Protesting that state cuts to its Medicaid business will "doom" Passport Health Plan, CEO Mark Carter is questioning whether the Bevin administration is "for reasons unknown, hostile to Passport."

"If there is an ulterior motive to push Passport out of the Medicaid market, there has been little effort to conceal it," Carter said in a Jan. 10 letter to Scott Brinkman, secretary of Gov. Matt Bevin's executive cabinet.

The Courier Journal obtained a copy of the letter.

Meanwhile, Louisville elected officials and community leaders are voicing alarm at the possible demise of the Louisville-based Medicaid managed care company, which employs 700, as well as over the economic development blow that would occur if the company's plans for a headquarters on West Broadway fall through because of state cuts.

"I am amazed that Frankfort would go down this path — it does not make any sense to me at all," said David James, Metro Council president. "I think this sends a horrible message to West Louisville about what Frankfort thinks about West Louisville."

Earlier coverage:Passport says state cuts threaten future, new Louisville HQ

Kentucky Medicaid Commissioner Carol Steckel on Friday said Passport's claim the state may be seeking to put it out of business is "absurd."

"It is nonsensical to assert that the Department for Medicaid Services or anyone else would want to push a Kentucky-based insurer who employs hundreds of people out of the market," Steckel said in a statement provided by the Cabinet for Health and Family Services.

Steckel said state officials have met with Passport on numerous occasions and Passport has failed to provide any evidence that the rates, developed by an independent actuary, are not sound.

Steckel said the state cannot change rates to "make special accommodations" for a single company. And while state officials appreciate Passport's commitment to the city and state from an "economic development perspective," Medicaid officials can't consider that in setting rates, she said.

But Metro Council member Barbara Sexton Smith, whose district includes the part of western Louisville where Passport plans to locate, called the state's actions "political bullying" and said loss of the headquarters "would be the most devastating blow possible."

Louisville Mayor Greg Fischer said Thursday that he's concerned about Passport's members as well as its new headquarters under construction at 18th and Broadway alongside a new YMCA — a complex hailed by western Louisville leaders and city officials as an economic boon to a part of town long starved for jobs and business growth.

"It's really a significant issue for us," Fischer said. "It could not only affect delivery of health care, which everybody should have ... but it could also affect the headquarters at 18th and Broadway and the momentum it's bringing to West Louisville."

Read more:Racism, jobs and pensions: 5 things to know about Fischer's 2019 plans

Steve Tarver, CEO of YMCA of Greater Louisville, said YMCA officials were delighted to learn Passport planned to join them at the new complex with a headquarters it envisions as a health and wellness campus.

"We want to be about healthy living and youth development and social responsibility," Tarver said. "We're cheering them on all the way. Our missions are so similar."

The Courier Journal reported Wednesday that Passport claims the cuts imposed last year threaten its viability. Officials for the company, which handles Medicaid claims for about 310,000 low-income and disabled people in the Jefferson County region, said it has tried for months to negotiate a solution with state officials.

Carter said in his letter that Passport believes the state's rate-setting process is "deeply flawed" and deserved closer examination.

Steckel in her statement said state officials have tried to be "transparent and objective" about the process and would be happy to explain in more detail, possibly at a legislative committee meeting.

Passport said the rate change hit it the hardest because it cuts by about 4.1 percent rates in the Jefferson County region, where Passport does most of its business, while raising rates about 2.2 percent for the rest of the state, where four commercial insurance companies divide up most of the rest of the state's Medicaid business.

Passport, Kentucky's first Medicaid managed care organization, was created in 1997 as a pilot project to control costs in Jefferson and 15 surrounding counties. The state later expanded managed care statewide, adding for-profit commercial insurance companies.

The federal government provides about 80 percent of the money for Kentucky's $11.5 billion-a-year Medicaid program, which provides health care for almost 1.4 million people.

The state cuts, enacted July 1, 2018, are causing significant losses for Passport and could put its standing in jeopardy with the Kentucky Department of Insurance, the company said in a formal appeal to state officials. It lost $60 million in 2018 and projects losses of up to $144 million in 2019, the appeal said.

If its net worth drops too low, Passport would be subject to a state takeover or liquidation, the appeal said.

More headlines:Judge suggests delaying Kentucky Medicaid overhaul. Bevin says no

It doesn't say what would happen to the more than 300,000 Passport members if that happens. But in 2013, when a managed care company operated by Centene Corp, a St. Louis health company, dropped out of the Kentucky Medicaid market, the state shifted its 125,000 enrollees to other companies.

Carter said in his letter that "wiping out Passport is a terrible trade-off" for relatively small savings to Kentucky as a result of the cuts.

He also noted in the letter that state officials have indicated state Medicaid funds should not be used for "economic development," meaning construction of Passport's new headquarters — an argument he said is spurious.

Passport rents commercial office space in southeastern Jefferson County and was seeking new space when it decided to build its own headquarters.

"In the long run, leasing costs more than owning and provides less stability and flexibility," Carter's letter said.

And no one questions where the four commercial insurance companies that also provide managed care for Medicaid — Aetna Better Health of Kentucky, Humana CareSource, WellCare of Kentucky and Anthem — locate their offices, his letter said. Nor does the state object when those companies make a profit, it said.

"No one wrings their hands each time one of them declares a shareholder dividend," his letter said.

Passport is the only company of the five that relies on Kentucky Medicaid as virtually its sole source of income. It's the second-largest provider after Wellcare.

Carter's letter said that to finance the headquarters project, Passport is using mostly cash reserves it built up over 20 years from investments and a separate Medicare plan it managed.

And by moving to western Louisville, it is locating in the very neighborhood where many of its enrollees live, unlike other managed care organizations, or MCOs, his letter said.

"What Passport chose to do was something no other other MCO would have ever considered, locate its headquarters in the very heart of the population it serves," it said. "The move will allow Passport to directly and positively affect its members by going right at many of the social determinants of health, by providing jobs, training, food, health services and any number of other benefits so often denied or out of reach for t his populations."

State Sen. Morgan McGarvey, a Louisville Democrat who serves on a legislative Medicaid oversight committee, said he was surprised by the state's actions affecting Passport.

While the committee hears regular complaints about managed care companies — most often for late payment of claims or denying services — Passport draws far fewer complaints, he said.

"Since I've been in the legislature, Passport has always had a reputation as being one of the good providers," he said. "Passport is delivering care and services to people in Louisville who are an important part of our population. I don't know who could step up quickly and take over what they're doing."

Deborah Yetter: 502-582-4228; dyetter@courierjournal.com; Twitter: @d_yetter. Support strong local journalism by subscribing today: courier-journal.com/deborahy.

Reporter Darcy Costello contributed to this story.