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The California Dept. of Managed Health Care has fined Kaiser Foundation Health Plan $3 million.

The department said the fine is for Kaiser not adequately providing oversight of quality assurance programs intended to address patient complaints and physician peer review cases at its 29 medical centers in California.

The DMHC started an investigation in August 2006 after issues were identified during an investigation into Kaiser's San Francisco Medical Center kidney transplant facility, and after several complaints were received by the DMHC's HMO help center.

The department found that Kaiser did not meet state requirements in two ways. It lacked adequate health plan oversight of quality assurance programs, and it was inconsistent in its handling of quality of care cases referred for peer review.

But the plan could not verify whether serious problems were being addressed now, according to the department.

"State law requires health plans to have processes in place to hear member concerns and act upon them in a timely manner," said Cindy Ehnes, director of the DMHC, in a prepared statement.

In its own prepared statement, Kaiser said it has "a long history of evaluating and improving quality assurance processes, and monitors performance through data tracking and reporting to the highest level of management."

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The New Jersey Dept. of Banking and Insurance fined Aetna a record $9.5 million for trying to pay nonparticipating physicians 125% of the existing Medicare fee schedule instead of their billed charges. The department also ordered the health plan to reimburse physicians for those billed charges.

The bulk of the fine -- due immediately and one of the largest ever imposed by the department -- stems from Aetna's attempt to apply the 125% schedule to out-of-network physicians who were providing emergency care to patients, providing care during patient admission to a network hospital, or providing care after referrals or authorizations from Aetna, according to the order.

"Aetna was trying to impermissibly shift the cost of care onto the patient, where it was Aetna's obligation under New Jersey law to cover those services," said Larry Downs, general counsel for the Medical Society of New Jersey.

The July 23 order also tags the health plan for "misrepresenting Aetna's obligation with respect to claims" in a June 1 letter sent to 130 physicians and for "not providing its members the right to be free of balance billing."

It says Aetna must "reprocess all claims under insured contracts" for services rendered by the affected physicians, and that Aetna must pay them "an amount sufficient to insure they do not balance-bill members."

Department spokeswoman Jaimee Gilmartin said, "We're going to let the order speak for itself," and issued no further comment.

Aetna spokeswoman Cynthia Michener said the plan would request an appeal hearing with the department. The order says Aetna has 30 days to submit the request in writing.

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