The state Human Services Department on Thursday rejected the bid protests of four health care companies that weren’t selected by the department for contracts to serve Medicaid recipients beginning next year.

The department’s action clears the way for the companies to take their challenges of the contracting process to state District Court.

At stake for the companies are billions of dollars in contracts to serve recipients of managed care under Medicaid, the health care program for low-income New Mexicans.

The outcome of the legal fight also will determine whether some 300,000 Medicaid recipients will be shifted to new providers effective Jan. 1.

The Human Services Department announced in January that it had selected Presbyterian Health Plan, Blue Cross Blue Shield of New Mexico and Western Sky Community Care to provide Medicaid managed care beginning in 2019.

Presbyterian, Blue Cross, Molina Healthcare of New Mexico and United Healthcare of New Mexico are the current providers of Medicaid managed care.

Molina, United and two other losing bidders for the new contracts filed protests over the purchasing process with the Human Services Department. The agency notified the losing bidders in letters dated Thursday that their protests had been denied.

In a statement, Human Services Department spokeswoman Mary Elizabeth Robertson said the decision to award contracts to Presbyterian, Blue Cross and Western Sky was in the best interest of state residents.

“These plans will provide the highest quality of care for New Mexicans, at the lowest cost,” the spokeswoman said.

The losing bidders had alleged the Human Services Department had committed a laundry list of legal errors in the bid-selection process, including faulty scoring of proposals, using payment rates that weren’t financially sound and employing bid-evaluation criteria that weren’t disclosed beforehand.

They also alleged the department failed to support its decision to go from four Medicaid managed care providers to three in 2019.

Molina, which has been the most aggressive in challenging the contracting process, has said the process was tainted by a possible conflict of interest because a department consultant on the Medicaid contracts has business ties to a sister company of Western Sky.

The department has denied the conflict-of-interest allegation.

A state District Court judge in February dismissed a lawsuit by Molina seeking to block the Human Services Department from proceeding with the new contracts. Molina can now go back to the court to seek to stop the contracting process while its appeal is pending.

The stakes for Molina are high; its New Mexico premium revenues, including Medicaid payments, totaled $1.3 billion in 2016, according to corporate filings.

Molina provides managed care to more than 217,000 Medicaid recipients and United nearly 88,000.

If the companies ultimately fail to win new contracts, their managed care patients will have to be assigned to the winning bidders.

In a statement issued by a company spokeswoman, Molina said the denial of its bid protest clears the way for it to proceed to court “to seek protection of both our rights and the rights of our members to continue to access their care through Molina’s network.”

More than 850,000 New Mexicans are enrolled in Medicaid, and about 700,000 of those receive managed care.

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