Passport Health sues Kentucky over Medicaid rate cuts

The lawsuit also claims the Cabinet of Health and Family Services knew the cuts could drive Passport out of business
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Updated: Feb. 16, 2019 at 5:20 PM EST
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LOUISVILLE, KY (WAVE) - Passport Health Plan has filed a lawsuit claiming that Medicaid rate cuts imposed by the state could drive it out of business by March.

The lawsuit also claims the state knew the cuts could render the Louisville-based nonprofit insolvent, saying that the Cabinet for Health and Family Services exhibited “knowing indifference to the likelihood that such lowered rates would drive Passport out of business in a foreshortened period of time."

Another potential impact, according to the lawsuit: Reduced access to needed health care services those who use Medicaid in the region.

Passport’s Medicaid coverage impacts about 315,000 people total and serves about 209,000 Medicaid beneficiaries in the Metro area, which represents 65% of Medicaid beneficiaries in the region and 16% of Medicaid beneficiaries statewide. Kentucky had about 1.26 million Medicaid beneficiaries as of January 2019. (The other 106,000 beneficiaries are located in other areas of the Commonwealth.)

As of January 31, approximately 125,709 of Passport’s members were in Jefferson County.

The lawsuit says that at the same time CHFS lowered the Medicaid rates paid out to Passport, it increased the rates for all other regions in the state, “having the effect of singling out Passport as the only Medicaid managed care organization to suffer a composite rate reduction.”

In other words, the lawsuit alleges that other providers in the state received higher rates for Medicaid services, increasing revenue, while Passport, which serves Louisville and its surrounding counties, received lower payment rates for Medicaid services, decreasing revenue.

Passport was founded, it says, to serve the Commonwealth and health care providers to align and arrange for services under the Medicaid program where prior efforts had been unsuccessful.

Unlike some other Managed Care Organizations (MCOs), Passport has had no history of denying or delaying claim payments to manage cash flow, it says, but focuses on getting its members the care they need.

The lawsuit also points out that Passport has been repeatedly recognized as one of the top managed care Medicaid organizations in the country and accredited by the National Committee for Quality Assurance. NCQA has ranked Passport first in Kentucky and 25th nationally for years, and “has consistently ranked Passport higher than any other Medicaid MCO in the south or central United States,” the lawsuit says.

Passport also says in the lawsuit that throughout its existence, it has exhibited substantial cost savings for the Commonwealth of Kentucky. In May 2012, a Washington D.C.-based study “estimated that Passport had saved Kentucky’s Medicaid program approximately $180 million over the previous two calendar years.”

The lawsuit was served to defendants William Landrum III, Secretary of the Commonwealth of Kentucky Finance and Administration Cabinet; Adam Meier, Secretary of the Cabinet for Health and Family Services; and Attorney General Andy Beshear.

When asked for comment, the CHFS Office of Public Affairs said they were reviewing the lawsuit.

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