point is well taken and a chance to could cost more but if you do fee for service and cap the dollars which is what we're talking about and don't use the plan than the average captated person and do the difference but from a interpretation of capitation for fee of service no actuary would disagree with you. >> i guess i am confused and you write "they will pay this and plus and a real time weekly basis". >> right. >> so when you say we are just paying capitation that is inag@according to what you have written here. >>i want to say a few words and your questions are really important especially in the non kaiser world you really worry about the fee for service and

the captated and how they're aligned. i think that is less an issue with kaiser given the current structure for kaiser. we talked with pg&e and went self funded and talking about the reporting requirements and the performance of that contract ensures that the organization of kaiser continues to focus on appropriation utilization and appropriate out comes so i think there are ways and especially under this scenario and maybe more with this than the other agreement that we have -- under the kaiser agreement if we pursue this to make sure that our concerns about inappropriate utilization because right now paying on self funded can be controlled with performance guarantees and reporting. >> okay. with that being said we go over to slide four which is additional items that we

want to just briefly share with you which is if you were to consider the risks what your risk exposure under risk sharing arrangement you may the premium and up side, down side of 25% relative to the premium and under flex fund it's the same and capped at 125%. that's the maximum liability. under self funded the risk exposure you bear the entire risk if utilization was horrible and under that you would of course stop loss to mitigate the exposure. another thing discussed in the budget discussions if you move towards risk under kaiser there is administrative complexities and require more manpower at hss. lastly -- the last two items are pertinent to transparency, the

maximum data for transparency seen under self funded and under all of the items insured or constructed as insured but give reconciliation of experience and pay all of the taxes to the federal government and under self funded you do not. with that we have three -- one item that we need to decide upon at this point -- of course we will bring you in april the fully insured quote from kaiser and risk sharing defers the ability to utilize any positive gains if gains occur they put you in the position to have to fund the gains. we're not recommending pursuing that further but we would like your approval when we bring you the quotes bring you analysis about what we think is available under flex funded and self funded. yes? >> i'm sorry neil you're not at the recommendation page. >> i'm sorry. it's coming up.

this is what we're saying is coming up. sorry about that. all right. any questions about item one, goal one? >> i wonder if the hit tax, how much is that? administrative 4% and 5% that you have to pay, but not the hit tax. >> hit tax for most non kaiser people is 2%. under kaiser it's less than 1% -- it's around 1%, one and a quarter% of premium. >> so administrative costs -- >> bigger. >> add 4% and minus the h it and only 1%. >> you don't pay premium tax. >> any other comments on this? >> okay. >> thank you. >> all right. let's move on to goal two. as you know and

brought up in the discussion icm was a discussion in the spring per the renewal for 2014. here are six items that are considered to writing core services presented under oo. cm. there are statements about what it is. it roughly runs 16% and we talked about before and that is several million dollars. it's 30 middle annually for this population. >> >> we have a statement as was shared by lisa and peter. kaiser is committed to continue communications on this topic and appreciates the opportunity to get feedback and input that would be valuable to hss and as was stated earlier negotiations are ongoing. now with that this is the page on icm. any additional questions? okay. this is where we are on this item. >> commissioner scott. >> yes, sir? >> in regard to this and i have been party to some of the

discussions, not every one of the meetings in the pre-negotiation phase of this i still come away from the process slightly disappointed recognizing there is more work to do around this topic, and i say that publicly because i will be sitting in a chair during the rate -- as chair of the rates committee and i will raise rigorous questions. the fact is some of the elements, the icm, aren't clinical in nature and compare it to other plans doing for city and county of san francisco and the others that are part of the system it doesn't make a lot of sense and i have heard the explanations and they have been thoughtfully presented but we really need to keep our eye on this and i am not entirely persuaded to where we are at this moment.

