Providence hospitals across California are the latest to sue Kaiser Permanente over allegations that the organization’s health plan has underpaid for emergency and post-stabilization care provided to Kaiser members.
The Providence complaint reviewed by Becker’s was filed April 11 in Los Angeles County Superior Court and was advanced by a judge on Aug. 8, who rejected Kaiser’s bid to split the case into separate lawsuits.
According to the Orange County Register, Kaiser argued that Providence’s claims involved 12,528 individual bills from 10 different hospitals that span different geographic regions, economic conditions and medical situations. The bills included trauma cases and more than 1,000 patient admissions, so Kaiser argued that combining them risked “jury confusion” and would create a logistical burden.
The Providence hospitals in Los Angeles, Orange, Humboldt, and Sonoma counties are arguing that they have no written contracts with Kaiser establishing discounted payment rates. The hospitals claim that Kaiser must pay either the full billed charges or the reasonable and customary value for services, specifically for out-of-network emergency and post-stabilization care when no contract exists. Providence alleges Kaiser has instead paid arbitrarily reduced amounts, or nothing at all, despite requirements under state law and implied contract principles. The system says the disputed claims from the last three years now total several tens of millions of dollars.
According to the Register, at least seven other health systems have sued Kaiser over similar allegations, including MemorialCare, Pomona Valley Hospital and Physicians for Healthy Hospitals.
The Providence lawsuit is seeking compensatory damages in an amount to be determined at trial, plus statutory interest, restitution, and injunctive relief to stop the alleged underpayment practices. Providence also claims that without a change in Kaiser’s payment approach, additional underpaid claims will continue to occur while the lawsuit is underway.
Kaiser Permanente shared the following statement with Becker’s:
“When a patient needs emergency care, they may need to be seen at a hospital that isn’t in their health plan’s network. Over the years, to prevent hospitals from overcharging and insurers from not paying in these cases, and to keep patients from getting caught in the middle of billing disputes, California has passed laws that allow hospitals to be fairly paid, protecting patients in crisis.
When a non-Kaiser Permanente hospital delivers emergency care to one of our members, and we do not have a contract in place with agreed-upon prices, we follow California law. The law requires payment of the reasonable value of the hospital’s services, so neither hospitals nor insurers can exploit the lack of a contract by demanding unreasonable payment or refusing to pay fairly, after care has been provided.
In keeping with the law, we cover our members’ emergency care regardless of the provider, just as our hospitals provide emergency care to anyone who comes in, regardless of their health plan.
The law requires every health plan to have a mechanism in place to determine reasonable payments, and to provide it to the state for review, which we do. To calculate reasonable payments for care our members have received, we use the hospitals’ own financial statements on file with the state, which report what it bills and receives from health plans. Our methodology targets payment at more than the average of what a hospital receives from most plans. We have used this approach for more than 20 years, ever since the state put these regulations in place. Our approach fully meets the state’s requirements for determining a reasonable amount to pay.
When hospitals sue for higher payouts, they generally seek far more than what they receive from other health plans. An objective assessment shows that our payments are more than what Providence typically accepts from others and should not be the cause of Providence’s current financial challenges. Providence hospitals are an important part of the California health care system, and of the communities they serve here.
Finally, it’s important to note that this is a dispute between providers and Kaiser Permanente; our members are not parties to the Providence lawsuit.”
