Attorney General reviewing Passport payments, nearly finished probe of for-profit colleges

01/27/2011 07:38 PM

The Attorney General’s office has been looking into the legality of $30 million the state’s largest contractor paid to its founding hospitals, Attorney General Jack Conway said.

The Passport Health Plan has a nearly $900 million contract with the state to manage the care of poor and disabled Kentuckians covered by the Medicaid program. Passport has been the subject of scrutiny since a state Audit revealed excessive spending by Passport executives on lobbying and travel and poor oversight by the state.

Conway said his office is investigating several areas involving Passport and will decide what type of legal action it may take, such as litigation.

“It’s an area of major concern for the state,” Conway said.

Specifically, Conway said $30 million that the Passport program transferred back to its three founding entities: The University of Louisville Hospital, Jewish Hospital and St. Mary’s Healthcare.

“Some of it has been characterized as a return on investment — which is like a dividend — which we can’t have under this contract,” Conway said.

Conway also explained a more than $2 million settlement that his office announced it had reached this week with AmeriHealth Mercy, which is a third-party administrator for the Passport program.

Investigators found evidence that AmeriHealth Mercy officials falsified documents to inflate numbers of procedures, such as pap smears for cervical cancer screening, in order to get a $700,000 bonus from the state, Conway said. The Attorney General’s office is now going through Franklin Circuit Court to have AmeriHealth Mercy officials pledge to fix their procedures.

“We’re entering some agreements to hold their feet to the fire in the future,” he said.

Conway’s office also has been investigating for-profit colleges in Kentucky to determine whether schools are “not delivering” on their claims of job placement for graduates.

He said one probe will be completed “soon.”

He declined to name which colleges his office is investigating, but it served subpoenas for six colleges last fall and others in previous years.

“I don’t want to cast dispersions until I have the information,” he said. “But something’s happening here. I think the industry has a lot to answer for. I think the U.S. Department of Education has a lot to answer for.”

While in studio, Conway answered questions about how much he would support several pieces of legislation that have been proposed in the 2011 General Assembly.

  • Louisville Democratic Rep. Reginald Meeks filed a bill to move oversight of for-profit colleges from the Kentucky Board of Proprietary Education to the Council on Postsecondary Education, which governs the public non-profit colleges and universities. Conway said some change is necessary because most of the Proprietary Education board’s members are employees of for-profit colleges.
  • On legislation to put cold medicine with pseudoephedrine — an  ingredient in meth — behind the counter, Conway said he is “negotiating with members of the General Assembly” and will announce in the next 10 days where he stands. Some have raised concerns about whether the legislation might slow the process of keeping tabs on the purchase of meth ingredients.
  • Conway said he will “follow up” on a request by Rep. Brent Yonts, D-Greenville, to investigate whether prison food company Aramark violated its state contract by not turning over certain documents to state auditors, while state Auditor Crit Luallen reviewed the Aramark’s work with the state’s corrections system last year.

- Ryan Alessi


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