Kaiser Permanente’s insurer arm has agreed to a $200 million settlement over “deficiencies in the plan’s delivery and oversight of behavioral healthcare” to its members, the California Department of Managed Health Care (DMHC) announced last week.
Most of those funds, $150 million, represent a five-year sum the major nonprofit has promised to invest into bolstering its behavioral health delivery in the state. This includes hiring an outside consultant who will work with Kaiser to implement other improvements.
A quarter of that total is a monetary penalty, $40 million of which will be paid to the state by Oct. 21 and $10 million of which will only come if the DMHC determines that Kaiser “unreasonably failed to meet its obligations” to the settlement’s terms. DMHC said it is the highest fine the department has ever brought against a health plan.
“This settlement agreement aims to provide Kaiser patients with the care they are entitled to in a timely manner,” California Gov. Gavin Newsom said in a statement on the settlement. “Today’s actions represent a tectonic shift in terms of our accountability on the delivery of behavioral health services. Accountability of the private sector is foundational to ensuring our entire system of behavioral healthcare works for all Californians.”
Kaiser Permanente is the largest healthcare service plan in the state with over 9 million California enrollees and over $91 billion in total year revenue during 2022.
DMHC notified Kaiser that it would be conducting a non-routine survey of its behavioral health operations due in part to “complaints received from enrollees, providers and other stakeholders,” according to the settlement (PDF).
However, in August 2022, Kaiser was experiencing a strike of about 2,000 behavioral health clinicians that “exacerbated the plan’s challenges,” DMHC said. Different components of the investigation were conducted before, during and after the 10-week demonstration, during which the striking workers often highlighted behavioral health care disruptions as a bargaining tactic.
“In summary, while the Plan was managing unprecedented statewide need for behavioral health services exacerbated by the pandemic and the [National Union of Health Care Workers] strike, the Department’s investigation identified deficiencies in the Plan’s provision of behavioral healthcare services, many of which have been ongoing,” DMHC wrote in the settlement.
The “several” areas of concern spanned quality assurance, oversight of delegation and providers, enrollees’ timely access to care, network and referral adequacy, and handling of enrollee grievances and appeals, mental health parity and communications, according to the settlement. The agreement struck between the department and the integrated care provider requires improvements in each of these areas.
“In addition to paying the highest fine the DMHC has ever levied against a health plan, Kaiser Permanente has agreed to make significant improvements to the plan’s operations, processes and procedures and business model to better assist enrollees with accessing care,” DMHC Director Mary Watanabe said in a statement. “The DMHC is committed to using its full authority to hold Kaiser accountable and ensure enrollees have access to behavioral health care when they need it.”
In a statement, Kaiser Permanente CEO and Chair Greg Adams pointed to “an unprecedented rise in demand for mental healthcare services over the past three years,” which for his organization translated to a 33% increase in need during the pandemic. He also reiterated that DMHC’s non-routine investigation landed alongside staffing shortages and a strike and that Kaiser as a whole has increased its mental health treatment services for members by an additional $1.1 billion over the pandemic.
“Even so, during the period of the DMHC survey we fell short of our members’ expectations and our own expectations,” Adams wrote.
The required investments will lead Kaiser to develop, build and expand programs that, for example, address the rising mental health needs of younger patients, digital wellness offerings, school and university partnerships, mental health workforce development programs and initiatives better integrating mental health care into primary and specialty care, Adams wrote.
“Our agreement with the DMHC takes full accountability for our performance during the survey period including our shortcomings, acknowledges our work to improve mental health care and ensures that our ongoing investments not only help the members of Kaiser Permanente but also build a stronger mental health foundation in the communities we serve,” he wrote.
DMHC noted in the settlement that it has “repeatedly” cited Kaiser for deficiencies in oversight quality assurance compliance and brought “several” enforcement actions against the nonprofit for these issues since 2006. The latest non-routine investigation showed that some of the behavioral health care-related issues cited in past actions “continue to persist,” DMHC wrote.