Molina ‘likely’ to leave over Medicaid loss

Health care company’s contract with the state was not renewed

Molina Healthcare of New Mexico said in court documents it is likely to leave the state over the loss of its Medicaid contract with the Human Services Department.

Molina said in the filings it has more than 1,100 employees in New Mexico making a combined salary of $12.6 million in 2017, and spends more than $4 million annually for the office space and properties it leases. The company insures about 260,000 members; 224,000 of those are on Medicaid.

“If Molina is not awarded a contract, which is HSD’s current path, Molina will likely leave New Mexico entirely since Medicaid is the most significant portion of Molina’s current business within the state,” the company wrote.

The company is seeking an injunction and restraining order against the Human Services Department and its secretary, Brent Earnest, to prevent the state from moving forward with what the company claims was an unfair Medicaid procurement process.

Molina also said it filed a protest with the state Monday. According to documents on the department’s website, the state has already executed the contracts with the winning bidders.

The department has denied there were irregularities in the procurement process, and calls Molina’s claims “self-serving, anecdotal and conjectural.” It has filed a motion to dismiss those claims.

The state announced in January that recipients of the Medicaid contracts known as Centennial Care 2.0 were incumbents Blue Cross Blue Shield of New Mexico and Presbyterian Health Plan, as well as newcomer Western Sky Community Care, a subsidiary of the St. Louis, Mo.-based company Centene Corp. Neither Molina nor United Healthcare, both incumbents, had their contracts renewed.

In a statement, Centene told the Journal it plans to create “hundreds of jobs in New Mexico” through Western Sky and had already begun interviewing candidates. Centene has not responded to additional requests for comment.

There are about 850,000 Medicaid enrollees in New Mexico, according to the Human Services Department, roughly 40 percent of the state’s population.

Molina alleges the state oversaw a “flawed” procurement process for the Medicaid contracts, and that a consultant hired by the department to help evaluate proposals — a company called Mercer — had a business relationship with Centene that made it financially beneficial for it to favor Western Sky in the process.

In a statement, Molina claimed the state’s scoring procedure was “arbitrary and capricious,” especially as it related to scoring Molina’s pricing bids.

“There simply is no legitimate reason that with price differences that amount to pennies on the dollar, Molina’s pricing score would be so significantly lower than other bidders’ scores,” said Molina’s New Mexico CEO Daniel Sorrells in the statement.

Mercer has not responded to a request for comment.

In its motion to dismiss, the state said Molina has a relationship with Mercer in at least one market, and that Molina appears to be threatening to “cease providing services to Medicaid this year.”

“Molina is putting the company’s interests above the Medicaid members’ interest,” the state wrote in court filings.

A Molina spokeswoman said the company’s relationship with Mercer is unrelated to Medicaid, and that Molina would “never do anything to jeopardize the care of our members or not fulfill our contract obligations.”

According to a recent Securities and Exchange Commission filing, the loss of Molina’s Medicaid contract will slash hundreds of millions of dollars from the company’s premium revenues.

But the company already appeared to be struggling in the state before the loss of the contract: in a recent investor presentation given before the Medicaid announcement, Molina’s national CEO Joe Zubretsky said the company’s shareholder returns had been “unsatisfactory” and identified New Mexico as one of the markets that needed improvement.

Also on Tuesday, Molina disclosed that the state of Florida invited the company to bid in only one of eight counties where its Medicaid contracts are up for renewal, according to company filings.