UnitedHealth Group Inc. has been dealt a blow in a bid to secure a multibillion-dollar military benefits contract after a lengthy fight with Humana.
After awarding the contract to UnitedHealth in June 2009, the U.S. Department of Defense reversed course on Friday and gave it instead to Humana, the government's current vendor.
The contract, which provides health care benefits to soldiers and family members in 10 southern states, is worth an estimated $23.5 billion over five years. About 93 percent of that goes to hospitals, clinics and doctors who provide the care. The insurer collects fees for processing claims, managing provider networks and providing customer service.
Minnetonka-based UnitedHealth said the contract fight isn't over.
"The Department of Defense had it right nearly two years ago when it awarded this contract to our company," UnitedHealth said in a statement. "We disagree with this change in course, which resulted from a flawed, uneven and extensive appeals process. We will aggressively pursue all options available to us."
The Defense Department said its decision was made "for convenience of the government" and was based on a review that resulted in a "different 'best value' selection," according to a news release.
The military's health care program, known as TRICARE, has been administered by Humana Military Healthcare Services Inc. in the southern region since 1996.
About 2.9 million of the more than 9.6 million military members, veterans and their dependents covered under TRICARE live in the southern region of Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, Oklahoma, South Carolina, Tennessee and most of Texas.
