CalPERS to Monitor Chronic Disease Care

May 1, 2002 ( - The California Public Employees' Retirement System (CalPERS) is demanding proof from its health insurers that they're doing everything they can to keep people from getting expensive ailments such as diabetes and heart disease.

According a news report in the Sacramento Bee, CalPERS’ moves are being closely watched because the giant pension fund could be kicking off a trend that would improve care for chronically ill patients around the country.

Health Prices Skyrocketing

The CalPERS move also comes as the organization is socked with a whopping 25% average premium increase from new service contracts with HMOs Kaiser Permanente and Blue Shield.

Although disease management programs aren’t new, they haven’t been as prevalent with HMOs.
“Most employers were happy to live in ignorance about quality through much of the 1990s as long as they kept prices low,” Allen Feezor, CalPERS health benefits administrator, told the Bee. “Now the price pendulum has swung the other way. CalPERS recognized that any long-term strategy needs to get away from this price pendulum and concentrate on how we can effect better care for our members.”

CalPERS, which will spend $2.2 billion on HMO care next year, and other purchasers of health insurance, have good reason to seek improved care for the chronically ill.

According to the Bee report, the sickest 20% of Americans typically account for 80% of health care bills. Roughly half the money spent on employee benefits covers care for the 5% of workers who need a disproportionate amount of medical attention.

Employers say the current system of chronic disease management offers little accountability.

CalPERS to Build Treatment Database

CalPERS, meanwhile, is about to spend $15 million to develop a claims database that will essentially let managers see what happens each time any of its 1.3 million members visits a doctor or fills a prescription.

Over time, such data is expected to show CalPERS which doctors, hospitals and treatment plans best serve its members – especially those with chronic problems.

Because of its size, CalPERS has enough patients in its benefits plans to calculate which arthritis treatment, for example, is most effective in terms of both cost and quality. CalPERS can then ask the health plans it contracts with to tailor benefits accordingly.