conditions, but they are more likely that some of these conditions occur as we age. i think that this is a rather remarkable benefit and our retirees will be thrilled to know that they'll have it because it actually will save them a lot of money or as commissioner sass points out, for those retirees who are unable to afford the extra cleanings that they are recommended to have because of their conditions, they'll be able to get them at, and have them included in their p.p.o. and i think that's a huge, huge benefit for retirees. so thank you very much. i would urge you only one of you needs to change your vote. you don't even have to do the whole roll call again. if just one of you says you'll change, one of you who voted no, if you decide to change your vote, it changes what happens today and that would help retirees a great deal. thank you. [please stand by]

>> thank you for your comments.

>> i am diane. i would ask a question. i really hope that you vote, someone votes to change the vote. if not, is there any possibility you could do what you did with the vsp plan and give those with the premier plan to buy the upgraded dental plan if we don't mind buying it and those that don't want to buy it don't have to if you don't want to change the votes the other way? >> thank you for your public comment. any other public comment? hearing and seeing up he we are ready to vote. >> president scott. >> yes. >> vice president. yes. >> commissioner breslin. no. >> commissioner. no. >> yes. >> commissioner staff.

no. sorry. >> the motion fails. it does not carry. we have no action on that item. i would ask that the staff take a look at a suggestion that was made during public comment about having this as an option in the plan if it is possible. that would be something to be considered. >> we will also pull the current evidence on both prevention and treatment of chronic disease. i was trying to get the numbers. we are running the reports to see the prevalence of the disease. we know the adult population is 20% of population. i don't know what it is for our members that have chronic disease. rigorous dental care helps prevent it. i would imagine in the retire

repopulation at least 60% or greater. we will validate that and come back and work with delta dental if there are variations. we will look into the question for existing pairry dontal -- peri dental disease. >> we have also for the dental dental ppo not approved a rate guarantee for three years. that would be part of the unfinished business. that would need to be part of this review. i hope we can bring back something to act on in june. >> we have been at this for merely two plus hours. we have not -- excuse me. >> we have rate guarantee for dell tan dental.

there is no change we approve ththe deltan dental care. all you have to do is renew it with no change. it fails to include it. >> just a moment. before you make that assertion you are in the right place. is what he is saying accurate? >> as i understand it, you have a decision on the active and now the delta hmo and uhchno plan for retirees. the ppo for retirees is open. we need to bring it back in june if there is no action today. >> that is my understanding what we have done. i want to highlight the fact that we have not only not

approved the smile away benefit but not accepted the three year rate guarantee as outlined here, is that correct? >> yes. >> thank you. now, i am going to get back to a standing point that i have that the mind can only comprehend what the end can endure. i would like to declare a 10 minute recess. thank you. [ a recess was taken at this time ]

>> please resume your seats. >> we are back into session. we are now ready to take on item 7. >> item 6, i believe. that is the discussion item. secretary, if you would hold. given the fact we engaged in extensive discussion beyond which i apparently have no control. i would like to claim the privilege of the chair and move

up the two action items that are listed on page of the agenda, then have the discussion on trio. >> that is action 7 and 8? >> yes. >> thank you. item 7. review and approve the blue shield non-medicare flex funding rates for the 2019 plan year. >> we are dealing with item 70 the agenda. blue shield to 19 active and retiree rates. >> mike clark from am. we are going to review the rating and renewal for the two

blue shield california plans that are offered to active employees and early retirees. on page 2 i am reviewing the hmo plans offered. we work with blue shield to assess bell the information and calculated increases 10.5% on the total cost rate across the access plus rates and 5.6% increase for the trio plan across all elements of the rate cards. for both plans this represents increase of 8.8% including all components including medical and pharmacy costs with pharmacy rebates. the captiontation charges for certain services under a fixed cost in the blue shield plans,

fees at attributable to the programs and large plan pooling cost. manage care organization tax in 2019 that will not apply after 2019. that is built in, and then per discussion that we had in the march health service board meeting, up for rate stabilization and amortization of $3,162,000. the healthcare sustainabilities fee and best doctor fee we reviewed earlier today. >> any recommendation? >> the recommendation the renewal approved. we provided comments on page 4. if you look at the experience. keep in mind the 2017 access plus was the only plan offered. trio was implemented in 2018.

