Kaiser Marketing Practices Investigated

Times Staff Writer

State regulators are investigating Kaiser Permanente’s Southern California operation for allegedly deceptive marketing practices related to the upcoming transfer of about 18,000 Coachella Valley patients from outside doctors to the HMO’s staff physicians.

The California Department of Managed Health Care is looking into whether Kaiser misled members into believing that they could continue seeing their current primary care doctors when, in fact, that will no longer be the case after June 30.

“We are investigating the situation for a potential violation of the Health and Safety Code,” managed care agency spokeswoman Lynne Randolph said. Kaiser has until Friday to respond to the agency’s request for information.


Generally, Kaiser members must get their care only from Kaiser hospitals and affiliated Permanente medical group doctors. But until now, Kaiser has not had clinics in the Coachella Valley, and its local members have been allowed to see non-Kaiser doctors under contract with the HMO.

On July 1, Kaiser will open its own medical offices in Palm Desert, Palm Springs and Indio with 11 doctors whom most Kaiser members must see for primary care. But the managed care department is concerned that the HMO was not sufficiently forthright about that requirement.

The investigation comes at a sensitive time for Kaiser, the nation’s largest HMO, following a scandal involving its kidney transplant program in Northern California. Officials required about 1,500 patients awaiting kidney transplants to leave established outside programs in 2004 and join Kaiser’s new program in San Francisco.

Delays and confusion abounded, and the number of transplants performed on Kaiser patients plummeted. Kaiser announced earlier this month that it would close its transplant unit and shift all of its patients back to the outside hospitals.

Kaiser officials in Southern California said the HMO has been upfront with patients about what to expect.

“As far as I can tell, we really have done things according to what the [managed care] department wanted us to do,” said Dr. Benjamin Chu, president of the Southern California region of Kaiser Foundation Health Plan and Hospitals. “When I reviewed the communications, I don’t see any false marketing.”

Chu said Kaiser has been running a marketing campaign since last fall to inform members about the changes.

But the HMO’s existing physician directories continued to list 125 doctors -- internists, pediatricians and family practice physicians -- affiliated with the Desert Medical Group and the Oasis Independent Physician Assn. Medical Group. Their contracts to see Kaiser members terminate June 30.

After the transition, Kaiser patients in that area will still be referred to outside physicians for specialty care. In addition, members with certain serious or chronic health conditions won’t be required to transfer doctors immediately.

Some patients say they have been blindsided.

Betty Ault, 82, of Cathedral City said she received a letter May 1 telling her to call Kaiser and pick a new doctor. When she called that day, she said, a woman told her that Kaiser did not yet have a list of its new doctors but that members would receive a booklet in two weeks that would include names and pictures of the doctors.

When the brochure did not arrive, Ault said, she called again this week and was told no booklet existed but that she could choose from two Kaiser doctors who would serve her area. “There’s two doctors; can you believe this?” Ault said.

Louis Ross, 84, said he has seen his current doctor for seven years and was surprised to learn he wouldn’t be able to stick with him.

“I don’t like to switch doctors, but it looks like I’m going to have to,” he said. “It’s always difficult when you get to know a certain doctor and you have a lot of faith in that doctor and all of a sudden you have to give him up. No two ways about it.”

Although Kaiser has asked members to call in to choose a new Kaiser physician, only 1,000 of the 18,000 affected members have done so, a Kaiser spokeswoman said.

The physicians group that handles contracts for the outside doctors says Kaiser provided misleading information during insurance events at several companies. The group says that as recently as April, the HMO displayed lists including doctors who Kaiser knew would not be available after June 30.

The events are held because employees generally have the chance, once a year, to switch insurance plans during an open enrollment period.

“There’s been a lot of confusion,” said Dr. Marc Hoffing, medical director of the doctors group. “It was not made clear to the patients what exactly it meant by staying with Kaiser.”

Los Angeles lawyer Ray Gallo has also been trying to persuade the managed care department to intervene on patients’ behalf.

“A lot of people have relationships with these doctors -- they’ve been with them for a month or a year or 10 years,” Gallo said. “People didn’t have the opportunity to make an informed decision, and in fact were led to believe that something else was the case.”


Times staff writer Tracy Weber contributed to this report.