A judge on Wednesday rejected a challenge by Molina Healthcare of New Mexico to the loss of its state contract to provide managed care to Medicaid recipients.

The ruling means that, barring some 11th-hour court action to halt the process, more than 200,000 Medicaid recipients now served by Molina will have to switch to another health care company Jan. 1.

The decision by state District Judge David Thomson in Santa Fe also means the potential for billions of dollars in lost revenues for Molina and raises questions about the company’s future in New Mexico.

Molina said it will appeal the ruling.

“We remain concerned about our members’ access to and continuity of care, particularly with regard to our most vulnerable high-risk members,” the company said in a written statement issued through a spokeswoman.

State contracts to provide managed care to Medicaid recipients are worth billions of dollars. In a reflection of what was at stake in Molina’s case, more than a dozen attorneys for the state, Molina and other interested parties attended Thomson’s announcement of his decision.

Nearly 830,000 New Mexicans are enrolled in the government-funded health care program for low-income people and the disabled. Molina serves more than 206,000.

Molina’s New Mexico insurance premium revenues, including Medicaid payments, totaled $1.3 billion in 2016, according to corporate filings.

Molina previously said the loss of the Medicaid contract would imperil its commitment to New Mexico and its health care system in the state.

Molina also provides health care coverage to New Mexicans outside of the Medicaid program, including enrollees through the state’s health insurance exchange and Medicare recipients.

The state 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 and Blue Cross currently provide Medicaid managed care, but Western Sky will be a new provider. Medicaid recipients who receive managed care will choose among the companies.

Molina, which is in the final year of a contract to provide managed care to Medicaid recipients, was one of five losing bidders for the new contracts.

In rejecting Molina’s challenge to the contracting process, Thomson ruled the Human Services Department didn’t violate purchasing laws or regulations in denying Molina a new Medicaid contract.

Thomson said he wouldn’t second-guess the Human Services Department employees who evaluated and graded the Medicaid contract proposals from Molina and the other companies.

“The court will not substitute its judgment for HSD’s,” he said.

The Human Services Department has said the Medicaid contracting process was fair and in the best interest of New Mexicans.

In a written statement after Thomson’s ruling, a department spokeswoman said the agency is ready to move forward to the change in the lineup of Medicaid managed care providers.

Molina had alleged a laundry list of legal errors by the Human Services Department in deciding which companies would receive the new Medicaid contracts.

Among the arguments rejected by Thomson: that the department improperly scored Molina’s proposal, used payment rates that weren’t financially sound and employed bid-evaluation criteria that weren’t disclosed beforehand.

Thomson said the issue raised by Molina that was most concerning to him was an allegation the contracting process was tainted by a possible conflict of interest. A consultant to the Human Services Department on the procurement has business ties to a sister company of winning bidder Western Sky.

Thomson said he found no evidence that the business relationship affected the contracting process. Human Services Department employees evaluated the contract proposals, and the consultant had no authority in that evaluation process, the judge said.

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