Following Rate Hikes, CalPERS Plans to Shift Focus to Quality of Care

Facing 25% average increases in its health insurance premiums for next year, the California Public Employees' Retirement System "wants proof" that the higher costs will lead to better care for its 1.3 million members, the Sacramento Bee reports. CalPERS, which will spend $2.2 billion on HMO care next year, plans to spend another $15 million to develop a claims database that will allow its pension fund managers to track what happens each time a member "sees a doctor or fills a prescription." CalPERS officials expect to use such data to determine which doctors, hospitals and treatments "best serve" its members, particularly those with chronic problems, and then to request that its contracted health plans "tailor" their benefits accordingly. Ken Wood, executive vice president and COO of Blue Shield of California, said CalPERS' actions could "breathe new life" into managed care, forcing plans to improve outcomes for chronically ill patients. Wood added that CalPERS "recognizes that the mechanisms of managed care have value, and they are focused on maximizing its potential." CalPERS Health Benefits Administrator Allen Feezor said, "CalPERS recognized that any long-term strategy needs to get away from [focusing on cost] ... and concentrate on how we can effect better care for our members" (Rapaport, Sacramento Bee, 4/28).