, Corbin, KY

State News

December 3, 2010

Little progress made in Passport management issue

CORBIN — By Ronnie Ellis/CNHI News Service

Frankfort lawmakers and administration officials spent Thursday blaming each other for problems in the management of Passport, the managed care partnership that manages Medicaid for the state in 16 counties surrounding Louisville.

But at the final meeting of a legislative task force formed to recommend ways to save money in Medicaid, there isn’t much new on the table.

Senate President David Williams, R-Burkesville, blamed the administration of Gov. Steve Beshear and his Cabinet for Health and Family Services.

After grilling Cabinet Secretary Janie Miller about Passport and the Cabinet’s monitoring of the state contract, Williams said the task force began by asking for recommendations from the cabinet and ended with the same request — but getting no recommendation.

But the task force ended Thursday with only one of its own — that lawmakers create a Medicaid false claims penalty, an idea offered but not passed in previous sessions. That was suggested by House Speaker Greg Stumbo, D-Prestonsburg, who defended Miller after Williams earlier told her, “Basically, you haven’t done your job.” Later Williams suggested task force members come up with additional recommendations and share with the chairmen and he suggested one might be to give the chairmen subpoena power.

Medicaid costs continue to grow as costs rise and client rolls expand in the down economy. Lawmakers had suggested Passport’s managed care system might save the state money if expanded to other areas of the state. But then an audit by state Auditor Crit Luallen found the partnership between five Jefferson County health care providers had accumulated large reserves while receiving sizable increases each year from the state. She said those funds could’ve been used to improve or expand services or to reduce state costs. The audit also discovered conflicts of interest and high salaries and expenses by the three-person management team at Passport.

Wednesday, Beshear told Passport’s board to terminate the management team or the state will terminate its contract with Passport when it’s due for renewal next June. Thursday, Williams said corrective action had been implemented at Passport — what he called a government “takeover” — but “the cabinet remains intact.” Miller responded with a year-by-year chart of contract increases for Passport which showed an average of 6.5 percent increases before she became Cabinet secretary. During those three years, increases were 3.1, 3.1 and 0 percent, respectively.

She said she limited those increases after learning Passport had distributed $30 million in excess reserves to the five original investors. The first $10 million reimbursed the investors their original investment, but Luallen criticized the other $20 million. Miller said the money showed Passport could offer services without the increases it sought in state funding.

The administration is also calling for an expansion of managed care, seeking proposals from for-profit vendors and both Williams and Stumbo pointed out the cabinet would not be able to limit such vendors’ profitability to keep costs low for the state. But Stumbo defended Miller, noting the problems with Passport are “systemic” and pre-date the Beshear administration.

While all sides sought to blame the other for the problems uncovered by the audit, no one has questioned the quality of care provided by Passport which has been nationally recognized. The question which began all of this is whether managed care can provide service to Medicaid clients while restraining growth in costs. Luallen’s audit recommends a comparison of traditional fee-for-service costs in the Passport service area with Passport’s costs. Lawmakers have complained the Cabinet should have been able to provide them such information.

Miller contended the Cabinet had offered some data comparisons, although she conceded those data weren’t complete, and that no lawmakers or staff ever sought information about the data during the legislative session. But Stumbo’s office produced a letter from him to Miller, dated March 1, 2010, in which it sought such and other information.

The whole matter arose again Thursday afternoon in a meeting of the Appropriations and Revenue Committee. Sen. Tim Shaughnessey, D-Louisville, said he and Rep. Harry Moberly, D-Richmond, had quizzed Passport CEO Dr. Larry Cook and University of Louisville President Jim Ramsey, one of the investors, about disbursements to U of L and where it had gone in the university budget during the legislative session. That occurred at a time other public universities received spending cuts from the legislature. While he agreed Passport and the Cabinet share blame, Shaughnessey said, the legislature didn’t fulfill its oversight responsibilities either.

RONNIE ELLIS writes for CNHI News Service and is based in Frankfort. Reach him at Follow CNHI News Service stories on Twitter at

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