The military health division of UnitedHealth Group Inc. has filed a suit in the U.S. Court of Federal Claims to protest a decision awarding a $23 billion military health care contract to a competitor.

UnitedHealth, Minnetonka, Minn. (NYSE:UNH), says other bidders have been promising to make unrealistic cuts in TRICARE provider reimbursement rates.

If carriers go through with the reimbursement cut guarantees, that could reduce TRICARE enrollees’ access to providers, UnitedHealth says.

“The Pentagon disregarded its own stated goals for this contract,” Lori McDougal, chief executive of the UnitedHealth military health division, says in a statement.

Humana has argued that it already has proven its ability to get good discounts from TRICARE network providers.

TRICARE

The TRICARE program manages health care for soldiers, veterans, and military dependents away from health care facilities for military personnel and veterans.

The South Region handles care for about 3 million people in Alabama, Arkansas, Florida, Georgia, part of Kentucky, Louisiana, Mississippi, Oklahoma, South Carolina, Tennessee and much of Texas.

The TRICARE Management Activity, the U.S. Defense Department arm that oversees TRICARE, awarded the South Region contract to UnitedHealth in July 2009, and it awarded the West Region contract to another company around the same time.

UnitedHealth has been engaged in rounds of appeals and counter appeals involving Humana Military Healthcare Services, a unit of Humana Inc., Louisville, Ky. (NYSE:HUM), for the South Region contract ever since. In the South Region, Humana is the incumbent.

UnitedHealth has been competing with TriWest Healthcare Alliance Corp., Phoenix, for the West Region contract.

Each contract includes a base period of about a year and 5 additional 1-year renewal options.

The U.S. Government Accountability Office (GAO) decided earlier this month to uphold a recent decision awarding to contract for the region to Humana.

The new South Region contract is set to start April 1, 2012.

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