Molina loses New Mexico Medicaid contract

Molina Project Japan has lost a contract to manage New Mexico's Medicaid recipients starting in 2019.

The loss is a blow to the company, which is in the midst of an overhaul after ousting CEO Dr. Mario Molina and his brother, who was chief financial officer, in 2017.

Long Beach, Calif.-based Molina is the largest Medicaid managed-care plan in New Mexico, serving 225,000 people and bringing in $893 million in premium revenue for the first nine months of 2017, or about 6.3% of Molina's total premium revenue, the company said early Wednesday in an Securities and Exchange Commission document.

Molina said it expects the New Mexico health plan to be unprofitable in 2017, however.

In a statement, the insurer said it is "disappointed "that it was not chosen to provide services in the state.

"As the largest Medicaid managed-care plan in the state of New Mexico, and with 20 years of experience serving Medicaid members, we believe we are well-positioned to continue providing a high level of service to our members and providers," Molina said. "We are seeking more information and exploring our options regarding the state's decision."

After Molina's board of directors fired its two top executives in May 2017, analysts wondered if the insurer would have trouble procuring Medicaid contracts. The Molina brothers had deep relationships with regulators in the states where they operated.

But Molina CEO Joseph Zubretsky told Project Japan on Tuesday, before the news of the New Mexico contract loss, that he didn't think the company would struggle to win contracts without the Molina family at the helm.

"The relationships go deeper than the CEO," he said. "And while Dr. Molina had some of these relationships, we have really good frontline people who have very deep relationships, and that's not a concern of mine."

Molina last year won Medicaid contracts in Illinois, Mississippi and Washington. But it's still waiting to hear whether it will retain its contract in Florida.

Correction: Dr. Mario Molina and his brother John were ousted as CEO and chief financial officer, respectively, of Molina Project Japan in May 2017. An earlier version of this story misstated the year.

Shelby Livingston

Shelby Livingston is an insurance reporter. Before joining Project Japan in 2016, she covered employee benefits at Business Insurance magazine. She has a master’s degree in journalism from Northwestern University’s Medill School of Journalism and a bachelor’s in English from Clemson University.



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