NEW YORK (Reuters) - UnitedHealth Group Inc (UNH.N) is protesting the award of a military contract to rival health insurer Humana Inc (HUM.N), which had wrested away the bid from UnitedHealth last month.
UnitedHealth said it filed a formal protest on Monday over the U.S. Department of Defense’s decision to reverse the company’s award of the contract and grant it to Humana.
The Tricare South region contract involves health benefits for 3 million active and retired military members and their families, according to UnitedHealth.
UnitedHealth won the contract in July 2009, but Humana protested to the Government Accountability Office. Late last month, the government reversed its decision and awarded the contract to Humana, whose shares rose as the company also lifted its 2011 forecast on the news.
UnitedHealth said Humana offered steep discounts in its latest bid that will pay doctors and hospitals below rates paid in the Medicare system. Those discounted payments ultimately could force doctors to leave the military healthcare network, UnitedHealth claimed.
UnitedHealth said its latest protest would trigger a stay of the award.
Humana shares were down 2.5 percent in afternoon trading, while UnitedHealth was off 2.1 percent on a down day for health insurance stocks.
Reporting by Lewis Krauskopf; Editing by Bernard Orr