Kaiser Permanente to pay community hospital over $82M to resolve out-of-network reimbursement dispute
A health plan operated by Kaiser Permanente will be forced to pay millions of dollars to a California hospital, after a court upheld a ruling that found the facility was not reimbursed fairly for out-of-network emergency care it provides to patients.
The nonprofit insurer will be on the hook for $82.3 million in back payments, according to a report from Law360. The case dates back to 2019, but a final judgment had been delayed by multiple appeals.
In its lawsuit, Pomona Valley Hospital accused Kaiser Permanente of only paying $39.8 million for patient care, when the tab was actually $136.6 million. The incidents of underpayment, involving patients who arrived at Pomona’s emergency room, were said to have occurred between 2017 and 2020, meaning that the lowball out-of-network reimbursement continued even after a complaint had been filed with a state court.
Over that timeframe, Pomona Valley said it submitted nearly 4,100 claims to the insurer, which paid it at roughly an in-network rate, despite failing to negotiate to officially include the hospital in its network.
Further, Pomona Valley argued that the amount it was paid was not enough to cover the emergency care it provided to patients.
At the time, the hospital was suing for $105 million, including interest on the amount it claimed was owed, all of which a jury awarded in 2023. That award was reduced, however, after it was determined that a previous contract between the payer and the hospital that listed emergency care rates may not have been accurate.
A slew of appeals
Pomona Valley Hospital was instead issued a lower judgment—but that too would be challenged by Kaiser Permanente in an appeal to a higher court. At one time, the insurer was granted a new trial, but an appellate court put an end to that prospect in a win for Pomona Valley, as the battle played out in a series of hearings over the last several years.
This latest ruling did not change the jury’s determination, but instead reduced the judgment amount, on the basis that interest was wrongly calculated because of the inaccurate documents presented during the initial civil trial.
The final judgment of $82.3 million will not be subject to further appeal.
Pomona Valley Hospital, itself a nonprofit, is centered around a single community hospital in Los Angeles. It was in-network through a Kaiser Permanente health plan from 2004-2017, when the contract expired.
Health Exec reached out to Kaiser Permanente for comment; a spokesperson sent the following statement:
"In keeping with the law, we cover our members' emergency care regardless of the provider, just as our hospitals provide emergency care to anyone who comes in, regardless of their health plan.
Kaiser Permanente uses hospital financial reports filed with the state to help determine fair payment amounts. These reports show what hospitals charge and what they are paid by health plans. Our goal is to pay above average rates paid to hospitals. We have used this method for more than 20 years, and it follows state rules for fair payment.
When hospitals sue for higher payouts, they generally seek far more than what they receive from other health plans. Kaiser Permanente’s payments to Pomona Valley Hospital exceeded what the hospital typically accepted from other health plans and were substantially above its costs. Other court and arbitration cases have found that our payment methodology resulted in payments that met or exceeded the fair market value of services.
Pomona Valley Hospital is an important part of the California health care system, and of the communities it serves here.
Finally, it’s important to note that this was a dispute between providers and Kaiser Permanente; our members were not parties to the Pomona Valley Hospital lawsuit."
Chad is an award-winning writer and editor with over 15 years of experience working in media. He has a decade-long professional background in healthcare, working as a writer and in public relations.