Kaiser Permanente will be forced to disclose more under California law

Kaiser Permanente, a large health system based in California, will be forced to follow the same disclosure laws as other healthcare payers and providers in the state thanks to a new law signed by Gov. Gavin Newsom.

The law was drafted amid an ongoing labor negotiation breakdown between Kaiser’s 85,000 California-based union workers and the health system. Last month, the union-backed workers voted to strike in October after contract negotiation talks fell through. Their previous contract with Kaiser Permanente ended in 2018, and the workers are demanding several changes from the healthcare provider, including better wages and benefits with more protections, more transparency around executive compensation and an increase in Medicaid participation.

Kaiser Permanente is a non-profit entity, but its workers have criticized the organization’s practice of paying executive high salaries, including a $6 million raise for its CEO Bernard Tyson.

The new law requires Kaiser to provide more data about its revenue and profits of individual hospitals, rather than lumping in the figures by region. All of the 400 hospitals in the state are required to follow this rule and report financials on a per-facility basis except the 35 operated by Kaiser Permanente. The California Assembly approved the bill in late August.

“This law arms employers and others with the information they need to fully understand why the cost of their health insurance with Kaiser Permanente may be rising,” said state Sen. Richard Pan (D-Sacramento), who authored the law.

Specifically, Kaiser will have to:

  • Break out revenue and expenses at each facility
  • Break out revenue by type of payor at each facility
  • Break out rate increases by type of service

While the new law will go into effect, more rules could be coming for the nonprofit entity. Another bill making its way through the State Assembly would require Kaiser to report how its nonprofit assets are being used and paid out as benefits for executives and doctors at for-profit businesses.

Kaiser does have an arrangement between its Kaiser Foundation Health Plan to furnish a retirement plan to doctors and executives in the for-profit Permanente Medical Group with a $7.7 billion obligation. Kaiser Permanente reported $11 billion in profits since the start of 2017, including $5.2 billion from the first half of 2019. The nonprofit has more than $37 billion in its reserves.

"Kaiser Permanente has always been very transparent with the state and followed all disclosure laws," a Kaiser Permanente spokesperson told Health Exec. "Under SB 343, the Office of Statewide Health Planning and Development (OSHPD) will receive even more detailed financial data from Kaiser Permanente.  We look forward to working with OSHPD to implement the new law.”