UnitedHealth Group's revenue from government programs is about to get much bigger.
The Minnetonka-based health insurer announced late Monday it has landed a multibillion-dollar contract from the Defense Department to manage health benefits for military members, veterans and their dependents in the southern part the country.
The five-year contract covers about 3 million beneficiaries of TRICARE, the Defense Department's military health program. It begins April 1, 2010, with the transition period beginning immediately.
The total contract is valued at $21.8 billion, of which $20.3 billion is forecast to go directly to hospitals, clinics and doctors who provide the care. The remaining $1.5 billion will go to UnitedHealth for processing claims, managing provider networks and for other forms of customer service.
"We believe that bringing together the proven achievements of the military health system with UnitedHealth Group's capabilities will further enhance the effectiveness and quality of health care provided to TRICARE beneficiaries," said Stephen Hemsley, UnitedHealth Group chief executive.
Those TRICARE beneficiaries are in Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, Oklahoma, South Carolina, Tennessee, and parts of Texas.
UnitedHealth, the country's biggest health insurer by revenue, has steadily expanded its managing of benefits for government health programs.
Of its total 2008 revenue of $81.19 billion, $28.1 billion came from its Medicare business, Ovations. Another $6 billion came from its Medicaid business, Americhoice.
