and guidance is very much appreciated. next slide, please. port staff identify ways to facilitate the ability to manage rent forgiveness which requires the lease amendments. as shared on may 12th, charter section stated anticipated revenues of 1 million or more or a term of ten years or more must be approved by the board of supervisors. providing deeper and broader relief such as rent forgive next would trigger amendment under section 9118. it presents a challenge to the implementation of an efficient program and while this does not impact our entire portfolio, it covers many of the port's major

attractions. this would require approval under the charter. port staff work with the city at minimuadministrator. if submitted and approved, they would delegate authority to the agreement -- (audio cutting in and out. (. >> this ordinance will be introduced in june. next slide, please. >> so in summary, we recommend the commission approve the extension of the broad-base rent referral through july 31st. we want one minor amendment that

is attached on your staff report. on the second page of the resolution, the second clause should be rewritten to read, whereas on may 17th, the health officer earne issued a nw order to shelter in place. staff is looking forward with relief measures with the commission and our tentants. next slide, please. so in terms of the next steps, we envision taking the opt-in program and the discussion on continuing the discussion on rent forgiveness on june 9th. if approved, we would launch the opt-in application period of the extented perform from june 15th and july 15th. on the july 14th commission meeting, we would continue

discussion on further rent relief. on july 31st, this won't be the closing of the broad-based deferral program and august 1st, the launch of the rent deferral and then in the summer, we could take potential action on further rec relief as contemplated today. next slide, please. i'm here to answer any questions that the commission or members of the public may have on this item. thank you for your time. >> commissioner, is there a motion? >> to moved. >> second. >> open it up for public comment on 8c and members of the public who are joining you on the phone. the operator will provide instructions now for anyone on the phone who would like to provide public comment. >> thank you, president brandon.

we will open the cue for anyone on the phone who would like to make public comment on item 8c. >> operator: the conference now in question and answer mode. to summon each question, press 1-0. you will be entered into the cue. dial 1-0 if you wish to make public comment. >> is there anyone on the phone? >> operator: question, it looks like three callers on the line at this time. >> thank you, please open the line to the first caller. >> you have three questions remaining.

is there a caller on the line? >> operator: caller, your line is open. we cannot hear you. caller, can you try to dial 1-0 to exit the cue and 1-0 to reenter. shall i move on to the next caller at this time? >> yes. >> you have two questions remaining. >> hello, president brandon. can you hear me ok?

>> yes. >> my name is drew harper and i entered a letter in the public record at the last port commission meeting and i hadn't heard anything back and thought it be wise to speak to you today. i've been a tenant of the port for 35 years, having paid millions of dollars of rent for two small businesses at south beach harbor, a sailing school and excursion company. these are uncertain and stressful time for all tenants of the port, many generating revenues of over the sunny monthsfus of the year. your tenants have no opportunity to make money and little opportunity to afford steep rents the port charges for water access. we also find ourselves in an

unusual situation that the port is in the city and county of san francisco and we cannot operate or businesses paying 100% of our rent. there's no legal precedence, it is very unusual situation to have the landlord tell you that you can't do business, yet require you to pay all of your rent. i don't see any agenda items specifically releasing the relief. though i appreciate the conversations pressing forked that. toward that. the rent deferment will push hundreds of your tenants to file for bankruptcy. we're not asking for free rent but recen relief. the fact they can remain whole seems unlikely because none of us will remain whole.

i, along with many port tenants have spoken to port attorneys. and i think it is up to the port to which attorneys were afforded to have the conversations with. anecdotally, i thought you should know pier 39 had not charged rent since the sip order went into effect and this is as per my colleague. on that alone in my 40 years of doing business, you have many rural tenants who have provided extraordinary amount of income to port of san francisco and please do the right thing to help your tenants survive this pandemic. thank you very much for the

opportunity to speak and i hope you and yours right main healthy and safe. >> thank you, mr. harper. next caller, please. >> operator: you have one question remaining. >> yes, hi, my name is john valeer. i run -- can everybody hear me? >> yes. >> i've been running a non-alcoholic company for the past ten years and i've been with the port since that time. we've been paying our rent on a month to month basis and we've been good at it. during this pandemic, we lost about more than 80% of our

business, restaurants are closing down, bars and it's been very devastating on our end. and we also have inventory issues. we have inventory that is expired and about to be expired the end of this month in the month of june and a total of $30,000. we have a bunch of customers which all of the restaurants and the bars in downtown san francisco that has not paid since february and this goes up to $60,000. we are still operational 15% to 22% and we are hoping to get forgiveness for the past couple of months and who knows what will happen in the future and anything helps.

we are very fortunate that we did not getn get any grants fron francisco. we did get ppe, but that was just available and that doesn't cover the losses that we're having today. thank you for your time and i appreciate it. hopefully we get some positive news from you in the future. >> thank you. we really appreciate your comments and i'm sure you'll be hearing from the port. thank you. >> any other callers? >> president brandon, no other callers wishing to make public comment. >> seeing no callers on the phone, public comment is closed. >> thank you for the

presentation and this has been an ongoing discussion and i know a difficult one and i think you and your colleagues on staff have been thinking through this issue very carefully as we do. i think one of the things we should move forward with the things you have discussed here, but we know that as the tenants before us just mentioned their difficult situation, i think in order for us to have a full picture as port commissioners, there's one thing, unfortunately, none of us wanted this pandemic and it's something we're all victims of. and we already said that under normal circumstances, we had hoped to have a revenue of 98 million and we've lower the the forecased theforecast to 75t know what it would be if the team took a look at it. what i'm interested in knowing, knowing that it is dallaire we e

to share the pain but, unfortunately, we're not the federal government, so that we just can't print money and have stimulus that way. we are not in a position to do that from the standpoint. but we sh what i need to know, e talk about further discussion on rent relief or forgiveness, i need to know how the port is going to fiscally sustain itself during this period of time, because at some point, what is our cash position? what is our cashflow position going to be if we look at some of these programs. we need to look at both sides of the equation. where will our cashflow come from to sustain us and the tenants through this difficult time? i don't have that part of the equation at the moment and katie, you're in the hot seat and i'm sure at some point, you can give us a clear picture.

