CALPERS-KAISER: Widely Hailed Pact May Not Be So Open

      The California Public Employees' Retirement System's pact with Kaiser Permanente, which gave CalPERS "the right to audit Kaiser Permanente's rate-setting methods," may not be as groundbreaking as it first seemed, Hospitals & Health Networks reports. While the deal was widely hailed as "precedent-setting" at the time (see CHL 6/17), H&HN reports that "as details about the agreement surface, it's looking less and less like an open door to Kaiser's back-office workings." Bill Branch, information officer at CalPERS, said Kaiser "agreed to allow us for the first time to audit their books on all data related to setting the community rate and the CalPERS rate." But "Kaiser officials have a different take on the agreement," according to H&HN. Kathleen McKenna, Kaiser's communications manager, said CalPERS does not "have the ability to completely audit all of Kaiser," and can only "review how we get our rate specific to CalPERS." Both Kaiser and CalPERS officials acknowledge that the organizations do not have a "written agreement on how much information the two parties will share."

Trend-Setter
      H&HN reports that the deal was a "trend-setter" -- not in information sharing, but in increased rates. In return for the peek at Kaiser's books, CalPERS agreed to "a whopping 10.75% premium hike next year," which "may help drive up 1999 rates elsewhere." Already Kaiser has won a double-digit rate hike from the Pacific Business Group on Health (see CHL 6/24) that is believed to be around 12%. "The train has already left the station. If Kaiser goes up 10.75%, other health plans increase their demands," said health care consultant Albert Lowey-Ball. "This sends a symbolic message to the health care market," said former CalPERS negotiator Tom Elkin, noting, "The pendulum is swinging, and prices are going back up" (Papinchak, 9/5 issue).