Health Net Inc. has protested against the U. S. Government Accountability Office's (GAO) award of a billion-dollar military health-care contract to Aetna Inc.

The replacement of Health Net with Aetna taking over the programme in the North in July, and UnitedHealth Group Inc. replacing Humana Inc. in the South, was protested by both Health Net and Humana after the decision. Health Net said in its filing with the Securities and Exchange Commission said it was not known what actions the Defense Department would take in response to the U. S. Government Accountability Office's recommendations, publicly unknown to Health Net or Humana.

Humana's protest citing award criteria and procedural discrepancies in requesting proposals learnt was upheld last week.

The Tricare North Region Managed Care Support contract will add $1.1-billion to Aetna's net revenue over 5-years. Under the military contract beginning April, Aetna will administer health care benefits to active duty service members, retirees and their families in 21-states.

The change in vendors for the new contracts has dealt a significant blow to Health Net, who derived a major share of its earnings from the Tricare programme that serves military personnel, retirees and families.

Supported by Blue Shield of California, TriWest Healthcare Alliance replacing the Civilian Health and Medical Programme of the Uniformed Services (CHAMPUS), won a $16-billion contract for providing coverage in the West to military retirees and the families of active-duty personnel.

The U. S. military health-insurance programme - TriCare Management Activity that awarded the contracts, provides services for about 9.4-million members of the military, their families and retirees. Split into three regions, the programme requested bids from managed care companies for the first time in 5-years. According to the Defense Department, the new contracts have a base period of 10-months and five one-year options.