California health system sues Kaiser, alleging 'tens of millions' in underpayments

Santa Barbara, Calif.-based Cottage Health sued Oakland, Calif.-based Kaiser Permanente, alleging the insurer routinely underpaid claims, according to the Santa Barbara Independent.

The lawsuit, filed in early March, alleges Kaiser underpaid for services mostly rendered in Cottage Health's emergency rooms. According to the complaint, Kaiser paid 62 percent of the face value of its members' bills in 2018, 58 percent in 2019 and 70 percent in both 2020 and 2021. Cottage alleges Kaiser underpaid "on thousands of occasions" costing it "tens of millions" of dollars. 

In one case outlined in the lawsuit, a patient received emergency treatment for a wrist fracture at a Cottage emergency room in November 2021. Kaiser allegedly paid 10 percent of the list price, claiming the fee exceeded the maximum allowable under a contracted fee arrangement. Cottage claims no fee agreement existed. Cottage further alleges the appeal process with Kaiser to get higher reimbursement is designed to obfuscate, frustrate and discourage challenges.

Kaiser told the Independent it is committed to "paying fair and reasonable rates for emergency services provided to our members by non-Kaiser Permanente hospitals." 

Kaiser also said it was confident it would prevail "following an impartial review of the facts," according to the newspaper.

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