Kaiser Permanente is known for its closed, integrated delivery system, in which Kaiser health plan members visit Kaiser doctors and are admitted to Kaiser hospitals. Prime Healthcare Services is becoming known in California for buying hospitals, canceling their managed-care contracts and charging higher, out-of-network rates.
Perhaps it was inevitable as Prime grew to own nine hospitals in California that the two companies would clash.
Prime, Victorville, Calif., said last week that it has filed eight lawsuits in California state courts against subsidiaries of Kaiser, alleging that Kaiser has wrongly denied more than $25 million in claims related to emergency services provided to members of Kaiser Foundation Health Plan. Prime and Kaiser do not have a contract, but Prime alleges that one is implied by state and federal law, including Primes duties under the federal Emergency Medical Treatment and Active Labor Act.
The lawsuits are broadly similar in their allegations, said Radha Savitala, assistant general counsel for Prime. In the lawsuit filed in Los Angeles County Superior Court on behalf of 153-bed Sherman Oaks (Calif.) Hospital, Prime alleges that Kaiser requires out-of-network hospitals to call its Emergency Provider Response Program when a Kaiser member comes into the emergency room, in contravention of federal law requiring a patient to be stabilized before his or her insurance carrier is contacted.
Prime accused Kaiser of pressuring patients and their families to request transfer to Kaiser hospitals before the physician treating the patient has decided that the patient is stable enough to be transferred.
The lawsuit also cited a $250,000 fine that Kaiser paid to the California Department of Managed Health Care in May 2007.
After an investigation, the department alleged that Kaiser did not meet regulatory requirements in six ways regarding emergency treatment for its members at out-of-network hospitals. The departments report said that Kaiser generally applied a clinical standard to determining whether the emergency visit was justified, rather than the prudent layperson standard required by regulation. This would force patients to appeal the denial of the claim, the report said.
Kaiser had not been served with the lawsuits as of deadline, even though the lawsuits were filed in January, said Jim Anderson, a Kaiser spokesman. Kaiser contends that Prime hospitals are not notifying the health plan of the admissions of its members once stabilized, as required by California law, Anderson said.
Moreover, he said, Kaiser paid $1.2 billion to non-Kaiser hospitals in California for treating its members in 2007. The folks who are putting out news releases and filing lawsuits are the exception, he said.
Regarding the fine Kaiser paid to the state, Anderson said it involved a limited number of claims that were not handled properly by Kaiser. Anderson would not say how many claims were involved. Kaiser has rectified the situation to ensure proper handling of these claims, Anderson said.