October 18, 2012
External Affairs Branch
Robert Udall Glazier, Deputy Executive Officer
Brad Pacheco, Chief, Office of Public Affairs
Contact: Bill Madison, Information Officer
CalPERS Seeks New Health Plan Partners
SACRAMENTO, CA – The California Public Employees’ Retirement System (CalPERS), determined to aggressively use innovative approaches for its health program and fully explore all options for more quality affordable care, has begun a search for partners to offer health benefits to CalPERS members and their families.
CalPERS is using a Request for Proposal (RFP) process to cast a wide net within the health care industry to seek competitive bids for its health plan business. One RFP solicits health maintenance organization (HMO) plans, the other its preferred provider organization (PPO) business. CalPERS is seeking for the first time to self-fund the fee-for-service portion of its HMO plans. CalPERS PPO plans are already self-funded.
The RFPs seek bidders willing to share risk by aligning incentives with CalPERS health initiatives, and able to offer options to address CalPERS purchasing needs. CalPERS health initiatives were developed during a lengthy health benefits purchasing review process, resulting in interrelated strategies that aim to reduce healthcare costs and improve outcomes. A key component of the RFP is a prospective bidder’s willingness to incorporate those strategies, including transparency, pricing and performance guarantees, health and disease management, and integrated healthcare models in their proposals.
“We are looking for health plan partners who are willing to step up to the line by entering into an aggressive risk-sharing arrangement with us,” said Rob Feckner, CalPERS Board President. “This is an opportunity for us to provide high-quality health care for our members by using innovative and cost-efficient solutions with higher levels of accountability and transparency. We’re looking to improve plan performance and drive structured change in the marketplace while simultaneously creating better options for our members and employers.”
The PPO RFP was issued October 5. The HMO RFP will be released in the latter part of October. Draft responses for the PPO RFP are due to CalPERS in November; HMO responses are due in December.
The criteria established in the RFPs are a result of a year-long effort that included surveys, stakeholder discussions, market scans and an examination of past CalPERS successes. It will ask them to supply data and respond to questions that gauge the effectiveness of their wellness and disease management programs; implementation of integrated health care models; access to high-efficiency physician and hospital networks; and strategies to mitigate costs and improve quality of care. In addition, the RFPs ask bidders to explain their capability to coordinate pharmacy benefit services.
“Our key criteria for evaluating vendors will include not only a willingness to share risk, but to also help us implement strategies that include payment delivery changes that provide quality health care solutions at a lower cost,” said Priya Mathur, Chair of the Pension and Health Benefits Committee. “We believe these strategies will lead to delivery of market reform to achieve the long-term systemic changes that have helped CalPERS save hundreds of millions of dollars in the past few years.”
The selected vendors will administer health benefits for CalPERS starting January 1, 2014. The current PPO and HMO contracts expire December 31, 2013.
CalPERS is the nation’s largest public pension fund with approximately $243 billion in assets, administering retirement benefits for more than 1.6 million members, and spending nearly $7 billion annually to provide health benefits for more than 1.3 million State, public school, and local public agency employees, retirees, and their families. The average CalPERS pension is $2,332 per month. The average benefit for those who retired in the fiscal year that ended June 30, 2011, is $3,065 per month. For more information about CalPERS, visit www.calpers.ca.gov.