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CA Fines Kaiser Permanente $2.5 Million

News  |  By Doug Desjardins  
   February 07, 2017

The health system was penalized for not providing data on Medi-Cal managed care patients due to an issue with its health information technology, a Kaiser official said.

This story originally appeared in California Healthfax.

The California Department of Health Care Services (DHCS) has issued a fine of $2.5 million against Kaiser Permanente—the first fine levied against one of its Medi-Cal managed care plans in more than 15 years.

Kaiser, which currently serves about 700,000 managed care patients in 15 counties, is working to resolve information technology issues that prevented it from supplying data to the state, officials said.

Kaiser has been fined for failing to submit managed care data on how Medi-Cal members access care. The state uses this information to set rates and measure utilization, said DHCS Spokesman Tony Cava. The fine "was the first financial sanction levied against a managed care plan since at least 2000," said Cava.

Since 2014, DHCS has been working with Kaiser on data submission issues and accepted a corrective action plan (CAP) from Kaiser last spring to be in compliance by January 1, 2017, he said. "Kaiser failed to comply with the CAP, [which it] attributed to systems issues, so the sanction was issued."

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In a January 13 letter to Kaiser Permanente, DHCS Director Jennifer Kent said Kaiser had missed reporting deadlines in June 2016 and January 1, 2017. She stated that Kaiser "was unable to submit" several different types of data required by the program.

These include physician-administered drugs (PADS) as well as external medical claims to DHCS and Kaiser's 13 plan partners in the Post Adjudicated Claims and Encounters System format.

The penalties included a fine of $742,500 for not submitting patient encounter data and a fine of nearly $1.8 million for not submitting PADS data for the March 2010–March 2015 reporting period.

The failure to report data was due to a health IT issue, which the health system is in the process of resolving, said Nathaniel Oubre, California vice president for Medi-Cal and Charitable Care at Kaiser Permanente.

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"Kaiser Permanente is an integrated health system, therefore, our systems and technology—such as our electronic health records and online capabilities—are focused on quality, access, and integration of care," said Oubre.

"While our administrative systems and processes were not originally designed or fully updated to collect and report certain data in the format specified by DHCS, we are taking steps to change this and are making investments in technology that will facilitate compliance with the state."

The sanction was related to Kaiser's inability to capture certain administrative data for the Medi-Cal program and was not related to quality, patient care, or patient access; and "does not affect care or quality in any way," Oubre noted.

Cava said the DHCS "continues to have ongoing discussions with Kaiser to work through any remaining issues, and will do so until they are fully corrected."

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