>> san francisco health services board will now come to order. please stand for the pledge of the flag. i pledge of allegiance, to the t ed states of america and to the republic for which stands, one nation under god, indivisible, with liberty and justice for all.

>> roll call please. [roll call] >> president breslin: we have a quorum. item number 4. >> approval with possible modification of the minutes set forth below, regular meeting minutes from january 10, 2019.

>> president breslin: any corrections to the minutes? >> i think the references paragraph, item 13. we're talking about the reason the board did do a self-evaluation last year. it states that we didn't do it without an explanation. the explanation was we were engaged in hiring of an executive director. we did not complete the self-evaluation for that year. >> president breslin: i'll add that. i had one item, item number 11 page 7 second paragraph second line. conducive should be convenient. any other corrections? i need a motion. >> i move that the minutes be adopted as edited.

>> second. >> president breslin: any public comment? seeing none. all those in favor. it's unanimous. item number 5 plaza. >> general public comment on matters within the board's jurisdiction. >> president breslin: any public comments? abbie did you have -- >> i wanted to take this opportunity to provide some staff recognition of the health service system staff and three areas. the first is that as the board knows, we have launched a new website which has been a very long project that many staff have been involved in and some of them that are here today, i like to ask them to stand. mitchell griggs, marina coleridge, brian rodriguez, lisa

ocampo, irina, jeanette long, and natalie eckberg. [applause]. it truly takes a village. you folks didan amazing job. i stayed out the way. thank you very much. i hope that everyone here has had an opportunity to go on the website and your comments and feedback are welcome. >> president breslin: i said in the training, i'm not good going to sites. it does look great. in todays presentation, you will see two reports of which enterprise analytics team has

put together. but the report production is done by our communications team. i want to acknowledge them. they are kind of the folks behind the scenes on lot of the really looking good materials that are coming out on a fairly consistent basis. i want to do a shot out to those individuals. also in my director's report, i acknowledged two of our staff who have been promoted recently. anthony gonn is here. he has accepted a position as i.s. business analyze in the enterprise system analytics division. he's got terrific technical skills in operational expertise and had previously worked as management assistant for the c.o.o. thank you anthony for stepping

up again. it's been great. is william here? there he is. stand up william. he has accepted a position as principal admin analyst position within the contracts unit of the finance division effect in january. he was promoted. he's highly experienced in contract administration and we're seeking for someone to back fill that position. william is a great asset to the finance contracts division. thank you william. [applause] >> president breslin: any public comment on it item? seeing none, now we'll go into our rates and benefits period.

item number 6. >> revised rates and benefits calendar for the plan year 2020 presented by abbie yant executive director. >> the materials are in your packet. there were few minor adjustments that were made in the march meeting. we'll be doing the presentation over all. not separately for different plans. the copay benchmarking will occur in the march meeting. we have also in april consolidated the dental discussions in that same month. those are the changes that we made. we do still have a hold on folks calendars for the march 28th meeting. it is my recommendation that we release that hold at this time. >> president breslin: okay. that will no longer be on the --

>> correct. we'll pan the hold on the april 25th meeting. we've been seeking permission of the group that meetings here prior to us at an earlier time. while this calendar reads 1:00, we are on the last day of february. we'll seek permission to use the room at 12:30 should we believe it necessary. i would ask the board members to hold the 12:30 meeting time that way we'll have adequate amount of time. that allows us to waive that march 28th. >> president breslin: that's a great idea. much better than setting up another date when not necessary. anything for that item? any public comment? seeing none. item number 7.

