Nation's Largest Business Health Coalition Announces 1998 Rate Trends for California and Arizona, Along with HMO Performance Assessment as Ranked by Physicians

San Francisco, CA, June 17, 1997 - For the fourth consecutive year, the Pacific Business Group on Health Negotiating Alliance has kept health care premiums in check, while raising the bar on quality and other performance indicators. The trend for plan year 1998, for the fifteen HMOs with which Alliance employers spend in excess of $500 million in premium, is 1%. This is significantly below the California general and medical CPI, and well below premium trends approaching 10% nationwide. The trend in Arizona, where the Alliance negotiated for the first time, is 3%.

Three Largest HMOs Offer Special Deals
"We are pleased that all California health plans successfully kept a lid on inflation in the industry, especially the three in which most of our employees receive care," stated James C. Franklin, Chair of the Negotiating Alliance, and Associate Vice President of Total Compensation at Stanford University.

"In particular, Kaiser Health Plan shared their savings from internal efficiencies with us through very favorable rates for 1998. Two other HMO partners, PacifiCare and Health Net, have assured us stability and predictability in pricing with rate guarantees through the turn-of-the-century." All three of the HMOs are undergoing mergers this year.

"Long-term pricing arrangements allow us to devote even more of our energies to issues related to quality of care and data improvements," noted Sherrie Matza, Vice President, Bank of America. While the HMO industry met many of their performance measure targets set jointly with the employers in 1995, nearly $1 million was rebated for missed measures to the companies, which in turn contributed the monies to the Quality Improvement Fund. Each year the Alliance gauges HMO performance in the areas of customer service, quality of care, data improvements, and partnerships with the physician community.

Participants in the Negotiating Alliance, a nonprofit subsidiary of the Pacific Business Group on Health include:
APL Limited
The Automobile Club of Southern California
Bank of America
Bank of the West
Bechtel Corp.
Chevron Corp.
The Federal Reserve Bank of San Francisco
Fireman's Fund Insurance Co.
LSI Logic Corp.
McKesson Corp
Mervyn's California
Ross Stores
Safeway Inc.
Pacific Bell
Stanford University
Union Bank of California
Varian Associates
VLSI Technology
Wells Fargo Bank

Employers participating in the Arizona negotiations include
Bank of America
Bechtel
Fireman's Fund
McKesson
Mervyn's California
Ross Stores
Pacific Bell
Safeway Inc.
Varian
VLSI Technology
Wells Fargo Bank
U S WEST

Blue Ribbon HMO
The PBGH Board of Directors, consisting of a representative from each member company, will also designate later this year one or more Blue Ribbon HMOs that come closest to meeting PBGH standards for cost efficiency, quality of care, and physician and enrollee satisfaction. PBGH employers will communicate the Blue Ribbon HMO designation to employees during open enrollment for 1998. "Naming a Blue Ribbon HMO reinforces the commitment of employers to promote those plans with proven track records in quality, and supports consumer decision-making based on quality as well as cost," said Patricia E. Powers, PBGH's Executive Director.

Physician Assessment of HMO Performance
The PBGH negotiations include feedback to the HMOs on how the physician community assesses their performance. The information is based on the first-of-its-kind survey conducted by PBGH in conjunction with the National IPA Coalition and the American Medical Group Association. "HMOs' relationships with physicians appear to be improving," noted Powers "although there is still room to do better. While the health plans scored relatively well in the areas of service and efficiency, there is a need for stronger incentives and cooperation with the physicians to measure quality of care and share data."

Survey findings revealed that PacifiCare, followed by Health Net, ranked relatively high in many areas of performance, although their newly acquired plans, FHP and Foundation, did not fare so well. Key HMO performance areas assessed by the physician groups include: the service relationship, data reporting, the financial relationship, consumer education, utilization management, and quality improvement. Kaiser, with its single physician group, was not a part of the survey.

Contact:
Clark Miller
Senior Communications Manager
Pacific Business Group on Health
Telephone: (415) 615–6302
E–mail: cmiller@pbgh.org

Return to Press Releases