Passport CEO Mark Carter

Passport Health Plan CEO Mark Carter, March 4, 2019

LOUISVILLE, Ky. (WDRB) – Passport Health Plan, the nonprofit that manages Medicaid benefits in the Louisville region, will likely be out of business by “late summer or early fall” because of rate cuts imposed by the state, Passport CEO Mark Carter said Monday.

“We’re losing $12 million a month and we can’t keep doing that,” Carter said in an interview.

Carter sat down with WDRB hours after two top officials in the administration of Republican Gov. Matt Bevin showed up uninvited to a news conference hosted by U.S. Rep. John Yarmuth, D-Louisville, in which locally elected Democrats denounced the state’s treatment of Passport.

Adam Meier, secretary of the state Cabinet for Health & Family Services, and Scott Brinkman’s, Bevin’s executive cabinet secretary, said during the event and to reporters afterwards that they have no agenda against Passport, that the rates paid in Louisville region are based on sound data and that Passport needs to look in the mirror to fix its problems.

“There is nothing that we gain by having them go out of business,” Meier told reporters following the event. “If they go out of business, we are going to have to find other (insurance companies) to take on all that; that’s a big administrative lift for us.”

Brinkman told the crowd gathered at the press conference that state officials would be willing to hold a “public hearing” with open participation, including experts from the state and Passport, to discuss how the Medicaid payments Passport receives were set.

“We want to get to the bottom of this and clear up the rhetoric and just explain the whole process,” Brinkman said.

But in the interview, Carter said it’s the state health officials who have refused to engage with Passport since the rate cuts were first disclosed in mid-2018.

“We have never had a counter-proposal. Not one,” he said. “So, to get to a solution, you have to sit down together with an objective of solving the problem. And that’s all we’re really looking for.”

At issue is the Bevin administration’s move last year to consolidate the state’s Medicaid regions from five to two.

Region A includes the Louisville area, where Passport has 65 percent of the business, and Region B is the rest of the state. Payments in the Louisville region were cut by 4.1 percent, while they were raised 2.2 percent in the rest of the state, Passport has said.

On Monday, Brinkman said the change has been misinterpreted as a deliberate attack on Passport when in fact, other insurers operate in Region A and were not exempted from the cuts.

Passport is a 20-year-old nonprofit controlled by medical providers such as the University of Louisville hospital and doctors’ group, primary care clinic Family Health Centers and Norton Healthcare.

Passport is one of five “managed care organizations” – the others are big, for-profit insurers – that oversee Medicaid benefits for low-income people in Kentucky.

Passport has paused construction on a new headquarters in west Louisville – a move Carter said has already cost at least $3 million – and sued Bevin’s health cabinet to overturn the rate decision.

The west Louisville construction pause was among a handful of cost-cutting moves Passport announced last week to avert the threat of being seized by the state insurance department.

On Monday, Carter said those moves resulted in about $23 to $28 million in savings for the six months that will end June 30.

While Passport likely couldn’t last into the fall, a more pressing date looms, Carter said.

Passport’s contract with the state Medicaid department is renewable for one more year beginning July 1.

Carter said the contract would have to be mutually acceptable to Passport and the state, and neither may be able to accept the status quo.

“At the present run rate I am not sure (the Medicaid department) would want to renew our contract,” he said.

A state health cabinet spokesman did not immediately respond to a request for comment.

Reach reporter Chris Otts at 502-585-0822, cotts@wdrb.com, on Twitter or on Facebook. Copyright 2019 WDRB News. All rights reserved.

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Chris Otts reports for WDRB.com about business and economic topics, higher education and local / state government. He joined WDRB News in 2013 after seven years with The Courier-Journal. Got a tip? Chris is at 502-585-0822 and cotts@wdrb.com.