>> review of the united healthcare u.h.c. utilization claims experience for 2018 calendar year. presentation by mike clark from acon. >> good afternoon president breslin and members of health services board. i will walk through the united healthcare city plan utilization report and claim experience for the calendar year 2018. if you look at the content page, i'll do a brief introduction, remind on restabilization actions and dive into the experience separately for active employees in the city plan and early retirees and include the nonmedicare dependents who are enrolled if the city plan.

if we look at the information that i'm going to present to you, again, separate claim experience for active employees, focusing on comparison of 2017-2018 in four areas. how is membership changed? how the contracts size, which is the relationship of total covered individuals employees with independents to the subscribers and then look at financial information claim information on two bases per subscriber. we're looking at service date in the year. when you say, went to the doctor, or had hospitalization between january 1 and december 31st, even if the claim might have been paid, for instance it's on new year's eve, you go to the hospital, it's not going to get paid until the

following year. that will be incurred date. secondly looking at paid dates. when the claim was paid by united healthcare regardless of the service dates. just keep those distinctions in mind as we look through the financial information. with rate stabilization just to provide some background on this, the long-term sustainability is a focus of ours. it's part o that. specifically for the city plan, the medicare program went to fully insured starting if 2017 and so that allowed at that time claim stabilization fund to be used towards city plan active employees and early retirees.

most recently, in june 2018, there was a full allocation of the reserves balance at the time, $1,661,000 to be applied towards 2019 city plan and city plan choice available rates. when we look at the comparisons in this document, between the aggregation of rates for city plan and then actual claim experience, we expect the claim experience to exceed the rateses that were set because the difference is, these rate stabilization reserves that were applied during 2018. with that as background, page 4 is table that illustrates for the active employees. lot of information on this page. on the left side you can see head count information.

subscribers in this case will be the employees themselves. >> president breslin: excuse me. why are we using the term subscribers. >> it's to corollate to an employee, a retiree or a cobra beneficiary. >> president breslin: why not put employee? when esee subscriber i think of not our plan. we always used member, dependent or retiree. >> thank you for the comment. i'll use employees in the future. you can see 1079 employees

enrolled in the silver plan. as you look across, as we alluded to earlier, the claim experience, the total claims roughly 19 million on both paid basis and incurred basis do exceed the monthly premium. that is because, we had rate stabilization reserves helping to offset the total premium costs that $16.8 million figure under the monthly premium, would have been over $20 million if we were not applying rate stabilization reserves. i want to caution that even though these loss ratios which is the mathematical formula claims divided by premium, even though the loss ratios appear to be high, we expected that because of the application of

rate stabilization reserves. page 5 change in membership accounts between december 2017 and december 2018, shows we had growth in terms of both employees and all members in the plan over the course of 2018. the growth was higher percentage wise with dependents, which is why you see all number percentage. that also grew the number to employee ratio as well. even though there was a reduction in the rate stabilization reserves between the december 2017 and december 2018, we still saw growth in the plan.

then the average premium increase because again, there were fewer dollars applied in rate stabilization in 2018 versus 2017. from a overall claim experience, you'll see that we had similar results on an incurred bases absolutely a slight reduction at 0.9%. on a paid claim bases, an increase of only 4.5% in the average paid claim cost per employee. that indicates that going from 2017 to 2018, that we did not see a high cost increase in city plan. it was fairly reasonable, slightly below national average trend which is running in the 6% to 7% range. even though the premium

increased, it's good to see that the claim cost per employee actually increased at a reasonable rate for 2018 for the city plan. >> excuse me, could you tell me what the premium increase would have been would the stabilization? >> so, there were approximately $7 million applied for 2017 and about $4 million in 2018. the premium increase without the stabilization impact would have been approximately 5 to 6 percent. >> thank you. >> now we'll turn our attention to early retirees and what we're

seeing in head count for 2018. you can see how they distribute about month. in particular, i want to call to your attention that when you look at the dependent columns on this page -- so the ones that are labeled mm retirees which is nonmedicare dependents, then two over from that and which is nonmedicare dependents of medicare retirees. you can see, especially in the nonmedicare dependents column the impact of the dependent verification audit. it was at the end of july, when dependent reductions related to dependent verification took place. obviously when i saw that data, i started to question, why we see such a large reduction at that point and working with

