State senator says U of L doctors used Medicaid funds to pay themselves $4.8 million in bonuses, seeks more oversight

State Sen. Tim Shaughnessy has questioned a $30 million transfer of surplus Medicaid funds to Passport Health Plan board members in 2008 and 2009. Shaughnessy, a Louisville Democrat, says doctors at the University of Louisville medical school paid bonuses to themselves using about $4.8 million intended for indigent care and used another $5.2 million to purchase an electronic records system, making them eligible for more bonuses from the federal government, Deborah Yetter of The Courier-Journal reported.

Since Attorney General Jack Conway ruled the transfer illegal, some groups have elected to repay. University Physicians Associates will repay $9 million over five years; U of L, University Medical Center and local hospitals that provided capital to start Passport have agreed to repay, but on different terms. Conway did not indicate whether the $4.8 million in compensation was bonuses or salaries, Conway spokeswoman Shelley Johnson told Yetter.

Shaughnessy said repayment is not sufficient to address the real problem — “that U of L’s board wasn’t involved in major financial transactions involving groups with which it is affiliated, including Passport, University Physicians Associates and the U of L medical center,” Yetter reports. “We need to know how this happened, and we need to make sure it doesn’t happen again,” Shaughnessy said in an interview.

Shaughnessy is working on legislation for the 2012 General Assembly requiring public university boards to apply more oversight to groups like Passport. He has also written letters to Passport chairman Dr. Gerard Rabalais and U of L President James Ramsey. (Read more) To read Shaughnessy’s letter to The Courier-Journal, click here.

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