i think we should answer that as we consider all the other measures going forward because we have to have a balanced picture. if we did some things that have been proposed, would we be able to sustain that on the long-tem? long-term? we need need a balanced view because we can't put ourselves out of business but i don't think it will be that dire but i don't have enough facts to be comfortable to consider more measures until we have some facts is figures in front of us to balance out how this should work going forward in the longer term. the program makes sense, but as we go forward, we need to have the port side of the equation put in front of us before we make further decisions to didn'o forward. we need to know at the end of the day, our mission is to

sustain ourselves long-tem. long-term. we have to cut back as a result of this and that's painful. i'm not concerned about the operational side but i need a projection that shows us what other pain can we take to help or tenants. there will be a point, perhaps, where we can not go all the way and so, we need to explain that to our extents and stakeholders in a fair and transparent way exthat's what we should be doing for the city of san francisco. >> i concur with commissioner owho's comments. that should be forthcoming.

i do support the proposal before us. in totality. i would like staff to do is t to -- if we know now you can answer this, will we cut individual deals with tenants or is our plan to group tax associate with tenants and implement inequity to the tenants on a certain set of facts? >> commissioner, at this time, there's no set -. (audio cutting in and out). >> i will say that a proposed fd39 bill does present some challenges, the way that the bill is drafted would require to

negotiate in good faith with each of our tenants and so, i imagine that we will be watching this very closely as we -- it is our desire to have a relief program because some sectors have been struggling more during this time than others.

>> i would like to see if we'll treat the sector groups the same or are we going to negotiate each one to the best of ourability anourability and a gr with a good team may get a better deal than someone without a team negotiating by themselves. all of our leases will be public and we'll have tenants look at better deals that have been cut than their own deals and do we want to be in that position of negotiating good faith but at a net result being challenged that we weren't forthright.

when it's all over, if they gave someone a better deal, will they give that better deal to all of our tenants? i would like us to walk through this because the leases will all be public at the end. i have shifting a little bit, i have some interest in doing sector programs and having a policy that would affect all of the tenants equally. for example, taking the restaurant sector and i'll call out to the parking lot sector is

two and deleting their minimum-based rent each month and only collecting the percentage rent that their lease calls out for and we would set it -- in my example, it would be for a year. all of restaurant leases would be adjusted to their base minimum -- no minimum resident, just their percentage of business and we would be their partner and we would do that in my example for a one-year term and we're treating every single restaurant equally across the board. a decision like that would actually mean no rent or the actual shutdown from february 26th to the day it's lifted. i would like us to have these types of discussions so we know

how we want to innerface with individual tenants and the collective results that we hope to get out of this. that concludes my comments, madam president. >> commissioner bealman. >> first of all, thank you so much for the report. i want to reiterate that commissioner's comments, i'm in alignment with them. i want to expand on what i would need to move forward from this in what i would think would be a

good conversation. i agree with the sector-by-secker approach. sector-by-sector approach. we node these approaches. when you look at the stack report and the information you gave us, particularly on page 4 and then even geographically on page 5, each sector is reacting to the pandemic in very, very activity ways andifferent waysde restaurants in parking as an example where we have high participation, it's very different than our harber facility's rent and i'm using this to illustrate a higher percentage of payment. so i want to see the staff break down from a sectorrer approach of how we'll provide relief to

the tenant. i think we should be grouping large projects like pier 70 and mission rock into separate categories due to their size in scope. if they're seeking rent relief. and i do think we should be exploring some of the comments made from the letter be received, the ability to do new terms, the example that about raising base rent so that we are in this together. i don't think any of us can assess when the public is going to feel comfortable returning to the waterfront to engage in businesses in a meaningful way. we will see a rush in the beginning when the restaurants are allowed to do dine-in service and i think knowing the answer to that and i think that we knee to be in partnership and

we don't want a rash of our businesses going under. and i think we also need to weigh the fact that while we're an enterprise department, we're part of the city and county of san francisco and do we want to be putting -- this is a question from my fellow commissioners. i don't have an opinion formed yet, but do we want our businesses applying for loans to turn around and be providing that money to the port? i just called that as a question to play to the larger ecosystem with the city and resources that are available. and i agree with you we need to track carefully the 939. it could have a major impact on us and i think port staff should reach out to the mayor's office to understand what the city and county's overall position is since it would have a broader

effect. those are my comments to the things i would like to see discussed with some of the information. i would like to see when we enter that conversation and also sector by sector projections of what those -- if we were to do rerent reef relief, what the nus would look like and how they tie back to the port. >> thank you. vice president adams. >> wow! i definitely want to proceed with caution going down this row. road. i see all of the major companies here filing for bankruptcy, like jc penny and pier 1. i have so many questions and i

