Kaiser Foundation Health Plan Settles Federal Mental Health Network Claims for $31 Million

The U.S. Department of Labor's Employee Benefits Security Administration announced a settlement with Kaiser Foundation Health Plan Inc. addressing multiple federal investigations into the insurer's mental health and substance use disorder service delivery. The agreement resolves allegations that Kaiser violated the Mental Health Parity and Addiction Equity Act by failing to maintain adequate provider networks and improperly using patient screening questionnaires to restrict care access.

The settlement affects millions of California members who receive coverage through employer-sponsored health plans governed by the Employee Retirement Income Security Act. Under ERISA jurisdiction, EBSA enforces mental health parity requirements for approximately 2.5 million private employment-based group health plans covering approximately 133 million individuals nationwide.

Kaiser will pay at least $28,323,219 to reimburse members for out-of-network mental health and substance use disorder expenses incurred when in-network services were unavailable. The company will also pay a $2,832,321 civil penalty to the federal government. These payments represent federal enforcement of mental health parity violations separate from California's $200 million state settlement with Kaiser announced in October 2023.

Federal investigators found Kaiser's network inadequacies forced members to seek treatment outside the plan's provider network, resulting in higher out-of-pocket costs through increased coinsurance and deductibles. The investigation also determined Kaiser improperly relied on patient questionnaire responses to deny medically necessary care, creating barriers inconsistent with how the plan processed medical and surgical benefit requests.

Beyond monetary remedies, Kaiser committed to operational reforms including reducing appointment wait times for mental health and substance use disorder services, improving utilization review processes to ensure medically necessary treatment authorizations, and implementing enhanced network adequacy monitoring systems. These requirements align with EBSA's enforcement priorities targeting nonquantitative treatment limitations that create disparities between mental health coverage and medical-surgical benefits.

The settlement establishes a claims process administered through a dedicated website at www.outofnetworkhealthclaims.com. Kaiser has notified California members who participated in employer-sponsored plans after January 1, 2021, and likely incurred out-of-network expenses after attempting to access in-network mental health or substance use disorder services. Eligible members may file claims for reimbursement by contacting the settlement administrator at 1-877-684-4129.

This enforcement action represents EBSA's continued focus on mental health parity compliance. According to the agency's 2024 Report to Congress, EBSA has devoted nearly 25 percent of its enforcement program resources to investigating nonquantitative treatment limitations. The agency has identified network composition disparities as a critical compliance issue, noting instances where plans show equal numbers of in-network providers but participants experience significantly greater difficulty accessing mental health providers compared to medical-surgical specialists.

Kaiser Foundation Health Plan, headquartered in Oakland, California, provides coverage to more than 12.6 million members through Kaiser Foundation Health Plan Inc., Kaiser Foundation Hospitals, and the Permanente Medical Groups. The federal settlement follows Kaiser's October 2023 agreement with the California Department of Managed Health Care, which included a $50 million state penalty and required $150 million in additional investments to improve behavioral health services for all Californians.

EBSA provides assistance to plan participants experiencing network access difficulties through its toll-free helpline at 1-866-444-3272 or online at askebsa.dol.gov.

Key Points

• Kaiser Foundation Health Plan will pay minimum $28.3 million to reimburse California members in employer-sponsored plans for out-of-network mental health and substance use disorder services
• Federal civil penalty of $2.8 million assessed for Mental Health Parity and Addiction Equity Act violations under ERISA jurisdiction
• Settlement resolves EBSA investigations into inadequate provider networks and improper use of screening questionnaires to deny care
• Affects California members who participated in employer-sponsored Kaiser plans after January 1, 2021
• Operational reforms include appointment wait time reductions, improved utilization review procedures, and network adequacy monitoring requirements
• Claims must be filed through settlement administrator at www.outofnetworkhealthclaims.com or by calling 1-877-684-4129
• Federal settlement distinct from California's $200 million state settlement with Kaiser announced October 2023
• EBSA continues prioritizing mental health parity enforcement, dedicating 25 percent of enforcement resources to nonquantitative treatment limitation investigations

Primary Source: U.S. Department of Labor, Employee Benefits Security Administration

Primary Source Author: U.S. Department of Labor, Employee Benefits Security Administration

Source Link: https://www.dol.gov/newsroom/releases/ebsa/ebsa20260210

Supplemental Links

• Kaiser Settlement Claims Website
• Mental Health Parity and Addiction Equity Act Overview
• EBSA 2024 Report to Congress on MHPAEA Enforcement
• Employee Retirement Income Security Act (ERISA) Information
• EBSA Contact Information for Network Access Issues
• California DMHC Kaiser Settlement Agreement (October 2023)