Lujan Grisham administration reverses Medicaid decision as part of ethics settlement

SANTA FE — As part of an ethics settlement, Gov. Michelle Lujan Grisham’s administration has agreed to reverse the last-minute cancellation of a Medicaid procurement and move forward instead with the original companies selected for contracts to help run the massive program.

The agreement comes after the State Ethics Commission investigated the procurement cancellation and prepared to move forward with a lawsuit alleging the cancellation violated the state procurement code.

Rather than go to court, the ethics agency and Lujan Grisham administration entered into settlement talks with retired state Supreme Court Justice Judith Nakamura serving as mediator, producing the agreement announced Thursday.

As part of the settlement, the state Human Services Department denies any wrongdoing.

But it will move forward with contracts for the four companies originally selected through a competitive process to serve as managed care organizations — Blue Cross and Blue Shield of New Mexico, UnitedHealthcare, Molina Healthcare of New Mexico and Presbyterian Health Plan —starting next July.

And the state won’t negotiate a contract with a fifth company, Western Sky Community Care, that now helps run the state’s Medicaid program but wasn’t selected for a contract, even after it applied.

In January, the Lujan Grisham administration had been set to move forward with the award to the four companies, before the governor and some of her top staffers expressed concerns about the procurement.

The abrupt cancellation triggered bipartisan criticism from lawmakers. It also resulted in an ethics investigation, revealed Thursday.

The State Ethics Commission, an independent agency in state government, said Thursday that it investigated the procurement and authorized the filing of a civil enforcement action alleging the cancellation violated state law. But the lawsuit wasn’t filed, as the agency believes it was able to remedy the alleged violation through Thursday’s agreement.

The Lujan Grisham administration didn’t mention the ethics settlement Thursday when it announced plans to move forward with the original four companies selected after the initial request for proposals.

Instead, Kari Armijo, acting secretary of human services, said the agency had “spent the past several months reviewing the MCO contracts in depth and making improvements that focus on advancing and incentivizing health plan performance and ensuring that Medicaid customers have access to this information when they pick their health plan.”

She added: “We will be negotiating contracts that reflect these improvements with the expectation of achieving better health outcomes for Medicaid customers.”

Vital services

Medicaid is a critical part of New Mexico’s health care landscape. The state spends about $8 billion — a mix of state and federal funds — to provide health care for lower income families and individuals.

About 967,000 people — 46% of the population — were enrolled in Medicaid earlier this year, according to HSD data.

In 2021, about 54% of the births in New Mexico were covered by Medicaid, the third-highest share in the nation, according to KFF, a nonpartisan health research organization based in San Francisco.

Medicaid eligibility and benefits vary based on a complex set of factors, including income and family size.

Turquoise Care

A revamped Medicaid program, set to be called Turquoise Care, was to begin in January 2024, and HSD had letters ready to go notifying four of the five bidders that they had been selected.

But a last-minute decision to cancel the procurement process came after a current MCO, Western Sky, was excluded from the final list of recommended providers, according to documents previously obtained by the Journal.

The disruption drew the ire of politicians on both sides of the aisle, including House Minority Leader Ryan Lane, R-Aztec, who said anytime “there are multiple responses to a (request for proposals) and then the RFP ends up getting canceled, the public should start asking questions.”

By June, HSD spokeswoman Marina Piña said the department was “nearing completion of its evaluation of the design” for a new request for proposals.

But Thursday’s announcement takes the procurement back to the point it was in January, before the cancellation.

Piña said the proposals weren’t rescored ahead of Thursday’s announcement.

“The determinations to award or not award were based on the original evaluation committee scores,” she said.