agree with the commissioners, there's a lot of questions and i'm about to supporting, but we have to use a lot of caution because all of our business will be like an open book and someone would think they got a better deal than someone else and to negotiate a lot of different things, we have an obligation to help and i want to know, will we be getting federal stimulus money or any money from the state. but i think this is a painful conversation and i don't think -- i can support this today, but i think this is a long, long discussion. this is one of the biggest decisions this commission has to made since i've been on the commission to to that and it cannot be taken lightly and this can't be for public servants. i have to take it lightly as we

go down this path. i'm done, president brandon, thank you. >> thank you so much for your participation and i know a lot of thought has gone into this. and i support what we are discussing here today. we definitely need protection to understand how we're going over this. we have to add it sector by sector. we have to take into consideration as commissioner adams said the local support. there's a lot that goes into this and i the port commission said, this will be a huge issue and effort. so the more commission we have, the better and maybe more than one conversation. this may be a continued conversation. this is so fluid and things are

changing and there no one size that fits all. there will be a lot that goes into making this decision thank you so much for all that you have done to date. any other comments, commissioners? a motion and a second. a role call vote. pair operato.(role call). >> the motion is unanimously and 2077 is adopted.

>> item 9 is new business. >> commissioners? , any new business? seeing none, can i have a motion to ajourn the meeting. >> motion to ajourn. all in favour. aye. role call vote. pair thanthank you very much.

>> announcer: you're watching "coping with covid-19." >> hi, i'm chris manus and a you are watching "coping with covid-19." today joining us is susan girardeau of the california pacific medical center. and mow to cope with emotional stress of a major daf. she's here today to talk to us about how to help young children cope with this ongoing pandemic. dr. girardeau, welcome to the show. >> thank you very much. >> let's start by talking about some of the issues that 5 to 11-year-olds might be facing. what are some difficultties they might be experiencing during this pandemic? >> the biggest difficulties that all children experience is

fear and anxiety and it's displayed in a variety of different ways. the kids have a fear of a family member getting sick or themselves getting sick. they have a fear of separation. obviously with our quarantine, all of us at home, children still have a fear of separation in own home, which means from room to room, that they cannot be home alone without a parent. it is very difficult and even at night to sleep in their own bed can be a problem and an issue that is under the umbrella of anxiety. the other parts that play into it is the anxiety of when will this end?

as we know currently, we don't know and that is the most difficult. and all kids, their peers, are an important part of their development. so it is often asking when can i go to school? at this point, they are very tired of online school. when can i take my friends and when can i see extended family? >> right. what kind of indicators are there that a young child is struggling right now? >> particularly behaviors that are really across the age spectrum of 5 to adolescence is sleep disturbances and increase in nightmares and in the younger kids, night terrors. woe see across the age speck trup, fear of the dark. the other behaviors that we are

seeing is the regression in their normal developmenttal tasks. for the younger child and as i referenced sleeping in their own room. other types of behaviors that parents or caregivers might see are meltdowns over relatively minor issues. often we're seeing a decrease attention and focus, especially with online school. we're also seeing headaches, stomach aches that we typically see when there is stress and trauma. >> i see. let's say we've realize add child is having difficulties. are there specific ways we can talk to them to get them to open up, perhaps phrases or ways to ask questions that will encourage them to share their concerns? >> there are a number of ways. number one, the biggest thing that parents can do is to really listen to their child.

often times we're rushed. we are working parents, plus as well as now teachers online as well as playmates. so, to pause and really listen to what their fears are. as parents, we often don't get down to a younger child's physical level, look at them and listen to them and talk to them directly. i often use the technique of nailing a feeling and kids often times -- they're not going to, especially in times of stress, come up with this feeling that they can name. so, i recommend to parents always of naming three feelings. happy, sad and mad. and you've been through those three. not frustration. but just nailing it to those three.

another technique that i highly recommend is to use the third person. in a way such as i have heard other kids say that they're scared and they don't know why they're scared. do you think that happens with you sometimes? this is a way that kids feel much safer in talking about their feelings because they don't feel like they're on the spot, but other kids are feeling that same way. >> i understand. do you think that there is secondary concerns for kids as concerns are gradually lifted? i know one small child frightened to go outside right now. >> yes. and we're seeing that already right now. because with -- as one -- as restrictions are lifted and we're able to go outside, you

know, people are wearing masks and that can be very frightening. even if halloween. many kids won't wear a mask. children under 2 do not wear masks. under 7, they don't have to. but over the age of 7, it is highly recommended by the c.d.c. that kids wear masks. that is going to be difficult. so, what i've recommended is for kids to make their own masks. they can make their own designs on the paper surgical masks. and so it is there. they can't put [inaudible] on it, whatever makes it feel a lot safer for them. other things that i have heard are kids are afraid to go outside. i heard this from a number of families because they haven't really been able to do so so they're afraid they will get sick. i recommend that families start very small steps and the first

step is take a ride in the car. that is the first way to go outside, windows down. and if you have a sunroof, open the sunroof and unbuckle the seat belts or car seat and be able to stand up and that is a small step to feel like the outside might be safe. so, it has to be in small steps for the fear it is going to be exacerbated. >> absolutely. so, could you tell me a little bit about your book, disaster shock? >> yes, "disaster shock" has been originally written for the 1989 earthquake in san francisco. this has been a number of disasters since then and families in 1989 gave us the feedback that it was extremely helpful because there was really no literature available

on how to help children and families that haven't talked to them. unfortunately our natural disasters increased with tornadoes and the last wildfires affecting northern california. it has been updated again for the pandemic. >> right. and finally, what would you say to parents about how to talk to their kids in general? could you suggest some good ways to re-assure them? >> a few ways that i have been suggesting is, number one, you have to be honest. about what you know. and be able to explain in developmentally appropriate terms what is happening. and that we are all learning. we don't know. there are many things we don't know. but that parents need re-assure the kids that they are safe, that the family will be together. but they need to be able to get

the kids a little leeway, so to speak. and i'm not saying not disciplined, but what your discipline techniques may have been before may need to lighten up a little bit because these are very unusual circumstances for adults, but as well as for kids. but i always suggest and recommend that parents be honest with the kids because that is the trust that children have in their parents. parents must be really aware their kids will hear, they will read their body language and understand the anxiety we all feel, but the parents need to be honest that they -- the kids will be safe. >> i understand. well, thanks for coming on the show, dr. girardeau. i appreciate the time you've given us today. thanks again. >> you're welcome. >> and that is it for this episode. we'll be back with more

pandemic-related information shortly. thank for watching.

