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UnitedHealthcare dumped from multibillion Pentagon contracts for Tricare

Humana emerges the big winner as decision nearly doubles the number of military beneficiaries served by insurer.

Susan Morse, Senior Editor

The U.S. Department of Defense on Thursday cut out former Tricare West Region contractor UnitedHealthcare and has given the contract to Health Net Federal Services, which also manages the Tricare North Region.

In addition, in the move to cut costs by paring down the number of Tricare regions from three to two, Humana was awarded the contract to manage not only the southern region, which it currently covers, but also the eastern region for the military health program.

The new East Region is a combination of the current south and north regions.

The move doubles the service area for Humana from 3.1 million beneficiaries in the south to about 6 million people in 29 states and the District of Columbia, according to the insurer based in Louisville, Kentucky.

[Also: UnitedHealth shows strong revenue growth but $200 million more in ACA losses than predicted]

UnitedHealthcare had managed the Tricare west region since 2012.

The contract for that region is valued at more than $49 million in the initial phase and up to $17.7 billion over the five-year contract period, according to the MilitaryTimes.

Final disposition of the contract award is subject to the resolution of any protests that may be filed by unsuccessful bidders, the defense department said.

In a statement, UnitedHealthCare said it was evaluating its next steps and looked forward to hearing the government's explanation for its decision.

"We remain committed to serving the healthcare needs of our country's military service members, retirees and their families in the TRICARE West Region," UnitedHealth spokesman Bruce Jasurda said.

[Also: Red Oak Hospital sues UnitedHealth plans, self-insured employers for embezzlement]

Humana was awarded its current Tricare South contract in 2011. This newest contract is the seventh to be administered by Humana Government Business which has maintained a partnership with the Department of Defense since 1996.

"We take deep pride in serving those who have served our nation, so we are very pleased by the DoD's decision," said Orie Mullen, president of Humana Government Business. "This is a tremendous opportunity for us, and we look forward to providing great access to high-quality, innovative and cost-effective health and well-being services to active military members, retirees and their families."

Tricare provides benefits to military service members, retirees and their families. 

Twitter: @SusanJMorse

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