News release: Colorado - Denver/Boulder

October 5, 2000

For more information, call:
Steve Krizman
Kaiser Permanente
Phone: (303) 344-7932
E-mail: Steve.A.Krizman@kp.org

Kaiser Permanente sues Colorado for Medicaid underpayment

Denver, CO – Kaiser Permanente filed suit against the state of Colorado on September 29 to recover Medicaid underpayments.

"We have lost money through the Medicaid program, but we've stayed in because it's part of our social mission," said Kristin Snyder, vice president of Prevention, Public and Government Affairs, for the Colorado Region.

Kaiser Permanente's suit states that Colorado Medicaid officials were not following their own rules when paying health plans participating in the Medicaid program.

One of those health plans, Rocky Mountain HMO, previously filed a similar suit and in May of this year was awarded $15 million in back payments. The judge in that case was outspoken in his criticism of the state's disregard for its own reimbursement rules. Colorado District Court Judge Warren Martin said in his order that the state director of the Medicaid program "undertook to achieve savings by taking them out of the hides of the HMOs. He surreptitiously, and sometimes openly, hid data from the HMOs . . . and in essence said, 'If you don't like it, get out.'"

"We watched to see if the state would make changes in light of that judgment," Snyder said. Instead, the state appealed the ruling.

"We decided we owed it to our members, who had been subsidizing Medicaid, to try to recover that money," Snyder said.

It is not known how much the state owes Kaiser Permanente. "We have a lot of work to do," Snyder said. "The rules for determining payment are complex, and we'll have to go through records to match the proper application of the rules against our actual experience to arrive at a figure. We've only just begun."

Kaiser Permanente currently has 7,200 Medicaid members in Colorado. Kaiser Permanente is a nonprofit health care organization that cares for 370,000 members in Colorado. Its 535 doctors comprise the largest medical group in the state. Care is provided by an integrated team of physicians, nurses, pharmacists, dietitians, mental health counselors, and physical therapists. The organization owns and operates 16 medical offices equipped with the latest medical devices, including a fully computerized patient record and prescription system.