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Without State Contract, Passport Health Plan Plans To Sell Business To Competitor

Passport West Louisville construction site

Passport Health Plan, the Louisville-based Medicaid provider, announced plans Friday to sell some of its assets and property to competitor Molina Healthcare of California.

The state again passed over contracting with Passport this spring, after Gov. Andy Beshear's administration reopened bids for contracts over concerns that his predecessor Matt Bevin's bid process for managed care organizations may have been biased. Bevin's administration announced in November its plan to drop Passport.

The companies announced Friday that Molina would purchase assets such as Passport's brand, operations, clinical infrastructure and more. Molina also said it would offer employment to 500 Kentucky-based employees of Passport and its majority-owner Evolent Health, based in Virginia.

Molina said it would pay $20 million with cash on hand to purchase these assets. The deal is subject to regulatory approval.

"While we are disappointed that Passport was not awarded a new MCO contract, we firmly believe that this agreement provides the best path forward for Passport members, providers, employees and our community," Passport CEO Scott Bowers said, according to a news release. “The trusted Passport name and brand will live on and, more importantly, this agreement provides continuity of care and coverage for our members during these challenging times for our community.”

Passport struggled financially following changes to Medicaid reimbursement rates, and with most of its business based in Kentucky, the loss of a state contract raised questions about its continued existence.

“We look forward to being able to achieve a major objective of this transaction, which is the continuity of care for Passport’s members," Molina's president and chief executive officer Joe Zubretsky said, according to a news release.

The organization had about 315,000 members at the end of June, when its previous contract with the state expired, it said.

Louisville Mayor Greg Fischer said in a statement he was excited to see a smooth transition for Passport's members and employees.

"And I’m thrilled at the prospect of seeing the project at 18th and Broadway proceed. My team and I look forward to working with Molina on their plans and supporting even more opportunities for west Louisville and its residents," he said.

The $20 million price tag does not include Passport's 20-acre property near 18th St. and Broadway in west Louisville. Passport said Molina would purchase that real estate in a separate transaction, but a representative did not immediately respond to a question about its sale price.

Passport announced plans in 2017 to build a corporate headquarters in west Louisville, where much of its member base lives. The $130 million project was intended to be one of several major developments in the area, but the organization put it on "indefinite hiatus" amid financial troubles in February 2019. That news was disappointing to supporters who saw it as an opportunity for positive economic development in a part of the city long depressed by racist policies that historically preempted that sort of investment.

In January, Molina publicly expressed interest in leasing that site, though at the time the company said it was not interested in developing it. Days later, as it attempted to save its business in Kentucky, Passport said it was considering hiring a developer for the project and that it was open to selling the property.

Amina Elahi is LPM's City Editor. Email Amina at aelahi@lpm.org.