the persons we review is actuaries is 2017 the access plus plan only. the experience was 1.4% higher than predicted if we recall from the march 2018 presentation on the claim experience for the blue shield plans. that is a factor that enters into the rating forecast. think about the 8.8% increase. 1.4% is attributable to the experience in 2017 in what was expected. we saw the health risk score scores increasing for the active and employee presentation. in the prior period to the existing data for the present period. then we relied on the blue

shield inputs for how the individuals in the two plans distributed when trio was introduced. 40% migrated to trio in 2018, leaving 60% of the prior access plus population staying in access plus. they are not equal populations from a health risk standpoint. not equal populations how they use provider in the blue shield network. blue shield provided us factors that looked at the distribution. for instance imagine the folks that migrated to trio, that was preferred provider outcome that was desired with the implementation of trio. so continuing on, page 5.

there were also significantly higher large claims in the blue shield experience in 2017 relative to prior years. if you recall we discussed this in march in our review of the blue shield experience while there was serglarge claim poolings that helped to offset some of the coasts of the individuals who exceed $1 million. the underlying experience for large claims was much more significant in 2017 relative to prior years. then the fee increases for the six costs components 2% on the administrative fees, 9.9% on the large claim pooling charge. we thank blue shield. the original increases for each of these items were higher. in partnership with blue shield they enabled decreases to the original positions to end on

these rate increase positions for 2019. >> describe what is a large claim in the blue shield world. >> in the blue shield world, from a pooling standpoint, if an individual in a calendar year exceeds $1 million in medical plus pharmacy experience, then blue shield takes the risk on the remaining claims. the first $1 million become the responsibility of sfhsf and employers. beyond $1 million is the responsibility of blue shield. >> do you recall and i recognize this is an odd question. how many of these large claims we would have had this year. i understand you say significant increase. if we had five last year, did we have 10 this year? >> i will give a specific

example. in calendar year 2017, there was approximately $6 million of claim amount pooled out representing 8 individuals. the prior year there was only one individual with about $225,000 pooled out. there were some cases over $2 million. that was the nature of this increase. >> thank you. that puts some sense of magnitude to it. thank you. >> so the third bullet we talk about how different the dependent to subscriber ratio is between the individuals who enrolled in trio in 2018 versus remained in access plus. now if you recall, certain individuals who used certain providers within the blue shield network that are aligned with

the trio product, if the entire family was using those tree use providers, those individuals were defaulted into the trio plan for 2018. if they choose to enroll differently. by the nature the entire family had to use trio providers, it would make sense a lower dependent to subscriber ratio in trio. let's say if myself and my partner were using trio providers but our son was not, we would not have been defaulted to trio. then in the rate cards, we also reflect the best doctors' fee at $1.15 per subscriber per month for 2019. >> that moves us to the reality

page. >> yes, page 6. we look at the early retirees where the subsidies are determined by city charter. we look at one of the primary cost sharing subsidy sharing groupings within the active employee population, 93% employer subsidized for bow only. 93% for employee plus one and 83% for employee plus two or more. that is 93, 93, 83. what we outlined here are the projected contributions to be paid by the member on a monthly basis. employees on the left side of the chart, early retirees, right side of the chart. impact on intercountrybution change and total rate change

monthly basis 2018-2019. for access plus we talked about the 10.5% aggregate cost increase. that cascades through each of these three ways to look at cost. the employee contribution, employer contribution and the monthly total cost rate. for early retirees, we build the formula based on the elements of the charter. the first component we looked at was approved a couple months ago is the revised 10 county. then the difference which is the difference between the employee only active rate and retiree only early retiree total rate and take half of what is left and that is the subsidy.

that determines the calculation of the employer contributions we develop the total cost on the 10.5% increase. then the differential between those two numbers or the top chart, retiree contributions early retirees on the right side of the page. >> any questions from the board? next. >> on page 7. early retiree information on page 7 is exactly the same as what we looked at on page 6. we look at for active employees the 19 196.83. the monthly total rates same between six and seven.

