In a blow to Passport Health Plan of Louisville, Gov. Matt Bevin’s administration has notified five other health insurance companies they are to be awarded contracts to manage around $8 billion a year in Kentucky’s Medicaid business — effectively cutting Passport out of the work it’s had for more than 20 years.
Companies notified that they are to be awarded the contracts are Humana, Wellcare, Aetna and two newcomers, United Healthcare and Molina Health Care. Unsuccessful bidders were Anthem and Passport, both of which previously held state contracts for Medicaid managed care.
The loss would hit Passport much harder and could put it out of business because its main revenue comes from managing health care for Kentucky Medicaid enrollees, a population it was founded to serve in 1997 as a nonprofit. Anthem, by contrast, is one of the nation’s largest health benefit companies.
Passport’s loss of the Medicaid contract also is a blow to Evolent Health, a Virginia-based health management company that announced plans to buy Passport in May.
And the contract award raises new questions about the future of a new headquarters and health campus Passport had planned to build in western Louisville that local leaders had hailed as a boon to growth and economic development.
Passport suspended construction of the 337,000-square-foot complex at 18th and Broadway in February. But Evolent said it would seek a developer to try to revive the project.
Notice of the award of the five-year agreements, the largest outside contracts in state government, come despite major changes to the Medicaid health program planned by Gov.-elect Andy Beshear — most significantly, abolishing Bevin’s plan to overhaul it and add work requirements and other new rules for most “able-bodied” adults.
The managed care companies would have been responsible for carrying out some of Bevin’s changes under the contract terms. Beshear, a Democrat who defeated Bevin, a Republican, takes office Dec. 10.
Those following the lengthy, complicated contract award process believe that no matter who was awarded the contracts, someone will protest, causing potential delays.
The five-year contracts are effective July 1 and will require the companies to manage the health care of about 1.2 million Kentuckians enrolled in Medicaid. About 1 million more Medicaid enrollees are outside the managed care system and not affected; they include residents of nursing homes and individuals in specialized programs or in residences for people with disabilities.
Kentucky’s Medicaid program spends about $11 billion a year, about 80% of that in federal funds, on health services.
Passport was the state’s first Medicaid managed care company. It has operated continuously under contract to the state since it was founded in 1997 as a pilot project to help the state control Medicaid costs in the Louisville region.
Passport operates only in Kentucky, and Medicaid is its major source of income. It has about 600 employees in Louisville and manages health care for more than 300,000 Medicaid enrollees, the majority in the Louisville region.
Evolent Health agreed to buy a majority ownership stake in Passport, which had been struggling financially since the state last year cut Medicaid rates for the Louisville region.
Evolent, which already provides services and staff for Passport, agreed to purchase a 70% share of the nonprofit company for $70 million and invest additional funds to shore up Passport.
The loss of state Medicaid business could be a setback to that deal and could affect the University of Louisville, which, as a founding partner of Passport, stands to get about $45 million from the sale. U of L plans to put the money toward its medical school and University of Louisville Physicians, a practice that includes more than 700 primary care and specialty doctors who also work as professors and researchers at the university’s medical school.
It isn’t immediately clear how the loss of the contract would affect the pending sale of Passport to Evolent.
Passport now is the second-largest of the five managed care companies with current contracts. The other four, Aetna Better Health of Kentucky, Humana CareSource, WellCare of Kentucky and Anthem, are affiliates of commercial health insurance companies that operate in multiple states.
The award marks the third time the state has handed out new contracts for the Medicaid work since 2012, when it awarded three-year contracts to the five companies it currently employs. The current contracts were re-awarded in 2015, and the Bevin administration has extended them several times.
Most company officials had expected the new contracts to be awarded by late summer or early fall.
For many years, Passport operated as the only Medicaid managed care organization in Kentucky, focused on the Louisville region, until the state decided in 2011 to seek other outside, for-profit companies to provide managed care statewide for most of its Medicaid patients.
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Written by Deborah Yetter. Cross-posted from the
Courier-Journal via the Kentucky Press News Service.