is evaluating the funding structures and alternatives to the i cm. integrated care management fee and the pledge cap for the fully insurance structure and looking at the performance guarantees and also looking to see if there is a possibility of in incentive programs and fee schedule. i'm going update our discussions since our last meeting and that will start on meeting no. 4 on september 12th. we did work looking at historical democratic reports from kaiser and i think i attached late, but it was an attachment and that was waiting for you when you arrived on the demographic reports. these demographic reports came to the same conclusion that the kaiser

foundation had trended. >> someone's cellphone is going off. >> sorry, the kaiser membership has trended younger over time. and so i think we are all on the same page. they are now with that in terms of it being a factor that has been included in our renewal and is clear that although the kaiser membership has grown and grown in all areas of young and old membership that over all the age has improved. we have a younger population than we've had in 2009. we also talked quite a bit about the risk study. one of the funding proposals we are considering is risk premiums and an agreement on how to do the risk study to determine the risk of the population. we have agreed on a

medical and pharmacy all claim data based risk study that has been initiated and we have the goal of completing that by february of 2014 for the board's review in march and if we meet that deadline we should be able to go with the pricing, if not we'll be informed of the risk of the populations and how we manage with them going forward. we have done a lot of work on our existing performance guarantee structures. this was primarily for 2014 and it was the basis for moving forward and looking for further enhancements in 2014. and producing quarterly meetings with health area leadership in kaiser. we have not met with the clinicians and really talk about the clinical issues that are going on in the

population and how we can either develop our wellness program or do other activities to try to focus on improvements. we are thinking this is a great opportunity for us and we'll be talking about not only clinical updates but market updates and trends in the market. we have enhanced clinical reporting also as a new performance guarantee which we'll talk about prevention and disease and lifestyle factors and health care intervention and in different programs and kaiser and that will be new information for us and we have taken the clinical metrics that are performance guarantees from 14-21 and 16 of those are now city and county specific metrics. they were northern california, kaiser wide metrics before and now they are specific to our population in what we really want to focus on

and 11 of those are now measures where kaiser will have to perform at the 90th percentile or above to meet with the performance. we have appreciative work to collaborate and continue to look for ways that both are focused in the right areas to improving health care. i think the other areas we are working on is the icm, integrated care management, and we haven't made as much progress as we had hoped and we are at a point where kaiser still believes that though they have lowered their fee schedule and increased the i cmf and they feel that approach is a way

that kaiser delivers care. we are continuing to discuss it but there isn't a whole a lot of progress being made in this area and we continue to put most of our effort now to see if there is something we can do in this area. the alternative funding proposals are ones that really are who are really now fully immersed in evaluating the different opportunities. i think there are several opportunities that the board will be able to evaluate in january and be able to look at what you think we pursue in the rates and benefits process in 2014. then we also had the opportunity to meet with some of the senior leadership at kaiser. the cfo and senior advice pred for actuarial service for underwriting and it was good to hear from the leadership of kaiser and i want to say the kaiser team we work with everyday, we didn't learn

anything new because the kaiser team we worked with everyday accurately portrayed the message from the scene -- senior leadership. it's a good thing that there is complete consistency with the team in terms of understanding how kaiser sets our annual premium amount and the process they go through for that. upcoming is a few more meetings. we actually canceled this week's meeting because we didn't have an agenda item. the 11/13 meeting was canceled. we have a meeting on the 12th. i want to say we are not just working on kaiser, we are also working on united health care and you will hear about that dashboard presentations later and we have some issues with the health care city plan and we are working on a solution for that. we are working on the other

benefits options for united 13 and kaiser health care. that concludes my report. any other questions? >> questions? dr. dodd? >> i just wanted to thank commissioner scott for his participation in the meetings. not only do you bring a perspective from kaiser but an employer perspective and it adds to have a member of this decision making body present who talks the talk. so it's been great to have your participation. i know president brez lan has participated. it's like you are standing behind the staff and it makes a different. >> our actual rates and benefits, when do you think that will start? >> it starts in january through june. we are looking to get rolling in february.

