Dive Brief:
- UnitedHealthcare has lost an appeal over its exclusion from Tricare, the federal government's health insurance contracts for the military.
- The insurer currently serves as one of three companies serving the Tricare system. It has the West of the U.S., while Humana has the South and Centene has the Northeast.
- Under a reorganization by the U.S. Department of Defense, there will only be two Tricare regions next year rather than three, and UnitedHealthcare was the one to lose out. Humana will now serve the former South and Northeast regions that were combined into one East region, and Centene will take over the West.
Dive Insight:
The contract shake-up is a major disappointment for UnitedHealthcare. The company reportedly bid on both contracts that went to its rivals and lost appeals over both those losses, the Star Tribune reported. The deals are said to be worth a combined total of up to $58 billion over five years.
UnitedHealthcare lodged its appeal in August, and the decision from the U.S. Government Accountability Office (GAO) came this month to uphold the new contracts.
The military's reduction to two Tricare regions was said to be an effort to reduce costs, administrative variation, and changes for mobile military families as they transition between assignments.
The news didn't appear of much concern to investors, given that its stock Tuesday only went down five cents per share to $152.23, the Star Tribune noted.
As previously noted, UnitedHealth's appeal was worth a shot considering that it got its current contract by appealing a previous bidding process it had initially lost.