>> any other? >> commissioner fraser. >> i am concerned which ones uryou're talking about? >> i am talking about the whole icm. there are elements that kaiser talked about that are part of the icm and i recognize we're still under going and having conversation about them. i'm just putting this particular stake, if you will, out there so we get to a place of resolution and comparable iciality of these elements that we can see with the other health care providers. >> okay. thank you. >> okay. now let's move on to goal three, the profit pledge. so at the time that we had the

renewal process for 14 the question was posed whether or not kaiser permanente would offer a profit pledge. these are statements from kaiser they will not read now but under these options and risk and flex and self insured and go to [inaudible] all gains and losses. this is in my opinion correct. okay. any questions up to goal three? >> dr. ghotbi. >> i'm going to pick up from here in terms of reviewing the efforts around goal four and five, the performance guarantees, and goal five, the incentives programs so the goal in four was to evaluate and improve guarantees and guarantee all expectations of hss and specifically we wanted to make sure that our performance guarantees were consistent

across the vendors. we had work to do here with kaiser and we made significant progress in 2014 expanding our clinical performance guarantees with a few examples listed here in terms how the commitments on the care for our members around diabetes, the measuring and we have the assessment on obesity around our children and adolescents and an additional set of reporting to help us understand the clinical illness of our membership along with an ongoing everyday for 2015 to continue this commitment on insuring that the performance guarantees are par with the other health plans and focused on outcomes and prevention. on goal number five, on the incentive programs this was again an effort to in fact a relationship. >> >> with the clinical leaders of the kaiser organization

consistent with our relationship with our partners for a better understanding of the health care needs of our members and tailoring our attention and efforts accordingly so we didn't in previous discussions with kaiser had the opportunity to really talk with their physician leadership and their nursing leadership on what they were seeing in our membership and what we could jointly work on together in focusing on health care and we now have a structure and a engagement pilot program that will allow us to do just that and i think this adds significant value to the city and the membership and we're looking to do more work on designing what this will exactly look like, so that's goal five. any questions on four or five? >> commissioner scott. >> yes. on goal four i think it needs to be noted that at least the proposals that i have seen to date there has been a

decided shift between what i describe as administrative metrics versus clinical metrics in the overall tabulation of these 21 measures that are being talked about. phone abandonment rates and all of the things that you normally expect a plan to do were a large part of last year's discussion about performance guarantees. those kinds of administrative metrics are what gets you to the party. they're not the things that measure outcomes and i think that kaiser heard that during the course of the prenegotiations. they have been diligent in trying to refocus these and to tailor them to the experience of our members and that was a bit of a push but we got there and i think we're on the right path as a result. >> [inaudible] >> okay. we're now on slide

six, goal six. goal six. please bring up the presentation. oh please bring up the presentation. goal six is a fee assessment. if you consider taking risk it is my responsibility as your actuary to evaluate the sc. here are numbers that we received from kaiser. we evaluated them and these how they compare to medicare and just the last statement is presently where we are. we're in the process. we haven't finalized the process of the fee schedule and it says the validity of taking risks under these alternatives we will have a substantial understanding of the fee schedule so if you consider taking risks we can share our opinion as to whether or not we believe the fees that will be used to consider what your costs will be under those funding alternatives are within

reasonable -- within the marketplace that we now reside so with that any questions about the fee schedule? anything? okay. now to the recommendations, so i think this has been an interesting discussion. thank you for allowing me to share my opinions and as you know we will bring you in april a fully insured and here are the items that we are considering pursuing. flex option and pricing and comparable to blue shield and lower premium pricing could be possible and it should say if there are gains you will receive the benefits of the gains and itemizes some of the other items. the hit tax is applicable. pursue self funded and so that's item three in the bullets for recommendations and outlines a few of the criteria there and goes on to say we will continue to review the icm and

then the last item is work with kaiser to develop a collaborative care program for 2015 and targets important clinical areas so the items on the table are icm -- i think we're going to go forward with that and recommend that we continue that per your acceptance and the other one is the collaborative care engagement so what i want to put in front of you is you will get as part of the process a fully insured quote in april. given what i presented today -- i know i went fast, do you want us to do the calculations for taking risks under these programs or just see a fully insured quote in april and that's it? we don't want to take risks under kaiser or we want to look at it and share and give us your opinion. >> any comments from the board as to the direction?

