CalPERS Approves Plan To Study Two New Health Care Models To Reduce Costs
CalPERS last week approved a plan to study two new health care models to try to combat rising costs, a move that may prompt other large health systems to conduct similar studies, the Contra Costa Times reports. The health system will consider a proposal to reduce the number of HMO options offered to members to two or three. CalPERS also will consider a another proposal that would offer a single, statewide, self-insured plan (Metinko, Contra Costa Times, 2/23). CalPERS today offers health plans through seven HMOs and two self-funded preferred provider organizations, PERSCare and PERSChoice. Last Thursday, the CalPERS Board of Administration approved a six-month study of the proposals to determine their "prospects for providing greater price and product stability, improving members' ability to choose providers" and "allowing more efficient, more cost-effective management of care" (CalPERS release, 2/22). "Right now, a lot of this has moving parts," CalPERS spokesperson Clark McKinley said, adding, "There will be a strategic review of these models and things may be added or taken away." McKinley said that the health system would not implement the proposals before 2004.
Health care analysts predicted that the move may prompt other large health systems to study similar reforms. "CalPERS has served as a bellwether for the industry for a while. I'm sure some will be watching what they're doing," Alwyn Cassil, a spokesperson for the Washington, D.C.-based Center for Studying Health System Change, said. She also said that the proposed reforms "illustrate the leverage organizations such as CalPERS have lost in negotiating HMO deals with providers." Cassil said, "Right now CalPERS doesn't have the leverage it used to and health care is going through a boom time with double digit increases. They have to do something to manage costs." Dr. Mark Smith, president and CEO of the California HealthCare Foundation, said that the reforms that CalPERS has proposed "shouldn't have that drastic of an effect" on members. He said that many HMOs have "substantial overlap" between their participating doctors and hospitals, adding that the self-insured proposal would still offer member health plans similar to HMO and PPO plans. "While many groups have given up on trying to provide (high-quality) care at a reasonable cost, CalPERS it seems is still trying to do that. They are still trying to cut some of their expenses while still giving members a good health care option," Smith said (Contra Costa Times, 2/23).
Meanwhile, CalPERS reported last week that 85,000 members switched health plans in 2002 after the health system eliminated four HMOs last year. The 85,000 health plan switches during the open enrollment period in 2001 represented a seven fold increase from 2000 and a more than three fold increase from the 1999 record of 25,000 health plan switches. CalPERS HMOs reported a 5.5% decrease in enrollment -- a loss of 24,000 members -- while the health system's PPOs reported a 19% increase in enrollment. Ninety-six percent of new PERSChoice members transferred from CalPERS HMOs (CalPERS release, 2/22). In a separate announcement, CalPERS has selected Blue Cross of California to administer PERSChoice and PERSCare, which serve 280,000 enrollees. The CalPERS Board of Administration approved a three-year contract with the health insurer, which has administered PERSChoice and PERSCare since January 1999 (CalPERS release, 2/22).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.