare will be forced to switch to another company.

An article in yesterday's Business section misstated the expiration date of Sierra Military Health Services Inc.'s contract with the Defense Department. The contract will expire in September 2004.
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