commissioner. >> i think in the order to not be in the same kettle of fish last your we need to take a broader look and i think -- and i don't speak for the whole board but i think we should look at all of the options and i don't want to comicate your life and side by side comparisons in easy to read charts. >> yes. >> i think that's critical sore we will be here forever trying to figure it out so the graphics folks have to do a masterful job to cause me to understand what you're talking about, and then if you've did it that well beforehand i am hoping to convey it to our members. >> yes. >> okay. >> anyone else? commissioner fraser. >> i am dubious about the self funded epo. >> okay. >>i will tell you honesty -- i

understand what essentially saying we want to be a free rider on the way kaiser is organized for most of the rest of book of business so in a self interested way maybe that the system will do that. i really worry that is a long-term bad idea for kaiser and also potentially a long-term bad idea for other kaiser members so i think that's a short term potential gain, could be a loss, so i'm dubious about that. i have no objection to having the information presented but i think it's important to think of these as policy implications in the long-term and not short term and not with rosy glasses on, not what is going to happen next year but moving from -- i believe most experts believe the payment model that tends to drive innovation and keep costs low which is more capitation

and less fee for service is a worry some trend. >> any other thoughts on this? i'm noticing here you're not recommending the risk sharing option, so do we want to even have more information on that? i don't see why we want it if it's not a good option. >> i think we felt administratively the problems of not having one year settled why we were pricing the next year and rolling it into the following year would be beyond what we would want to take on, the benefit, the benefits versus the work, and tracking all of the finances didn't seem to be advantageous and we would be able to get to a similar savings model with the flex funding arrangement that would allow us to see that and bring the

pricing from the last year into the pricing for the next year. >> so are we thinking about taking this on for 2015 or the following -- or looking forward? >> this is for the 2015 renewal cycle. >> and actually considering going that way for the 2015. okay. commissioner. >> just a comment on what commissioner fraser was saying and i would like -- [inaudible] fully insured, the flex funding. i have some references with the fully insured and might give impression to the members and assuming it comes out and lower everything else and this is what she's saying and short term and give impression to the members

why didn't you go with this one, so i have reservations with fully insured but just one question for you when you bring all of the comparisons what data are you using? 2012 season or how many years of data are you bringing? >> well, as we did with the flex funded work for blue shield we would look at 36 months of data as current as we can get it. >> up to 2013? >> yeah, up to the end of the year. that would be our goal so we basically built the template for this for flex funded and if you go to the website the same analysis and side by sides that we presented before and i understand your opinions and i personally off the [inaudible] and maximize the trust for my client and

specific and that's my optic and i understand that and i appreciate it very much what was said and i understand that whole argument. it's absolutely fair to say but i am charged with one role to maximize assets of the trust and find the money and bring it to your attention. now, fully insured -- you could do that and we could see that or see if there is money to put it in the trust and is this better for kaiser in the long run? i will answer that question. you didn't ask that. kaiser's preference is still fully insured and run their organization that way as one big kaiser family, not we take advantage of this and do that and i want that on public record that is absolutely -- and i can say that without looking to kaiser and that's their

prerogative so with that do you want me to look at it or stick with fully insured or this and there isn't a lot of difference between the two and it's up to you guys to decide what you want to do. >> commissioner scott. >>i would offer a motion that we request that the actuary look at all three models discussed recognizing there might be a slight distinction between self funded and flex but i think at this stage to have an informed discussion to allow us to see all of the aspects and we're not down to decision time that we want to do this, and if we decide at the next meeting -- well, having the other option in the midst of the two we're going to talk about is more confusing to everyone then we can take that step at that time but i

would like to start with all of the complete information so we can make an informed choice. >> yes. >> everything but the risk sharing option. >> i am thinking of dollar signs every time we talk about more actuarial work and we have to think about that to some degree. >> so the motion is -- could you repeat that please. >> the motion is we direct the actuary to do analysis on the options presented today -- >> [inaudible] >> page 12. >> recommendation. >> okay. the fully funded option, the self funded option, and the flex option. >> i second then. >> okay. any other discussion?