marina coleridge, recognizing that this was attributable to output from the dependent verification audit. for instance that's why you see 228 dependents in june reduced to 178 in july. the following page documents the plan loss ratios and the claim experience. approximately 17.5 to $18 million in claims both paid on incurred basis compared to $16.5 million in premium. we did see higher claims. even we add back the portion that was attributable on rate stabilization to early retirees we would have seen seen loss

ratios above 100%. on page 9, this shes yo -- shows you the head count comparison. slight increase in retirees. that also reduced the contract size for the early retirees and city plan. the increase in average claim cost per retiree was 5.4% on an incurred basis, 8.0% on a paid basis relatively to premium increase approximately 2.2%.

my last page, page 11, just in conclusions, we saw the increase in membership in the active employee pool, similar overall counts over less dependents in the early retiree pool increases in average claim costs were within expected levels. we're not seeing high increases in 2017-2018, which is good for promotion of long-term viability of city plan. the high loss ratios, especially for the active employees, do validate the application of those additional city stabilization reserve funds in 2019. >> knowing just on that point, knowing this was a real sore spot in the last cycle, are we going to be able to digest that

at one meeting? whatever options you're planning to bring forward around design, cost and etcetera. it took little effort last year for us to wrap our heads around what we are do on an interim basis. this is supposed to be bringing forward a longer term solution. i'm raising the question. >> the answer yes. we can do this in one meeting. part of the reason why, we have delayed the rf r.f.p. that willo the sweeping design changes. we are still in an interim phase. we're going to have the same challenge as we had last year. and without the benefit of the stabilization reserve that is no

longer available. that will sustain itself through the next cycle which will be helpful. we're presently engaging in discussions with united healthcare to understand programmatic elements and new strategies and new ideas that can be promoted for 2020 without creating change of plan design or much plan in the plan design.

>> president breslin: any public comment. item number 8. >> review and preview united statessed healthcare u.h.c. city plan p.p.o. rate. presentation by mike clark from acon. >> we talked little bit about rate stabilization reserves in the last presentation.

page 3 give background on each the last two years. for the 2018 plan year, that was approved in june of 2017, the agency approved using was a $4,000,529,000,000 rate stabilization reserve to be

applied by down 2018 premiums. we expected at the close of 2018 cycle, that we would have spend down the rate stabilization reserve. we looked at 2017 plan year experience. with that determined because of favorable experience, there was $1,000,661 available. that help all else equal to reduce the total rate increase by 4%. $1,661,000 equates to 4% of the expected city plan spend for 2019. we have slides in appendix that provides more details for your

convenience.

>> president breslin: when you apply a deficit, how does that work? i don't understand it. >> the deficit will then slightly increase the rates that we present in may and this is the case presently on the blue shield plan. blue shield plans today and for the last several years, carried a rate stabilization deficit. it will show an add-on component that build the total rate. that's been happening with the blue shield plans. that will happen with city plan for 2020. >> president breslin: it increases the rate and the premiums? >> correct. the $117,00 $117,000 we'd estimo increase the premiums by 0.3%. >> calling back the question as

to, have we looked beyond 2020? this going to continue to grow. we all know that. i'm seeing this in isolation and looking for bigger response on boo we're trying to do here. the plan is important. it's foundational to who we are. we need to kind of figure out how we're going to fix it. >> excellent comment. i are say if you recall everything that we talked about that was approved last may and june for city plan, applies to 2019. that helped equal impact for 2019 projections on the baseline. looking at page 5 as an example. this is all 2018 data. the role forward for the 2019 changes will continue to apply for 2020 plan year. it's not part of this specific

exhibit, since this is a 2018 plan evaluation. >> i'm raising the question. remedy got to be found at some point. >> that is captured in the statement a i made about doing the medical plans or rfp 0 we'll look for a newer design. >> so it's a band-aid? >> now, yes. >> president breslin: city plan choice is not available. that means everybody in the city plan active and retirees? >> correct. >> president breslin: okay. go ahead.

