April 17, 2013
External Affairs Branch
Robert Udall Glazier, Deputy Executive Officer
Brad Pacheco, Chief, Office of Public Affairs
Contact: Bill Madison, Information Officer
CalPERS Awards Multiple HMO Contracts
Five companies get nod of approval for new direction
SACRAMENTO, CA – The California Public Employees' Retirement System (CalPERS) today announced that five companies will administer its Health Maintenance Organization (HMO) plans for the next five years. The CalPERS Board of Administration voted to award HMO contracts to Anthem Blue Cross, Blue Shield of California, Health Net, Sharp and United Health Care. The five-year contracts will begin January 1, 2014, and run through December 31, 2018. CalPERS will also continue to offer Kaiser Permanente as one of its HMO options for members.
The Board made its decision after reviewing the final staff evaluations of the responses to the Request for Proposals (RFP) for health plan administrators that CalPERS issued in October. CalPERS challenged bidders to offer innovative approaches for its health program and fully explore all options to provide high-quality, affordable care. The bidders' technical and financial responses had to meet stringent requirements, and staff found that most of the proposals offered high-quality health benefits and demonstrated a long-term commitment to reducing costs and an ability to meet CalPERS needs.
"This decision was made more challenging by the number of bidders and the strength and weaknesses of their responses," said Board President Rob Feckner. "The good news is that we found most of the proposals offered high-quality health benefits and demonstrated a long-term commitment to reducing costs and meeting the needs of our members."
CalPERS asked the bidders to offer options to address CalPERS purchasing needs and share risk by aligning incentives with CalPERS health initiatives. CalPERS developed the health initiatives during a lengthy health benefits purchasing review process, designed to identify strategies to reduce health care costs and improve health care outcomes. The RFP also required bidders to indicate how they would meet requirements to provide transparency in their operations, meet pricing and performance guarantees, support health and disease management and implement integrated health care models.
"The companies we chose will enhance CalPERS ability to effect the long-term health program changes we need to achieve long-term cost savings," said Pension & Health Benefits Committee Chair Priya Mathur. "We look forward to using innovative solutions to keep costs down and mitigate premium increases, while providing high-quality health care."
The HMO contract will affect more than 400,000 members currently enrolled in Blue Shield of California HMO Plans. In March, the CalPERS Board awarded Anthem Blue Cross a five-year contract to administer its Preferred Provider Organization (PPO) health plans. The PPO program includes the PERS Select, PERS Choice and PERSCare health plans with over 357,000 members.
CalPERS is the nation's largest public pension fund with approximately $260 billion in assets, administering retirement benefits for more than 1.6 million members, and spending over $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. For more information about CalPERS, visit www.calpers.ca.gov.