Sutter, CalPERS Possibly Agree To Cap Annual Price Increases
Sutter Health on Thursday reportedly agreed to a multiyear contract proposal with CalPERS that includes a cap on price increases, which could reduce CalPERS' health insurance premiums by about $20 million next year, the Sacramento Bee reports. Although confidentiality agreements prohibit CalPERS from disclosing the exact amount of the negotiated price cap, Sutter officials said they agreed to cap price increases at less than 10% a year for two years. Nationwide, annual hospital prices increase an average of 5% or 6%, according to the producer price index from the federal Labor Department. If CalPERS was able to secure price caps "well below industry averages, that would be a landmark deal that could help trigger insurance premium savings for other employers," analysts told the Bee (Rapaport, Sacramento Bee, 4/9). 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 15 Sutter-owned hospitals. Sutter began negotiating plans to reduce CalPERS' costs, including proposals to let Blue Shield of California 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 Sutter and have lower premiums (California Healthline, 3/17). CalPERS is scheduled to vote April 20 on its hospital network for next year, including whether to accept Sutter's price cap or eliminate coverage at Sutter hospitals (Sacramento Bee, 4/9).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.