California hits Kaiser with $2.2M fine for failing to provide required Medicaid data

Kaiser Permanente
Kaiser has been fined nearly $5 million since the beginning of the year for failing to submit Medicaid data. (Credit: Ted Eytan/CC BY-SA 2.0)

California officials have again slapped healthcare giant Kaiser Permanente with a multimillion-dollar fine for failing to provide data on patient care to the state’s Medicaid program.

The $2.2 million fine comes just months after a $2.5 million penalty in January against Kaiser, one of the largest nonprofit health plans in the country. The California Department of Health Care Services said these are the first fines it has imposed against a Medicaid managed-care plan since at least 2000.

The state agency uses this data on hospital admissions, doctor visits and prescription drugs to help set rates, ensure adequate care is available and monitor how tax dollars are being spent in the $100 billion program, known as Medi-Cal in California.

Kaiser isn’t appealing the latest fine, and the Oakland-based health plan said it expects to deliver the required information by September. (Kaiser Health News, which produces California Healthline, is not affiliated with Kaiser Permanente.)

The reporting lapses are surprising given that Kaiser is known industry-wide for pioneering the use of electronic medical records and developing data-driven treatment guidelines. But Kaiser has said its systems and technology were not designed to collect information in the format required by the state. The company said the sanctions were in no way related to the quality of patient care.

“We have recently made significant investments in new technology to help us comply with the new administrative data reporting requirements,” Nathaniel Oubre, Kaiser Permanente’s vice president for Medi-Cal, said in a statement. “We are committed to full compliance.”

Jennifer Kent, Department of Health Care Services director, notified Kaiser of the latest fine in a May 25 letter. She wrote that the insurer was making efforts to resolve the deficiencies, but it still had not complied with state deadlines. One of her deputy directors, Sarah Brooks, said the agency has been trying to get Kaiser to comply with the rules since 2014.

The state “takes very seriously its commitment to ensure contract compliance from Medi-Cal managed-care health plans so members can get the care they need,” Brooks said.

Brooks said additional fines may be imposed depending in part on whether Kaiser’s violations put Medi-Cal 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 is among 22 health plans that participate in the Medi-Cal program. About 80 percent, or 10.8 million, of Medi-Cal’s 13.5 million enrollees are in managed-care plans. Kaiser serves about 700,000 Medi-Cal enrollees.

In addition to being an insurer, Kaiser runs 39 hospitals across the country and hundreds of clinics. Kaiser operates in eight states and the District of Columbia, but about 70 percent of its 11.8 million members are in California. For 2016, the company had net income of $3.1 billion on revenue of $64.6 billion.

A consumer advocate said it’s disturbing that Kaiser has defied state rules for so long.

“We’ve seen Kaiser use their unique model as an excuse for putting themselves outside the law in the past,” said Carmen Balber, executive director of Consumer Watchdog, a Santa Monica advocacy group. “This demonstrates their hubris.”

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

Kaiser has faced other fines from California regulators. In 2013, the California Department of Managed Health Care fined the insurer $4 million for problems with patient access to mental health treatment. In June, the managed-care agency criticized Kaiser again for failing to address long delays in treatment, and it said additional fines were possible.

This story was produced by Kaiser Health News, which publishes California Healthline, an editorially independent service of the California Health Care Foundation.