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KAISER BLOCKS CRITICAL REPORT

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AUSTIN, Texas-Kaiser Foundation Health Plan of Texas is battling to keep under wraps a report in which insurance regulators charge the health maintenance organization inappropriately denied emergency room care.

Court documents indicate the Texas Department of Insurance was set to release the report and levy stiff penalties against the Dallas-based HMO for disallowing care and creating a "chilling effect" on emergency room use. The penalties are outlined in the report.

Kaiser Foundation, which covers 129,000 lives in the Dallas-Fort Worth area, operates in a partnership with the Permanente Medical Assn. of Texas as the HMO commonly referred to as Kaiser Permanente. The partners filed suit against the Insurance Department late last month and won a temporary restraining order blocking release of the report.

Judge Paul Davis, of the Travis County District Court in Austin, Texas, also granted Kaiser Permanente's request to keep confidential all documents and testimony gathered during the discovery phase of the case.

The restraining order will remain in place at least until April 18.

Meanwhile, another Kaiser Permanente unit is answering questions regarding emergency room services.

In California, Kaiser Permanente Northern California is coming under scrutiny by the California Department of Corporations because regulators in that state think the HMO has denied too many non-Kaiser emergency room claims.

In Texas, where the HMO does not operate its own hospitals, Kaiser Permanente's lawsuit states that the report's allegations of denial of care are inconsistent with an earlier evaluation by the Texas Department of Health. During two of the same years examined by the Insurance Department, the health department "found no deficiencies that warranted the finding of a violation," the suit says.

Until last fall, the health department had responsibility for examining HMOs with regard to delivery of care and other activities, and it conducted a review of the Kaiser Permanente plan for 1994 and 1995. That responsibility was transferred to the Insurance Department under an agreement the regulatory agencies reached last fall.

The Insurance Department's review of Kaiser Permanente, its first under the new authority, included the years 1994 through 1996.

A department spokesman, citing the order that details of the case remain confidential, said the department could not comment on the matter.

Kaiser Permanente's filing also charges the report unlawfully discloses confidential information taken from patient records and quality assurance reviews.

While specific fines aren't detailed, court papers say the allegations in the report do not support the Insurance Department's penalty. The papers indicate the department is seeking a hefty fine.

Kaiser Permanente did not get "sufficient notice of the alleged violations, much less an adequate opportunity to respond to the inordinately high recommended penalty," the lawsuit states. The suit refers to a "maximum penalty of $25,000" that could be assessed for each violation.

The HMO points out in the suit that the report also is inconsistent with findings by the National Committee for Quality Assurance, the accrediting agency for managed care organizations.

An NCQA spokesman said the Kaiser Permanente plan in Texas was given full accreditation in June 1995. The accreditation is valid for three years.

Information was not available on how the plan was rated in different categories. "Prior to July 1995, we did not produce detailed standardized reports on the plans," the spokesman explained.

Texas HMOs may find themselves abiding by new regulations that call for more public disclosure if a bill in the state Legislature becomes law.

S.B. 387, sponsored by state Sen. Chris Harris, would require that a report card system be developed to allow the Office of Public Insurance Counsel to rate the plans according to factors such as cost, enrollee satisfaction surveys, benefits provided, complaint and appeal numbers, and financial condition.

The bill has passed the Senate and is being debated in the House.

"We have no problem with the report card bill," said the Kaiser Permanente spokesman in Dallas. "Generally, we support any and all report card-type measures."

In California, the Department of Corporations found "a high level of non-Kaiser emergency room use" by enrollees in Northern California, and the HMO has been "denying a lot of those claims" because it thought treatment should have been at one of its facilities, said Charles Gibbs, senior counsel at the California Department of Corporations in Los Angeles.

"It raised a red flag with us," said Mr. Gibbs, and could indicate a barrier to care at the Kaiser emergency rooms. "They've given us a response that we felt was not adequate, so we are requesting additional information."

If the problem is not "corrected to the department's satisfaction, it could lead to an enforcement action," he added.

The Northern California managed care plan has made some changes in its review process of emergency room claims and is making other adjustments that are expected to satisfy the department's concerns, a spokesman for the Oakland, Calif.-based plan said.

Kaiser Permanente-Northern California uses emergency room services at its own hospitals in the state, the spokesman noted. Of about 700,000 emergency room visits in 1995, about 93,000 were at facilities other than those owned by Kaiser, he added.