what differs are employee only and employee plus one column for the employee contributions and employer contributions. >> questions from the board? hearing none, let's proceed. >> page 8 and page 9 illustrates rate cards for 2019. you can see all components of the rate card buildup, medical claim cost first line. that also does include fixed costs for blue shield, administrative fee and large claim pooling fee, vision costs are not changing for 2019. that was previously approved by the health service board. $3 sustainabilities fee, expenses in the footnote in the appendix is not changing from 2018. the best doctors fee, reduction

approved earlier today is built in and the claim stabbization amount. these figures represent the cascading of that $3,162,000 that i spoke of earlier for the buyup amount based on the enrollment in the various tiers for active employees and early retirees. that creates the total rates. the 10 county amount for 2019 is $672.08 monthly. the difference again is the difference between the early retiree only rate and active employee only rate. then taking total rate minus 10 county creates a figure, take half of that to become the retire resubsidy. that is how we determine the

contributions. at the bottom we compare the difference the same numbers we looked at two pages prior. >> questions from the board. >> do you have any idea for employee plus two early retiree? how many numbers in that category? >> we can research that and bring that back. >> is getting very expensive. >> other questions? hearing none. >> page nine same with 196.83. early retirees same figures on page 8 are on page 9. that is the access plus review. now we go to the trio plan rating review. the specifics the trio.

the exposure is captioned at lower level. these are flex funded programs. there is assurance element. these are insured programs. for trio blue shield accepts more financial responsibility. when claims exceed forecast 3.21%, every dollar above that becomes blue shield responsibility versus 125 for access plus. that helps provide additional risk protection for the trio program to sfhfs. not to exceed premium increase caption of 5.9% in 2019 and 8.5% for 2020. added financial protection reviewed with the health services board last year.

this is with the mind that a three year time horizon was essential to review in the program, look at the changes blue shield is looking to execute for members in program delivering costs and to make adjustments for long-term sustainability of trio. >> all right. next. with that on pages 11 and 12 we present the slides that show the comparison of rates. similar to what we looked at earlier. the moly employee and retiree an contributions at the top and we talked about 5.6% as the aggregate increase. that spreads 5.6 to 5.7 depending on the tier.

an aggregate 5.6% increase plays through the active employee rates i and for early retirees we apply the city charter formula. page 11 is the 9383. page 12 is for employees. page 11 and 12 are same for early retirees. >> what is your recommendation? >> accept 5.6% increase. looking at page 15 the rate cards presented today and increases we discussed we recommend that the health service board approve the blue shield plan renewal and 2019 rate cards presented for access plus and trio. >> thank you. are there questions by the board on the recommendations or

comments? commissioner lim. >> on slide 17 on the appendix there is a increase in medical increase prescription of 18.3. what we are interested in the increase of 12.5. that is huge increase which you haven't mentioned in your previous because 9.9 but the fees are paid to the doctors 12.5 increase. if you look at the trio, that fee is small. is that because we paid into the doctors but the doctor doesn't get the increase.

i don't understand the increase. >> i will be very happy to explain. >> orient where we are in the presentation that the points the commissioner raised in the appendix on page 17 and 18. so we are clear. where it shows table one captiontation fees going up by 12.5%. then when you go to table two, trio fees change is minus .03%. the question i think that and i will share that question is why? >> i am happy to explain. these particular figures on slide 17 and 18 are on a per subscriber per month basis. so they reflect the aggregate of individuals who enroll in self only plus one and plus two or

more coverage. we use these figures because ultimately the fixed free rates shared with us by blue shield are per subscriber bases. this time last year trio was still in the planning process, not yet implemented. the under writing prepared by blue shield, there was no way to know. it was no way to know how it would play out. the 2018 column represents estimates developed by blue shield this time last year with an actuarial best estimate how that may happen. for instance access plus there

was a higher dependent content in who actually enrolled in access plus than was forecast at this time last year. we know that number now because we have the 2018 enrollments. last year it was simply an estimate, best estimate. when you look at per subscriber basis because there is higher dependent content in access plus than originally estimated, it makes the projection now that we are doing for to 2019 claims higher because there is more dependents loaded into the 2019 column than estimated in 2018. in rate making, we are looking at rates for each of those three columns, the employer retiree only, plus one, or the plus two or more. what ends up happens is that

this overall 15.6% increase is indeed higher than the 10.5% aggregate increase for access plus. some of that is because there is going to be more people in the two or more tier than was originally estimatessed at this time last year for access plus. >> hasn't it been historically true dependents are less closely in term -- costly in terms of claims? >> absolutely true. there is more of them. completely agree they are less costly than adults. relative to this time last year where estimates were made for access plus versus trio. there are more dependents. >> the class is driven by the number, not utilization? >> yes higher dependent content

