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In what the Santa Fe New Mexican described as a “stunning defeat,” Democrat Gov. Michelle Lujan Grisham’s halting of awarding billion-dollar Medicaid contracts to providers who had followed the state’s procurement process and scored the highest bids, the state Ethics Commission reversed her action.

The State Ethics Commission investigated the cancellation of the Request for Proposals (RFP) on April 20, 2023. They contended that this cancellation violated the Procurement Code, leading to the authorization of a civil enforcement action by their Executive Director, according to a press release.

During a special session held on Thursday, the commission entered into a settlement agreement to resolve the previously authorized civil action related to the violations of the Procurement Code by state officials and employees. However, it was not revealed whether an ethics complaint prompted this investigation.

Tom Garrity, a representative of the commission handling public relations, stated via text message to the New Mexican, “The commission does not have anything to add beyond the press release and settlement agreement.”

Democrat State Senator George Muñoz of Gallup criticized the Governor’s intervention in the procurement process, stating that the process should remain open and transparent, with no alteration of the rules.

The press release highlighted that the state allocates approximately $8 billion annually to Medicaid, catering to almost half of New Mexico’s population by providing healthcare services.

The 11-page settlement agreement strongly denied the Ethics Commission’s allegations of violating the procurement code. It dismissed claims of wrongdoing, damages, and any form of liability, including Procurement Code violations.

The Governor’s stance, as outlined in the agreement, pointed fingers at the Department, asserting, “The scores for all applicants raised significant concerns as to whether any of the bidders would be able to provide seamless, robust, and high-quality health care to New Mexicans.” This led to the decision to cancel the RFP and reissue the contracts with stricter requirements and benchmarks for service providers, based on the Department’s belief that the Procurement Code did not apply to the RFP process.

Caroline Sweeney, the Governor’s press secretary, emphasized the necessity for high-quality and affordable healthcare coverage for over 930,000 New Mexicans served by Medicaid. Sweeney declared, “The status quo is unacceptable. MCOs have not been doing their part to build network adequacy across the state, and when we pay them over $7 billion annually, we have a responsibility to demand excellent performance and patient access — and they must deliver.”

Per the settlement agreement, the department will issue notices of intent to award contracts to the four initially selected providers: Blue Cross and Blue Shield of New Mexico, UnitedHealthcare of New Mexico, Molina Healthcare of New Mexico, Inc., and Presbyterian Health Plan. Western Sky Community Care, which competed for the contracts but was not recommended, will be informed that it wasn’t chosen for an MCO contract award.

Contracts with the four winning bidders will be negotiated, with a commencement date of July 1, 2024, following the RFP process, New Mexico’s Procurement Code, and relevant state procurement regulations.

Presbyterian will be notified of being awarded the contract to offer managed care for children in state custody.

The acting human services secretary Kari Armijo explained, “We will be negotiating contracts that reflect these improvements with the expectation of achieving better health outcomes for Medicaid customers.”

The Governor’s decision to reorder the procurement process drew bipartisan criticism, compounded by shifting explanations from the Governor’s administration regarding the reasons for canceling the request for proposals.

Initially, the Department stated that the cancellation allowed the new executives to assess the procurement design following the departure of Cabinet Secretary David Scrase and Medicaid Director Nicole Comeaux.

Later, the Governor’s communications director mentioned shared concerns with Scrase and Armijo regarding providers’ ability to ensure seamless care during the transition.

According to gubernatorial spokeswoman Maddy Hayden, the decision to cancel the procurement and reissue it was based solely on safeguarding the interests of Medicaid’s beneficiaries.

In December, a committee evaluated and scored the five proposals received by the Department following the issuance of a request three months prior. In January, Charles Canada, the department’s procurement manager, recommended awarding contracts to four of the five bidders, a suggestion endorsed by Comeaux and Gary Chavez, the department’s chief procurement officer.

Western Sky Community Care, the only existing Medicaid provider, failed to secure a contract. According to documents obtained via a public records request, the health insurance companies recommended for contract awards garnered the highest scores in the evaluation. They offered proposals deemed “most advantageous” to the State.