A California settlement compels the state’s largest health care provider to spend $150 million on behavioral health services.
Kaiser Permanente’s $200 million settlement with the State of California for its repeated failures to provide patients with adequate and timely mental health care was a long while coming.
The deficiencies themselves? Kaiser’s own employees say they’ve been hiding in plain sight.
“Years and years of banging our heads against the wall have finally paid off,” said Ilana Marcucci-Morris, a therapist at Kaiser Permanente’s Oakland Medical Center. “This has the potential to make Kaiser a leader in mental health care, rather than a serial violator of mental health care laws.”
The settlement, announced late Thursday by the state’s Department of Managed Health Care, includes a $50 million fine — the largest the department has ever levied against a health plan, Director Mary Watanabe said in a statement. Kaiser also pledged to spend $150 million over five years to build out behavioral health services that critics say have been woefully underdeveloped for years, leading to appointment wait times that violated state standards.
The settlement resulted from the department’s enforcement investigation and a nonroutine survey of Kaiser’s practices last year, which identified “several deficiencies and violations in the plan’s provision of behavioral health care services to enrollees,” the department said in a news release. Those included long delays for patients trying to schedule mental health appointments, a failure to contract enough high-level behavioral care facilities within its network, and Kaiser not making out-of-network referrals consistent with requirements under the law when in-network providers were not available, the department said.
Under the settlement, Kaiser must hire an outside consultant “to focus on corrective actions” related to access, referrals, appeals and grievances and to ensure that patients receive the mental health care they need, regardless of the type or severity of their conditions.
“Today’s actions represent a tectonic shift in terms of our accountability on the delivery of behavioral health services,” Gov. Gavin Newsom said in a statement. Newsom said the settlement aims to “provide Kaiser patients with the care they are entitled to in a timely manner.”
In a statement, Kaiser CEO Greg A. Adams said the agreement “takes full accountability for our performance during the survey period including our shortcomings, acknowledges our work to improve mental health care, and ensures that our ongoing investments not only help the members of Kaiser Permanente but also build a stronger mental health foundation in the communities we serve.”
Critics have argued that Kaiser patients haven’t received adequate care for years, despite previous enforcement actions. Kaiser paid a $4 million fine in 2013 for not providing its members proper access to mental health care. Four years later, it agreed to redress similar failures. Yet Kaiser has consistently left patients without follow-up mental health appointments for weeks, sometimes months, state officials and critics have said.
The situation reached a boiling point last fall, when more than 2,000 mental health professionals affiliated with the National Union of Healthcare Workers walked off the job, frustrated during contract negotiations by what they said was Kaiser’s refusal to address persistent staffing issues and long wait times for behavioral services. (Disclosure: NUHW is a financial supporter of Capital & Main.)
Capital & Main reported in 2021 and again last year that Kaiser workers said wait times for mental health appointments often stretched four to eight weeks or more. Jenny Butera, a marriage and family therapist in Sacramento who has since left Kaiser, said on Aug. 14 last year, “My earliest next appointment (is) mid-October — for anybody.” The American Psychological Association said in 2020 that it had never “seen such an egregious case of delayed access for follow-up appointments.”
The DMHC paid attention to such stories, and legislation that took effect last summer required providers such as Kaiser to schedule follow-up appointments for mental health care patients within 10 days of their last visit. In the wake of Thursday’s announced settlement, the department said its survey continues and could prompt a modified corrective plan.
“This settlement is a monumental victory for Kaiser Permanente patients and its mental health therapists who have waged multiple strikes over the past decade to make Kaiser fix its broken behavioral healthcare system,” said union President Sal Rosselli. “The DMHC’s report affirms everything that Kaiser therapists have said about their patients’ inability to receive timely, adequate mental health care.”
In his statement, Adams said demand for Kaiser’s mental health care services rose 33% during the COVID-19 pandemic and that 20% more people have sought care in 2023 than at the same time last year. He added that “an ongoing shortage of qualified mental health professionals,” along with clinician burnout and turnover and the 10-week strike last year, made it “very difficult to meet this growing need for care.”
The union has disputed Kaiser’s characterization, arguing that qualified therapists fled Kaiser over the years because of unreasonable workloads and short-staffing practices that predated the pandemic.
Kaiser Permanente is the largest health care provider in California, with 9.4 million residents using the system. The company was founded as a nonprofit, though its Permanente Medical Groups operate as for-profit entities. Kaiser reported a record $8.1 billion in net revenue in 2021 before showing a loss in 2022 — the only year since 2007 that the company has posted negative income.
Kaiser therapists have complained for years that Kaiser paid scant attention to the mental health care needs of its patients — a fairly common practice among health providers, industry economists say. Thursday’s settlement will change the math a bit.
“It makes me feel hopeful, knowing they have to put money into this,” Marcucci-Morris said. “We’ve been pushing for well over a decade.”
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