>> page 5 illustrates original expectations where i talked earlier about an expected shortfall of formal $4,529,000 and the rating for 2018. that was the amount of the rate stabilization reserve applied then to 2018 rating. those calculations are shown under the expected column on page 5. for the actual column, we had higher moment in city plan. that helps increase the numbers relative to what was expected. if you'll focus on row six from a pier surplus, these two numbers are different by $20,000. as it turned out, the actual experience of what the actual shortfall was was very similar to the expected.

for the rate stabilization reserve formula we look at the contingency reserve changes. there was an increase to the contingency reserve and therefore, that adds to the deficit for the plan. the $351,000 carry forward of deficit is almost all comprised of the contingency reserve change with a small amount about $20,000 due to the difference between actual experience and expected experience. i won't go through slide 6 and 7, they have some notes on the items related to slide 5.

for our recommendation on slide 8 as we do the math down the page, the bottom line is we're recommending that the health service board today approve claim stabilization deficit amount of $117,000 to be amortized for city plan and active employees and early retirees for 2020. there will be remaining number third of the amount that would carry forward past 2020. >> president breslin: i have a question about that. that's $3 million applied to the active retirees deficit, applied across all plans right? >> correct. this applies across all -- everybody on city plan. >> president breslin: what we

did last year, we applied some of the subsidy to the active only. since lot of the actives don't pay premium, it doesn't matter one way or the other. it's no benefit to them. why would we not just apply this deficit to the actives for the benefit of -- that will be really what will be the benefit of the members. >> okay. the remaining two thirds in 2017 was applied to the actives. that is correct for the 2018 -- >> president breslin: they don't pay the premium anyway. >> of all the employees on city plan, there are approximately 200 that do not pay a premium and the rest do pay some form of employee contribution for city plan. >> president breslin: we don't know how many in this plan do or don't? >> about 200 in the city plan.

>> president breslin: we should be doing what is for the benefit of the member. if they're not paying a premium, i don't see how that's a benefit for them. i think we can use little more training in this. one our training sessions coming up in october. if it is for the benefit the member, it's truly should have done -- >> i'm hearing a split though. it benefits some members but not all. >> it is true the majority of active employees do pay a contribution to be in city plan. all of the early retirees pay a contribution to be on the city plan. >> president breslin: i wanted to point that out.

if we applied the deficit in this case, it will be across the board. if we apply the deficit to the actives, early retirees wouldn't get an increase some of the actives who don't pay their premium, it wouldn't matter one way or the other. >> we applied this deficit. [indiscernible] >> president breslin: i said apply it to the actives. and not the early retirees. >> you might. all the actives are also paying premiums

>> the numbers increases last year because of the rate stabilization. only a few member will not take the burden. >> president breslin: active members that do pay, do they pay as much as the early retirees in premiums? probably not. >> no. >> president breslin: depending

on the contracts. that's my point as a fiduciary, we should put the money where most beneficial to the member. >> commissioner lim: i don't know how much the dollar amount of that is. >> if i add couple of comments. this particular recommendation as it is out outlined is based on how the health service board rate stabilization policy is written today. that is the basis of the recommendation. when we talked about alterations to apply rate stabilization reserves other than policy, there are certain discussions that need to happen with the board to allow that to occur. $117,000 is across approximately

2000 total people, employees, retirees. that translates to per person. i'm doing the math right. approximately $6 per person. >> president breslin: i think it's something we should look at in the future. if we're going to apply a subsidy to someone who's not paying the premium, then i don't think we should be doing that. the reserves for this comes out the trust right? the stabilization? they come out of excess minus cost? >> these are not cash reserves. i stand correct, $60 annual,

