Kaiser files lawsuit against Queen’s following contract expiration at end of May

KAILUA-KONA — Kaiser Permanente on Wednesday filed a lawsuit against The Queen’s Health Systems after Queen’s told the health plan it will be billing Kaiser members for the balance of any emergency services it provides that aren’t reimbursed.

The lawsuit comes after a hospital services agreement between The Queen’s Medical Center and Kaiser expired on May 30, making The Queen’s Health Systems hospitals, including North Hawaii Community Hospital in Waimea, no longer participating providers within Kaiser’s network.

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A Kaiser spokesperson said earlier this week that Kaiser members will still have access to and be covered for emergency and trauma services at those hospitals, as they would at any other hospital.

The lawsuit, filed Wednesday in federal court, asks the court to prevent Queen’s from billing Kaiser members for emergency services except for co-pays and deductibles and to also declare that Kaiser must only pay “the reasonable value” for emergency services the hospitals provide its commercial members.

Attached to the complaint is a letter from The Queen’s Health Systems’ Chief Financial Officer Mich Riccioni notifying Kaiser that effective May 31, emergency and non-emergency services would be provided to Kaiser commercial members “at 100% of billed charges.” Emergency services will be provided to Medicare members and Medicaid members at those plans’ respective rates.

The letter also said Queen’s wouldn’t notify or seek clearance from Kaiser for services provided to its members, who would be billed for any claim for services not reimbursed by Kaiser.

Federal law requires any hospital that takes government insurance, such as Medicare or Medicaid, to treat a patient who comes in with an emergency medical condition until they’re stabilized, regardless of their insurance status or who their carrier is. The federal government also requires health plans and insurers to cover emergency services their members receive, even if the facility providing those services is out-of-network.

These two laws together mean that even though The Queen’s Health Systems is no longer a participating provider within the Kaiser Permanente network, a Queen’s hospital must treat a Kaiser Permanente member who comes in needing emergency care, and Kaiser Permanente must cover those services.

Meanwhile, state law regulates how commercial members pay for the services they receive. For example, any hospital with a contract for services with a carrier must accept the payment that’s listed in the contract as “payment in full” for the services it provides. Hospitals also have to seek payment straight from carriers and are barred from trying to recover payment, except for copayments and deductibles, directly from the patient, even if the carrier refuses to pay or cannot.

Although the contract between Kaiser Permanente and The Queen’s Health Systems ended on May 30, Kaiser argued in its court complaint that the two “have an implied contract with respect to the provision and payment of emergency medical services,” and those implied contracts are regulated the same as any contract.

Kaiser said it promised to pay reasonable amounts for emergency services Queen’s provides its members, but Queen’s rejected that proposal, saying emergency and non-emergency services would be provided to Kaiser’s commercial members at 100% of the billed charges and that members would be billed for any claim for services not reimbursed by Kaiser.

In a statement to media, Kaiser said it “cannot agree to QHS demands for unreasonable rate increases,” calling such payments unsustainable and arguing that they would lead to an increase in the overall cost of care for all of the state’s residents

“We look forward to a court reviewing this case and are confident we will prevail following an impartial review of the facts,” Kaiser said.

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The Queen’s Health Systems said in a statement that it “is in the process of reviewing the lawsuit.”

“While we do not comment on pending litigation, we can say that we will continue to ensure all patients who seek our help, regardless of insurance coverage, receive the highest quality of care,” said the statement. “It has been our mission for 160 years to provide great clinical care for all the people of Hawaii, and we will continue to serve all patients, including Kaiser members, any time they need our services.”

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