Kaiser Plan Fined $4 Million By DMHC

Kaiser Foundation Health Plan was fined $4 million by the Department of Managed Health Care on Tuesday for creating barriers to its enrollees in obtaining mental health services.

The fine was the largest by the agency in five years, and comes as the DMHC has come under scrutiny for a declining number of sizable penalties against insurers. It also comes just weeks after the ouster of the DMHC attorney who oversaw such disciplinary actions during the period of decline.

Kaiser received the enforcement action and fine as the result of a routine survey conducted of the Oakland-based health plan last March. 

The survey concluded that Kaiser's Northern California division had provided literature to enrollees that suggested the plan would not offer to pay for extensive sessions of psychotherapy and other mental health services. It also concluded that appointments through Kaiser's network of providers in California were not offered in a timely manner, that it failed to appropriately monitor its network of mental health professionals, and that it didn't correct the deficiencies in a timely manner.

“The Department's actions are a result of both the seriousness of the deficiencies and the failure of  Kaiser to promptly correct them,” DMHC Director Brent Barnhart said. “The Department is taking this action to ensure that Kaiser promptly corrects these deficiencies and provides its patients with the mental health care promised to them by their health plan.”

The survey itself was vague as to how serious the deficiencies were. Delays in receiving referrals averaged about two days. And while it noted that those plan enrollees in Northern California did not seek care from mental health professionals at the rate of those in Southern California, no specifics about the disparity were available. DMHC spokesperson Rodger Butler was also unable to say if serious harm had been inflicted on Kaiser enrollees.

“Those deficiencies put Kaiser's 6.8 million enrollees in California at risk,” Butler said.

A Kaiser spokesperson did not downplay the deficiencies. “I don't think it would be right for anybody to characterize these issues as minor. We are dealing with people seeking to obtain therapy and mental healthcare,” said spokesperson John Nelson.

However, Nelson added that the size of the penalty was outsized. “It was disproportionate and seemed to acknowledge that no progress had been made in addressing the issues,” he said.

For example, Nelson noted that Kaiser added more than 100 non-medical mental health professionals to its provider roster, an overall increase of more than 5%.

The DMHC survey observed that Kaiser had taken corrective actions for each deficiency cited, but concluded they had not resolved the issues.

The fine was announced less than a month after the departure of attorney Anthony B. Manzanetti as the DMHC's chief counsel, who signs off on all enforcement actions.  He had been appointed to the post by Barnhart not long after he took the job running the agency in 2011.

Last February, Payers & Providers reported that the number of enforcement actions taken in the months after the appointment of Barnhart – who had been Kaiser's longtime general counsel prior to being appointed to the DMHC job by Gov. Jerry Brown – plunged dramatically. 

In 2012, Barnhart's first full year helming the agency, it issued 90 enforcement actions and a total of $451,000 in fines. In 2011, it issued 507 enforcement actions and nearly $3 million in fines.

Prior to taking action against Kaiser, the DMHC had issued 33 enforcement actions in 2013 and levied fines totaling $308,000.

Butler denied that the fine against Kaiser was connected to scrutiny the agency had drawn about the declining number of enforcement actions and fines.

Meanwhile, Nelson said that Kaiser officials would meet with DMHC officials to get a better understanding of how the fine was arrived at.

If Kaiser objects to the fine, it has until July 9 to notify the DMHC.

Kaiser can then seek a hearing in front of an administrative law judge. Butler noted that it takes four to six months to obtain a hearing date.