CalPERS To Vote on 2006 HMO Contracts by June 15

The California Public Employees' Retirement System later this month is expected to approve its 2006 HMO contracts, which "for the first time in five years" are expected to include "no major coverage changes," the Sacramento Bee reports.

For the past several years, CalPERS has made significant changes to its covered hospitals, HMOs, prescription drugs and physician services in an effort to keep premium rate increases low.

Major changes have included increasing fees charged to HMO members for physician visits and emergency department visits and placing additional restrictions on prescription drug purchases (Rapaport, Sacramento Bee, 6/5).

In addition, CalPERS last year voted to eliminate coverage at some of the most costly hospitals in its Blue Shield of California HMO network beginning in 2005 (California Healthline, 5/20). The change was estimated to save CalPERS $36 million this year and $50 million in subsequent years. As a result, average premium increases for this year were 11.4%, 3% less than what they would have been if the fund had not dropped the hospitals, officials said.

"We are now getting pretty good economic results from changes we made in previous years," CalPERS spokesperson Clark McKinley said, adding, "This year, we are strictly looking at the premiums. No benefit changes are on the table."

J.J. Jelincic, president of the California State Employees Association, said he expects costs to increase next year. "I don't think I'll get my wish, but I really wish the costs for workers could be less next year than they are now," he said.

According to the Bee, it remains to be seen whether CalPERS will be able to keep its premium increase below 10% for 2006.

The board will vote on the HMO contracts on June 15 (Sacramento Bee, 6/5).