UnitedHealth Gets 2nd Chance at $17B Gov’t Contract

Following a formal protest launched by UnitedHealth, the U.S. military's health-care program has agreed re-open the bidding process for a $17 million contract that was previously awarded to Phoenix-based TriWest Healthcare Alliance Corporation.

UnitedHealth Group, Inc., will get a second chance to win a $17 billion government health insurance contract.

The contract-under which the Minnetonka-based company would provide health benefits to more than 2.7 million military members, veterans, and their families in 21 Western states-was awarded to Phoenix-based TriWest Healthcare Alliance Corporation in July 2009.

But UnitedHealth formally protested, and Tricare Management Activity-the military's health-care program-said Thursday that it would “re-evaluate the award.”

Tricare has agreed to re-open the bidding process and “allow the existing competitors to furnish refreshed data.” Tricare will then look at the revised proposals and make a final decision later this year.

UnitedHealth spokesman Matt Burns, reached by phone Friday morning, wouldn't reveal the specific grounds on which the company launched its protest. He would say only that the problem was with the bid review process.

Tricare spokesman Austin Camacho also told Twin Cities Business on Friday morning that he couldn't discuss UnitedHealth's protest because it's “procurement-sensitive information until this is settled.” But he did say that Tricare's source selection team awarded the contract to TriWest after determining that its proposal “delivered the best overall value.” However, a subsequent independent review of the team's decision revealed that the award was “flawed in some ways” and that the team hadn't adequately evaluated the technical aspects of the proposals, Camacho said.

“While we welcome the . . . decision to uphold our protest, we hope the department will keep Tricare beneficiaries foremost in mind as the process moves forward-and not use the resolicitation as a means to request drastic, guaranteed cuts to provider reimbursements,” Lori McDougal, CEO of UnitedHealth subsidiary UnitedHealthcare Military & Veterans Services, said in a statement. “Such a course would invite a race to the bottom, compromising access to quality, affordable care for members of the military and their families.”

Camacho said that dates for the new solicitation process haven't yet been announced.

UnitedHealth is still waiting on word about a separate protest that it filed regarding a $23.5 billion contract for 11 states in Tricare's southern region. That contract was awarded to UnitedHealth in July 2009 but then rescinded and given to Louisville, Kentucky-based Humana Military Healthcare Services in late February. UnitedHealth launched a formal protest last month with the U.S. Government Accountability Office, and the protest prompted a temporary hold on the contract in question.

“We continue to maintain that in both the West and the South, UnitedHealthcare was the superior bidder on value, innovation, and quality,” McDougal said in a Thursday statement. “We will aggressively pursue all administrative and legal options open to us in our mission to serve the health care needs of the military community.”

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.