“I was surprised and disappointed by the auditor’s report regarding the Passport Health Plan. As providers of health care to some of the Commonwealth's most vulnerable families, children, and senior citizens, it is disheartening to learn of Passport’s excessive spending of taxpayer dollars. Passport has historically provided quality health care, but these business practices are unacceptable, especially for a business that receives millions of taxpayer dollars every year.State Audior Crit Luallen's press release and two PDFs containing the findings of the audit can be found at the Kentucky State Auditor's website. Excerpts of the press release follow:
Today, I am calling for a complete financial audit of the Passport system. I also call on the Passport board to immediately review their management as a result of these findings, and to freeze any spending that is not absolutely necessary for the direct benefit of Medicaid eligible recipients. The Passport Board should also adopt the financial reporting standards for public and nonprofit boards developed by the Auditor of Public Accounts to ensure the board’s continued adherence to fiscal responsibility.
As a result of these findings, I have directed the Cabinet for Health and Family Services and the Department of Insurance to meet with the Passport Board to develop an immediate plan to correct these practices. I fully expect Passport to make quick and permanent changes in their business practices in order to continue fulfilling their mission of providing quality health care to the most vulnerable Kentuckians.”
State Auditor Crit Luallen today released an examination of Louisville-based Medicaid managed-care provider Passport Health Plan, calling for more accountability and transparency in the management and oversight of the state’s largest contract.
The exam recommends Passport’s policies regarding expenditures and cash distributions should be consistent with the original goal of controlling growth in Medicaid costs.
Auditors found that as Passport’s excessive revenues grew, it increased spending on lobbying, public relations, travel and salaries, and provided financial benefits that favored its original investors over other area providers.
The exam notes weak ethical policies and numerous conflicts of interest and calls into question Passport’s board structure and oversight.
The exam makes recommendations to the Kentucky Department of Medicaid Services (DMS) to strengthen contract negotiations with Passport.
University Health Care (UHC), which does business as Passport, is a non-profit corporation created for the purpose of offering Medicaid services to beneficiaries in 16 counties. Passport derives all of its funding from state and federal sources and is the state’s largest contract, receiving $793 million in fiscal year 2010 to serve 164,000 Kentuckians.
The program was ranked the 13th best Medicaid plan in the nation in 2008-2009 based on access to care, overall member satisfaction, prevention services and treatment. The exam by the Auditor’s Office did not address the quality or delivery of medical services.
Auditors found that Passport’s success has allowed it to accumulate substantial reserves. Questions have been raised regarding the distribution of excess revenues and the program’s savings. The exam calls for a detailed analysis to quantify any savings Passport is achieving for the Commonwealth.
In response to allegations received during the exam, auditors found that UHC staff traveled frequently, stayed in luxury resorts, used limousine services, ate expensive meals and purchased numerous gifts – all with funding received from Medicaid and many without a clear business purpose.
“Passport plays such a vital role in the lives of many Kentuckians, it is imperative that it use state and federal Medicaid funds in an equitable and transparent manner,” Luallen said. “Any cost savings generated by the program should take the form of lower costs to the state or additional services.”
The exam makes 20 findings and offers numerous recommendations to Passport and the state to provide consistent “good stewardship” over Medicaid funds.