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Kaiser Permanente fined $2.5 million over missing data tied to California Medicaid

State says this was the first fine imposed against one of its Medicaid managed care plans since at least 2000.

California officials have fined health care giant Kaiser Permanente $2.5 million for failing to turn over required data on patient care to the state's Medicaid program.

The California Department of Health Care Services said this was the first fine imposed against one of its Medicaid managed care plans since at least 2000. The state relies on the data to help set rates, ensure adequate care is available and monitor how taxpayer dollars are being spent in the program, known as Medi-Cal in California.

Jennifer Kent, the department's director, notified Kaiser of the sanctions in a Jan. 13 letter that was obtained by California Healthline. The department later posted it online.

"This is the first time the department has sanctioned a health plan in recent history. The amount is significant," said Sarah Brooks, deputy director of health care delivery systems at the Department of Health Care Services. "We do take it very seriously."

Kaiser isn't appealing the sanctions and the health plan said it's "working toward compliance." The company said the sanctions were in no way related to the quality of patient care or access to treatment. (Kaiser Health News, which produces California Healthline, is not affiliated with Kaiser Permanente.)

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Brooks said her agency is in ongoing discussions with Kaiser and additional fines could be imposed depending on the company's actions and whether Kaiser's violations put the agency out of compliance with federal rules. That could force the state to repay money to the Centers for Medicare & Medicaid Services, which funds the Medi-Cal program jointly with the state.

Kaiser, the state's dominant HMO, is among 22 health plans that participate in the Medi-Cal managed care program, which covers about 80 percent of Medi-Cal enrollees in the state.

The Oakland-based company failed to submit data on out-of-network care that Medi-Cal patients received from November 2014 to September 2016, according to the state. Kaiser also didn't file data on "all physician-administered drugs" from March 2010 to March 2015, records show. That information is about infusions and other drugs given to patients in a doctor's office or clinic.

The insurer missed a June 30 deadline to comply and a subsequent one Jan. 1, which triggered the current penalties. The fine related to medical claims was $742,500 and the drug data fine was $1.79 million, for a total of $2.5 million.

The reporting lapses are unusual since Kaiser pioneered use of electronic medical records and health data collection. But the company indicated in a statement that being an integrated health system that operates a health plan, its own hospitals and medical groups complicated matters.

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Nathaniel Oubre, Kaiser Permanente's vice president for Medi-Cal, said its systems and technology -- including electronic health records -- are focused on "quality, access and integration of care."

But he said the systems were not designed or updated to collect information in the format required by the state.

"We are taking steps to change this," he said. "We are making investments in technology that will facilitate compliance with the state's data reporting requirements."

Medi-Cal represents a small portion of Kaiser's overall business, and some industry experts said the company may have been hesitant to alter its information technology systems to meet the state's demands.

Kaiser said it serves about 700,000 Medi-Cal enrollees across the state. Rival Anthem Inc. serves more than 1 million Medi-Cal patients.

In Medi-Cal managed care, the state pays insurers a fixed amount per enrollee to provide comprehensive care. That's different from the conventional fee-for-service system in which the state pays medical providers directly for services rendered.

In addition to being an insurer, Kaiser runs 38 hospitals across the country and hundreds of clinics. More than 18,000 salaried doctors work at its affiliated medical groups. Kaiser operates in eight states and the District of Columbia, but nearly 80 percent of its 10.6 million members are in California. For 2015, the company reported revenue of $60.7 billion and net income of $1.9 billion.

Kaiser has faced other stiff fines from California regulators. In 2013, the California Department of Managed Health Care fined the insurer $4 million for problems related to mental health treatment.

Two years later, the managed care agency criticized Kaiser again for failing to address the long delays in treatment for mental health patients.

Brooks said the state is rolling out a new ratings system for all Medi-Cal managed care plans next year that will track the quality of patient care, appeals processes, contract compliance and other performance measures.

Kaiser Health News (KHN) is a national health policy news service. It is an editorially independent program of the Henry J. Kaiser Family Foundation.

Twitter: @HC_Finance

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