>> usually february. so you expect that same type of scrutiny out of the other vendors that we've been doing with kaiser? >> absolutely. we are working with blue shield and united health care as well. this is the one where we are restructuring the funding and looking at different funding mechanisms which you heard in the audience that it's a big challenge to do and it takes a lot more work to do the funding part of it. there is a lot of work to see if we can redesign the active employee products for united health care because that product is as you know not, we can't sustain it. it's on life support. so, we have to, if we are going to save that, then we have to redesign it completely and i'm not even sure that's possible at this time but we are working on that area as well. i did want to

mention that because it's related we did receive a 3 page letter from one of our unions requesting information. i wanted to make sure that's communicated to the board. we'll bring that to the board at the next meeting with a response. >> thank you. any public comment on this item? >> seeing none, hearing none. oh, i'm sorry. >> harry bradshaw. i want to appreciate the information and the transparency at the board. it's not often that you create a powerpoint by the committee and it comes out a very high quality product. a couple questions about the kaiser

negotiations, it maybe in front of me and i don't understand the jargon. i know it talks about the capping at 4 percent. i'm sure it was for the funding models for 2015. i'm sure we are talking about not capping the profits this time around. limiting the icm and other medical services charges. i hear there is not a lot of progress made on that and i heard there was a goal of trying to limit the fees of 10 percent, are we on track for that or do you think it will be higher. with the accountability and transparency piece, is that, is part of the negotiations to get kaiser to report on the frequency on things like infections, unplanned hospital readmissions? and on the performance guarantees are they

tied to rewards and penalties if the provider doesn't meet those performance guarantees, if there is a penalty attach or incentives for doing a great job on that. i apologize, it's probably clearly in front of me, i just don't understand the report. >> thank you. >> i may need a little help to remember those. the first one are we making progress on it? we are not making as much progress on icm as i had hoped but we are going to make as much progress as possible. i won't be able to say for sure until january whether we've made progress on that. the performance guarantees are ones where there is a penalty and if there is not an award but there is a penalty if those are missed. >> can i point out. i'm not sure if you heard it, larry, we

made the performance guarantees far more stringent. kaiser was meeting the pge's and we are holding them to 9 percent. and there is a penalty attached to their not meeting the measures. >> on the profit cap, i think that would be most appropriate in the fully funded model and there are discussions on going on what that would look like and the board will see it once the actuaries are done at the january board meeting. did i miss anything larry? >> transparency. i'm glad you mentioned that. it's been a topic of enormous amount of discussion about where we are going with transparency and what kind of data do we need and how we get there and including the ways and

inappropriate hospitalizations, etc, that's been a topic of great discussion. we don't have a date as to when the date will be available but we are making progress that are agreeing to the data that equals the word transparency. >> i just want to also point out that before we review the proposed rates we do a utilization analysis and we look at the 25 high cost claims and last year and medical team went and literally pulled those records and went through each one of them and lisa and i went through how you used to have a pharmacist and nurse and said whether this is appropriate to have this many pneumonia aspirations etc because we understand what they mean and they could be in fact hospital induced. i believe last year that an reported out that every single one of the health cost claims, we pulled 17 of the 25

and reviewed them were legitimate high cost claims and not induced by the hospital. although we don't look at every single claim, we certainly look at the ones that would drive our claims experience in terms of rates. >> any other public comment? seeing none, i'm sorry. mr. scott? >> yes. i would, and i don't want this to be miss construed. i would ask for all interested parties in this process to recognize that this is a case that is being mixed. it is not in the oven yet. we need a little bit of latitude to fully and completely be responsive. i appreciate very much for your questions today, they are on point. these are precisely the

lines of inquiry we are pursuing with kaiser, but we also know that if we engage in premature conclusions about what this outcome is going to be, we are going to find ourselves in a place we may not want to be. i would just ask for a little bit of patience. we are in the kitchen, we are getting the right ingredients, some match to our expectations and some we may have to change or modify, but the cake is not in the oven. even after we complete these discussions, there is a whole rate setting process and there will be ample opportunity to continue to have this dialogue and that includes not only those that are represented but our city fathers as well. >> commissioner fraser? >> and mothers, excuse me. >> we do like the cooking analogy. i want to second commissioner scott's comments.

setting arbitrary target for one or other rates is not good policy and not good financial policy. what we are trying to do is get great quality care at a great price and kaiser has a unique model which many people love. there are many that members particularly love. there is where you can do less of this because we arbitrarily decided it needs to be an x personal of the rate which is not the way we should go. we should look at the overall rate. i want you to look at what's been reported already by all hospitals and hospital acquired infections are publically reported by all hospitals. >> is there a particular site for that? >> yeah. i'm not sure whether

it's federal or state website. i don't really go look at them. they are just reports. >> i believe it's the website. i heard they are limiting that website. we may ask the board of supervisors to put pressure on the state because the public scrutiny of that data is really important. we'll get back to you on that. >> any other comments? public comment? seeing none, all right. item no. 9. >> the clerk: discussion item question the blue shield's calculation. >> lisa gut be. i'm going to accept set up the questions.

