Original Source
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San Francisco Chronicle

Record $3 million fine for Kaiser

David R. Baker, Chronicle Staff Writer

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Friday, July 27, 2007
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Kaiser Permanente must pay a record $3 million fine after state investigators found that the health maintenance organization, the country's largest, did not adequately track patient complaints about treatment.
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The penalty, announced Thursday, marks the second time in a year that Oakland's Kaiser has faced a multimillion-dollar fine from the state.
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Kaiser was fined $2 million last year for its mismanagement of a new San Francisco kidney-transplant unit. Delays in transferring medical records and information about the amount of time patients had spent on transplant waiting lists slowed the process of getting new kidneys. The unit has since been shut down.
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But state regulators working on the case decided to probe further into Kaiser's handling of patient complaints. They found inconsistent and sometimes deficient procedures at the nine Kaiser medical centers they examined in California. The medical centers did not consistently ensure that problems with the quality of their care were identified and corrected.
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"We did not find that there were problems uniformly across the board - what we found was there was significant variation overall," said Cindy Ehnes, director of the California Department of Managed Health Care. "The risk to a patient was that if they had a problem, it might not be resolved."
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The fine is the largest yet levied by the Managed Health Care Department. But Kaiser may not have to pay all of it.
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Ehnes' department has given Kaiser a list of steps needed to correct the problems it found, steps that will cost an estimated $10 million to $13 million to implement. If Kaiser completes those steps by the time the department conducts a follow-up survey late next year, the HMO won't have to pay $1 million of the fine.
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"We thought it was important to provide the appropriate incentive over the next year," Ehnes said.
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The steps include establishing a uniform system for having physicians review complaints at the medical centers and report them to the health plan's headquarters. Kaiser also must create a process that allows the organization's management to keep tabs on changes in clinical practices at all 29 of its medical centers in California.
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A Kaiser spokesman said the health plan took no issue with the department's report and is already working on some of the changes.
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"We feel it's been a very thorough, thoughtful and fair assessment," said spokesman Matthew Schiffgens.
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The department reviewed case files and interviewed staff at four Kaiser medical centers in Southern California and five in Northern California, including San Francisco, San Rafael and South San Francisco.
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E-mail David R. Baker at
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This article appeared on page D - 1 of the San Francisco Chronicle








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Original Source
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Associated Press
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HMO Faces $3M Fine for Lax Oversight

Thursday, July 26, 2007

(07-26) 06:41 PDT Oakland, Calif. (AP) --
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Health care provider Kaiser Permanente faces a $3 million fine for what state regulators say were haphazard investigations into patient complaints and physician performance. It was the second rebuke in a year for the nation's largest HMO.

Last summer, the state fined Kaiser $2 million over mismanagement of a kidney transplant program.
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The director of the California Department of Managed Health Care, Cindy Ehnes, said her agency reviewed nine Kaiser hospitals and found inconsistencies in how questionable cases were handled. She said in Thursday's Los Angeles Times that the fine could be reduced to $2 million if Kaiser makes necessary improvements.
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"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 told the paper.
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"Those ears in particular seemed to be sometimes deaf," she said.
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Bernard Tyson, Kaiser's executive vice president of health plan and operations, said the hospital was taking steps to fix the oversight issues noted in the review.
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"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.
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Oakland-based Kaiser was penalized last August by the agency for breakdowns in oversight of its kidney transplant center in San Francisco. The state ordered Kaiser to pay a $2 million fine and give $3 million to an organ donor program. Officials said botched paperwork and administrative errors delayed some patients' procedures and risked lives.
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The latest inquiry grew out of the state's investigation of the transplant program.
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Inspectors examined 246 files involving complaints, quality-of-care concerns and other issues from five Northern California hospitals and four in Southern California. The probe did not focus on whether individual patients had been harmed.
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The 51-page report found 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."
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In one case, a peer review panel examining pediatric care determined that a doctor provided an "unacceptable standard of care," but it appeared no one alerted the hospital's top doctors to the finding so they could act.
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Regulators also found several instances in which doctors investigated cases in which the treatment they provided was called into question.
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Among several steps to overhaul its oversight system, Kaiser has agreed to draft a uniform set of standards for peer review, audit physician peer review programs to ensure they are accurately evaluating potential quality issues and reconfigure the computer system to better track quality reviews.
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The nine Kaiser hospitals examined in the report were in Baldwin Park, Fresno, Fontana, west Los Angeles, south Sacramento, South San Francisco, San Francisco, San Rafael and Woodland Hills. The state did not identify which hospitals had the weakest systems.
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Kaiser operates 29 medical centers in the state, with more than 6 million members.