LOUISVILLE, Ky. (WDRB) -- Kentucky Gov. Andy Beshear's administration on Friday awarded five large health insurance companies a set of five-year contracts to manage the state's Medicaid program, cutting Louisville's Passport Health Plan from the business after more than two decades.
Starting Jan. 1, the state's 1.4 million people on Medicaid, the federal-state health insurance program for the poor, will have their coverage managed by one of Aetna, Humana, Molina Healthcare, United Healthcare and WellCare.
United, the largest health insurer in the country, and Molina Healthcare are new to the state's Medicaid program and will replace Louisville-based Passport and Anthem.
The move means that about 200,000 Passport members in Louisville and surrounding Kentucky counties -- and another 100,000 Passport members in other areas of Kentucky -- will have a different company managing their Mediciaid benefits as of Jan. 1.
The five companies whom Beshear chose for the Medicaid business are the same chosen by former Gov. Matt Bevin's administration in its waning days in office. After succeeding Bevin in December, Beshear quickly canceled Bevin's awards and restarted the bidding process, citing "a perception that there was not a fair and level playing field" because of Bevin's derogatory comments about Passport.
Beshear's decision may be the death knell for locally grown Passport and its plan to build a high-profile headquarters building and "health and well-being" campus in impoverished west Louisville, where many Passport members live.
Scott Bowers, Passport's CEO, said the decision would have a "devastating impact" on the company's roughly 600 Louisville-based employees.
"I frankly don’t understand how you could upend coverage for over 300,000 vulnerable Medicaid members and potentially destroy 600 local jobs in the midst of an unprecedented pandemic," Bowers said in a prepared statement. "This action stands to hurt so many members of Team Kentucky and just doesn’t feel in sync with the compassionate leadership thus far under Governor Beshear that I’ve come to know.”
Nearly all of Passport's roughly $2 billion in annual revenue comes from its Medicaid contract with Kentucky.
Beshear said during his daily press conference Friday that Kentuckians should have confidence that the five companies chosen by the state are the most deserving of the contracts given that his administration and Bevin's reached the same conclusion.
Beshear also noted that Molina Healthcare, which specializes in Medicaid, has pledged to finish Passport's stalled the west Louisville project and place 1,100 employees there.
"That'd be really significant. 1,100 new jobs created at a time when we are restarting our economy in an area that hasn't seen enough new jobs, with what we hope is a company that will be incredibly stable, could be a really amazing opportunity," Beshear said. "I actually do believe that, while this is hard, saying goodbye to Passport, that we are going to see investments from multiple of the (contract) award winners that could be really transformational ... the types of investments that haven't been seen in decades."
Passport was formed in the late 1990s by local healthcare providers including the University of Louisville, Norton Healthcare and the former Jewish Hospital & St. Mary's Healthcare.
Last year, as Passport fell into financial distress amid a feud with Bevin's administration over Medicaid rate cuts, the Passport owners decided to sell 70% of the organization to Virginia-based Evolent Health, a for-profit health administration company that already had close business ties with Passport.
U of L and the other nonprofit owners, or "sponsors," got $70 million in the deal and retained 30% of Passport. Those sponsors are the University of Louisville, Norton Healthcare, the Louisville/Jefferson County Primary Care Association and the Jewish Heritage Fund for Excellence.
Last year Evolent Health CEO Frank Williams told Wall Street analysts that Evolent would liquidate Passport in the event Passport did not obtain the renewed Medicaid contract with Kentucky.