NU Online News Service, Feb. 22, 3:30 p.m. – The California Public Employees’ Retirement System, Sacramento, Calif., says it may use fewer managed care companies to supply its major medical coverage.

The agency has started a six-month review to consider new program designs for 2004 and later years.

The agency now uses seven health maintenance organizations and two self-insured plans to provide major medical coverage for its 1.2 million members.

Managed care companies do not get more to cover sicker CalPERS members or members in high-cost geographic areas, an agency spokesman says.

The CalPERS board is unhappy with skyrocketing prices, and the perception that the HMOs are cutting medical costs by avoiding sicker patients, the agency says.

The CalPERS board is considering one possible new program design that would use two to three insurers to provide several coverage choices for CalPERS members in all 58 California counties. CalPERS would find a way to pay more for members with higher anticipated medical costs.

The board is also considering a program that would use a single self-insured risk pool to offer several types of coverage statewide. Premiums would vary, depending on the option selected, but a single entity would administer the program, CalPERS says.