UHG Protests Gov’t Contract, MN Delegates Weigh In

UnitedHealth Group filed a formal protest regarding a federal health-care contract that the government recently rescinded, and four members of Minnesota's Congressional delegation have supported the company's position.

UnitedHealth Group is protesting a U.S. Department of Defense (DOD) decision to rescind a $23.5 billion contract-and four members of Minnesota's Congressional delegation sent a letter in support of that protest.

Minnetonka-based UnitedHealth on Monday filed a formal protest with the U.S. Government Accountability Office (GAO). The protest prompted a temporary hold on the contract in question, which was recently awarded to Louisville, Kentucky-based Humana Military Healthcare Services.

In July 2009, Tricare Management Activity-the military's health-care program-awarded to UnitedHealth a contract under which it would have provided health-care benefits to soldiers and family members in 11 southern states. The contract's total value over five years was estimated at $23.5 billion.

But Tricare said in late February that it terminated the contract with UnitedHealth “for convenience of the government” and planned to instead award it to Humana Military Healthcare Services.

Humana protested the government's decision to award the contract to UnitedHealth, claiming that the process used to select a contractor was different than what was outlined in its request for proposals.

The GAO explored Humana's assertion-and it agreed with Humana, which prompted Tricare to review contract proposals and “resulted in a different 'best value' selection,” according to Tricare.

Humana has operated Tricare in the southern region since 1996. The company has continued to run the program as the contract dispute has ensued-and UnitedHealth claims that Humana has benefited in its role as the overseer of the program.

UnitedHealth now alleges that Humana changed its bid within the two years since the contract was initially awarded to UnitedHealth, adding that the changes reflect payments to doctors and hospitals that are so low that doctors will drop out of the Tricare network and thus hinder patients' care.

U.S. Senators Amy Klobuchar and Al Franken and U.S. Representatives John Kline and Erik Paulsen together sent a letter to Deputy Secretary of Defense William J. Lynn, III, asking him to support the Government Accountability Office's hold on the contract.

“Increased competition for this contract will help ensure that the men and women of our armed forces receive the highest quality health care available to them,” the group wrote. “If DOD overrides the GAO's automatic stop work order at this time and begins to transition to the new contract, the competitive position of UnitedHealth Group will be weakened, the competitive process of the overall contract bid will be compromised, and the health security of our service members may be jeopardized.”

The four delegates requested that the “procedural status quo” be maintained during the appeals process until the matter has been resolved.

Health-care delivery under the contract in question is set to begin April 1, 2012.

UnitedHealth is Minnesota's largest public company based on its revenue, which totaled $94.2 billion in 2010. With 11,500 Minnesota employees, it's also among Minnesota's 15 largest employers.

Tricare administers health plans for 9.6 million members of the armed services and their families, including about 3 million in the southern region that's covered by the contract in question.