The administration of Gov. Susana Martinez fired back this week against what it called false allegations that the selection of major contractors for New Mexico’s multibillion-dollar Medicaid program was tainted by a potential conflict of interest.

The “allegations are both overblown and inaccurate,” the state Human Services Department said in a filing Thursday in the state District Court in Santa Fe.

The allegations center on the involvement of Mercer Health & Benefits LLC in the department’s contracting process. Mercer is part of a global family of companies and a longtime Human Services Department consultant on Medicaid issues.

Mercer has a business relationship with Envolve Pharmacy Solutions, a sister company of Western Sky Community Care, one of three companies selected by the Human Services Department in January for contracts to manage care for Medicaid recipients beginning in 2019.

In a letter attached to the department’s court filing, Mercer attorney Derek MacKenzie said the company and Envolve entered into the relationship in 2016.

MacKenzie said Envolve is one of the pharmacy benefits managers that Mercer introduces to its clients. Mercer is paid by its clients for the services and not by Envolve, he wrote.

The Human Services Department made the court filing in defense of its decision to award a Medicaid managed care contract to Western Sky, as well as contracts to Blue Cross Blue Shield of New Mexico and Presbyterian Health Plan. Western Sky has said it plans to use Envolve as a subcontractor in New Mexico.

Molina Healthcare of New Mexico and UnitedHealthcare of New Mexico, which were denied Medicaid managed care contracts, have alleged that the contracting process may have been biased because of Mercer’s ties to Western Sky through Envolve.

Molina has filed a lawsuit in District Court challenging the contract decisions by the Human Services Department. It and UnitedHealthcare also have appealed the decisions in protests filed with the department.

Molina and United are in the final year of contracts to provide managed care to New Mexican recipients of Medicaid, the health care program for low-income people. Molina serves more than 221,000 Medicaid recipients and United more than 88,000. Blue Cross and Presbyterian also are current Medicaid contractors.

MacKenzie said in his letter that Mercer employees working with the Human Services Department were unaware of the relationship between Mercer and Envolve until it was publicly raised by Molina after the contract decisions were made.

The attorney also said that while Mercer employees assisted the department in the contracting process, they had no decision-making role.

The allegations concerning a potential conflict of interest on the part of Mercer lack any factual basis, MacKenzie wrote.

In its court filing, the Human Services Department also addressed an October 2016 internal department email.

In that email, a department contracting officer expressed concerns about a potential conflict of interest on the part of Mercer. The company, the official said, had advised it had been approached about a possible business deal by the parent company of one of the companies seeking a Medicaid managed care contract.

The department, in the court filing, said the approach was made by the parent company of Blue Cross Blue Shield of New Mexico.

The department requested that Mercer not proceed with the business deal to avoid even the appearance of a conflict of interest, and Mercer agreed and declined the work, according to the court filing.

In a footnote in the court filing, the department also said Molina had failed to disclose in its filings that it has a financial relationship with Mercer in another state.

A Molina spokeswoman issued a written statement Friday, saying the company has no relationship with Mercer that relates to Medicaid in any state.

The statement added, “The issue that needs to be investigated before the [Medicaid] procurement is allowed to move forward is whether Mercer’s business relationship (or relationships) with a bidder (or bidders) gave Mercer an impermissible interest in the ultimate success of one (or more) of those bidders, and should have disqualified them from the central role they played in the procurement.”

Contact Thom Cole at 505-986-3022 or

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