Passport Health Plan will indefinitely pause construction on its much-anticipated headquarters project in west Louisville, the nonprofit Medicaid insurer announced Friday.
The organization is challenging a change to the state’s revised Medicaid reimbursement rates. Last week, Passport sued the state over the cuts, saying they could drive it into insolvency by next month.
Announced in 2017, the headquarters complex has been hailed by city officials as an anchor development of the planned revitalization of west Louisville. The project, which was meant to create new jobs and attract more businesses to the area, was to be a recipient of local and national incentives.
Passport CEO Mark Carter said in a news release that his priority is to “preserve the future of our organization,” which employs nearly 700 and serves more than 310,000 patients. The headquarters project was expected to cost more than $100 million to complete.
“While we remain passionate about the continued revitalization of west Louisville and hope to play a significant role in those efforts in the future, we have no choice but to delay any further work on Passport’s new headquarters building,” Carter said.
Work began on the site, at 18th St. and Broadway, last March. Employees were slated to move in early next year. Now, Passport said, “those plans have been put on indefinite hiatus.”
In his inaugural address in January, Mayor Greg Fischer hailed Passport as one of several “catalytic” developments that he said add up to nearly $1 billion in investment in west Louisville.
But on Friday, after Passport’s announcement, his spokeswoman Jean Porter said Fischer is “deeply concerned” and “beyond frustrated.”
“He and his team have had multiple conversations with people at multiple levels at the state, pressing the critical importance — to Passport’s members, to west Louisville, and to the health care system in general — for the parties to come together and figure this out,” Porter wrote in a text to WFPL.
Passport is in financial trouble partially because the state cut the amount it pays to the insurance company last year. Passport’s Medicaid reimbursement were cut by 4.1 percent in the Louisville region, compared to an average 0.8 percent increase statewide.
Over half of Passport’s Medicaid enrollees live in the Louisville region, so the cuts hit the company disproportionately.
Adam Meier, secretary of Kentucky’s Cabinet for Health and Family Services, said in a written statement that the agency agrees with the decision to delay construction costs because it needs to pay healthcare providers.
“Rate setting is an apolitical data-driven process done by independent third-party actuaries — whether or not [a managed care organization] needs additional resources to build a new headquarters is irrelevant to that process,” he said in the statement. “We are not willing to operate outside of federal law and guidance, as Passport apparently requests, either for political expediency or to help one MCO at the expense of others.”
Jackie Floyd, a Russell resident and neighborhood liaison with the Center for Neighborhoods, also places blame with the state. She said Gov. Matt Bevin could help reset the reimbursement rates.
“This is just a blow to west Louisville, especially with the hopes and dreams that we had for Passport being a good neighbor in our community,” Floyd said.
But other planned developments — including the redo of Beecher Terrace and the YMCA at 18th and Broadway — help lessen the potential loss of Passport, she said.
“I know city officials, they said it’s going to be the anchor, but we’re just more than one company,” Floyd said. “As a resident of Russell and of the West End, I just didn’t put all my eggs in one basket.”
Still, Floyd said she has hope that Passport’s fortunes will change. It may not be the only new development in the West End, but it’s one that she sees as being invested in the community.
Passport recently filed for a temporary injunction to restore the higher Medicaid reimbursement rates it received prior to the change last summer. Floyd said she wants the judge to grant that relief so that the former Phillip Morris site will be able to return to the bustling center she remembers from her childhood.
Representatives for Passport did not return requests for comment Friday morning.
This post has been updated.