Hartford Health insurer Aetna Inc said on Wednesday it has been disqualified from a multibillion-dollar contract to provide services under a U.S. Defense Department health care plan, Reuters reports.
The contract, covering the northern region of the department’s TRICARE program, was awarded to the current provider, Health Net Inc  which argued that Aetna had an unfair advantage because it had hired a TRICARE insider.
The $2.8 billion contract includes five one-year renewal options for a total potential value of nearly $17 billion.
The U.S. Government Accountability Office upheld Health Net’s protest last November. It included the argument Aetna should be excluded from the competition because it hired a former TRICARE chief of staff to prepare its proposal.
Aetna said it is reviewing the basis for the decision and will seek to determine the best path forward.
“We believe we acted appropriately throughout the procurement process and that no nonpublic information was ever used in preparing the bid,” Susan Peters, president of Aetna’s government health plans, said in a statement.
The military health plan also said it would hold a new round of bidding on a contract covering its southern region, which was awarded last year to UnitedHealth Health Group Inc. That contract will continue to be serviced through next March by Humana Inc, which protested the award to UnitedHealth.
“We are eager to move forward with this process and intend to submit our best offer to the government,” Dave Baker, head of Humana’s military program, said in a statement.
Humana also reiterated its outlook for 2010 earnings per share of between $5.55 and $5.65.
TRICARE, which administers the health care plan for more than 9.6 million members of the uniformed services, retirees and their families, said an agency-level protest regarding the western region award to TriWest Healthcare Alliance Corp is still pending. The three regional contracts were awarded in July 2009.
Aetna shares, which closed at $29.22 on the New York Stock Exchange, were 1.4 percent lower at $28.81 after hours. Health Net shares, which closed at $22.15, were slightly lower at $22.12, while the shares of Humana, which closed at $46.57, and UnitedHealth, which closed at $30, were unchanged.
