Nearly two years after it first began discussing contracting directly with healthcare providers, the California Public Employees Retirement System says it will formally explore the matter soon.
CalPERS, which purchases healthcare coverage for more than 1 million state employees and retirees and is the second-largest healthcare buyer behind the federal government, first revealed it was considering bypassing health plans in March 1998. But 22 months later, the issue has yet to be discussed by the system's 12-member board.
A breakthrough occurred last month when CalPERS' health benefits committee instructed executive staff to present a proposal on direct contracting at the board's Feb. 15 meeting.
CalPERS spokesman Bill Branch said informal discussions about a contracting joint venture with another state retirement fund, the 500,000-member California State Teachers Retirement System, prompted a deeper look at the issue.
Few of the nation's more than 100 regional healthcare purchasing coalitions are involved in direct contracting with providers. Most still assign the task to a health plan or third-party administrator. Only one coalition, Minneapolis-based Buyers Health Care Action Group, contracts directly on a large scale, providing benefits for about a third of its 400,000 members.
"Direct contracting would be a very large and complex undertaking, and it's not something you would go into without careful study and consideration," said Branch, explaining why it has taken so long for CalPERS' committees and board to begin formally discussing the matter.
The teachers retirement system doesn't provide healthcare coverage for its members but has been exploring the possibility of doing so, said James Mosman, its chief executive officer. Along with working with CalPERS, direct contracting is among the options presented to the board in a recent consultant's report.