Kaiser Permanente Ordered to Halt Denial of Care

Kaiser Foundation Health Plan is illegally denying some of its California enrollees physical, speech and occupational therapy services, says a cease and desist order filed Monday by the state.

According to the order, Kaiser "categorically denies coverage" for these services on the basis that certain  enrolleess do not have a physical condition or physical impairment that triggers the coverage, and does not provide these patients with a medical necessity review, says the Department of Managed Health Care, which regulates managed care plans serving 21 million lives.

California's Knox-Keene Act specifies that speech therapy, physical therapy and/or occupational therapy "are required basic health services, and therefore Kaiser's denial of coverage for physical therapy, speech therapy, and/or occupational therapy based on a lack of physical impairment is illegal and contrary to the Act," the order says.

The written order, as filed, says that Kaiser denied these services with written letters of denial to at least 70 enrollees since 2009. An agency spokeswoman said on Tuesday that the number is now up to 106. Kaiser has at least eight million enrollees in the state.

The DMHC subjected those 70 cases to an independent medical review for evaluation of medical necessity of the requested therapy services. That review found that in excess of 75% of the cases the services indeed were medically necessary, and 10% were not. The remainder are still under review.

Yet, the order says, "Kaiser continues to illegally deny enrollee requests seeking services for physical therapy, speech therapy, and/or occupational therapy."

"The DMHC is taking this action to ensure Kaiser follows the law," DMHC's chief of enforcement, Anthony Manzanetti, said in a public statement.  The order says that Kaiser's actions violate eight provisions of state law, health and safety codes or codes of regulation.

John Nelson, a spokesman for Kaiser Permanente, responded to a HealthLeaders Media query by e-mail:

"We are surprised and disappointed with the DMHC's announcement.  We have been in discussions with the Department over these services and were already scheduled to continue our discussions later this week.   

"The Department appears to have misunderstood or mischaracterized Kaiser Permanente's approach to providing speech, physical, and occupational therapy to our members.  Kaiser Permanente provides these clinical and medical therapies to our patients. These therapies are not limited only to patients with "physical conditions."

"We remain committed to discussing DMHC's position with them and reaching a shared understanding.  In the interim, we will continue to cover medically necessary health care services."

In California, consumers have the right to appeal a health plan's refusal to provide medically necessary health care services.  They also have the right to receive an independent medical review if they disagree with the plan's decision.

The order says that the state's code of regulations provides that the DMHC may impose administrative penalties on a plan when it finds the plan "engages in a practice of mischaracterizing determinations substantially based on medical necessity coverage decisions, or otherwise interferes with the rights of an enrollee to obtain independent medical review."