The California Public Employees' Retirement System, the nation's third-largest purchaser of health benefits, has unveiled a new plan to contain rising healthcare costs that will include incentives for doctors and hospitals to improve the quality of care and mandatory case management programs by health plans.
The proposed changes, announced Wednesday, come as CalPERS officials estimate that the $130 billion pension fund could face steep premium increases that could top last year's 25% rise. The pension fund is expected to unveil the new rates in mid-June.
"Employer-based coverage is on life-support," says Sean Harrigan, president of CalPERS board of administration, in a release. "This plan deals with a number of extremely difficult issues, and it is our best hope for keeping our health plan working for our members."
A central feature of the plan is establishing longer-term contracts with health plans to stabilize prices, CalPERS says, adding that it is about to finalize plans for a multiyear contracts with Blue Shield of California.
Two other aspects of the plan directly affect physicians:
- Requiring health plans to have at least three case management programs to identify high-risk patients and five chronic disease management programs.
- Mandating that plans give doctors and hospitals incentives to follow treatment practices that are "clinically proven to be effective."
CalPERS says only the federal government and General Motors Corp. buy more health benefits.