Kaiser Permanente agrees to pay fine to Texas Department of Insurance

posted 5-5-97

Kaiser Permanente Texas has agreed to pay a million dollar fine and hire a consultant to assure high quality care for its 129,000 Texas enrollees in a settlement reached last month with the Texas Department of Insurance (TDI).

As part of the settlement, Kaiser also agreed to drop its lawsuit against TDI over the release of a report which alleged that Kaiser routinely refused to pay for emergency care. “The draft report contains flawed allegations made by unqualified and untrained TDI reviewers, not the true facts about Kaiser Permanente’s commitment to quality care,” said Bill Gillespie, MD, president and medical director of Kaiser Permanente’s Texas health plan.

The report alleged problems in record keeping, refusal to pay for emergency care services in violation of TDI rules, and failure to follow the quality assurance procedures contained in Kaiser’s application for a Texas HMO license.

The Texas Attorney General’s office released the report to members of the Senate Economic Development Committee and to the media last month, arguing that because the report does not identify patients, it is not protected by the right of privacy.

“The attorney general is wrong,” said Kaiser spokesperson David O’Grady. “The Texas Medical Practices Act is clear that any information that comes from peer review files is protected and confidential.”

Under terms of the settlement with TDI, Kaiser has agreed to hire an independent consulting firm, which will include a physician and nurse, to review and recommend changes in Kaiser’s emergency care, claims processing, quality assurance, quality improvement, peer review, and credentialing programs and procedures. The consultant has not been selected yet, O’Grady said.

To address concerns about the $52 million loss over the past two years in Kaiser’s Texas operation, centered in the Dallas and Fort Worth area, Kaiser’s parent company, Kaiser Foundation Health Plan Inc. of California, has agreed to put $80 million into its Texas operation this year.

Texas Insurance Commissioner Elton Bomer said revocation of Kaiser’s license as a Texas health maintenance organization was not seriously considered because it could have disrupted medical service for so many patients. “Kaiser’s agreement to submit a business plan and take steps to strengthen its finances without cutting corners on patient care eliminated any possibility that I would consider revocation,” Bomer said. Kaiser also could avoid paying $250,000 of the $1 million fine, depending on the HMO’s compliance with the settlement terms.