History and Accomplishments

Nineteen founding employers, unions and trust funds came together to launch the California Health Care Coalition as a nonprofit labor-management organization on January 1, 2006. Since then, CHCC has more than doubled its membership to include over 42 private and public sector employers, unions and trust funds currently representing 3 million Californians.

Key accomplishments include:

1. Launched a groundbreaking collaboration with Blue Shield of California to develop HMO and PPO networks that meet our expectations for safe, effective, and fairly priced health care;

2. Negotiated a model Pharmacy Benefit Manger contract with Catalyst Rx that offers complete transparency, aggressive pricing, and a physician visit program using actual client pharmacy claims to educate physicians about clinically appropriate, more cost-effective alternatives to their current prescribing choices;

3. Signed a Master Agreement and Pay for Quality Improvement Program with Doctors Medical Center in Modesto, California that is two years ahead of any government efforts and unique in California’s commercial market today;

4. Licensed the analytic resources of WebMD to compare California hospitals on the quality and cost of care;

5. Initiated in-depth discussions with senior managers at Kaiser Permanente on a wide range of issues raised by purchasers, with the aim of establishing joint initiatives to improve quality and stabilize premiums.

CHCC’s formation was inspired by a CalPERS decision to challenge high-cost California hospitals. Based on an analysis of its medical claims, CalPERS determined in 2004 that 38 hospitals in its Blue Shield HMO network had average case charges substantially higher than their peers, even after adjusting for clinical and demographic differences in hospital patient populations. CalPERS asked high-cost hospitals to reveal and explain the basis for their substantially higher charges and, if they would or could not, lower them to within five percent of the average case charge of their regional peers. Hospitals that refused to provide adequate explanations or lower their charges would be removed from the HMO network.

The CalPERS/Blue Shield challenge succeeded. Ten of the high-cost hospitals agreed to meet CalPERS pricing standards and remained in the network. The other hospitals were removed from the network, resulting in a savings of $38 million a year.

CHCC has aligned with CalPERS on the need to promote performance transparency and accountability in California’s health care delivery system.

Our accomplishments include:

Health Plans and Provider Networks

• CHCC has negotiated a groundbreaking collaboration agreement with Blue Shield of California involving CHCC as a partner in developing higher quality, more cost-effective HMO and PPO networks for member consideration in 2008. The collaboration agreement includes joint review of provider performance data, joint establishment of performance standards, discussion of provider contracting strategies, and the joint design of quality improvement and cost stabilization projects where CHCC has concentrated membership.

• Launched a dialogue with Kaiser Permanente leadership on the quality and costs of hospital and physician services, with a focus on developing joint initiatives to assure safety, promote health and reduce premium rates.

Pharmacy Savings

• Engaged a national pharmacy consultant, Evergreen Rx to help CHCC select and recommend a Pharmacy Benefit Manager (PBM) to our members. We selected Evergreen Rx because it accepts no money from any PBM or pharmaceutical company.

• Selected Catalyst Rx and negotiated a model contract offering highly aggressive pricing, complete transparency, and a Center of Excellence Approach that places experienced Catalyst Rx pharmacists in the field to educate California physicians and pharmacists about more appropriate, evidence-based prescription drug choices.

• Re-priced selected members’ pharmacy claims, revealing savings ranging from $3.00 to $6.00 per claim.

Hospitals

• Led a team of Stanislaus County employers and union purchasers to negotiate a master agreement and Pay for Quality Improvement program with Doctors Medical Center in Modesto, California. The agreement sets specific, measurable areas for quality improvement, increases payment to DMC for meeting improvement goals, decreases payment if it fails to do so and provides for extremely competitive rates for CHCC members willing to direct their plan members to Doctors Medical Center.

• Licensed the analytic resources of WebMD enabling us to analyze and compare California hospitals on their quality and costs.

• Produced detailed performance profiles of all general acute care hospitals in Los Angeles, Modesto, Sacramento, San Diego and the San Francisco Bay Area in preparation for local hospital meetings and negotiations.