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Molina Healthcare sues New Mexico, alleging unfair Medicaid bidding process

Molina also said that a contracting consultant for the department had "financial ties" to a company affiliated with the winning bidder.

Beth Jones Sanborn, Managing Editor

New Mexico State Capitol Credit: Google Street ViewNew Mexico State Capitol Credit: Google Street View

Molina Healthcare has filed suit against the state of New Mexico over the loss of a Medicaid contract to manage services for Medicaid recipients worth millions in managed care fees. 

According to a local report, the state said as of Friday it had not received notification of any such lawsuit, but Molina said in a statement sent to Healthcare Finance News that it had filed a lawsuit challenging the state contract loss alleging contracting irregularities by the state Human Services Department.

[Also: Molina hires new CEO to replace fired J. Mario Molina]

Molina also said that a contracting consultant the department used has "financial ties" to a company affiliated with the winning bidder for the Medicaid work, posing a conflict of interest.

The department had announced this month that Molina and United Healthcare had lost the contract and as of 2019 would no longer provide managed care services. They also revealed that they would employ Blue Cross Blue Shield of New Mexico and Presbyterian Health Plan as Medicaid managed care providers, and a new provider Western Sky Community Care, had also been contracted, the local report said.

[Also: After staggering Q2 loss, Molina healthcare scores court victory over $52 million in risk corridor payments]

Molina claimed that HSD's procurement process excluded important stakeholders such as the New Mexico Department of Health, the New Mexico Children, Youth and Families Department, and the Office of Superintendent of Insurance, and that the agency sped up the procurement process without reason. Molina also said that HSD moved up the contract award announcement from March to January, contrary to the request-for-proposal timeline and made a habit of changing evaluation factors during the process, resulting in a lower technical score for Molina based on undisclosed factors.

"The fact that the state rushed the RFP timeline, did not schedule oral presentations, and made the decision in a vacuum, reflects another potential injustice on New Mexico's most vulnerable residents," Daniel Sorrells, president of Molina Healthcare of New Mexico said in a statement. "In addition, the move jeopardizes our work creating successful behavioral health programs, such as our partnership with the Bernalillo County Metro Detention Center and our future goal to scale it to 27 other county jail programs throughout New Mexico." 

The conflict of interest claims hedge on HSD's hiring of an outside firm, Mercer, as a consultant on the RFP. Mercer helped draft and review the proposal, as well as helping with training or "coaching" HSD on how to evaluate the bids. However, Mercer has ties to an affiliate of a successful bidder known as Envolve, a specialty health services company that is a subsidiary of Centene Corporation – the parent of Western Sky, one of the apparent Medicaid RFP winners. 

"This procurement process was competitive and fair. Molina HealthCare has an opportunity to protest following the end of the procurement period," Mary Elizabeth Robertson, a spokeswoman for the Human Services Department said in a local report. "HSD is committed to providing the highest quality services to the people of New Mexico dependent on Medicaid."

Molina is the state's largest Medicaid health plan and serves nearly 224,000 New Mexicans through Medicaid, 5,500 New Mexicans through Medicare, and an additional 29,000 New Mexicans through the health insurance marketplace, or about 58 percent of all New Mexico marketplace members. If Molina leaves the state, 26 percent of New Mexicans receiving Medicaid will be forced to transition, including those receiving behavioral health and substance abuse treatment.

Twitter: @BethJSanborn
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