>> all right, president breslin we're good to go as long as you're ready. >> president breslin: the san francisco health services board will come to order. commissioner secretary, will you give a presentation on the structure of this meeting. >> clerk: yes, very briefly. we would like to remind everyone who is livestreaming at home that this is a special meeting and it has limited agenda items so we're not presenting the following items on our agenda. the general public comment. the approval of the may 14, 2020 meeting minutes. the director's report. the president's report. the financial report. updates from the health plan

representatives overall. and agenda item requests. additionally, we are going to begin public comment with three minutes in length. all public comment should be made concerning the current agenda item that has been presented. again, any public comment made outside of the current agenda item presentation will be asked to hold their comment and remake their comment during the appropriate agenda item. next slide, please. i will not review all of the instructions for public comment. but there will be a public comment slide at the end of each presentation for members to make public comment during that time. thank you. >> president breslin: all right. item number 2, please. >> clerk: item 2 is the roll call. president karen breslin. >> president breslin: here. >> clerk: vice president stephen follansbee. >> present. >> clerk: commissioner mary hao.

present. and commissioner randy scott. present. commissioner chris canning. i'm here. and supervisor dean preston. here. we have a quorum, president breslin. >> president breslin: okay. item number 3, please. >> clerk: item three is the approval of the addend an to plan-year 2020, section 125 cafeteria plan and the 2020 health service systems membership rules regarding flexible spending accounts and the mid-year health plan enrollment. this item is presented by mitchell grig fwrch s, the chief operating officer. and, mitchell, you may be muted. >> yes. i'm unmuted now. so, good morning. this is mitchell griggs with the chief operating officer.

and good morning president breslin and members of the board. last september i had the section plan and our member rules for your approval for 2020. and as you know these documents govern our compliance with section 125 of the internal revenue code. and in that governance there are certain restrictions that apply when an eligible member can make mid-year changes to their group coverage elections and it is also our responsibility of the health service system and the health service board's responsibility to enforce these restrictions to protect the benefits pre-tax and non-taxable status. that being said, here we are in may 2020, and the i.r.s. has provided in response to the 2019 covid crisis some guidance under a couple of notices 2029, and 2033, that is providing some flexibility with respect to mid-year elections under the

section 125 cafeteria plan. for the planned year 2020. can we go back to the -- the first slide, please. yeah. so under "purpose." so this applies to our health coverage. also our flexible spending accounts and our dependent care spending accounts. so what i'm doing here -- or what i've done -- is created an addendum to those rules and the cafeteria plan and the member rules as you approved back in september. next slide. so what this addendum does is that it revises the member rules and cafeteria plan and this is based on the guidance from the i.r.s. notices. it applies to employees and retirees eligible for benefits and it allows making mid-year election changes once and to make them once during the calendar year 2020, without a

qualifying event. number one here, this is in respect to medical, dental and vision coverage. and an employee retiree can make a new election. let's say they waived coverage for 2020, and they decide they want coverage now or need coverage now they're able to make that election without any qualifying event. or, b, if they currently are enrolled in the plan they can change plans. and they could also change the coverage level. in other words, they can add a dependent or delete a dependent without any type of qualifying event. and, lastly, under the medical and dental and vision, they can actually -- if they are enrolled for a 2020 plan they can waive that coverage for the rest of the planned year. if they want to do that they do have to test that they have other health coverage that's not sponsored by one of our employers. number two here, this is -- 2 and 3 is in respect to our

s.f.a.s with health care s.f.a.s, they can decide to cancel going forward for the rest of the plan year, cancel their election. they can make a new election if they had not enrolled in a flexible spending account before. or they can increase or decrease their election. and this is going forward. and number three, applies to our dependent care flexible spending accounts. again, they can cancel going forward in the plan year of their election and make a new election or increase or decrease the election they have made for the plan year 2020. next slide. so the next one, which is based on i.r.s. notice 2033, is specific to health care flexible spending accounts and this is our carryover provision that we currently have in our health care flexible spending accounts. typically i would ask you to approve this, again, this september for the following

