Tim Shaughnessy's Allegation Suggests Jack Conway WINKS, While University Of Louisville Doctors Use Millions Of Dollars In Medicaid Indigent Care Money To Give Themselves Bonuses. Tsk! Tsk!!

Medicaid funds allegedly misused: U of L doctors used $4.8 million in Medicaid money for bonuses, Shaughnessy says
Shaughnessy claims U of L doctors paid selves $4.8 million
Written by Deborah Yetter

Doctors at the University of Louisville medical school used about $4.8 million in state Medicaid funds to pay themselves “financial bonuses” — money that was supposed to be used for indigent care, state Sen. Tim Shaughnessy says.

And they used another $5.2 million for an electronic records system that would make U of L doctors eligible for additional bonuses from the federal government, according to new details of a controversial transaction that Shaughnessy said he recently obtained from Attorney General Jack Conway’s office.

A spokeswoman for Conway said Wednesday that the office determined only that the $4.8 million was compensation for U of L doctors. But Shaughnessy insisted that Conway’s staff described the money as “bonuses” at a recent meeting.

“I was shocked,’’ said Shaughnessy, a Louisville Democrat who was the first to publicly question a transfer of about $30 million in surplus health funds in 2008 and 2009 from Passport Health Plan to U of L, University Physicians Associates, or UPA, and others represented on Passport’s board.

Although those groups have agreed to repay most of the money to settle an inquiry by Conway — who determined the transfer of funds was illegal — Shaughnessy said he believes U of L’s board needs to exercise more oversight to prevent a recurrence of what he calls the “Passport scandal.”

Shaughnessy said he plans to file legislation for the 2012 session of the General Assembly that would require public university boards to exercise more oversight over affiliated entities such as Passport.

“We need to know how this happened, and we need to make sure it doesn’t happen again,” he said in an interview.

Conway’s office investigated Passport after it was the subject of a scathing report last year by state Auditor Crit Luallen that blasted travel, entertainment and other spending by former executives but also questioned the $30 million transfer.

Passport is a nonprofit Medicaid managed-care organization that provides health care to about 170,000 low-income and disabled Medicaid recipients in Jefferson and 15 surrounding counties.

UPA declined to comment on Shaughnessy’s concerns, which he also outlined in a Sept. 14 letter to the organization’s chairman, Dr. Gerard Rabalais, said spokeswoman Diane Partridge.

“We have just gotten our hands on it, and we think it’s inappropriate to comment until we respond to Sen. Shaughnessy directly,” Partridge said.

She also declined to say whether any of the 600 physicians who make up UPA received bonuses, as Shaughnessy’s letter claims.

“We haven’t looked through the letter enough to even comment,” Partridge said.

In its investigation of the transfer of about $10 million from Passport to UPA, the attorney general’s office determined that about $4.8 million was used to “compensate” physicians and another $5.2 million was used for an electronic medical records system, according to spokeswoman Shelley Johnson.

She said in an email that Conway’s office did not determine whether the physician compensation was for bonuses or salaries.

“UPA was forthcoming with us that $4.8 million went to the clinic practice group and was used to compensate physicians,” she said.

But Shaughnessy said members of the attorney general’s staff told him at a Sept. 8 meeting that the funds were used for bonuses.

Further, he said, he was surprised to learn that the electronic medical records system, launched earlier this year with the help of $5.2 million in Passport money, makes UPA physicians eligible for bonuses of up to $44,000 over five years under the federal government’s Electronic Health Records Incentive Program.

Under a settlement Conway announced in July, UPA will repay the state $9 million over five years. Other groups that received funds from Passport’s $30 million transfer agreed to repay the funds according to various schedules. They include U of L, University Medical Center and local hospitals that provided capital to start Passport.

But Shaughnessy said the repayment doesn’t address his basic concern — that U of L’s board wasn’t involved in major financial transactions involving groups with which it is affiliated, including Passport, UPA and the U of L medical center.

“There was no involvement of the U of L Board of Trustees,” Shaughnessy said. “How did these millions of dollars get allocated without any involvement of the board?”

Shaughnessy said his legislation would try to consolidate and clarify existing laws that apply to public universities and the role of their boards with respect to organizations they are affiliated with but do not directly control. He said he also has outlined his concerns in a letter to U of L President James Ramsey.

University spokesman Mark Hebert said U of L has received Shaughnessy’s letter and is working on a response but has no immediate comment on the proposed legislation.