any public comment on this item? >> i am richard roth, a retiree. i am glad you're looking at all of the options. and it's important. and also -- maybe this is off topic but i want to talk about kaiser's communications or lack of communications and commissioner fraser i took your advice and found out the drchz of observation and hospitalization but i didn't find out from kaiser and they should tell people. the doctors didn't know what it was and i asked the billing department and everything. last year was challenging for the rothman household and i think kaiser was very insensitive. their billing office said one thing. they mail bills out and say another.

we call up and say one thing. they still mail the bills out and the final and send it to the collection agency even though we kept writing back and i think there needs to be more communications between kaiser hospital and their billing department because i don't think one hand knows what the other hand is doing. >> thank you. come forward please. >> my name is diane erlick and i have a question about the self funded epo and similar to the current plan. does this mean for instance the paperwork for the individuals that have plan one have to do would fall on the individual -- would fall on us at kaiser if you choose that plan? for the people in plan one they have to submit all of the paperwork to medicare and all that stuff. would we then be doing that with kaiser and

would the people actives doing the paperwork that they do to submit to the insurance company? >> no. absolutely not. i'm sorry. absolutely not. for the member it would be invisible. this funding mechanism would be invisible to you so if we didn't tell you wouldn't know we changed the funding. >> okay. just to comment on what richard said about being in the hospital. it's not just kaiser. there has been a lot written about that. i get a lot of these newsletters. it's all hospitals. there's a great deal of confusion about that and none of the big hospital chains have been very honest about that. >> thank you. all right. there is a motion to have our actuaries pursue fully funded, the flex funded and the self

funded for more information at the april meeting or may meeting perhaps. all in favor say? >> aye. >> opposed? no opposed so that is unanimous. thank you. moving on to the next item please. >> membership rules committee, item six action item approval of flexible spending act fsa carry forward option up to $500 for 2014 plan year. president breslin. >> we will take this as a full board item or as a committee of the whole, and i will be chairing this for the moment because commissioner ferrigno is not here. if you look to the first part of that which is page 14 you will see the change to the flex funding and there will be additional item number

seven, and it's a flexible spending account. fsa require annual enrollment and don't carry over year to year and effective year 2013 and unused balance up to $500 can be carried forward to the following plan year. the health fsa carry over option up to $500 is independent of the annual fsa election requirement. we discussed this at our last board meeting or maybe the one before and we all agreed -- oh i thought we agreed pretty much it was a good idea for the members so i would entertain a motion to approve this rules change. >> so moved. >> second. >> okay. moved and seconded. any discussion? any public comment? seeing none all in favor say? >> aye. >> all those opposed? no. no

one opposing. all right. thank you very much. on to the next -- back to the regular board matters now which is item seven. >> item seven action item approval of recommended health care sustainability budget plan. lisa ghotbi. >> i'm sorry i should have spoken up a little bit quicker. i think the approval has to be for the rules but separately also for the cafeteria plan, both of the documents are updated and approved. is it possible to take -- under item six it was approval that the fsa language needed to be included and updated in the health services and rules and also in the annual cafeteria plan document so i'm sorry if it was confusing but there are two sets of documents here, the same language however, and so -- >> so maybe we can revisit that item, item number six and if

you restate that motion. >> the motion was to approve those documents. >> membership rules and the cafeteria plan. >> correct. >> and i would second that. >> okay. any public comment? all in favor say? >> aye. >> opposed? all right. thank you. thank you. now we're at item number seven. >> item seven action item approval of recommended health care sustainability budget plan. lisa ghotbi. >> thank you. under tab seven is a presentation to the board as required of the health sustainability budget summary of 2013 expenses and plan for 2014. i'm going to ask the board for a continuance on this really at the last second we recognized an error in the math we're and we would like to continue this until the next meeting and

bring it back to you. >> okay. i don't need a motion to continue, do i? do i need a motion just to continue? okay. the item will be continued unless there is an objection. item eight please. >> item eight action item approval of resolution ordering the 2014 board election for two terms and authorizing the staff to in fact and proceed with the election. lisa ghotbi. >> so before you under tab eight is a resolution ordering the health service board election, setting the dates for the election, offering the health systems to operate the election and proceed and the two elections are president breslin