Kaiser Permanente will be assessed a record fine today for its haphazard investigations of questionable care, physician performance and patient complaints at its California hospitals, according to state HMO regulators.
The California Department of Managed Health Care said it will levy a $3-million fine against Kaiser, the largest HMO in the state, with 29 medical centers and more than 6 million members. If Kaiser makes necessary improvements, agency director Cindy Ehnes said, she will forgive $1 million of that.
The penalty marks the second time in a year that Kaiser has been publicly rebuked and fined for glaring breakdowns in oversight.
The state's latest inquiry grew out of its investigation into problems that forced the closure last year of Kaiser's kidney transplant program in San Francisco. Hundreds of patients were endangered when Kaiser forced them to transfer to its own fledgling program from established transplant centers at outside hospitals.
Last August, the state fined Kaiser $2 million for the transplant debacle, and the HMO agreed to pay an additional $3 million to promote organ donation.
Even then, Ehnes said, the question remained: "How could it happen?"
To answer that question, the state focused on whether Kaiser was properly handling -- or even knew about -- allegations of subpar care at its hospitals statewide. Inspectors examined 246 files involving complaints, quality-of-care concerns and other issues from four hospitals in Kaiser's Northern California region, and four in its Southern California region.
The investigation did not examine whether individual patients had been harmed, only on how well Kaiser monitored the quality of patient care.
"A patient has to be sure that if they have a problem ... the health plan has their ears open to hear those complaints and their arms available to tackle any of the problems that have arisen," Ehnes said in an interview. "That's what our concern was, that those ears in particular seemed to be sometimes deaf."
A top Kaiser official on Wednesday called the state's 51-page inspection report "thorough and actually very constructive."
The managed-care agency found that under the HMO's massive umbrella, individual hospitals had their own rules: Some rigorously pursued potential medical mishaps; others did not.
The vast majority of the report focused on a system called "peer review," a standard quality-assurance mechanism at hospitals in which doctors' committees examine patient cases to determine if the care was appropriate.
Inspectors found large differences among hospitals in how often questionable cases were being referred for peer review. In Northern California, one hospital might refer as much as 20 times as many cases as another.
Even when peer review was performed appropriately, it did not always result in sufficient efforts to improve care, the report says. In a quarter of the 57 cases examined by the state in which peer review committees found a quality problem, follow-up was incomplete.
In one case, a peer review panel examining pediatric care determined that a doctor provided an "unacceptable standard of care," but it doesn't appear anyone alerted the hospital's top doctors to the findings so they could act.
Regulators also found several instances in which doctors were in charge of investigating cases in which the treatment they provided was called into question.
Investigators said they stopped short of determining whether those reviews were handled appropriately.
"You can't really move on from the taint of looking at your own case," said Marcy Gallagher, the chief state surveyor on the Kaiser inquiry and the head of health-plan surveys at the managed-care agency.
Gallagher said inspectors identified at least three occasions on which committees at Kaiser hospitals inexplicably stopped their review of troubling cases before they were complete. Kaiser was asked to finish those reviews, she said.
Overall, the report found that the HMO "lacked the ability to verify consistent handling of complaints throughout its medical centers or to determine whether serious or chronic problems were being addressed."
The nine Kaiser hospitals examined as part of the report are in Woodland Hills, Fontana, Baldwin Park, West Los Angeles, south Sacramento, San Rafael, South San Francisco, Fresno and San Francisco. The state did not identify which hospitals had the weakest systems.
Bernard Tyson, Kaiser's executive vice president of health plan and hospital operations, stressed that the review did not take issue with the quality of care delivered. "The survey identified the areas in which there were shortcomings, and we have corrected those shortcomings or are well on the way to correcting those shortcomings," Tyson said.
He added that the HMO is focused on shoring up the systems for handling member complaints and quality assurance at its hospitals -- and not on the fine or the public relations fallout of two rebukes in as many years.