$117,000 divided by approximately 2000, about $60 a year, and $5 a month per individual what that translates to. >> president breslin: move on. finish it up here and we'll see what everybody feels here. is that the end? >> i'm complete. thank you. >> are you asking for us to adopt your recommendation? >> yes, please. >> i move the adoption of the recommendation of the acon regarding the stabilization reserve for the coming year. >> second. >> president breslin: any discussion? >> i would like to -- if we're going to seriously consider what the implications of change in

policy would be in this particular effort, there's a broader principle that's involved. we are now talking about not surpluses that are reducing premiums but we're talking about deficits, they are increasing premiums. i guess the question for this board is, this problem is going to get worse. we know that. if you take the whole thing this year, it would be almost a percent more than you were dealing with. i'm trying to figure out is there some other way to thread this needle. president breslin provided an option in order to do it. i'm hearing you say we have to have more discussion. this is where we'll have the authority to suspend the stabilization policy in order to

make the changes being suggested. i don't know if that takes two readings or whatever. >> i think you have the right to approve this stabilization you want. the board policy are policies and they are guidelines. as long as there's a majority and you have a quorum you can make decision to violate any policy or governance rule you want. i think it's obviously something you need to be conscious of doing. you should consider what the implications of doing that are. in terms of this item, and your ability to decide how to apply a given stabilization that is part of the rates and benefits process, i think this has been noticed and i think you can vote on it today if you want.

if you believe you want more time to reconsider, you can push it off and we can renotice it for the next board meeting. >> president breslin: it might be wise to have more thorough -- we have to have another report on this to see what it looks like. we did that. i don't know if we should continue that. >> i would be happy to withdraw my motion if the person who seconded withdraw. we might be able to have the analysis done based on this discussion and then bring this back if you will, to have us suspend the policy to determine that's what we want to do. that give us time and we'll see the real effect what we're talking about here. i withdraw my motion.

>> commissioner lim: hard part is, we have a deficit of $351,000. we are spreading for three years. this is only $117,000. if you suspend the policy, we are kicking the $351,000 down the road. next year, instead of $351,000, it might be $600,000 or $500,000. if you start applying the policy, it might be enough to be $300,000. we're kicking the can down the road. only way we can do it unless you do some plan changes and increase the copayments, all of those.

>> president breslin: i wasn't saying not apply the deficit. just apply it to the actives. same amount of money but it will be applied to actives. >> commissioner lim: previous discussion was to expense the policy. >> president breslin: that will be to apply to one group. >> you can say you're spending it and you're making a one-time decision. >> president breslin: was it consistent last year when we applied it to the actives? >> in june 2017 for the 2018 plan year, when the decision was made to apply the entire,

$4,429,000, that was a suspension of policy that allowed h.s.b. to apply one third proportionately, remaining two thirds to active employees only. >> president breslin: i don't remember suspending that. >> for last june, the policy was suspended again to allow the entire $1,661,000 to be allocated rather than one third. that money was allocated proportionately. that element was consistent with policy but the suspension still allowed for application of the

entire balance rather than just one third. >> again, i withdraw my motion to accept the recommendation. >> second. >> with that, if i may, i recommended item be brought back to the board for an action based upon the discussion of applying the stabilization support or subsidy to deficit to the active members. >> president breslin: our concern seems to be with this plan. how are we going to provide for people that are out of the area that do not have the another choice. generally that would be early

retirees. although it might include other people that are still active in commuting some place. generally it will be the early retirees that we trying to keep afloat here and afford the plan. that's my thinking on this. >> last year's analysis was 7% active employees did not have access to kaiser blue shield plans conversely over half of early retirees did not have availability of another plan. you are correct that most of the individuals in city plan who do not have choice early plans are retirees. >> president breslin: i'll second that motion. is there any public comment on this item? no public comment? all those i in favor.

any opposed. it passes unanimously. >> thank you. >> president breslin: now we're going into the finance and budget committee matters. that will be item 9. >> approval of san francisco health service system fiscal year 2019-2020 and fiscal year 2020-2021 proposed general fund administration budget presented by the finance and budget committee chair rafael mandelman. mandelman i.d. financ --

