Passport Health Plan is Reimbursed for Misappropriation of Funds

by Devin Katayama on July 21, 2011

Members of Passport Health Plan will pay back $26.4 million dollars that the Medicaid provider misappropriated.

When Passport’s surplus grew to around $90 million dollars, it tried to hand money back to Norton Hospital, Jewish and St. Mary’s Inc., University Medical Center and University Physicians Associates.

Passport executives did this to try to lower their balance sheet and negotiate more Medicaid money from the state, said Attorney General Jack Conway.

But the money wasn’t used for Medicaid purposes, he said.

“The minutes of the board meetings reflect very little, very little questioning of whether or not this was illegal,” said Conway. “Apparently they relied on opinion of outside council that they could do this. But the law in Kentucky is pretty clear that non-profits can’t disperse dividends to their members.”

The payments were among several contentious points in a scathing report from the state auditor’s office that preceded a number of changes at Passport.

The attorney general’s office made several recommendations for the provider as well, such as suggesting independent board members be appointed. Passport says six will join in the fall.

Some of the healthcare providers like Norton Healthcare plan on paying its bill immediately. University Medical Center will make payments over five years.

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