CalPERS Board Rejects All HMO Bids

February 22, 2001 ( - The California Public Employees' Retirement System Board of Administration has voted unanimously to reject all 10 health maintenance organization (HMO) price bids submitted for the 2002 plan year, saying the rate request increases were unjustified.

The bids ranged from increases of 5.5% to 41%.

The Board directed staff to solicit new, “more realistic” bids and return to the March 20th Health Benefits Committee with no more than the seven “best offers.”

While the Board focused largely on price, “best offers” also include:

  • service
  • care management
  • access to providers

Staff originally requested five types of bids from each HMO, including:

  • prices on current basic plan design
  • a dual option design, including the current design and a low option design
  • a creative benefit design, enabling plans to design their own plan based on receiving no more than a 6% increase
  • bids on a regional rate basis
  • bids assuming that the HMO would become the exclusive or semi-exclusive HMO for CalPERS.

Rate increases for Medicare coordinated products were twice the levels of the basic HMO plan rate hikes, and proposed multi-year rate proposals did not generate a staff recommendation, according to a press release.

CalPERS is the nation’s largest public pension fund with assets totaling approximately $165 billion, providing retirement and health benefits to more than 1.2 million state and public employees and their families.