2020-2021 plan year but i wanted to include it in the addendum now so that members get notice that this is changing so they can better financially plan what they're going to do with their health care flexible spending accounts. what this notice from the i.r.s. does is increase the carryover limit from $500, for 2020, to $550. and to make sure that you all know that the carryover is the money that you have left over that you don't spend in one plan year. you can carry it over to the next year, up to $550 for 2020-2021. just as a note here, the i.r.s. is not requiring employer groups or those leading the group to make those changes. it's completely up to the employer and it's on a go forward basis. and it does have to -- if you decide to do these -- you have to make sure to follow the

non-discrimination rules. that means that you can't just give it to one group to be eligible and not others. next slide, please. we will be implementing this with a communication plan, mostly web-based meeting with the department, personnel officers within the city, emails and we'll be working with our other employer groups and the superior court so they can apply and send these notices out -- or a notice about this addendum through their communication channels. so basically h.s.s.'s recommendation to the board is that you approve this event and that modifies the two plan documents, our section 125 cafeteria plan and the sfhss rules to make them consistent with the notices from the i.r.s. and those allow employees and

retires who are eligible for benefits to make mid-year election in the calendar year without a qualifying event. any questions from the board? >> vice-president follansbee, m.d.: this is commissioner follansbee. if this is approved today this is up for reapproval in september when we normally would approve the recommendations for the following 2021 years? >> so the guidance from the i.r.s. is that this only applies for 2020. the only piece of this is the notice 202033, which raises the carryover from $500 to $550 for sfhss h.s.a. but the other 2029 is the

medical plans and the vision and the health care flexible spending account elections only applies for 2020, and this would be amending the current documents that we had out there that you approved back in september. >> commissioner scott: this is commissioner scott and i move that we accept the staff recommendation. >> president breslin: is there a second? >> commissioner canning: i second. >> president breslin: okay. is there any public comment on this item? >> clerk: at this time we're going to go into the public comment section for this item. we're going to give the numbers at home a few minutes as there is quite a delay between this live event and the feed that is being given to members through sfgov-tv. so i'll pause for about 30 seconds to allow for people at home to catch up to the questions that were asked and for them to join the phone line

at this time. >> clerk: moderator, can you please up the phone line for our first caller. >> you have two questions remaining. >> hi, just want you to know this is commissioner zvanski and i'm only through public comment, i somehow can't connect through the computer. so i apologize. i have no questions and i support thests, so please record my vote as being supported and on the board. and i apologize again.

i am reaching sfgov remotely and it's the only time that i attend the board meeting at this time. thank you. >> clerk: thank you. moderator, can you please up the call line for the next caller? >> you have one question remaining. >> good morning, commissioners. thank you for everyone's work to provide flexibility to all city employees through this agenda item. my comment is related to addendum item 2 about the changes. as described on page 2 and page 5 of the attached notice 202029, the i.r.s. now submits the cafeteria plans such as ours to apply unused balances to pay for or reimburse medical expenses near the end of the year, december 31, 2020. and how this would apply to the

city is that the grace period for unused balances had already ended back in march. and i wanted this to ask to extend the grace period through the end of the 2020 calendar year because the grace period, again, had ended in march to provide additional to all employees and if there's future addendums to any future addendums planned for rollovers and balances of this calendar year 2020 as allowed by notice 2020-29. thank you for your time, commissioners. >> clerk: thank you, sir. moderator, are there any callers left in the queue? >> you have zero questions remaining. >> clerk: thank you. president breslin, this concludes public comment. >> president breslin: okay, we

have a motion on the table to approve addendum to section 125 cafeteria plan and sfhss membership rules. all those in favor signify by saying aye. >> aye. >> president breslin: any opposed? it's unanimous. all right. and now we'll go into our raise and benefit section and i remind everybody that this is a continuation of our may 14th meeting and there were many public comments at that meeting. and the recommendations, the staff recommendations remain the same as that meeting. but i will limit the public comment time to one minute. and i appreciate any of those who had comments at the other meeting, if they may consider not re-commenting if there is

nothing changed, but that would be up to you. so i'd like to have director to maybe explain how the rates and benefits works. >> thank you, commissioner breslin. this is the executive director of health service system. thank you to the board for adjusting your schedules to attend this special meeting today. as we know, setting rates and benefits on an annual basis is a very rigorous process. it is not easy to do. and indeed sfhss was created to have this primary role of working with actuary services to determine the best rates on behalf of our members in san francisco. our actactuary we'll hear from shortly to determine what the

rates are for the coming year so those negotiations that occur take all of that very sophisticated mathematical analysis into consideration and is a process that is standard in the industry. and it can be difficult to understand. certainly, we've all done a lot of study. there's educational videos on our website that explain how rates are set. because we do -- we do realize that it is a difficult science for people to understand and so we do our best to make sure that the public understands and that our members understand how we do this. we do stand by the recommended rates that were submitted to the board last week, or two weeks ago, and that enables us to ensure the same level of coverage that our members have come to expect. so it's important that we recognize that there's no changes in the coverage of the benefits that our members enjoy.

a very rich health benefit in san francisco that is guaranteed to our members through the charter and health ordinance. so it's our job as the health service system to administer these benefits and i think that most people recognize that we're on a very, very tight timeline every year to get these rates approved by the health service board, approved by the board of supervisors, so that i.t. systems can load in all of the data, the communications team can prepare the outreach material, and that can all drop and be ready by october 1st for our members to enroll or re-enroll in their health plan. that allows us then to crunch the numbers, get all of those new information over to the health plan so that each of us have a valid, effective insurance plan in place on january 1st. so it's a very heavy lift every year and the timeline is extremely sensitive.

