BILL ANALYSIS                                                                                                                                                                                                    �



                                                                  AB 2142
                                                                  Page  1

          Date of Hearing:   May 9, 2012

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                Felipe Fuentes, Chair

                   AB 2142 (Furutani) - As Amended:  April 23, 2012

          Policy Committee:                              PERSSVote:6-0

          Urgency:     No                   State Mandated Local Program: 
          No     Reimbursable:              

           SUMMARY  

          This bill authorizes the California Public Employees' Retirement 
          System (CalPERS) to implement risk adjustment procedures that 
          adjust and redistribute payments across its health plans based 
          on rules and regulations established by the CalPERS Board of 
          Administration.  The Board would also be authorized to adjust 
          premiums as part of health promotion and disease management 
          programs.

           FISCAL EFFECT  

          Minor and absorbable costs for CalPERS.  To the extent the 
          actions undertaken by CalPERS reduce the growth in health care 
          costs, there would savings to the state and local employers.

           COMMENTS  

           1)Purpose.   According to CalPERS, authorizing the Board to adopt 
            these changes will allow CalPERS to improve participant health 
            outcomes, encourage health plan competition, maintain plan 
            choices, promote efficiency and quality among health plans 
            with the goal of lowering health care costs.  CalPERS states 
            without these changes, they will be limited in its ability to 
            develop more effective health benefit programs and reduce 
            participant, State and contracting agency benefit costs.

           2)Background.   CalPERS administers the Public Employees' Medical 
            and Hospital Care Act, which provides health benefits for the 
            State of California and for more than 1,100 local and 
            governmental agency and school employers.  The Board annually 
            determines health plan availability, covered benefits, health 
            premiums, and out-of-pocket payments for over 1.3 million 








                                                                  AB 2142
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            participants at an annual cost of nearly $7 billion.

            CalPERS recently conducted a Health Benefits Purchasing Review 
            (HBPR) to evaluate its current health benefits program design 
            and purchasing strategies, and to identify and implement 
            potential cost reduction measures and quality of care 
            improvements. While the Board has the statutory authority to 
            implement most of these programs and cost containment 
            strategies, it lacks the specific authority to implement 
            changes that allow CalPERS to implement risk adjustment and 
            modify premiums as part of health promotion and disease 
            management programs.

           3)There is no registered opposition to this bill.  
           Analysis Prepared by  :    Roger Dunstan / APPR. / (916) 319-2081