Lawmakers question New Mexico's last-minute decision to redo massive Medicaid procurement

A report by a Human Services Department evaluation team shows the final scores issued to each of the five health insurers that submitted bids for a new state Medicaid contract. (Eddie Moore/Albuquerque Journal)

SANTA FE - The last-minute decision by Gov. Michelle Lujan Grisham's administration to cancel the procurement process for contracts to run the state's massive Medicaid program is generating questions from lawmakers.

The governor and top staffers in her office recently "shared concerns" with top Human Services Department officials about a possible disruption of services, a spokeswoman said, after a current provider was not included on the final list of recommended providers — or managed care organizations.

The Human Services Department previously said the reason for halting the procurement process was due to high-level departures, including agency secretary David Scrase, who retired last week, and Medicaid director Nicole Comeaux, who left last month.

Sen. Gerald Ortiz y Pino, an Albuquerque Democrat and chairman of the Senate Health and Public Affairs Committee, said he didn't know why the Lujan Grisham administration decided against going ahead with the contracts.

"It's unfortunate," Ortiz y Pino said. "It leaves everything up in the air. I think a lot of us had great confidence in Dr. Scrase, and so when they canceled it just as he leaves, it just raises doubts, unnecessarily."

Other legislators also described the decision as puzzling.

"Anytime there are multiple responses to a (request for proposals) and then the RFP ends up getting canceled, the public should start asking questions," House Minority Leader Ryan Lane, R-Aztec, said in an interview.

This year the state is budgeted to spend about $1.2 billion on Medicaid programs; the total spending with a federal match is expected to reach roughly $8 billion.

Prior to the decision being made to abruptly halt the procurement process, an evaluation team had reviewed bids over two weeks in December. That led to a recommendation that contracts be issued to four of the five health insurers who had applied, according to records obtained by the Journal.

The lone insurer that was not recommended for a contract was Western Sky Community Care, a subsidiary of St. Louis-based Centene Corp., which has helped run the state Medicaid program since 2019.

Centene has faced overbilling allegations in other states, including a recent $66.5 million settlement with the state of Indiana to resolve claims of overbilling the state's Medicaid program for pharmacy benefits management services.

In New Mexico, the company agreed to pay $13.7 million under a 2022 settlement with then-Attorney General Hector Balderas' office, after an investigation by the State Auditor's office uncovered what it described as "abusive" billing practices.

The insurer also gave $20,800 in campaign contributions to Lujan Grisham's reelection campaign last year, though the other companies vying for contracts to run the Medicaid program that provide services to roughly 800,000 New Mexicans also made similar donations.

The Centene Charitable Foundation and Western Sky Community Care in early January also committed $3 million to the One Albuquerque Fund for the Gateway center.

In a statement, Lujan Grisham spokeswoman Maddy Hayden said the Democratic governor and top Governor's Office staffers had shared concerns with HSD then-secretary Scrase and current acting secretary Kari Armijo about "continuity of services" during the looming change in managed care organizations, but defended the governor's involvement in the process.

"This decision was based solely on protecting the best interests of the nearly 1 million New Mexicans covered by Medicaid and had nothing to do with the status of any entity as a donor or non-donor," Hayden told the Journal.

The state's contracts with its three current managed care organizations are set to expire at the end of this year. The Lujan Grisham administration is planning to launch its rebranded Medicaid program — called Turquoise Care — in 2024.

Western Sky Community Care provides health insurance in New Mexico for about 87,000 people, including low-income pregnant women and individuals with developmental disabilities, under a five-year contract awarded in 2019.

Western Sky is one of three managed care organizations selected in January 2018 by former Gov. Susana Martinez's administration to provide health care coverage under Centennial Care, which is the current name for the state's Medicaid program.

The other two managed care organizations — Blue Cross and Blue Shield of New Mexico and Presbyterian Health Plan — were also among the five health insurers that submitted bids last fall for new contracts.

Under the scoring criteria for the new Turquoise Care contracts, insurers were evaluated on their experience, capability and method of approach, according to records released in response to a request made under New Mexico's public records law.

Using that criteria, a seven-member state evaluation team ranked Western Sky Community Care well below its four competitors — Blue Cross and Blue Shield of New Mexico, United Healthcare, Molina Healthcare of New Mexico and Presbyterian Health Plan.

While the Human Services Department released the final evaluation report to the Journal, the agency withheld the submitted bids themselves, describing them as "confidential."

A Western Sky Community Care spokesperson indicated Monday the insurer plans to bid again for a state contract when the procurement process is reopened.

"In the coming months, Western Sky will continue to work with the state to understand the new RFP process, and we plan to respond and continue to serve New Mexico," the spokesperson said.

The company also said it had proudly served Medicaid members in the state since 2019, adding it intended to continue working to ensure enrolled Medicaid beneficiaries get "high-quality, comprehensive and coordinated care to help them live healthier lives."

Human Services Department spokeswoman Marina Piña said a timeline for launching a new contract process is still being determined, but added the agency plans to work with a Medicaid expert to assist in designing the procurement.

She said the department was confident new contracts will be issued before the end of the year — when the current contacts are set to expire.

In addition, Piña cited concern the initial contract evaluation process did not adequately measure each bidders' ability, saying the highest-ranked bidder under the evaluation — Blue Cross and Blue Shield — received a score of 1,083.5 points out of a maximum of 1,815 points.

But she acknowledged performance issues and past penalties assessed against current providers, including Western Sky.

"Again, the cancellation was not a decision taken lightly and was done in the best interest of the New Mexicans the department serves," Piña said in an email to the Journal.

While the Human Services Department initially attributed the decision to cancel the Medicaid contract process to leadership changes, at least some of the changes atop the agency had been in the works for awhile.

In a Journal interview, Scrase said he talked to the governor about retirement over the summer and eventually agreed to stay on through this year's 60-day legislative session, which ends March 18.

He left a bit earlier, he said, because of an out-of-town family health emergency. Scrase went on leave in late January, and his official last day was Friday.

The request for proposals was issued Sept. 30 last year, and the decision to cancel the procurement was made Jan. 27, the same day the state announced Scrase's plan to retire.

Scrase told the Journal that he didn't have much insight into the decision, which came while he was out of town.

He said he had read in the newspaper that the cancellation was to allow "the new leadership to put their mark on the Medicaid program. That's my understanding of why (the state) stepped back from the procurement. I think the process had been fully completed."

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