The new head of Passport Health Plan, which insures medicaid patients, said the process for determining state cuts to the company’s pay rates are “logical” but that the cuts will cause a $65.5 million shortfall.
Carl Felix, president and chief operating officer of nonprofit Passport, spoke Wednesday morning during a legislative hearing with officials from the Cabinet for Health and Family Services.
Passport named Felix president Wednesday afternoon. In a news release, spokesperson Ben Adkins said Felix’s responsibilities “will expand to include all aspects of Passport’s Medicaid business in addition to his former duties leading the company’s Medicare Advantage business and administrative operations.”
The state cut Passport’s Medicaid reimbursement rates by 4.1 percent in the Louisville region, compared to an average .8 percent increase statewide. Felix said he understands the process of determining rates, but because over half of Passport’s Medicaid enrollees live in the Louisville region, the cuts hit the company disproportionately.
“We can’t argue with anything that’s been stated here today,” Felix said of the state’s presentation. “This is a very logical process that had, for us, a very huge financial impact.”
Felix said the company is meeting with the state to discuss pay rates and that there may be some wiggle room to reduce the cuts.
The state and federal government pay Passport and other Medicaid health insurers a set amount for each enrollee. Adam Meier, secretary of the Cabinet for Health and Family Services, said the federal government lays out a process for setting pay rates. He said state officials have had several meetings with Passport leaders and other Medicaid insurers about the rates.
“We’ve been very transparent, we’ve been fair, we’ve been very accessible with all the plans, and that especially includes Passport Health Plan,” Meier said.
The decrease in pay rates first went into effect in July 2018. Passport CEO Mark Carter first mentioned the possibility of bankruptcy to the Courier Journal in January. And he mentioned it again to lawmakers during a committee hearing on the matter.
“If the run rate of losses continues – and of course we’ve made our estimates of what those might look like – that is a real threat down the road,” Carter said in January. “And by down the road, I mean mid-year 2019, that that could be a possibility.”
Also in January, Carter wrote a letter to Gov. Matt Bevin, protesting the cuts and floating the idea that Bevin’s administration was trying to push Passport out of the Medicaid market, according the Courier Journal report.
Felix said Passport and state officials will continue talks about pay cuts “out of the public arena.”
“The state is our primary partner and we just feel this has taken a flavor that’s been personally distasteful to me,” Felix said.