PacifiCare Asks to Raise Rates Beyond Contract

PacifiCare Health Systems Inc., which three years ago promised the state’s largest retirement system that it would tie rate increases to the consumer price index, has asked to be relieved from its contract to raise rates. The Cypress-based health-maintenance organization said it is attempting to renegotiate its contract with the California Public Employees Retirement System because premium increases in the contract have not kept up with health-care inflation. The company said it was allowed to raise rates by just 2.5% last year, while its costs increased by about twice that. The retirement system, with 1 million retirees, confirmed that it is negotiating with PacifiCare and that a final decision by a committee of the organization’s board is due Tuesday. Requests for premium increases are pending from several health-maintenance organizations, which generally are asking for increases of about 7.3%. This is the second year in a row that California’s managed-care companies have asked for significant raises.