Molina Healthcare sues state over loss of Medicaid contract

Molina also said a contracting consultant used by the department had a conflict of interest. It said the consultant has financial ties to a company affiliated with a winning bidder for the Medicaid work.

At stake for Molina in the lawsuit are millions of dollars in managed care fees from Medicaid, the multibillion-dollar health care program for more than 850,000 low-income people in New Mexico.

"New Mexico's HSD has seen no such lawsuit as of today," said Mary Elizabeth Robertson, a spokeswoman for the Human Services Department, in an email from Feb. 2. 

"This procurement process was competitive and fair. Molina HealthCare has an opportunity to protest following the end of the procurement period. HSD is  committed to providing the highest quality services to the people of New Mexico dependent on Medicaid."

Molina, which provides managed care to about 225,000 Medicaid recipients, is in the final year of a five-year contract.

The Human Services Department announced this month that Molina and United Healthcare, also in the final year of a five-year contract, would no longer provide Medicaid managed care services beginning in 2019.

The department said it would retain Blue Cross Blue Shield of New Mexico and Presbyterian Health Plan as Medicaid managed care providers and that it was contracting with a new provider, Western Sky Community Care, a subsidiary of Centene Corp. of St. Louis.

The contracting decisions by the Human Services Department followed a request for proposals from managed care organizations.

In its legal bid to keep its Medicaid work, Molina alleges the Human Services Department accelerated the contracting process without reason and exhibited a pattern of changing evaluation factors for contract proposals.

“This resulted in Molina’s technical score being reduced based on undisclosed factors,” Molina said in a news release.

“The fact that the State rushed the [contracting] timeline, did not schedule oral presentations, and made the decision in a vacuum, reflects another potential injustice on New Mexico’s most vulnerable residents,” Molina President Daniel Sorrells said in the release.

Molina also said the Human Services Department hired a firm named Mercer as a consultant on the contracting process and that Mercer coached the Human Services Department on how to evaluate contract proposals.

Molina said Mercer has a multibillion-dollar contractual relationship with Envolve, a sister company of Medicaid contract winner Western Sky Community Care.

The New Mexico contract proposal by Western Sky shows it plans to use Envolve, whose website says it provides supplemental health benefits, medical management and other services.

“Mercer has a vested interest in the success of Envolve, and apparently will benefit from any revenue and profit Envolve obtains from Western Sky’s operations in New Mexico. Yet Mercer was also centrally involved in developing, managing, and evaluating [contract] winners,” Molina said in its news release.

A spokesperson for Centene, the parent company of Envolve and Western Sky, couldn’t immediately be reached for comment.

Contact Thom Cole at 505-986-3022 or tcole@sfnewmexican.com.