California employee retirement system flips to Blue Shield of CA for PPO coverage

The California Public Employees’ Retirement System (CalPERS) has named Blue Shield of California as the only health plan in its preferred provider organization.

CalPERS’s previous carrier for two decades was Anthem Blue Cross.

The retirement system oversees pension and health benefits for more than 1.5 million members and is the second largest public purchaser of employee health benefits in the country, only behind the federal government.

Starting in 2025, 400,000 PPO plan members will switch to Blue Shield of California in addition to 176,000 members already in Trio HMO, Access+ and Medicare Advantage plans.

Virtual care company Included Health was selected by CalPERS to provide virtual care and population health management services to active CalPERS employees.

"We're excited about the opportunity to partner with organizations like Blue Shield of California and CalPERS that have taken great strides in promoting and developing advanced primary care models and accountable care organizations in California,” said Included Health CEO Owen Tripp in a statement. “By combining the provider network expertise of Blue Shield with the population health management expertise of Included Health, we have a real opportunity to bend the cost curve for the population and create a blueprint for others to follow."

Blue Shield won the bid partly because of the insurer’s ability to address population health outcomes, said Tim Lieb, Blue Shield of California senior vice president of growth.

“This is the largest potential account we could have won,” Blue Shield of California CEO Paul Markovich told the San Francisco Business Times.

“We are excited to work with Blue Shield of California, which has demonstrated a true commitment to not only make sure CalPERS members are well served, but to help change health care quality and cost for all Californians,” said Don Moulds, Ph.D., chief health director of CalPERS, in a statement.

CalPERS also announced the system would be raising premiums by 10.77% due to “medical costs rising sharply” and high medical inflation.

Blue Shield’s bid process began in September. Under the new contract, the two organizations hope performance guarantees will decrease cost trends to 3% by 2029.

“If our cost trends are higher than the target, Blue Shield has money on the line, and if CalPERS’ trend is lower than the target, we will share in the savings,” Lieb told Fierce Healthcare in an email.