Kaiser Fined $3M for Lacking Oversight; $1M Will Be Forgiven if Corrected

By Kathy Robertson
San Francisco Business Times

Quality oversight and physician review at Kaiser Permanente's 29 medical centers in California are so inconsistent that it's impossible for the health-care giant to determine whether serious problems are being addressed, state regulators announced Thursday after a lengthy investigation.

The state Department of Managed Health Care levied a $3 million fine against Kaiser for failure to provide adequate oversight. The agency agreed to waive $1 million of the fine if Kaiser completes a proposed correction plan.

The probe, started as an investigation into Kaiser's now-defunct San Francisco-based Northern California kidney transplant program, was broadened last fall to cover how the Oakland-based health plan and hospital system handles consumer complaints and a wide spectrum of oversight issues.

Kaiser posted $1.3 billion in net income last year on revenue of $34.4 billion.

State regulators found Kaiser does not comply with state law in two areas. It lacks adequate health plan oversight of quality assurance programs and there's a significant variation in and inconsistent handling of complaints against doctors at individual medical centers.

The investigation looked at records from nine of Kaiser's 29 medical centers in California, including four in Northern California: San Francisco, San Rafael, South San Francisco and South Sacramento. In addition to a review of policies and procedures, quality program descriptions and work plans, state regulators looked at complaints from April 1, 2005, through March 31, 2006, to see how they were handled.

"This survey is a culmination of our investigation that began last year with Kaiser's kidney center closure into why Kaiser didn't know the problem was going on," state agency spokeswoman Lynne Randolph said. "We looked at the oversight and saw the health plan was not doing the job it was supposed to be doing at its individual medical centers."

She stressed the investigation is not a reflection of the individual quality of care patients get at Kaiser hospitals.

"We believe the survey conducted by the state was thorough, thoughtful and constructive, and we have moved full speed ahead on the corrections," said Bernard Tyson, executive vice president of health plan and hospital operations for Kaiser Permanente.

"The survey did not say we have 29 broken programs, but that they are inconsistent," he said. "(It) was not about the quality of care provided to our members, it was concerned with processes."

Five areas of deficiency were identified by state regulators:

The health plan did not have a proper system in place to monitor and evaluate the care provided by the medical groups or medical centers.

The health plan failed to inform its providers and medical centers of the scope of its quality management responsibilities or monitoring procedures.

The health plan's board of directors did not request sufficiently detailed reports or oversight activities to ensure the board would be informed of significant or chronic quality problems within the Kaiser system

Physician peer review processes in the medical centers did not consistently ensure that all quality-of-care concerns were identified and corrected.

Quality oversight systems in the medical center were not designed to consistently ensure that all quality assurance concerns were identified and corrected.

In addition to the $3 million fine, state regulators and Kaiser agreed on corrective action that requires Kaiser to establish a reporting process to allow the health plan to review and monitor changes in clinical practice, quality-of-care complaint systems and peer review programs at all 29 medical centers.

The Department of Managed Health Care will require additional corrective actions from Kaiser by Oct. 1 on standardizing peer review and quality management in its medical centers.

State regulators will also conduct site visits starting in November, but with no advance notice.

From: San Francisco Business Times (www.bizjournals.com)