Feds deny UnitedHealthcare's protest on military contracts

The federal government has denied UnitedHealthcare's protest over a decision this summer to award two large contracts in military health care to rival health insurers.

Minnetonka-based UnitedHealthcare currently is one of three vendors with a multiyear contract to provide services to military members, veterans and their families through the federal government's Tricare program.

Starting next year, the U.S. Department of Defense will split the country into two regions, rather than three, and announced in July that it would hire two health insurance vendors for the job — Kentucky-based Humana and a division of St. Louis-based Centene Corp.

UnitedHealthcare filed its protest against the decision in August. Earlier this month, the U.S. Government Accountability Office (GAO) issued a final decision to uphold the contract awards.

"I am pleased our new Tricare contracts are moving forward," said Dr. Karen Guice, acting assistant secretary of Defense for Health Affairs, in a statement. "The new contracts demonstrate our continuing commitment to serving the health care needs of our country's military service members, retirees and their families."

In a statement Tuesday, UnitedHealthcare said it "remains fully committed to serving the health care needs of our country's military service members, retirees and their families in the Tricare West Region, including a successful transition."

The new contracts have a combined value of up to $58 billion over multiple years. UnitedHealthcare said it bid on both contracts, and lost protests on both contract awards.

The new contracts combine the South and Northeast states into one East region, where Humana would manage care under the contract awards announced in July. Centene would replace UnitedHealthcare as vendor for the West region.

The government's Defense Health Agency has said that it's switching to a two-region structure to reduce administrative variation and costs. The change also "provides seamless support to a mobile Tricare beneficiary population, especially for those families with special needs as they transition from one assignment to another," the agency said in an August statement.

UnitedHealthcare is the nation's largest health insurer. UnitedHealth Group, which is the insurer's parent company, employs about 15,000 people in Minnesota.

Its stock was little changed Tuesday at $152.23, down 5 cents a share.

Christopher Snowbeck • 612-673-4744