Kaiser settles suit with consumer groups

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Signaling a more responsive attitude in its dealings with upset consumers, Kaiser Permanente Thursday announced a settlement with consumer groups that alleged the HMO had engaged in false advertising in recruiting new members.

The settlement includes promises by Kaiser to publicly disclose some of its internal operations, the first time an HMO has agreed to such measures.

“It’s really setting an example for other health plans in the nation,” said Jamie Court, executive director of the Santa Monica-based Foundation for Taxpayer and Consumer Rights. “Kaiser is showing some responsiveness to community concerns.”

Thursday’s settlement stems from a lawsuit filed in 1999 by the Foundation for Taxpayer and Consumer Rights. The suit alleged that Kaiser had recruited nearly 500,000 new members through fraudulent advertising. The HMO claimed in an ad campaign that only doctors, not administrators, make decisions about care. But the lawsuit said that Kaiser had implemented health-care policies based on monetary and profitability concerns, impeding access to care.

As part of the settlement, the state’s largest HMO will publish on its Web site clinical guidelines used by physicians. This will help patients better understand the rationale behind their care and give them tools to make sure they get what they need, Court said.

Kaiser will also publish its standards for evaluating physicians’ salaries, so patients understand the financial incentives of their doctors. Additionally, it will survey members about its call centers, which its customers call if they want appointments, advice from a nurse or to leave a message for their doctor, and make changes based on the results.

This is Kaiser‘s third large settlement with consumer groups since George Halvorson took over as chief executive officer in May. Kaiser agreed in September to donate $1 million to Duke University for research on a rare and fatal genetic disorder in lieu of covering an expensive treatment for two children. In November, the HMO paid a $1 million fine to the California Department of Managed Health Care, ending an acrimonious battle over its role in the death of a San Leandro woman.

Kaiser officials refused to comment in detail on Thursday’s announcement or the more cooperative attitude that has taken hold since Halvorson took the reins from former CEO Dr. David Lawrence. In a press release Bernard Tyson, a senior vice president said, “It is particularly gratifying to turn conflict into a productive collaboration with these important consumer groups.”

In addition to its promise to unveil some policies surrounding its physician’s practices, Kaiser guaranteed to devote resources toward physician recruitment to ensure members’ access to doctors. And it said it will encourage members to select their own doctor so they have personalized care.

Kaiser also reaffirmed that call center employees will not receive financial incentives for limiting or denying access. From January 2000 through December 2001 Kaiser paid bonuses to call center operators based in part on whether they met targets for the percentage of callers they made appointments for and the number of calls routed to advise nurses.

“In the bigger picture, there are lots of things that need to be done,” Court said. “But this was important because it allowed for public disclosure that hadn’t been there before.”


Judy Silber covers biotechnology and the business of health care. Reach her at 925-977-8507 or [email protected]

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