in the 2019 column. >> to follow up. these are mostly fixed fees paid to the doctors. that is my good example. why 12.5% increase. i could increase more on the medical prescription claims. computation fees, why is there 12.5 increase? >> again, so the 2018 caption itation feet was on the aggregates access plus population from 2017. what happened going to 2019 a higher risk individual was more likely too take access plus versus trio. you will see on the next page, page 18, blue shield did not outline a specific estimate for

capitation fee in 2018. in to 19 they are able -- 2019 they are able to know what provider groups they are using and you will see the capitati. n fee in 2019 is lower for how they use providers versus access plus. as an example if you take a weighted average based on enrollment we know now of the 413.980 page 17 and $330 on page 16 and look at it as a whole for blue shield you will see it compares relatively in line with the fee of $367.89 in 2017. that was projected for the 2018 trio. >> other questions?

>> i have a question. in terms of we know that a lot of the rise in healthcare costs are pharmacy related. does both access and trio use the same pharmacy benefit program or how do they manage pharmacy costs? is there a difference in the two plans? >> benefits are the same. >> thank you for coming. >> thank you for having me. i am with blue shield of california. yes, the plan design is identical for both the access plus as well as trio plan. there are differences in the aco partners who are part of the trio product, they do more

aggressively collaborate with blue shield to manage the cost of prescriptions, settings in which they are delivered, mail order, drug, etc. >> to make sure i am clear. blue shield does not contract with a third party promising benefit program like express scriptses or whatever? >> we use distribution channel of cbc care mark for retail and drug. we are opened pharmacy benefit manager. we manage formula and utilization and drive it with the partners. >> commissioner sass. >> i am interested in what the postmortem is going to be on breaking trio from blue shield here. what i believed would happen a

year ago when this was suggested. i thought it would be similar to what happened as kaiser grew and blue shield shrank. now this isolates the cpmc patients from other patients. what you are saying is people moving to trio are in better health, fewer dependents, lower coasts on a number of scales. the people that remain in access costs see it driven up. it is adverse selection. when you put the two together and you average it all out, what is the rate of increase in our health costs from last year to this year as consequence of making this change? what might it have been if we hadn't done this in the first place? would we be better off overall or are a few people benefiting?

it is less than 50% benefiting, 80% that remains are kind of being penalized as a consequence. it is important to understand what the economics of this actually look like as opposed to the alternative had we not done this. one theory was that perhaps c pmc would see they needed to be more competitive and proactive in managing people more efficiently to stay competitive. if your population is sicker and includes more dependents and people stay in access plus because they have health needs and specialists are involved with their care they need to stay with. it seems like a situation where blue shield is extremely expensive at the expense of

around on some level, and i look at this trio as shadow priced a few percentage points behindna terms of rate increase. >> i will speak. 8.8% is the aggregate rate increase across both plans. that increase would have been 8.8% or similarly from 2018 to 2019 had access plus been the continued only blue shield plan. the benefit of the rating for trio occur understand the 2018 rating where in absence of trio, the access plus increase would have been 5%, and it was. the rate increase for 2017-2018 access plus was 5%. trio the rate decreased 5.9% when you compare the 2017 access plus rate to the 2018 trio rate.

the members who migrated to trio saw the immediate benefit in their rates from the projected reduction in costs that trio would deliver as part of the aco partnerships, rate increase captions i talked about earlier and so forth. that played in the 2018 rates. we it is here today only having very limited early information on trio claims, not enough to build into the underwriting forecast for 2019. we have had the opportunity to sit with the blue shield team to review some early data. again, what we have access to now that we didn't have then are risk scores of populations. one plan versus the other. dependent information and so forth. to me, yes, based on that information we have differential increases between trio and

access plus we recommend for 2018 to 2019. clearly, we need to keep an eye towards how each of those populations develops and the claim experience. i would say that you saw about a 4% reduced aggregate blue shield rate for 2018 because of the trio implementation. 40% took tree use, 10% times that is 4%. that is how i get the number. for 2019 the aggregate plays out. you have a rate stabilization deficit you hope to draw to zero. we know the claim experience for 2017 ran higher than was projected in the 2017 rate. that plays into why 8.8% on the aggregate. you raise excellent points we need to monitor.

