Cottage Well being Throws Down Gauntlet on Kaiser Permanente

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Cottage Well being System spared few emotionally charged adjectives in lambasting Kaiser Permanente for allegedly short-changing Cottage to the tune of “tens of tens of millions” of {dollars} in a lawsuit filed in opposition to the nationwide well being chain early this month. Attorneys representing Cottage — with three hospitals and several other pressing care facilities — didn’t merely accuse Kaiser of appearing in methods each “unlawful and unfair.” As well as, they charged that Kaiser had behaved in a fashion that “could solely be labeled as immoral, unethical, oppressive, and unscrupulous.”

Particularly, Cottage charged Kaiser had routinely underpaid for providers rendered largely in Cottage’s emergency rooms to sufferers coated by Kaiser Permanente. In 2018, Cottage alleged, Kaiser paid solely 62 % of the face worth of the payments accrued at Cottage by sufferers coated by Kaiser. In 2019, Kaiser paid solely 58 %. In 2020, it was 70 %. And in 2021, it was once more 70 %. All these funds not totally paid price Cottage “tens of tens of millions” of {dollars}, the lawsuit claimed. All of the whereas, Cottage maintained, Kaiser was reporting internet revenues starting from $3.5 billion to $6.5 billion.

A lot of the billing disputes concerned sufferers looking for remedy at one in every of Cottage’s two emergency rooms. Some additionally concerned sufferers looking for “post-stabilization care.” Since 2018, Cottage charged, Kaiser had underpaid “on hundreds of events.”

Cottage’s attorneys included one particular instance involving a shopper looking for emergency remedy on November 7, 2021, for a wrist fracture. Kaiser opted to pay solely 10 % of the listing worth, claiming that the price “exceeded the utmost allowable underneath contracted price association.” Cottage said no such contractual settlement existed and that the ten % didn’t start to cowl Cottage’s prices. 

When Cottage sought to enchantment, its fee adjusters discovered themselves confronting a system designed by Kaiser to obfuscate, frustrate, and discourage challenges. “Kaiser deliberately underpays claims and maintains an opaque and tough enchantment course of to position the burden of fee on suppliers like Cottage Well being,” the lawsuit charged. As well as, Cottage charged Kaiser disguised its “self-awarded reductions to stop efficient appeals.”



Cottage complained that efforts to succeed in Kaiser by cellphone proved particularly exasperating. “Kaiser sometimes left Cottage Well being ready, typically for over an hour.”

In the end, within the case of the wrist fracture, Kaiser reportedly knowledgeable Cottage it will reply to its billing by February 11. It didn’t accomplish that. 

The appeals themselves, Cottage’s attorneys wrote, had been confounding within the excessive. For instance, in keeping with Cottage, Kaiser required appellants to articulate of their enchantment what Kaiser’s reasoning was for paying what they mentioned they’d pay. These causes — not less than within the case of the wrist fracture — relied on what Cottage described as “nonsensical reasoning” and couldn’t moderately be described. And failure to adjust to the intricacies of Kaiser’s byzantine appeals requirements, Cottage said, successfully disqualified the enchantment.

Kaiser Permanente launched an announcement responding to the lawsuit in solely the vaguest of phrases. The chain, the assertion learn, was dedicated to “paying truthful and cheap charges for emergency providers supplied to our members by non–Kaiser Permanente hospitals.” The assertion mentioned Kaiser appeared ahead to a court docket evaluate of Cottage’s declare for “excessive expenses” and expressed confidence that Kaiser would prevail “following an neutral evaluate of the details.” 

Cottage maintains an efficient monopoly for hospital care all through the South Coast and enjoys extra leverage than many hospital operations in extracting increased compensation from insurance coverage suppliers. This was one of many issues in play when federal regulators declined to approve efforts by Cottage to merge with Sansum Clinic a number of years in the past. 

However in its court docket papers, Cottage portrayed itself as an aggrieved David going up in opposition to a really giant and grasping Goliath. Cottage Well being, the lawsuit said, “was based in 1888 by a bunch of fifty Santa Barbara ladies who acknowledged the necessity for a not-for-profit facility devoted to the wellbeing and good well being of all residents, whatever the one’s capability to pay.” The watchwords of the health-care system had been — and stay — “excellence, integrity, and compassion.” Cottage, the lawsuit added, gives “tens of tens of millions in no-cost providers for the advantage of most in want.” 

Kaiser, in contrast, was described within the lawsuit as “a non-public multibillion-dollar firm with a nationwide presence,” with 39 hospitals, 730 medical workplaces, 24,000 physicians, and 140,000 nurses. No point out, nonetheless, was manufactured from the lawsuits in opposition to Kaiser introduced by the federal authorities in latest months for overcharging Medicare sufferers.


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