State Agency Rejects Advice That 7 HMOs Be Dropped

In response to outcries from some of the affected health plans, the California Public Employees Retirement System on Wednesday rejected a consultant’s recommendation that it drop seven of the 19 HMO plans it offers state employees and retirees and their dependants.

The action by the system’s governing board was expected after the CalPERS health benefits committee recommended Monday against relying solely on a recent A. Foster Higgins & Co. evaluation of HMO performance to determine which plans to offer the retirement system’s 800,000 members.

The Higgins study recommended that the system drop seven HMOs that had low average scores 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.

HMOs that would have lost their state contracts said that they had not filled out the Foster Higgins questionnaire correctly or completely and that they deserved another chance to prove the quality of their organizations.

The PERS board on Wednesday directed its staff and the consultant “to work closely with all the current carriers during the next contract year in validating and resubmitting the questionnaire where responses were found to be in error, deficient or missing and report back to the committee regarding this process.”

The information collected will be used next year in evaluating the HMOs, the board said.