Cook Says Changes Are Coming To Passport

by Gabe Bullard on November 18, 2010

The board of directors of Medicaid manager Passport Health Plan met Thursday for the first time since an auditor’s report revealed inappropriate spending and conflicts of interest within the agency.

Passport CEO and board chair Dr. Larry Cook says an interim-CEO will be hired to relieve him of his duties in that position. He will remain on the board, but may be replaced next year when he gives up his vice presidency at the University of Louisville, which he has been planning to do since before the audit. Passport is part of U of L Health Care.

Passport receives public funds to manage Medicaid plans in Jefferson and 15 surrounding counties. Cook says the board will soon meet with the state health cabinet and determine whether any money should be repaid to the state.

“That’s a possibility,” he says. “We’ll work with the cabinet and if they think that’s an appropriate thing to do, I presume we’ll do it.”

Cook says the board will more closely review expenses and determine whether its lobbying efforts are appropriate. Two executives who were found in conflict of interest due to consulting jobs will stay on at Passport, but not without changes.

“In referring to consultant activities, in referring to travel activities, life will obviously change for all of our current and future employed people,” says Cook.

The auditor’s report also found that Passport had transferred some thirty million dollars to various partners, including U of L. Cook says while it’s possible some of Passport’s money was misspent, these transfers were legal.

“We feel we exercised all due process,” he says. “We do not feel we have violated IRS rules or Kentucky law and I’m certain that issue will be explored by the parties.”

Dr. Cook’s full statement:

Audio MP3

Governor Steve Beshear has issued the following statement:

“Attached is a letter sent to the Passport Board yesterday from Secretary Janie Miller of the Cabinet for Health and Family Services calling for an immediate meeting to address corrective actions in response to the troubling audit findings. It is my understanding that the Passport Board plans to hire an interim CEO.   Obviously a new interim CEO is needed at Passport, but any candidate for that position should be reviewed by the Cabinet to make sure that there are no potential conflicts of interest, allowing that interim CEO to make it his or her first and only priority to clean up this mess.

However, while a new interim CEO is important, it is also essential to have a top to bottom change in management and a total reorganization in the governing structure of Passport.  Any new management and governing structure must understand that they are accountable to the taxpayers and that they will be transparent with the taxpayers’ dollars.  Additionally, the Cabinet will be conducting a full financial and programmatic audit of Passport, and I expect the new management to be fully cooperative in that effort. Finally, we notice from Passport’s news release that they plan to begin ‘a review of all lobbying efforts to determine appropriateness for an organization that is established as an at-risk, provider-sponsored, 501(c)3 not-for-profit HMO.’  A review alone is totally unacceptable.  We expect a immediate freeze on any expenditures for lobbying and any other expenditures not directly related to medical care for Medicaid recipients until the Cabinet and new Passport management can address these issues.”

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