>> thank you. other comments or questions from the board? any public comment on this presentation? all right. what is your pleasure? the recommendation is found on page 15 of the presentation. we recommend the health service board approve the proposal and rate cards for access plus and trio. >> do i hear a motion to that effect? >> i would move we approve the proposal and the 2019 monthly rate cards as presented in this material. >> is there a second? >> second. it is moved and seconded we

approve the rate cards as presented in the material and previously described to us. is there any further questions from members of the board? any public comment? hearing and seeing no public comment we are ready to vote. signify by a ye. those opposed. the motion is carried unanimously. all right. we are now ready to move to action item 8. >> approve kaiser permanente rates for to 2019 plan year. >> mike clark. we present the recommendation for 2019 renewals for kaiser california enrollees. active employees and early retirees. >> i notice you specify for kaiser california.

when will be anticipate seeing the multi regional rates? >> we will present that in june. >> i want to be sure no one would be left out. thank you. >> indeed. page 2 we recommend that the health service board approve .3% premium decrease from 2018 to 2019 for active employees and early retirees in california. the active rate cards like we did with the blue shield. the 19683 contribution strategies page 3. >> i am ready to entertain a motion. >> i move to approve the non-medicare rates for 2019 plan year. >> second. >> properly moved and seconded

that we accept the recommendation of this rate decrease. is there discussion? >> nice to see good news. >> any public comment? >> we are ready to vote. signy fiby aye. the motion carries unanimously. now knowing what is ahead of us is going to be a foot slog. we have to be out of here in one hour by 5:00. i recognize that we are still pending the trio update. i am going to ask the director if that doesn't happen today will the world fall in? >> no. >> thank you. i appreciate the patience and preparation of those who are ready to make that update. we will try to entertain it in

june. i would like to move forward to item nine. >> discussion and possible action of the city plan, suspension of rate stabilization, city plan design changes, changes in tier ratios and non-medicare and premium contributions for to 2019 plan year. >> mike clark. you will see on page one the contents for today. there was a separate two page handout that was prepared for the commissioners of the board and available to the public on the table. >> .

>> there is a lot of stuff. we are going through it. >> i will refer to that. these are highlights from our february presentation on the reserve approval for the city plan. >> last month i stood before you to discuss sustainability actions on the uhc city plans specific to early retirees. today we are going to talk about the entire population early retirees as well as active employees. that will lead to recommendations that we have suggested to the board for plan design changes, network changes, subsidy adjustment changes that will then lead into discussion on the both the status quo renewal summary for city plan. seeing the rate cards and impact

of 2018-2019 projected rate change if you took no action and several scenarios for your consideration today. >> on page 3. we remind everybody of statements we made last night. of the city plan for active employee and early retirees populations with the city charter. this is a important plan for sfhsf that is our goal. our call to action knowing that there are complex issues we will discuss today the plan will continue to experience erosion in the claim experience and acseller rate to a death pieral which occurs when costs increase which then causes lower risk

populations to leave the plan, leaving higher risks in the plan, adverse selection. page for a multiyear plan is necessary to positively impact viability. we are asking to discuss recommendations for 2019. there will be continued dialogue to 2020 and beyond on evaluation of ideas. this will be part of the strategic planning discussion in coming months. >> coming months. this will begin on june 22nd and the planning meeting this board will conduct. it is not like this is going to drift into the future. we mean that we are going to be talking about trying to begin this process. please proceed. >> thank you.

we address these three reasons last month to re-address the rate stabilization. reserves are depleted from the high of $26 million in 2014. this was where i referenced the two page handout distributed $1,061,000 left at the end of 2017. this two page handout is from the february hsp presentation on the derivation of the $1,661,000. we know there are escalating costs for prescription drugs and the city could payments are less than for foss access plus and trio. prescription cost are the highest inflating costs of healthcare cost also. we want to maintain afford

ability for members. we have members with limited plan choice. they do not have all maps availability based on geography, active employees and early retirees. diving into that on the next two pages. for the active employee population there are 73 active employees to the most recent review who live in the zip code with limited plan choice. when we refer to limited plan choice kaiser and blue shield plans were not available, at least one kaiser plan or at least one blue shield plan. majority live in the geographies -- agree graffitis referenced today. that is 73 out of a total active employee population of 1,049