Nov. 4 (Bloomberg) -- Aetna Inc.’s $16.7 billion contract won in July to provide health insurance to about 2.8 million U.S. military personnel will be reviewed in light of an appeal by Health Net Inc., the companies said.

The Government Accountability Office upheld a protest by Woodland Hills, California-based Health Net, which previously held the contract. The award now goes back to the Pentagon for further review, the companies said in a separate statement and filing.

The Tricare North Region Managed Care Support contract would add $1.1 billion to Aetna’s net revenue over five years, the Hartford, Connecticut-based company said. Under the military contract scheduled to begin in April, Aetna would administer health care benefits to active duty service members, retirees and their families in 21 states.

“We will continue to cooperate with the Department of Defense as it considers the GAO’s recommendations,” said Susan M. Peters, president of Aetna Government Health Plans. “We stand ready to serve our nation’s military personnel and their families in the North Region, and help them access the best possible health care.”

Health Net said it didn’t know whether the GAO’s recommendation would ultimately change the outcome of the contract award.

Public Release

“Health Net anticipates the GAO will publicly release additional information regarding its protest decision, including the grounds for the decision and the remedy recommended by the GAO to the Department of Defense,” the company said in its filing.

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

To contact the reporter responsible for this story: Shannon Pettypiece at spettypiece@bloomberg.net.

Last Updated: November 4, 2009 19:18 EST