UnitedHealth protests $23B military contract to Humana

UnitedHealth Group (NYSE: UNH) is protesting the Department of Defense's recent decision to let Humana (NYSE: HUM) continue providing military health coverage through its Tricare program. The contract is worth roughly $23 billion.

In a letter to the General Accounting Office, UnitedHealth alleged the Defense Department violated federal procurement law by awarding a Tricare contract for the 10-state South region to Humana. The letter triggered a temporary hold on Humana's contract, according to Business First.

Humana has run Tricare in the south since 1996. It lost that contract to UnitedHealth in 2009, but won it back in February after convincing the GAO that the selection process was flawed.

The GAO sided with Humana against UnitedHealth in a legal decision in October 2009, saying the UnitedHealth contract should be reconsidered because Tricare officials failed to consider discounts available to the government from Humana's established network of providers, reports the Minneapolis Star-Tribune.

UnitedHealth also claims Humana changed its bid since 2009, offering steep discounts that will pay doctors and hospitals below rates paid in the Medicare system. Those discounted payments ultimately could force doctors to leave the military healthcare network, according to Reuters.

The GAO will decide on the merit of the UnitedHealth complaint by June, notes the Star-Tribune.

To learn more:
- see the Business First story
- read the Minneapolis Star-Tribune article
- check out the Reuters piece

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