Kaiser agrees to $200M settlement, must overhaul behavioral health care services

HOLLYWOOD, CA - JUNE 22: General views of Kaiser Permanente Hollywood Medial Offices on June 22, 2022 in Hollywood, California. (Photo by AaronP/Bauer-Griffin/GC Images)

Kaiser Permanente must overhaul behavioral health care services and pay a $50 million fine under a settlement agreement announced Thursday by the California Department of Managed Health Care.

Under the settlement, Kaiser will also make investments totaling $150 million over five years toward improving behavioral health care services.

Gov. Gavin Newsom praised the settlement on Thursday, saying it will give Kaiser enrollees full and timely access to services they are entitled to under state law. 

"Today's actions represent a tectonic shift in terms of our accountability on the delivery of behavioral health services," Newsom said. "Accountability of the private sector is foundational to ensuring our entire system of behavioral health care works for all Californians," said Governor Newsom.

The $50 million fine is the highest the state's managed health care agency has ever levied, said DMHC Director Mary Watanabe.

The agreement stems from two actions by the state agency -- an enforcement investigation and a non-routine survey. 

Those actions found several violations and deficiencies in Kaiser's provision of behavioral health care services to enrollees, including timely access to care and oversight of the plan's providers and medical groups.

The state agency found Kaiser Permanente canceled behavioral health appointments and, in many cases didn't give enrollees appointments that met timely access and clinical standards that were required despite a strike by mental health clinicians in August 2022. 

In addition to the length of time enrollees had to wait for appointments, the state found violations that included a shortage of contracted high-level behavioral health care facilities in the plan's network and inadequate oversight of the plan's medical groups in evaluating appropriate care.  

Under the settlement agreement, Kaiser Permanente will hire an outside consultant to focus on corrective actions, and to provide expert guidance.

The settlement was welcomed by the National Union of Healthcare Workers, which represents the more than 4,000 psychologists, social workers and marriage and family therapists employed by Kaiser Permanente in California.

"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 Sal Rosselli, president of the union.

The managed health care agency's report "affirms everything that Kaiser therapists have said about their patients' inability to receive timely, adequate mental health care," Rosselli said.

In a statement about the settlement on Thursday, Kaiser CEO Greg Adams said there has been "an unprecedented rise in demand for mental health care services over the past three years, largely driven by the global pandemic and its aftermath."

Kaiser saw a 33 percent increase in need during the pandemic, and 20 percent more people come in for care in 2023 than at the same time last year, Adams said.

"An ongoing shortage of qualified mental health professionals, clinician burnout and turnover, even a 10-week strike last year by 2,000 mental health clinicians in California, have all contributed to make it very difficult to meet this growing need for care," Adams said.

Kaiser has increased staffing and facilities, and since 2020, has invested an additional $1.1 billion to provide mental health treatment for members, Adams said.

Kaiser hired nearly 600 additional therapists, expanded networks to include thousands of community therapists and invested an added $195 million in new clinical facilities that include 329 mental health provider offices. 

"Even so, during the period of the DMHC survey we fell short of our members expectations and our own expectations," Adams said.

"Our agreement with the DMHC 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," Adams said.