Passport: New Medicaid rates higher than expected


Passport Health Plan said the state’s new proposed Medicaid disbursement rates for April 1 are higher than it expected — but could not yet say whether the increase is enough to avert insolvency.

“We have received the rates and noted an increase above what we expected,” a Passport spokesman told Insider via email. ”We are continuing our analysis and cannot provide any additional details at this time.”

A state spokesman told Insider via email that the proposed rates “do result in increases,” but he declined to provide details.

“While we have no way to predict the impact these rates will have on Passport’s operations, we are certainly hopeful the new rates will improve their ability to continue operations,” said Doug Hogan, executive director of public affairs for the Kentucky Cabinet for Health and Family Services, which oversees the rate setting.

The size of the rate increase is critical to determining whether Passport, which despite drastic cost-cutting is losing about $1.25 million per week, can survive long-term.

The Centers for Medicare & Medicaid Services has predicted that national health spending is projected to grow at an average annual rate of 5.5 percent through 2027.

Passport is one of five organizations in Kentucky that manage Medicaid benefits. It has 312,000 customers, about two-thirds of whom live in the Louisville area. Medicaid is a mostly federally funded health insurance program primarily for the poor, pregnant women and people with disabilities.

Passport officials have said that the state last summer changed its rates arbitrarily and that they unduly harm Passport. The nonprofit has sued the state to restore previous disbursement rates. However, state officials have told Insider that they changed the distribution rates because of budget cuts and to bring profitability of Kentucky’s managed care organizations in line with the national average.

Unless the state significantly increases the dollars it has been providing to Passport, the nonprofit’s fate is all but sealed, barring a favorable — and quick — resolution in court.

State leaders appeared disinclined to make any drastic alterations to its distribution rates. Adam Meier, secretary of the cabinet, has told Insider that the state would consider changes if “substantive issues with the rates are identified. To date, Passport has not brought any errors in or substantive concerns with the rate-setting process to the table.”

The state told Insider on Wednesday that the April 1 rates “were derived using the same data-driven process … as in previous rate-setting.”

Actuaries from the Kentucky Department for Medicaid Services and from the five managed care organizations met Tuesday to discuss the new rates. The organizations will be able to provide input before the rates are finalized.

The state said the new rate rollout has long been planned and is unrelated to its recent dispute with Passport.

Local health care experts have told Insider that they worry Passport’s demise could lead to a disruption of care for some Medicaid beneficiaries and delayed payments for some local health care providers as the beneficiaries transition to another managed care organization.

Passport’s fiscal problems had prompted the nonprofit on Feb. 22 to halt work on its $87 million planned headquarters at 18th Street and West Broadway.