The co-owners of Kentucky Medicaid insurer Passport Health Plan, which have been seeking an ownership partner to infuse capital, have chosen to sell a 70 percent stake in the organization to for-profit Evolent Health.
A May 29 story in the Louisville Courier-Journal noted that Passport has the second largest share of the state's Medicaid business, but has been struggling financially since the state last year cut Medicaid rates for the Louisville region, where Passport does most of its business.
Founded in 1997, Passport’s owners include the University of Louisville, University of Louisville Physicians, University Medical Center, Jewish Heritage Fund for Excellence, Norton Healthcare and the Louisville/Jefferson County Primary Care Association. Passport already works with publicly traded Evolent Health (NYSE: EVH), which provides an integrated value-based care platform to providers and payers.
Passport is a Louisville-based health plan that serves more than 300,000 Medicaid beneficiaries and has provided managed care services in Kentucky for more than 20 years. Evolent has provided extensive services to Passport since 2016, when the organizations formed a relationship to launch the Medicaid Center of Excellence, focused on improving health outcomes for Medicaid beneficiaries in Kentucky and in several states nationwide.
The agreement states that Arlington, Va.-based Evolent will acquire an ownership interest in Passport Health Plan and will expand the scope and term of its long-term management services agreement with the health plan. Passport will be jointly owned and operated in partnership between Evolent, the University of Louisville and other Passport owners. Evolent will contribute $70 million for a 70 percent ownership interest in Passport Health Plan and will also provide interim balance sheet support if necessary to meet near-term regulatory capital requirements. Evolent Health expects to account for its ownership interest in the joint venture as an equity method investment. The plan will be governed by a newly formed board of directors upon closing with joint representation from the current owners and Evolent Health.
The deal is subject to normal closing conditions, including approval from several state and federal regulatory agencies. The Courier-Journal story said that Passport CEO Mark Carter would step down on June 7 and Scott Bowers, Evolent's national Medicaid president, would become Passport CEO. Carter will remain on for a period as an adviser.
"We strongly believe in Passport's mission and have been proud to partner with Passport's leadership team to serve the Commonwealth of Kentucky," said Evolent Health CEO Frank Williams, in a prepared statement. “We are confident that by leveraging our value-based care platform and the full scope of our clinical programs, as well as providing enhanced functional expertise, we can drive strong operational and financial performance. We look forward to collaborating with the University of Louisville and other Passport owners—as well as local and state regulatory agencies and other key stakeholders—to continue driving improved health outcomes and critical support to one of the Commonwealth's most vulnerable populations."
Evolent says it partners with more than 35 healthcare organizations to actively manage care across Medicare, Medicaid, commercial and self-funded adult and pediatric populations.
