Kaiser Permanente Settles Behavioral Health Access Violations for $200M

Kaiser Permanente has agreed to pay a record-setting fine over its mismanagement of behavioral health benefits.

In total, Kaiser Permanente must pay $200 million. This includes a $50 million fine, the largest the California Department of Managed Health Care (DMHC) has ever issued, as part of a settlement agreement. Kaiser Permanente has also committed to spending $150 million on improving statewide access to behavioral health care services.

“Today’s actions represent a tectonic shift in terms of our accountability on the delivery of behavioral health services,” California Gov. Gavin Newsome said in a news release. “Accountability of the private sector is foundational to ensuring our entire system of behavioral health care works for all Californians.”

DMHC announced the settlement on Oct. 12. It was the result of two actions on the part of the agency: an enforcement investigation launched on Aug. 12, 2022, and a non-routine survey started on May 16, 2022. For both actions, the state looked into the health plan arm of Kaiser Permanente, called the Kaiser Foundation Health Plan.

The settlement agreement requires Kaiser Permanente to improve quality assurance within the plan and for its medical group partners. Most of its health plan spending goes to regional for-profit Permanente Medical Groups.

The leadership of Oakland, California-based Kaiser Permanente admitted that it fell short in ensuring that its health plan members received adequate and timely access to behavioral health, even within its own medical groups.

DMHC said it identified issues with “timely access to care, oversight of the plan’s providers and medical groups, network adequacy, conformity to mental health parity, and grievances and appeals, among many other issues,” according to a statement

Citing an unprecedented rise in demand for behavioral health care, Kaiser Permanente Chair and CEO Greg Adams said it has spent an additional $1.1 billion on mental health care for members since 2020. The organization has hired about 600 therapists and added “thousands” of community therapists to its provider network. 

“Even so, during the period of the DMHC survey we fell short of our members’ expectations and our own expectations,” Adams said in a statement.

Kaiser Foundation Health Plan and other Kaiser entities have been on DMHC’s radar since 2006, according to the settlement agreement. DMHC started the non-routine survey after receiving complaints from enrollee providers and other stakeholders. A strike of mental health workers in Kaiser Permanente’s North California region heightened the scrutiny placed on the organization.

“In summary, while [the Kaiser Foundation Health Plan] was managing unprecedented statewide need for behavioral health services exacerbated by the pandemic and the [National Union of Health Care Workers] strike, the Department’s investigation identified deficiencies in [the Kaiser Foundation Health Plan’s] provision of behavioral health care services, many of which have been ongoing,” the agreement states.

The Kaiser Foundation Health Plan covers about 9 million members in 32 of the 58 counties in California, making it the largest in the state. Kaiser Permanente’s total revenue in 2022 was $95.4 billion, according to a financial disclosure.

The settlement agreement does not dictate how Kaiser Permanente will spend the $150 million community investment funds. Rather, it represents DMHC’s “intention and desire” to have the funds go to model development and implementation for the following issues:

— Partnerships and funding that increase mental health training

— Expansion of community mental health training programs

— Programs designed to decrease stigma

— Child and family mental prevention and early intervention

— Cognitive behavioral therapy-based programs to aid in the mental health of middle school children

— Training pathways for peers and para-professionals

— Support and pay community-based organizations

Through settling, Kaiser Permanente worked “in good faith” with the state, DMHC Director Mary Watanabe said in a news release.

“In addition to paying the highest fine the DMHC has ever levied against a health plan, Kaiser Permanente has agreed to make significant improvements to the plan’s operations, processes and procedures and business model to better assist enrollees with accessing care,” Watanabe said. “The DMHC is committed to using its full authority to hold Kaiser accountable and ensure enrollees have access to behavioral health care when they need it.”