The Passwords app uses the passcode set for the device if Face ID or Touch ID (depending on iPad Model) is not enabled.
When enabled, it will default to either Face ID or Touch ID, and not offer an option for a passcode. It also has no option to change the passcode used with it, as that is the device passcode. You would need to go to Settings ➜ Face/Touch ID & Passcode ➜ Change Passcode to actually change it.
Is it not responding to Face ID or Touch ID when opened?
Do you not have Face ID or Touch ID enabled for your iPad? In Settings ➜ Face/Touch ID & Passcode?
Are you maybe using a 3rd party password app?
Please provide details and context regarding your issue, and we may be able to help.