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Read Making a Killing

home / healthcare / in the media

American Health Line
Jan 24, 2003


Kaiser Permanente, the nation's largest not-for-profit HMO, yesterday announced that it will disclose some of its internal operations as part of a settlement with a consumer group that alleged Kaiser engaged in false advertising in campaigns to recruit new members, the Contra Costa Times reports (Silber, Contra Costa Times, 1/24).

The Foundation for Taxpayer and Consumer Rights alleged that Kaiser Permanente falsely led members to believe that "all medical decisions were made by their doctors" and that the HMO was "unencumbered by 'bean counters' or insurance administrators." However, the consumer group said that Kaiser Permanente's use of guidelines for care and hospital length of stay -- which were created specifically for the HMO by the consulting firm Milliman & Robertson Inc. -- "flies in the face" of Kaiser's advertising campaign. The suit also claimed that Kaiser Permanente encouraged physicians' cost-cutting behavior through bonuses and other incentives, including withholding as much as 30% of a physician's salary if cost targets were not met (American Health Line, 1/7/02).

Under the settlement, Kaiser will publish on its Web site clinical guidelines used by doctors for the treatments of "hundreds of diseases," the New York Times reports (Freudenheim, New York Times, 1/24). According to Jamie Court, executive director of the Foundation for Taxpayer and Consumer Rights, the guidelines will help patients "better understand the rationale behind their care and give them tools to make sure they get what they need," the Contra Costa Times reports (Contra Costa Times, 1/24).

"This sets a new standard for the competition and the doctors," Dr. John Wennberg, a health policy expert, said. He added, "Patients seeking information on the standards of care will have a new place to go. They could use it in negotiating with their own physician." However, the guidelines are not compulsory, and doctors can deviate from them without penalty, the New York Times reports (New York Times, 1/24).


Kaiser also said it will publish on its Web site details on how it determines salaries and bonuses for its doctors, making it the first HMO to disclose such information, USA Today reports (Appleby, USA Today, 1/23).

As another part of the settlement, Kaiser said it would not offer financial incentives to telephone clerks for limiting access to care (Los Angeles Times, 1/24).

Telephone service representatives at Kaiser Permanente call centers in three Northern California cities were given financial bonuses if they reduced the amount of time they spent talking with each patient and limited the number of doctor's appointments they scheduled, according to company documents (American Health Line, 5/20/02).

Also under the settlement, Kaiser said it would allocate more resources toward recruiting doctors so members would have greater access to physicians, and the HMO said it would encourage members to choose their own doctors. Kaiser is "really setting an example for other health plans in the nation," Court said, adding, "In the bigger picture, there are lots of things that need to be done. But this was important because it allowed for public disclosure that hadn't been there before" (Contra Costa Times, 1/24).

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