Kaiser, Texas Settle Dispute on Patient Care

The Texas Department of Insurance and the Kaiser Foundation Health Plan have settled a dispute over the quality of the health maintenance organization’s patient care in Texas.

Kaiser in February had sued the Texas Department of Insurance to block the release of a report that was highly critical of Kaiser. Texas officials had threatened to shut down Kaiser’s Texas operations, which serve 124,000 patients, because of allegedly poor care and the poor financial condition of the nonprofit HMO.

The settlement announced Friday calls for Kaiser to pay a $1-million fine and take several steps to assure quality care, according to a statement from the Texas Department of Insurance. The deal calls for the Texas operation to receive an $80-million cash infusion from its California-based parent this year.

Kaiser’s Texas operations have lost $52 million over the past two years as they have struggled to compete with for-profit health groups.

The Insurance Department agreed not to release the critical report until it had been reviewed by the state attorney general for possible violations of patient confidence. Parts of the report deemed nonconfidential will be released after the review, according to the statement.

Texas insurance commissioner Elton Borner said revocation of Kaiser’s license was an issue only because of the HMO’s financial condition and that the agreement announced Friday “eliminated any possibility that I would consider revocation.”