Kentucky Health Plan Violates Redistribution Constraint to Tune of $26 Million

July 20, 2011; Source: Courier-Journal | A nonprofit health plan in Louisville, Ky., managing $780 million in Medicaid dollars for other health providers, has violated the redistribution constraint by – you guessed it! – redistributing millions of dollars to its member agencies. Apparently the payments were made by Passport Health Plan to surreptitiously divest itself of a portion of surplus, the size of  which it might cause the state to balk at rate increases. The surplus had, in fact, grown to $90 million by 2009.

So much for stewardship of the interests of consumers.

The payments surfaced in a 2010 audit and Attorney General Jack Conway has negotiated the paybacks to Passport, which is now under new management and has an expanded governance system. The largest repayment of $14.4 million is to come from University Physicians Associates. Only one group, specifically serving the needy and indigent, will not have to repay Passport. Meanwhile the new CEO of Passport, Mark Carter, has agreed to a rate decrease and says the new leadership is glad to have the incident behind them, but some still believe that the state has gone very easy on those involved.

NPQ has written quite a few Newswires on the problem of nonprofit health plans acting like for-profit corporations. This is one more argument for consistent regulation of these agencies.—Ruth McCambridge