UnitedHealth Awarded $20B Military Contract After Protest

UnitedHealth Group persuaded the government to revisit its 2009 decision to award a U.S. Department of Defense contract to TriWest; the bidding process was reopened, and the contract has now been awarded to UnitedHealth Group.

UnitedHealth Group, Inc., on Monday announced that it was awarded a $20.5 billion contract to provide health care services for members of the military in 21 states-a contract that it had lost three years ago.

Minnetonka-based UnitedHealth formally protested the 2009 decision by Tricare Management Activity-the military's health-care program-to award the contract to Phoenix-based TriWest Healthcare Alliance Corporation. UnitedHealth said at that time that the protest related to the bid review process, and Tricare in April 2011 agreed to reopen the bidding process.

TriWest said in a Friday press release that it is “extremely disappointed” with the government's reversed decision. “At this time, we will seek to ascertain whether it was appropriate and fair, and to determine our future course of action,” TriWest said.

The contract has been awarded to UnitedHealth's military and veterans services business unit. Under the agreement, the company will provide health care services for active duty and retired military service members and their families in 21 western states, including Minnesota.

UnitedHealth will provide contract and claims processing, as well as management support, and it expects to receive about $1.4 billion for its administrative services over the course of five years, beginning in April 2013.

“We believe service members and their families will benefit from the Department of Defense's careful consideration of this contract, given the need to provide the highest quality of care while also controlling health care costs,” Lori McDougal, CEO of UnitedHealth's military and veterans services, said in a statement. “We are committed to working with the Department of Defense to ensure beneficiaries have access to cost-effective, quality, and innovative care, and we are grateful for the opportunity to deliver exceptional care and service for Tricare beneficiaries in the West Region.”

UnitedHealth last year also filed a protest regarding a separate $23.5 billion contract for 11 states in Tricare's southern region. That contract was awarded to UnitedHealth in 2009 but then rescinded and given to Louisville, Kentucky-based Humana Military Healthcare Services. The government rejected that protest by UnitedHealth.

UnitedHealth Group is Minnesota's largest public company based on its revenue, which totaled $101.9 billion in 2011.