so we appreciate having the special meeting to continue this process. i also just want to note that health care costs are increasing and, again, that's a complex discussion that we can, again, have at another time. but we do take into account the increase in utilization of these benefits that our members have been doing, which is good that we are enjoying the benefits. and that the cost of the health care really has to do with the infrastructure of the system, the expense of the workforce itself, and the pharmaceuticals and the technology that are also prevalent in our health system today. so with that i'm going to turn the microphone over to our actuary, mike clarke, who will present the kaiser plan first and then proceed with the blue shield plan and the united

healthcare plan. so, mike, it's your turn. >> president breslin: madam secretary, you didn't read the item yet though. >> clerk: yes, i'll wait for our producer to move over to the slide and then i'll call the item. llt r all right, item 4 is review and approve updated of the kaiser permanente non-medicare rates and premium contributions for active and early retiree members, plan year 2021. this presentation is from mike clarke for aon. >> mike clarke for aon. next slide. i'll present the kaiser

permanente 2020-2022021 non-medicare rates and premium contributions for active and early retiree members. this starts with a rate-setting premise that we included for today's discussions on the three plans. just to help to bring more visibility to our rate-setting process and then how total cost rates allocate to members and employers. then we will dive into the 2021 plan rating for the kaiser permanente or kaiser plan and present the 2021 rate cards for early retirees and finish with our recommendation and then ask for a statement from a kaiser representative. you cannee appendix items in this presentation. i do not plan to cover them in this particular discussion today but the appendix slides are also

available for reference. next slide. so as we start the rate-setting methodology process on the next slide, we thought that it would be helpful to talk through a couple of different concepts. so if you could forward to the next slide, please. starting with health plan funding. and each of the san francisco health services plans utilize a particular funding method based on how that particular plan is established. and they can be summarized in three different categories which represent the column headings to this slide. self-funded plans are where the claim dollars are based on services delivered to members or paid by the trust, along with planned administration fees to manage the plan. and you can see in the second row the aon actuary uses fees

for self-funded plans. and a particular example that i'll talk through later today is the u.h.c. city plan. and the second is for the two blue shield plans and, again, i'll review those in more detail later today. but for high level summary, flex funding is an insurance approach where most claim dollars based on services delivered to members are paid by the trust, with six costs for certain health care services called capitation as well as planned administration fees and large claim re-insurance, that pooling mechanism that occurs at $1 million per participant annually. and here the aon actuary, myself, is doing those with cost assumptions that i validated as the ac actuary and the large clm

pooling fees. so in this particular presentation we'll focus on fully insured. as you can see towards the bottom of the third column here all kaiser plans to sfhss members are fully insured. the funding method of fully insured is that the health planet sets fixed dollar premiums to cover expected claim costs for health care services by members as well as the administrative fee costs incurred by the plan. and a very important distinction is that second row in the last column here, who sets the recommended sfhss plan rates for fully insured plans. for these fully insured plans it's the plan's actuary, using planned cost assumptions, but assumptions that i carefully scrutinize as the aon actuary

and along that the administrative fees and any large claim fooling adjustments and required legislative fees. and there's a large claim pooling neck nymph in the kaiser plan very similar to what is described on this page for the blue shield plans. so we just wanted to start with the perspective distinction of the funding methodologies as well as my involvement as the aon actuary on behalf of the health service board in setting rates for each of these programs and in particular on the fully insured plans, it's the planned setting the rates but with careful scrutiny by myself and certainly working in conjunction with abbey and her team at the sfhss staff. next slide, please. so this process is what we use

as actuaries to develop the plan rates that you'll see today. both for the kaiser plan in this presentation as well as the blue shield and the united health care rates that we'll see in later presentations. we start with the prior period claims, a base of experience that's used to then to project forward, applying health care trend inflation factors, so that executive director referred to civil of these factors that drive ever increasing health care prices, including the price of services escalating. so how the physicians and the laboratories and the health systems and the hospitals are reimbursed for care. planned utilization. so as we grow older, it tends to lead to greater use of health care. and so any changes in plan

utilization also factor into the health care inflation factor. and then new technology. there are always new technologies supporting patients with medical care. new prescription drugs. many of these are commented upon in the media at times, which are phenomenal new technologies that do help promote better health, better outcomes for patients. but, certainly, as these new technologies are developed they typically come at higher price tags than predecessor technologies. so after we apply the health care trend inflation factors, then we account for any plan design or head count changes and for sfhss, the -- there are no plan design changes proposed for this cycle. and the enrollments by plan tend to remain relatively consistent from one year to the next. so for sfhss, this is a very

minor element of the process, but a part of the process, nonetheless. we add administrative and other fees that i've talked about earlier slide from the health plans. and then also sfhss specific cost elements such as any adjustments to the rate stabilization reserve application and rates, or the $3 sfhss health care sustainability fee. so those are the final component added into the determination of rates. and then the next step is that the aon and plan actuaries compare the next year cost projections to the total current year dollars when we multiply the existing rates. so, for instance, right now for 2020 rates, times current enrollment in 2020. so that leads to the needed percentage change in rates from this year to next year.

and the bottom of this slide illustrates the calculation that's done, bottom line, you're taking the 2021 projected plan cost, divided by the 2020 rates times enrollment, to determine what that needed rate change factor is going into the 2021 plan year. next slide. so revisiting the slide that we presented two weeks ago, this cycle renewal efforts for each of the plans is focused on understanding how plan costs in 2019 -- so that is the foundation of costs used in these projections, the first element of the five steps that i talked about on a prior slide -- and how those plan costs are impacting the 2021 rate actions as well as seeking opportunities to enhance member support from the health plans that you'll hear from today. so this is the summary of rate

actions and for the blue shield plans, the u.h.c. plan it's the after-rate stabilization rate adjustment because that does apply as we looked at two slides ago. for the kaiser plan for this specific presentation it's a fully insured plan. so there is no rate stabilization applied to the kaiser program. so ultimately this presentation will recommend a 5.8% rate increase for the kaiser plan for active employees and early retirees. next slide. this slide captures the total proposed cost rates for 2021 for each of the plan plans that we'l present today. you can see kaiser at the top of the page with the red oval, given this specific presentation, but you can see the comparison and the total rates which include not only the

