Economy · Archive
Passport asks judge to immediately intervene in lawsuit against state
The Medicaid plan sought temporary court action as it challenged Kentucky’s payment methodology and warned of mounting financial pressure.
Passport Health Plan asked Franklin Circuit Court to require Kentucky to provide additional Medicaid payments while its lawsuit against the state proceeded. The nonprofit argued that immediate relief was needed to avoid insolvency before the court could reach a final judgment.
A hearing on the request for a temporary injunction was scheduled for February 26, 2019. Passport was then one of five organizations managing Medicaid benefits in Kentucky.
The organization had filed suit against the state, the Cabinet for Health and Family Services and the cabinet secretary. Its complaint alleged breach of contract, bad faith and constitutional violations tied to changes in the way Medicaid funds were distributed. Those were allegations in active litigation.
What the filing asked the court to do
- Temporarily restore the earlier payment approach while the case continued.
- Act before Passport’s projected finances fell below regulatory thresholds.
- Consider the possible effect of disruption on Medicaid beneficiaries in the Louisville region.
Financial claims in the filing
Passport said the revised rates, which took effect the previous July, placed it at a disadvantage relative to four for-profit competitors. It argued that the payment change could leave it insolvent before its broader legal claims were resolved.
According to figures presented in the lawsuit, Passport had lost $65.5 million in the prior year and projected continued losses of about $4 million per week. The organization said those losses could push its capital below statutory requirements by March 31, 2019. These figures reflected Passport’s contemporaneous filing and forecasts.
Potential effect on care
Passport argued that its loss from the market could reduce access to care and disrupt services for Medicaid beneficiaries in the Louisville area. At the time, the plan reported serving roughly 315,000 beneficiaries statewide, including about 209,000 in the Louisville region.
The cabinet disputed the premise that the rates were unsound. In its response at the time, the agency said it was reviewing the lawsuit and maintained that discussions with Passport’s actuaries had not identified a legitimate problem with the rates.
Other pressures under review
Separate reporting based on public financial records found that management fees paid to healthcare consulting company Evolent Health also weighed on Passport’s finances. Read that analysis of management fees and financial pressure.
The uncertainty also affected plans for an $87 million headquarters project in west Louisville. Community leaders had viewed the development as a potential source of economic activity in an underserved area. Passport had declined to detail its cost-cutting plans as the dispute unfolded.