one of our unions is looking at the rates and benefits process as the question of hsf regarding the rate setting process from the 2013 and he basically was asking about how was the pricing done and concern that maybe we overpriced 2013 and so i thought the best way to answer that question was how to actuary through the health service board address the question and -- kosher. >> okay. neale coacher, hue hewitt. you have in your packet 2013-2014 rating. i even have an executive summary. can you

hear me okay ? the question relates to the way trends are applied to calculate 2013-2014 premium equivalence. in this presentation to analyze the use of the blue shield renewal presented at the health services board will be reviewed. i actually have that page as the very last page of this document. at that time, i don't mean to go all the way to the end. we pointed out the medical spin we projected for the earlier data in 2013 was determined to be 56815 and because of the incredibly good work of the aco's we can actually 1 year later because we had more information bring that down which means we actually did not increase the rates for 2014 because between that point in time, and the

point in time whenever we rated for the subsequent period data improved, trim lines improved and we took a leap of faith and put a zero through. >> you recall the board gave us extra time to add additional data as we made the projections. we were making those projections on a very small monthly utilization. >> anyway, when we set the rates for 2013, i have in graphic actuarial detail on page 2 to explain exactly how we got where the data set came from, the amount of money we were talking about. what it equates to that we implied an 05 trim and we presented to the board and approved by the board and we have some nice numbers for this year. all of the math, i won't go to all of it,

equates to 56815. that is through april 2011-march 2012. we go another year forward and use the next year's data and start trending for it with more current information, standard underwriting principals and standard underwriting approach. with that being said sorry about that i will have to turnover. we go to the next page and from march to february. we did lots of linear aggression on your behalf. i brought the chart for everybody's review. you were comfortable with this at the time and we projected a number to the $555.43. i won't elaborate but everything is based on actuarial principals

and they stand all the task and we are not going to charge your population anymore money in 2014 and your trust fund has money to pay claims. with that being said, any questions? >> you look like you want to ask questions. >> this is not a question. it's a comment to both the employers that we negotiate on behalf as well as to the unions and that is had we not subsidizing the rates and preserved families in blue shield we wouldn't have such good utilization data. the message to the unified school district and the union county in those employers we must engage in contribution

methodology that preserve healthy people in blue shield. that is what determines the blue shield rates and for that kudos to lisa and marina in terms of working on our contribution and the other unions have accepted that contribution model. if we are going to ri main competitive, and kaiser competitive, the unions must accept the contribution models. >> any other comment? any public comment? item 10:

dashboard. >> an an alytic managers system. the dashboard system today is a series of on going support of various health plans. today we'll look at our city plan through 2013. we'll be looking at the merging cost and auto utilization for our active and retirees. the majority of the participating city plan are in the retirement program. the numbers look very good for this group of folks. in contrast, the membership has decrease in our active early

retiree pools and those that have either catastrophic illness and those with no other options live outside of the blue shield or kaiser service areas. so, what we've done with this particular dashboard is really conducted a deep dive in our areas of concern. so to that end we are not looking at necessity depth of our retirees. our areas will look at the areas of concern in the active city plan as well as our early retiree. in the report contents, again we'll be looking at our claims and auto evasion -- utilization for inpatient and outpatient and numbers that we do in the dashboard and we have that separate analysis where we have separated out the heche population to use as a

comparative and some notes about the report which everything is reported on a basis and any of the increase percentages we provide in the dashboard. at this point i'm going to turnover the presentation to my colleague. >> good afternoon, dr. payton. members of the commission, supervisor ferrel. what i would like to do today is give you an update since i was last here about a year ago. first we'll talk about act ifs and then move to early retirees. if you look at the graph i think it's quite visually noticeable that there is a downward trend. what

you will notice is that the active rate has been reduced 20 percent. the active membership should they trend continue is projected to be less than 100 members by 2015. of those 700 members 70 are heche members. just to put in perspectives with those numbers. with the declining trend you are seeing

an increase in age. what i will notice is that the city plan is a ppo model, a preferred provider organization which is a health maintenance organization. but even given that difference you will notice there is an almost that the cost on a member per month basis is twice blue shield and even more on the part of kaiser. and you will also notice that if you compare the two groups that you will find that the city plans on an annual basis

it's not an end point basis. blue shield is 37 and kaiser is 35. what that does if you are looking at a demographic factor rating whereas 20 is a 1, 40 is a 2, you will see that the city plan because of their age, their demographic factor applied to the rate is 2.29 versus kaiser which is 1.56 because of the cost in the age. this is a very significant issue. what you also noticed even with that, in spite of the decreasing membership that cost continue to grow year over year 13 percent last year which is above the national trend. moving on to page 5, here what we are looking at is the total cost per member per month, what

we are looking at you will see the city active per member cost increased about 7.5 percent from 2008-2013. the drug cost alone increased 100 percent where as the average drug increase is about 15-17 percent and the city plan at about 22 percent -- annual increase of 37 percent or higher. the heche population cost for inpatient and outpatient. that will be if you are looking at your colored chart, the orange and tangerine. i'm not good at colors. art is not one of my fortes. their