Bids are due by Nov. 26
The nation's second largest buyer of employee healthcare is calling on healthcare marketers to put on their thinking caps to solve some of the nation's toughest healthcare problems. The savviest solutions will be rewarded with a $350 million contract.
Put On Your Thinking Caps
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For the first time in 10 years, the California Public Employees' Retirement System (CalPERS) is challenging the healthcare industry to step to the plate with new and innovative ideas for easier access to specialists, fewer disruptions in doctor-patient relationships and better access to medical care in rural areas. CalPERS is flexing its considerable muscle in issuing a requests for proposal (RFP) for its two PPO plans - PERSCare and PERS Choice -that generate the mulit-million-dollar contract. RFP bids are due by Nov. 26 and the new plan would take effect Jan. 1, 1999.
The CalPERS decision to issue the RFP was triggered by employer market pressure to deliver more affordable quality care and to provide greater access, according to Bill Branch, CalPERS health information officer. Its decision also meant that its 10-year relationship with Blue Shield, which managed the two PPOs, might come to a screeching halt if the insurance company can't be competitive with other bidders. Branch compared the RFP request to buying a new car. "As the healthcare market changed [due to managed care] in the last 10 years, CalPERS has had to add additional features to its PPO plans to remain competitive. Pretty soon you get to the point where it's cheaper to buy a new car with all of the fancy features included, rather then add them on. With CalPERS, it became much more economical to re-bid the PPOs rather than continue to add benefits."
Among other things, CalPERs is calling on healthcare marketing pros to be creative in submitting proposals for a relatively new concept in managed care, a point-of-service (POS) plan that, like an HMO, has its own network of providers, but allows members to use outside physicians when they're willing to pay a little more for the benefit.
CalPERS is also looking to make its PPOs as efficient and affordable as its 14 HMOs (which will be cut down to 10 after the first of the year).
"It's really a nice laboratory for them to test innovation," said Tom Elkins, a former PERS director who now heads up HMO Western Health Advantage. "It should spark all kinds of wild and crazy ideas that could really improve things."
Since PPOs tend to cater to older members who tend to be the sickest (as opposed to HMOs which tend to have younger, healthier members) CalPers will consider leveling the stakes by adjusting premiums between health plans with youngest, healthiest members and those with the oldest and sickest. "We are willing to share the risk with those plans that submit strong PPO proposals," said Branch, who concedes that although risk-sharing is a somewhat controversial move in the managed care industry, it has so far quieted the concerns of plans that want to submit affordable PPO bids.
Although it is too soon to tell how many plans will submit RFP bids, a number had tossed their hats into the RFI (request for information) pool earlier this year when CalPERS expressed initial interest in reviewing new healthcare ideas for its health plans (including its HMOs). Some of the heavy hitters included Aetna, Blue Cross & Blue Shield, California Advantage and Prudential.
But there is no question that Blue Shield will be in the ring. To retain the contract, the plan will have to really roll up its sleeves and get creatively competitive with the numerous plans that will by vying for the $350 million bounty. But Thomas Gwyn, Blue Shield's VP of public affairs, relayed the company's confidence in being a serious contender. "CalPERS made a reasonable management decision and we expect to be very competitive with our proposal." (CalPERS, 916/326-3991; Blue Shield, 415/445-5110; California Advantage, 888/322-4742)