UnitedHealthcare is continuing to try to win the South Region Tricare contract.

The military division of UnitedHealthcare, a unit of UnitedHealth Group Inc., Minnetonka, Minn. (NYSE:UNH), has filed a formal protest of the U.S. Defense Department’s recent decision to award the South Region contract to unit of Humana Inc., Louisville, Ky. (NYSE:HUM).

UnitedHealthcare is competing with Humana for a chance to provide health coveragesoldiers for 3 million Tricare enrollees.

Tricare manages health benefits for military personnel, dependents and retirees who get care away from military and Veterans Department facilities.

The new contract could last about 6 years and has a total potential estimated value of about $22 billion.

The old contract expired March 31, 2010.

Under the old contract, Humana was managing delivery of health benefits for 3 million active-duty military personnel, dependents and military retirees in the South region, which now includes Alabama, Arkansas, Florida, Georgia, part of Kentucky, Louisiana, Mississippi, Oklahoma, South Carolina, Tennessee and most of Texas.

The Defense Department awarded the new contract to UnitedHealthcare in July 2009, and Humana filed a protest.

Humana told the GAO that there were discrepancies between the award criteria and procedures described in the original request for proposals and the criteria used by the department in making the contractor selection.

In February, the Defense Department’s Tricare Management Activity unit changed course and awarded the contract to Humana.

One concern is that Humana’s bid depends on Humana paying doctors and hospitals rates far below the rates paid by Medicare, and those low rates could hurt the Tricare South Region system, UnitedHealthcare says.

More Tricare coverage from National Underwriter Life & Health: