in the premium and bank that in your reserve. with that being said. you had at 88 percent and in the far column what we did was shared that you needed $18 million, $18 1/2 million dollars in reserve for funded. we added $18 million to the paid claims and that is a ratio of 95 percent. are there any questions for the way it turned out? it turned out just fine. >> what did i say? >> for actives. sorry. >> can you back up for one second. can you ream -- remind me and i apologize me. we are at risk for the hospitalizations, we are at 4 for specialty physicians so you don't send everyone to

the hospital. >> can i make a request that we get a better system. my question is what is the structure that alliance their incentives with ours? >> they have acl claims targets that we fund. we set a certain amount of fundings that is a claims target and that is adjusted for certain anticipated to bring the cost down for standard studies for this set of risk. so i work with them and we agree that is hhs and with their actuarial people, if you hit these thresholds you will get a certain amount of money. it's fairly complex. >> is it a with hold on the capitation? >> no. i don't know if we could as a trust do it that way, but it's literal additional bonus. if they go

below this, that's how. there is a massive amount because they are driven to hit these targets. >> these are in here? >> she is saying no, but we have actually, can i say, when we price the product, the spread in here, i didn't add the claims target as part of the idnr reserve. but the difference between the premium, we actually with hold that money on the balance sheet of the trust. so yes. they are in there, but we didn't address it in this document. >> so it's -- let me ask it in a different way. is the 95 percent loss ratio, is that actually account for all of our expenses? >> it accounts for all of your expenses except your claims targets. >> we can have our cfo speak to this, but there is another reserve in the trust to pay

out if the targets are met which i'm not sure where we are in 13. it maybe really close. we may not pay out anything but there is a reserve and we spoke to that in a previous meeting. pamela may know off the top of her head. >> pamela. hhs. when i did the financial report i mentioned a figure of $68 million, in that is a figure we have to set aside for commitment. one if you want to call it a reserve is $6.6 million and that is the aco's incentive payments in the event that we have to pay out. >> thank you, i appreciate that. so, can you help me understand why we would no include that in the incurred loss ratio. because if we do

end up paying it out, we will have to refill that bucket out of the premium in the next year. should we in really looking at the performance add the claims pay out to it? >> your point is well-taken. so i wouldn't disagree with it. we could have added the $6 million. the balance sheet holds that money already. so at the time i introduced this, it didn't. i could say if we are going to be really true to the pin, we could spread it across all various categories of business. >> right, the good news if we add the 2.6 to the 18. we are still under the 230. that's the good news. >> yes. >> i would suggest when you come back with the final rate we are closing to knowing whether we want to pay that or

not. >> a very astute practice there. the percentage pay out was in the rates so these rates included the possibility of having to pay this out. i just want to say one thing, it's for both pieces, the actives and early retirees. we are well funded. good question. >> in some ways we really hope they hit the target. that's the interesting part because they hit it on the other side. >> if they hit the targets we are thrilled. well said. any other questions? excellent questions. okay. i will move on. early retiree data set. early retirees, i don't know what is about the city's early retirees whether they are in city plan, kaiser, their loss

ratios are better than the actives. i have no idea, the premium, the way it was established. >> that is stressful. >> that's what it is. but i wasn't here when they actually did this. but their loss ratio is incredibly good. they are active people, obviously. they just said i'm done with this and i'm going to ride my bike. very impressive. we collected $35 million and only needed $3.3 million on an added basis a little amount for the possess penl tenl -- potential of the claims target. this is incredibly good. this is from a financial perspective as an old guide actuary, i want to be in front of you 1 year later that we have great numbers to backup the decision. good decision, it saved a bunch of money and what i want to also remind

you is that they wanted 10 points more for 13 than you took. you said, it's at 13 points. we came in at 2.5 points. so excellent excellent decision. this year you took a 0 oechlt --. >> for the first 2 months, in 2013, they had a really bad flu season. these numbers are looking a lot better. i'm very optimistic and actuaries are not supposed to be optimistic. they are supposed to be conservative. we'll nail that zero this year. there goes my credential out the door. so we go ahead and roll it altogether and we are at an a 93 percent loss ratio and

fully funded and have a $13 million obligation to the continue gency -- reserve. we don't have to hope that we'll get the contingency reserve which was what i initially anticipated when i did the math. it's all coming right away. these are looking pretty good. with that being the case, i want to go, are there any questions? i want to take a 5 percent trade on the conclusive page, putting it forward, used a target loss ratio that on a very conservative for the actives alone, very conservative without banking in the better scene, this projected for 2 years would only be a 7

percent increase. so we would raise the zero up 7 percent. we don't rate it that way. we rate it together. it would be a 7 percent decrease. that being said, the over all high end of the increase which i will honor which i have to fine tune is probably no greater than 5 percent across the board. when we are done in june, given the data in ic and i was not sure after a 3 1/2 and zero where i would be, my assessment of this and it's tentative and i have to establish why i'm saying this. it's that no greater than 5 percent for blue shield and hopefully lower. so i'm visiting with the aco's about 14, quite a bit. talk to them about 15, what the metrics have to be to keep that number under 5 percent so we can

come back and say we have enough math and enough conviction to say we are going to be 5 percent or less for 2015. that's my tentative general -- renewal for 2015. anything about that one? >> yes, ma'am? >> can you talk to be a little bit about the idnr and contingency reserve. here i just don't remember. are we fully funded on the idnr and fully funded on the contingency? >> yes. >> congratulations. i was wrong. i voted for it. the question i have is if we have funded the i dnr and

contingency reserve because the premiums were higher in the beginning because we had to establish that? >> it's possible. yes. i'm looking at it fwr that perspective. i'm not saying i'm happy with five. you don't need the cash buildup or the balance sheet from the ibnr. it's all paid claims and i have to tweak it and do my stuff and now that we know all this. a lot of what we have to do in 15 is predicated upon experience which we don't know. why i say all this stuff is that we be the -- bet ahead of the curve with the data i have this pattern. i won't know until this runs until the end of 15 after 3 years of data. i need 36

months of historical data to tell you how the house is operating. any other questions? >> i just wanted to point out the aco's are doing a great job on utilization. but part of the equation in total cost is unit cost and we have as we understand from blue shield some very large organizations that are renewing for 1115. this organization for blue shield is renewing for 15 with new contracts. so it doesn't get credit for all the work he's doing. he's been very aggressive to work with the partners to ensure the unit cost is also going to be something we can sustain for 2015. it's based on also his work with the associations that we partner with. >> we are still in a two horse race. blue shield and kaiser.

any questions? >> any other questions? this is a discussion item. so, thank you very much. any public comment on this item? seeing none. item no. 6. also in item no. 6 there is a substitute, pages on your desk. city clerk: discussion item review active and early retirement claims experience and benefit design and determine preliminary contribution for 2015 plan year. mr. hewitt. >> this time i got data from kaiser in november. and they sent necessity -- me the premium and claim summaries. kaiser is fully insured and we

talked in january about whether or not we wanted to consider taking risk and just what kind of renewal given the ruckus from last year we should anticipate. so this is a twofold presentation. one is, do i want to keep the temperament of possible taking risk and some board members are opposed and others lukewarm and others think it's a nice idea. that being said we are going to review the data briefly and i can give you my actuarial view of the trajectory of the data of what it implies of a fully in insured rate. so just to give you a sense of what we have. we have a premium built upon experience data, 100 percent experience rated for inpatient claims, outpatient claims and of the rx data is all supposedly specific to kaiser. where they have to have a big access charge which has been a

lot of discussion if this meeting and other meetings at the other.cms. that is allocated not a specific basis but over all allocation by book basis. how does kaiser's active experience look? it's at 88 percent is their loss radiation. -- ratio. they have a better contract, they charge less than blue shield. depending on how it comes out, we would hope it would not increase because it was at 20 and went which was a factor in a premium shared and if we are just as successful from my perspective of getting the 9383 implemented across the board, then we have a percent of premiums. we won't have this aberration that we brought to the board many times about the kaiser pick up and the blue shields family

paid $700 and the kaiser family pays $300. here is the data i have. 88 percent loss ratio and if we go to the early retirement claims it's 83. that's very close to blue shield. i don't know why. i have no idea. when i reviewed all this data and took basically same thing but did not want to hold it to any kind of, we own the rate for blue shield. they create a rate that's kaiser and send it to us to review it and we try to negotiate it. hopefully we'll be able to negotiate it very clearly. when i do bring the renewal, the numbers should be very low given the loss ratios are low versus high. it should be very low. i would anticipate, even with

taxes i would anticipate a number less than what we saw last year and maybe half of what we saw last year. that would be my, and i'm not putting that out there as a forwarding kaiser aside to forward the process. that's just said that it's possible to obtain that rate. and finishing up the exercise which i was charged to do from taking the risk perspective. that if we take and create a premium equal to this year's premium, can we post that premium, pay all the fees, pay all the icm and still create money on the books for the balance sheet on the trust. i will complete that trust and you guys can say yay! or nay. that's my review of the data and my review of what i think it implies. i'm hoping to be able to say that kaiser

believes us also and the rates are relatively low and review all of their analytics. this is a preoccurs or to that. any questions? >> sorry i'm asking so many questions. on the kaiser, i note you said loss ratio but it's only through november 2013. typically you look at claims run out at 6 months sometimes to a year. is this include ibnr? >> yes. they are there months lag. when they give me that, that includes 3 months more. they can't give me data -- it's always 3 months earlier because of that. >> because they are almost exclusively, they are not exclusively paying themselves. they don't have that much out of network. they think they only need a 3-month. you believe 88 percent is fully

inclusive? >> yes. >> and it includes profit and all of that? >> yes. absolutely. they have all their money. yeah. that's 12 points of action. that's why, and not that to digress or get off the subject, when we have the main report this is the historical trend for kaiser. the loss ratio is low and when you look at it from an experience from premium perspective, there is cash on the table. the question is do you want me to continue and you said yes. do the math and show us what this is all about for 2015. >> any questions. >> any public comments? seeing none. we are finished with our benefits and rates, now we are on regular board

meeting matters. item no. 7. city clerk: item 7, discussion item, president's report. >> i just want to say thank you again to the staff for all of their work that they have been doing. i know they are involved in moving and i did get a chance to review the wellness center and it's a very nice space. i liked it. the ergonomic chairs that i sat in. i think it's going to be a very successful stop and they are in the process of moving upstairs. i want to thank our secretary, the board who she's now our full secretary. i do say thank you to the staff a lot, but i don't think i really point out how much laneey does for us. she's the glue that keeps us

altogether. thank you. with that, i'm moving to item 8. >> item 8. directors report. lisa guppy. >> yes, we are all moving tomorrow in terms of the office. the center moved on february 28th. so four of our staff members moved downstairs. the fifths being the one we are trying to hire now and the employee assistance program is going to be down in the wellness center. this space the large and it's empty right now. we've got the chairs and tables in but we still have to get some equipment in and we had bio metric screening this week and it was lovely to have that much space to have people be able to come in and have the biometrics and have the staff to be able to support that kind of event. we are

glad to be able to host wellness activities. we are planning a grand opening venturesome event -- event -- some time in may. the office is closing at noon tomorrow. we will be opened at minimal staffing and we'll close and noon and the doors will go down and the stores will close and we'll move everything over the weekend. we have a move committee that has been working very hard and thanks to those folks and the team that have been leading the move. in terms of positions, we have 6 open positions and making slow but steady progress on the contracts and compliance manager which we reposted at the 1831 position. it says

1832 position and the finance position and the health coordinator. that is continuing and it's a slow steady process. some of these are in civil service positions and we are waiting for the testing in order to hire a benefit analyst. operations was a little bit quite or in february. the analyst were working on all the backlog left over from the year-end of the beginning of the year transition. and you may recall that we rebuilt the system for mea cafeteria benefit and it went well for open enrollment and everything was working beautifully until we realizing the new hires weren't working right and that's now corrected for

everyone. communication's team, has been working hardworking on the wellness plan, the demographics report that you will see today as rosemary is pulling that together and we have a really beautiful new hire video that the idea of having our members be able to watch a video and learn a lot about it, about their benefits is something that i think we have an interest in pursuing. the one we did with open enrollment and rosemary is interested in getting feedback. this is in the website later today and we were interested in having people look at it and see how they feel in terms of it's ability to convey the benefits selection and choices that people have to make. as you may recall we are doing an rfq, a request for qualifications of a variety of communication activities for

getting around e benefits. when we have everybody making their selection for benefits online on the website, there is a lot of communication materials that have to be built to make sure they are making an informed decision. this rfq process will allow us to bring web designers and other folks to use technology and learn how to make those choices and i want to mention the retirement survey. we are timing it so we are fully moved and ready to take those phone calls. it's scheduled to go out at the end of this week or early next week. finance has been working on making sure the contract is one of the last ones to complete and we are doing the fsa and cobra rfp which is released on monday. that will be three rfp's on monday and the controllers report that

will provide some information for the data basis going and we are working on the data for union negotiations. a lot of request on that and there is city's report is being updated and we providing a lot of report and data for that calculation. i think we've talked about the wellness efforts and it's launched. they are doing big conferences down there in the big conference we have and starting to do other trainings and in terms of meetings, we wanted to just highlight that. we are working with the city's cat program so the catastrophic illness program and long-term disabilities programs are really well integrated and working effective for the members going through that kind of situation and needing both of those benefits to work together. and we've also been continuing to work on kaiser

and clinic can engagement and we have one on one meetings with every member of the staff to see how things are going in the department and what we can do as a management team to make sure that we are giving them the support they people and what the management team will be incorporating as a result of that. >> i'm sorry, also included in the packet is a presentation to the civil service commission on the impact of the affordable care act on city employees. with that, is there any questions? >> any questions? any public comment on this item? all right. discussion item? item no. 9. >> item 9. discussion item on financial reporting as of january 31, 2014. pamela levine. >> pamela levine. there is a

change that has occurred between last month and this month for the trust fund. that is we are projecting $2.2 million greater -- one second. let me back up. we started the year with the 77 700-0000 fund balance. we then have reported as we've gone along every month that that has been increasing. now we are projecting a fund balance of 98.3. the difference between that month and this month is that we have increased an

increase in admin fees for blue shield and then we offset, we reduced our projection for transfer to ibnr for flask so that change results in $2.2 million change between months. it's very small when you think of the larger amount of money that we are dealing with and we have been just bouncing up and down about 2 million, $3 million over the last couple of months. in terms of the general fund as the director lisa mentioned, we have a significant number of vacancies over this fiscal year and we are projecting that we are going to end the fiscal year with a balance of

$496,000. $645,000 is due to delays in hiring. we have several positions that we are either in kesing or about to interview. hopefully we will be able to hire them in the next month, month 1/2. but we still will need some money at the end of the year. the 250 offset by $150,000 of professional services that we are projecting based on the projections for the move and for the tenant improvement on the first floor, and the third floor we have not been billed for all of it and we want to make sure we are staying in our budget. as you know as we do a very large construction project there is still a change at the very end. we also have seen a larger