Blue Shield of California snagged a contract managing care for 400,000 California state employees.
The California Public Employees’ Retirement System awarded the payer its PPO contract, according to a June 12 news release from the insurer.
Blue Shield of California won out over Anthem Blue Cross, which has held the contract for more than two decades, according to CalPERS.
CalPERS provides health coverage to 1.5 million current and retired state employees. The PPO contract covers 250,000 employees in basic PPO plans and 150,000 with Medicare supplement coverage. The five-year contract will begin in 2025.
The agency also awarded a contract to Included Health to provide virtual care and population health management.
The contract includes risk-based thresholds for medical cost trends and outcomes. Blue Shield of California and Included Health will put $464 million at risk if they do not meet cost trend goals, according to CalPERS. The contracts set the initial medical trend cost target at 5.5% in 2025. The target will lower each year until it reaches 3% in 2029.
Blue Shield of California and Included Health are also responsible for hitting thresholds for member care, including controlling blood pressure, diabetes care, immunizations, cancer screenings and pregnancy care.
The value-based contracts represent a "mammoth change" for the CalPERS program, Peter Lee, former executive director of Covered California and an advisor on the contracts, said.
"For too long health plans offering PPOs have been both quality blind and indifferent to rising costs, because the employers or public purchasers are footing the bill," Mr. Lee said.
Anthem Blue Cross continues to hold HMO contracts with CalPERS. A spokesperson for the insurer said Anthem drove "significant savings for the state" during its two-decade tenure.
"We are grateful for the opportunity to serve CalPERS members, and while this is disappointing, our obligation to CalPERS members remains steadfast," the spokesperson said. "We assure continued service through the end of 2024 and affirm our readiness to resume support in the future. As we navigate this transition, our commitment to providing access to high-quality affordable health care stands firm as it does for our more than 9 million California consumers."