State May Reject HMO Recommendation


In response to complaints from some health maintenance organizations, the California Public Employees Retirement System is expected today to reject a consultant’s recommendation that it drop seven of the 19 HMO plans that it offers state employees.

The CalPERS health benefits committee is recommending that the system’s board not use the A. Foster Higgins & Co. study of HMO performance alone to make a decision on which plans to offer its 327,000 members.

The study recommended that CalPERS drop seven HMOs that rated low on numerous criteria, including financial stability, methods of choosing and contracting with physicians and other health-care providers, data reporting, service-area coverage, quality assurance, utilization management and efficiency of administration and providing member services.

But some HMOs that were rated low, including FHP International Corp. in Fountain Valley and Maxicare Health Plans Inc. in Los Angeles, complained that the report did not accurately reflect their operations and performance.


A vice president at FHP said its poor score may have resulted in part from the fact that the Foster Higgins questionnaire had been filled out by an FHP employee who didn’t understand the significance of the survey.

“The committee doesn’t want to discontinue a good health plan solely based on a report that may have been filled out by someone in the firm who didn’t know how to do it,” said Bob Walton, assistant executive officer for CalPERS. He added that the health benefits committee voted unanimously to recommend that CalPERS use the study only as an initial tool for evaluating quality of service.

On the basis of its analysis, Foster Higgins recommended CalPERS drop Maxicare, FHP, Travelers Health Network of California Inc., Bay Pacific Health Plan, Lincoln National Health Plan, PCA Health Plans of California and Health Plan of the Redwoods.