base premium rates from each the plans but then also the core vision costs that we add to the rate cards as well as the $3 sfhss sustainability fee. and you can see how these total costs on a monthly basis compare from 2020 to 2021, as well as the dollar difference and the percentage difference for each plan, for each major population grouping, the active employees and the early retirees. and within those groupings, each of the three dependent coverage tiers, and the single tier and the two-party tier and the full family or the member plus two or more dependents tier. next slide. and then we'll close our prelude by examining the -- how rates are distributed once total cost rates are calculated into employer and member

contributions. this particular example captures the city and county of san francisco employees and the two primary contribution-sharing approaches that we present in rate cards in this material. so one set of employees is a 93, 9383, which means as you can see on this chart for the employee only tier, the employer is paying generally 93% of the total rate. and the employee is paying 7%. and for the employee plus one tier, the same 93% employer and 7% employee sharing distribution. and for the employee plus two or more tier, 83% paid by the employer and 17% by the employee. on the bottom of this page you can see the 100/96/83 approach.

where the total rate is fully paid by the employer. so no employee contribution for the employee only tier. and 96% and 4% distribution, the 4% is a little cut off in this exhibit, but it's 96% paid by the employer and 4% by the employee. and then for the employee plus two or more tier, the same 83%, and 17% distribution is shown above. i do point to the footnotes here because there's two very important footnotes just to examine. so, first, the footnote number one is th the contribution apprh as shown above, but the other employers and sfhss plans, the san francisco unified school district, the city colleges of san francisco, and the superior court, and the m.e.a. employees all have their employer specific

contribution-sharing methodologies for active employees. and so total cost rates for these other employers are also segmented by distribution formulas into an employer and member contributions based on those particular employee agreements. and then the second -- and we'll focus on this when we present the united health care rates later today, for the highest cost plan for city, county of san francisco employees based on m.o.u., the employer contribution dollar amount or set for the highest cost plan to equal the employer contribution dollar amounts for the second highest cost plan which happens to be the blue shield access plus h.m.o. except for the employee only in the 100 swlsh 96/83 approach where the member pays no contribution for any plan. next slide.

for retirees and specifically early retirees in this chart, the city charter provides the formula for how contributions are set for employers and members, how those total cost rates distribute into employer and member contributions. this chart illustrates the three elements of the city charter employer contribution formula. we start with the light blue, so the lowest part of these three color bars. the light blue is the same amount for all plans, a monthly dollar figure that is calculated each year and presented and approved by the health service board in march to represent the average contribution being made across the 10 most populous counties in california, other

than city county of san francisco. so this is the first basis of the build of the employer contributions for early retirees. the second is what's called the actuarial difference. it's a plan-specific amount that is the same for all tiers within a plan and this is the difference between the retiree-only total cost rate for a plan, and the employee-only total cost rate for a plan. so, again, that's a plan-specific calculation. and then the third element, the gold bar, is the retiree prop e. contribution, which, like the actuarial plan specific, but it does vary in amount between the single tier and the two family tiers. and this is essentially 50% of the amount that is left after

the difference are subtracted from the total cost rates. so you can see in this chart each of the four major plans that are offered by sfhss to early retirees, the blue access shield plus in the upper left and the whether you shield trio in the upper right, and the city plan in the lower left and then this particular discussion's focus, the kaiser h.m.o. contribution in the lower right. these are actual 2020 amounts, again, the rate cards that we'll present today will have the recommended 2021 amounts for each of these segments of the employer contribution for early retirees. next slide. so with that prelude, let's transition to the discussion on the kaiser recommendation. next slide. so to summarize before i present the rationale for this

recommendation, i just want to summarize that staff recommends that the health service board approve today a 5.8% planned increase from 2020 to 2021 for the active employees and early retirees enrolled in kaiser on the plan rates proposed by kaiser for the 2021 plan year and that the resulting 2021 plan rate year cards for the kaiser h.m.o. for active employees and early retirees are contained in this presentation that we'll review shortly. next slide. the kaiser rates and premium contributions for the active and early retirees include the exhibits and, again, i referred earlier to the appendix which shows the underwriting build-up. and the rate cards presented as we reviewed earlier will be for the city, county of san francisco employees and the 93/93, 83 and the 100/93, 83

strategies recognizing different strategies across the spectrum of sfhss employers. and the early rate card shown in this presentation are for early retirees in the full city contribution levels based on dates of service, dates of hire, length of service, with the employer contributions determined based on the formulas i discussed earlier in our outline to the city charter. next slide. the 2021kaiser premiums on a status quo design basis are increasing by 5.8% for medical and pharmacy. there's no planned changes being considered and this follows the 5.9% rate increase from last year. the primary driver of this higher increase is impact of utilization that occurred in 2019 relative to 2018, at a higher level that has been seen

historically in kaiser's data for sfhss. so that overall the increase in kaiser's claim forecast from the 2020 plan year to the 2021 plan year is being influenced by what was observed in actual kaiser experience for sfhss plan members as the plan is rated exclusively on a basis of experience of sfhss members and a collective fashion and an aggregated fashion from 2018 to 2019. there is a benefit in the rating because of the permanent elimination of the affordable care act tax called the health insurance tax. it's permanently eliminated after 2020, so it applies in the 2020 rates, but will not be present in 2021 or any future rates as a result of this tax being repealed by the secure act

