GAO rejects UnitedHealth protest

  • Article by: JIM SPENCER
  • Star Tribune
  • June 14, 2011 - 8:28 PM

WASHINGTON - UnitedHealth Group got more bad news Tuesday in its effort to secure a $20 billion medical-care contract for 3 million members of the military, retirees and their families in the southern region of the United States. The Government Accountability Office (GAO) did not agree with a protest by UnitedHealth that was designed to retake the lucrative contract.

UnitedHealth won the Tricare southern region contract in 2009, taking it away from the existing provider, Humana. But last year the GAO said the government erred in giving UnitedHealth the contract because it failed to consider Humana's more economical offer. The GAO recommended the contract be returned to Humana.

On Tuesday, the GAO reinforced that decision. It declined to uphold a UnitedHealth complaint that the doctor fees Humana used to win the contract were so low that they would not attract enough physicians to treat the pool of patients. The GAO's recommendation that the contract go to Humana stands. The Department of Defense has the final say, but rarely overrules the GAO.

UnitedHealth must now decide if it will take the next available step -- a legal challenge. In a statement late Tuesday afternoon, the company left that option open.

"We intend to pursue all available options, including legal action, to ensure any Tricare south contract award by the Department of Defense provides the best access to quality health care for military members and their families," the company said.

However, a lawsuit may become a moot point if UnitedHealth wins the Tricare western region contract. The Minnetonka-based company did not win that $15 billion contract, but it convinced the Department of Defense that technical mistakes in the review process were significant. A new solicitation is now underway, pitting UnitedHealth against the existing contract holder, TriWest Healthcare Alliance Corp.

If UnitedHealth prevails in the west, it cannot get the south contract. Government regulations forbid a single company from administering health care in more than one of Tricare's three national regions.

Jim Spencer • 202-408-2752

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