As uncertainty dominates health policy, many providers seek more control over reimbursement, some through provider-sponsored health plans (PSHPs) and advocacy for the state legislation required to enable them. Evolent Health's National Medicaid President Mike Minor sat down with Mark Carter, CEO of Passport Health Plan, to discuss Passport's 20 years as a resilient provider-sponsored Medicaid health plan.
MM: Passport Health celebrated 20 years in 2017. How did you overcome inertia when you started in 1997?
MC: The perception was that we lacked the qualifications to function as a managed care organization. To overcome that, we leveraged a third-party administrator's infrastructure and experience. It helped that each coalition founder had extensive history with the state, and they all put capital into the new organization to help the state get more comfortable with our financial picture.
We also had to overcome perceptions of a conflict of interest. From the outside, taking control of our own Medicaid reimbursement might suggest we'd be enticed to maximize our payment. Kentucky proposed that if we could manage to 95 percent of the Medicaid costs projected by their actuarial analysis, we could keep the excess. If not, we were at risk.
MM: You started under a Democratic governor, and you're now thriving under a Republican governor. What advice would you give providers operating in states with shifting political leadership?
MC: Maintain strong relationships. Twenty years ago, we made a conscious decision to reiterate our mission and outcomes to elected officials whose tenure would span administrations. We have a fiduciary responsibility to the state, so when the governor's office changed hands, we met with the staff to help them understand our mission and how it aligned with their goals.
Although we're no longer in the partnership model of our original Medicaid waiver, we kept many of those components, including a council of 35 providers we call our care delivery “Noah's Ark”: home health, hospice, health departments, emergency transport, etc., are all represented. Those relationships and that accountability help new leaders understand our history and future and how we can help them implement their policy goals.
MM: How have you built financial resiliency into Passport?
MC: Early on, the provider systems put in capital, but the objective was for the organization to stand on its own. Being nonprofit helped – we could look at the plan's financial projections over a longer horizon than if we sought distributions and dividends. As CEO, I must show a 1-3 percent operating margin over three years, which gives me more flexibility than being accountable for one-year results. It also lets us focus more on balance sheet strength than quarterly operations, so we can better address our long-term financial health and let financial results be trailing indicators.
MM: How do providers benefit from being part of a Medicaid PSHP?
MC: Each provider-owner is closely aligned with the state on intergovernmental transfers and payment programs, especially regarding teaching programs. They have seats at the table in how care management and utilization programs are run.
We also have clarity into reimbursements. Commercial payers consider their utilization management (UM) policies proprietary, so providers may not fully understand claim denial rationales. Passport has UM policies, too, but the criteria are out there. Our claim denials can be lower, and our days in Accounts Receivable metrics better, because we provide visibility into the evaluation criteria.
MM: What's holding other states back from enabling PSHPs that you think could be overcome?
MC: One regulatory barrier is often the department of insurance's risk-based capital requirements. Kentucky enabled PSHPs by creating a separate risk-based capital requirement for stand-alone Medicaid plans that is lower than that of overall health insurance plans. In states without this provision, providers must come up with a substantial amount of money.
MM: What's the big piece of fruit you're reaching for next?
MC: Incorporating social determinants of health. Providers tell us patients missing appointments is a big problem, which is largely a transportation issue. Can you pay for transportation and get an ROI? We'd like to find out.
Part of serving those needs includes relocating our campus to a disadvantaged area of Louisville. This is an exciting move closely aligned with our mission of improving the health and quality of life of our members. Passport's new headquarters will bring new amenities to the neighborhood such as a cafeteria offering healthy sit-down dining and community meeting space. Efforts are under way to build out a surrounding campus with an array of resources to help people thrive, including housing, career services, health care, a grocery, a pharmacy, and more to support the 70,000 members who live within a 10-mile radius. Our goal is to develop a world-class campus that harmonizes with the urban streetscape while maximizing green space. Ultimately, it could serve as a model for building healthy communities where everyone has the opportunity to flourish.