CalPERS Expected To Issue Request for HMO Proposals This Month
CalPERS this month is expected to release a request for HMO proposals in an effort to reduce health care costs, the Sacramento Business Journal reports.
CalPERS has reduced the number of HMO plans that it offers to beneficiaries from 22 to three over the past two decades.
Blue Shield of California offers two different HMOs to CalPERS beneficiaries, while Kaiser Permanente offers a single HMO plan to beneficiaries.
The agency now is seeking more options to encourage competition among insurers.
Ann Boynton -- deputy executive officer of CalPERS -- said, "Our board feels very strongly that it is advisable at particular times to go out and test the market."
CalPERS also has indicated that it wants to expand HMO plans to rural areas (Robertson, Sacramento Business Journal, 10/26).
CalPERS sent out a request for information on HMOs to the health care industry this year, and a dozen health plans and physicians groups responded.
Large insurers that responded include:
- Cigna; andÂ
- UnitedHealth Group.
In addition, regional insurers such as Sharp Health Plan in SanDiego and medical groups such as the California Association of Physician Groups also responded to the requestÂ (California Healthline, 6/28).
Albert Lowey-Ball -- a Sacramento health economist -- said, "It's not surprising major players are sending in their plans to compete for this," adding, "There's been substantial pressure on the HMO market, in terms of declining market share."
Possible HMO Changes
Responses to CalPERS' request for HMO proposals will be due by December, and CalPERS will make a final decision in April 2013 (Sacramento Business Journal, 10/26).
The agency has said that it intends to renew its HMO contract with Kaiser. According to experts, CalPERS is reluctant to stop contracting with Kaiser because the insurer operates its own hospitals and physician practices and CalPERS does not want to force patients to switch physicians (California Healthline, 10/28).
However, CalPERS and Kaiser likely face difficult negotiations on costs, according to the Journal.Â
Blue Shield will have to bid to continue offering HMOs to beneficiaries. In preparation for bidding, CalPERS has extended Blue Shield's contract through 2013, when other HMO and PPO contracts are scheduled to expire.
Earlier this month, the agency issued a request for PPO proposals. Draft responses for the PPO proposals are due in November (Sacramento Business Journal, 10/26).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.