Ky. Gov. Matt Bevin and Passport sign

LOUISVILLE, Ky. (WDRB) – Gov. Matt Bevin said Tuesday that Passport Health Plan, the nonprofit Medicaid provider in Louisville, is “bleeding out” because of its own operational failures and not payment cuts his administration implemented last year.

“They are a very poorly run operation from a financial standpoint, it would seem, based on their actual cash flow. That’s a big problem,” Bevin told reporters in Frankfort. “There is only so much you can do for an operation that cannot maintain itself financially.”

Bevin cited figures showing Passport lost $26 million on its Medicaid business in the six months before state cut rates in the Louisville region last year.

Passport CEO Mark Carter said that’s accurate, but Passport’s loss was not as bad when its much smaller Medicare business is included and that the organization had a plan to cure the shortfall, one that included a small increase in its payments from the state. In fact, Passport got a decrease.

As it struggled with rate cuts, Passport posted a $122 million net loss in 2018 on about $2 billion in revenue – almost all of it Medicaid money from federal and state governments. The organization expects to lose $144 million this year.

Carter said Monday that Passport can’t sustain the losses beyond late summer or early fall. It has sued Bevin’s administration in a last-ditch effort to reverse the payment rates.

Whether Passport can resolve its issues with the state remains to be seen, Bevin said. But the 315,000 people that Passport covers – mostly in the Louisville area – could be picked up by another insurance company if Passport goes under, Bevin said.

Anthem, Aetna, WellCare and Humana – all large, for-profit insurers – are the other Medicaid contractors in Kentucky besides Passport.

“There are others who could fill in the gap. If for some reason one falls, the others could step up,” Bevin said.

Carter told WDRB on Tuesday that he was dumbfounded by Bevin’s comments.

“To say that we are poorly run – we have operated for 22 years on a less-than 1 percent margin,” Carter said.

He added that Bevin’s Medicaid department chose Passport to be the example when it needed to show the federal government how Kentucky was capable of implementing Bevin’s waiver to overhaul Medicaid in the state.

“We passed that with flying colors; that is not consistent with a poorly run organization,” Carter said.

Carter told WDRB on Monday that if Passport goes belly up, Medicaid coverage would still be provided in the Louisville area, but Passport would have to hand off its members to one of the other insurance companies.

At first, people who get coverage through Passport would be confused, and doctors and hospitals would have difficulty with payments and determining who is eligible for coverage, he said.

“There’d be a transition and it would be disruptive,” Carter said. “We are talking about 310,000 human beings who are among the most vulnerable citizens in our community.”

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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.