>> supervisor mandelman: just to highlight, based on the recommended proposal, there's a reduction of $67,058,000 for the budget and $134,115 for 20-21 budget. also there's contingency proposal from the mayor's office 1% can is $33,529 reduction. on the procedure, there's no change in the number of procedures. impact o of the reduction was enough to be big impact on the

contracts. with that, that's the only line item that we got with the 12% budget. impact of that will be $101,196. additionally, we had services requesting additional funding. there's -- funding will be $354,000. the budget and finance committee approved the budget this morning and presented to the board for full approval. do i hear a motion to approve the 2019-2020 and 2021 budget?

>> president breslin: i move to approve the budget. >> second. >> supervisor mandelman: any questions from the board? if not, any public comment. budget unanimously approved. >> i like to thank commissioner lim for making this such a painless process. >> item 10. approval of the san francisco health service system fiscal year 2019-2020 and fiscal year 2020-2021 proposed healthcare sustainability fund budgets.

presented by wilfredo lim. >> commissioner lim: for the budget, we have a surplus that will be getting forward for the following year. predicted revenue for 2019-20 is $2555 budget. it brings total revenue for 19-20 to $25,084. our budget total expenditure is

$4,596,000. it gives us a balance $687,000. getting the next year's budget, revenue will be $3.3 million and total expenditures would be $3 million giving us $332,000 surplus for 2020 budget.

one-time expenditures, replacement of the telephone system, primary payment -- [indiscernible] any questions?

i need a motion to approve? >> i move that we approve the sustainability budget as presented. >> second. >> commissioner lim: any discussions any public comment? seeing none. budget is approve unanimously. thank you. for the finance and budget committee. thank you. >> president breslin: thank you. now we're down to finance and budget we're on to our regular board meeting matters. item number 11. >> it's the president's report. the report is given by president breslin. >> president breslin: i have nothing to report. is there any public comment?

seeing none. item 12 please. >> it's the director's report. report given by executive director yant. >> thank you. good afternoon commissioners. i want to point out two pilots from my director's report. before i start, i was doing all the staff acknowledgements, i realized this is intense time of year for our finance division. i want call out pamela lebanon and her team who is putting together the budgets and audits and rates and benefits simultaneously. it's like magic. so thank you pamela and your team for the efforts that you have putting us all together here. as a reminder, we are still in the vendor blackout period. we are having our renewal meetings now with our vendors. you will hear the annual report

shortly and we already spoke to the website going live, which was really quite exciting for us. we're continuing to work towards the development of a risk management policy for the department. we have many components if place. i have met with the director risk management services for the city and we will be scheduling an assessment of our department in order to form a plan and any activities that we may need to undertake. we are very optimistic about actually gettin getting this new telephone system. we continue to have an outstanding relationship the department of technology and our scheduling meetings and ordering equipment. it really does look like it's going to happen. we will have the challenge of identifying new telephone numbers. we do know that we can keep the main numbers the same for a

period of time while we determine how best to transition to new phone numbers. it's very likely that we will have the new area code of 628, which is always difficult for people to adopt. we'll take our time getting there. i did want to point out that we mentioned during our strategic planning process, we were exploring with the treasure of tax collector office about financial well being. they've been excellent guiding us on some of the choices that we made going forward. one the ones we're looking at piloting later this year is working with all expansion of the services already in place for the general public. which is smart money coaching. we have the opportunity how we can partner with the city agencies that are offering those services and add a piece of the contract to it that we can offer to our members to have symptom

financial coaching and well-being. depending how that goes, we would consider expanding it. we have the physical capacity to do it within our offices. we think we could launch this later i this summer. the other area i didn't write about the report is how we approach the student loan challenges that are out there. it is true that many student loans for people that work in government, there's some distinct advantages for being able to get some of that loan forgiven. it's very complicated. there's a lot of vendors out there. we'll with the treasure tax collector look how would consider about going about vetting these type of services.