CalPERS Officials Delay Vote on Eliminating Sutter Hospitals From HMO Network
CalPERS officials on Tuesday delayed voting on a plan to eliminate coverage at 15 Sutter Health hospitals or accept a discounted rate at all Sutter facilities, the Sacramento Bee reports (Kasler, Sacramento Bee, 4/21). Sutter and CalPERS on April 8 signed such a plan. CalPERS officials previously announced that they were pursuing a plan to save $72 million in premiums, including about $53 million in savings by ending coverage for CalPERS beneficiaries at 45 hospitals statewide, including 15 Sutter-owned facilities. Sutter began negotiating plans to reduce CalPERS' costs, including proposals to allow Blue Shield of California to exclude the 15 Sutter hospitals from an HMO plan for CalPERS members; to include all Sutter facilities in a health plan for CalPERS members if Sutter would discount prices for them; or to create two separate Blue Shield HMOs for CalPERS members -- one that included all Sutter hospitals but would cost more, and one that would exclude some Sutter hospitals and have lower premiums (California Healthline, 4/20). CalPERS board member George Diehr said Sutter's discount plan would limit price increases to 7% per year for the next two years if CalPERS maintains coverage for all Sutter hospitals. If the pension fund decides to exclude some Sutter hospitals, the chain would raise rates by 12%, Diehr said. CalPERS President Sean Harrigan said officials want more time to study the impact that exclusion of the 15 Sutter hospitals would have on about 50,000 CalPERS members in Northern California who would have to switch doctors as a result of the decision. Sutter has said that if CalPERS eliminates the hospitals from its network, it will have to cut the doctors, as well. Some members of the pension fund's board have said that the hospital chain's proposed discount is inadequate because treatment at Sutter facilities is "60% more expensive than other Northern California providers," according to the Bee. At a public hearing on Tuesday, several retirees and current state employees urged CalPERS to preserve access to Sutter doctors (Sacramento Bee, 4/21).
Sutter and CalPERS officials should consider a "third choice" in their negotiations: "Let Sutter enrollees keep their Sutter doctors and hospitals -- but make them pay the going rate," a Bee editorial states. Going forward with the plan to exclude some Sutter hospitals from the CalPERS network -- and in doing so, exclude Sutter-affiliated doctors -- would be a "huge disruption for [government] employees and for medical services" in Sacramento and Modesto and "is the kind of last-resort decision to avoid," according to the editorial. Instead, CalPERS should loosen its "too rigid" pricing system, let consumers "see the real costs" and give them a choice, the editorial continues, adding that there "are no easy choices here for employees or for CalPERS or for Sutter. The best that can be hoped for is to begin to push this system back toward a relentless pursuit of more cost-effective care" (Sacramento Bee, 4/21).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.