FRANKFORT — A new audit released Tuesday of Passport Health Plan found significant improvements in the organization after a scathing 2010 audit found excessive spending on travel and food, high salaries and poor oversight.
Passport, which manages care for Medicaid patients in Jefferson and 15 surrounding counties, came under fire after a state auditor's report found troubling practices at the managed care organization that was founded in 1997.
Some of the problems uncovered by the 2010 audit included excessive spending on lobbying, top executives who had contracts with subcontractors, and questionable donations to charitable organizations with ties to Passport executives.
After the release of the 2010 audit, Passport Health Plan appointed a new board chairman and CEO, eliminated lobbying contracts and hired an internal auditor and compliance auditor.
Gov. Steve Beshear also announced he would hire an outside auditor to do a comprehensive audit of Passport's finances. That audit, conducted by Myers and Stauffer LC and released Tuesday, showed gains in key areas, but auditors still had concerns with some of Passport's policies, including setting limits on expenses for executives.
Auditors found that Passport executives now must submit expenses quarterly to the Passport board for review. But executives did not have a limit on how much they could spend on travel. The audit also found that former Passport executives were given severance packages "which could be considered generous."
The audit noted that one former executive received a year's worth of pay after the executive voluntarily left the organization. The audit did not name the former executive.
Passport, in the audit, defended the severance package, saying it was offered after the agency consulted its lawyers.
Auditors recommended that Passport develop a policy regarding severance packages.
Patient and doctor satisfaction with Passport remains high, the audit found.
"We believe these audit results close the door on a difficult period for Passport Health Plan and proves that Passport's unique structure as a non-profit, provider-sponsored plan allows us to operate in the best interest of the communities we serve," CEO Mark Carter said in a statement.
Passport is the single-source provider for Medicaid managed care in the Jefferson County region. However, the federal government has told the state it would not renew a waiver allowing Passport to continue as the single-source provider for managed care in that area.
In November, the state hired three companies to manage care to the Medicaid population in other areas of the state. The cabinet has asked the federal government to allow Passport to continue to provide services in that area until Dec. 31.
After Jan. 1, multiple managed care companies will bid to serve the region. Passport will be allowed to bid on that contract.