in december 2019. so this does create a rate offset that leads to the final 5.8% rate increase recommendation. next slide. just a reminder that when we set the total rate cards we also include not only the kaiser fully insured premiums but also the v.s.p. vision basic plan premiums which are unchanged from 2020. and the $3 health care sustainability fund which i have mentioned earlier today. and, again, we have mentioned the three components of the employer contribution based on city charter provisions for early retirees. next slide. so the rate cards include these population segments which we have discussed earlier. next slide, please. so now we'll talk about the rate cards, starting with -- next slide -- the changes in contributions for the early

retirees and the 93/93/83 contribution strategy for active employees. this table is a way to show the member contributions on a monthly basis. the employee and the retiree contributions. and th that's in the top set of rows. and the monthly employee contributions in the middle rows and finally the monthly total cost rate at the bottom of the page. and you can see that in all cases that there's a 5.7% increase. now the kaiser insured premiums are increasing by 5.8%, but because the sfhss $3 fee and the vision premiums are remaining the same for 2020 to 2021, when we include those in the rate cards, that's what produces a 5.7% on this page, slightly, slightly lower than the 5.8% for

the base kaiser premium. next slide. so this shows a similar view to the prior slide for the figures for early retirees but the 100 100/93 salt lake city 83 strategy for active employees. so you can see the 2020 contributions and 2021 contributions of the total rates at the bottom of the slide as well as the dollar and percentage difference between 2020 and 2021. next slide. this is the rate card itself for the early retirees in the 93/93/83 contribution strategy. so you can see how the premiums compromise of the kaiser insured premium at the very top line. that says premium. vision is that core vision benefit. and expense is the $3 sfhss health care sustainability fee. on the right side of the page you see how the elements of the

city charter contribution formulas plays into this determination of the sub-total of the city contributions and in particular for the single cost tier, the retiree-only tier, the fact that the -- the city contribution will cover the full rate for the retiree leaving no contribution for the retiree only for 2021, as has happened in past years. and then you can see the comparisons to 2020. next slide. and then this is the rate card for the 100/96/83 for employees. you can go forward two slides. again, staff recommends that the health service board approve a 5.8% uninsured plan increase

from 2020 to 2021 for active employees and early retirees in california enrolled in kaiser permanente on the rates from kaiser for the 2021 plan year and the resulting 2021 rate cards for h.m.o. for active employers and active retirees that we have had in this presentation. i'd like to go to the next slide and ask for a statement from a kaiser representative. >> good afternoon, commissioners. i'm kate tesler with kaiser permanente. i, along with my colleagues, appreciate the opportunity to come before the board to engage on the renewal and address any questions that you may have. we have heard the concerns raised at the last board meeting. we take these concerns seriously and we want to reaffirm kaiser permanente's commitment to working with the sfhss staff and the board, especially during these times of uncertainty. kaiser permanente was well

positioned to address this public health crisis long before it appears. that's because of the provider care coverage and our doctors, hospitals, and health plan are all connected, giving us the agility to really act quickly. we don't have shareholders and our earnings go back into serving our members and reinvesting in the quality of care that's always investing in the health of our members and our employer see healthy returns to us. this has not changed in our mission, whether it's providing the unique and the challenging opportunity to test our system and toy are veal the true value of our health care delivery system. kaiser permanente remains fully activated. we're acting swiftly to provide high-quality care and support in the safest ways for both our members and our front line staff. for example, within days we moved to -- we moved over 80% of our member to virtual settings to continue to get the care they

needed in a safer way. no matter how long this pandemic lasts, we're prepared. so to talk specifically about the renewal that mike just presented today, we have looked at most health care providers such as hospitals and clinics and are looking ahead to our expected costs in 2021. our approach to developing next-year rates is designed to allocate our costs in a way that works like each group's consumption of our health care. that's why that risk profile and utilization information is so important to this discussion. in addition, as mike shared, we're offereda as a fully insured health plan, meaning that we take 100% of the risk. its utilization is higher than forecast, sfhss does not owe kaiser permanente additional premiums. as we look at your specific membership, the risk profile is increasing. the claims are higher than the current numbers during the last two years, and overall claims have increased by 8%, when

compared to the will previous renewal experience. and in general your membership has used more services when we compare to our overall look at business. and we will continue to work closely with your actuary and your executive director to monitor these and to jointly identify the initiatives and improving risk and the overall health of your population. we must do our part as well. so while kaiser permanente does provide savings to the city and county of san francisco, with rates 15% to 27% lower for active members and their families, we know that any increase is challenging. especially in this current environment. and we remain committed to affordability in health care. and an important piece of this commitment is through our trends and it's important to understand that in 2021, the medical trend is 2.6% and (indiscernible) are below the average.

2021 is the sixth consecutive year where our average increase for our health plan are at or below 5% and your average increase for sfhss over the same period has been 3.6%. we appreciate the partnership with executive director and the board on the many initiatives that she's led that benefit the health and well-being of the city of san francisco employees. we have had wellness programs, pilot programs such as the recently published diabetes prevention program, and quickly implement covid-19 testing in partnership with city test s.f. there's many more initiatives that we have delivered on during this pandemic and some examples are redeploying staff and making sure that equipment, supplies and staff members are where they are needed most. and building on our existing tele-health infrastructure to have zoom appointments so members can get care from the comfort of their home. and expanding access to

prescriptions and increasing mailorder capacity and curbside pick-up. we have also adapted and innovated to improve on how we connect to members and customers including weekly emails with up-to-date information about care, resource and support. we don't know what the rest of this year and 2021 will bring with respect to covid-19. but we do know that we're continue -- that we are prepared to continue to provide the highest quality of care for the city and county of san francisco employees and their families. we value the partnership with sfhss and the long-term relationship that spans many decades. again, we appreciate this partnership and the time to address the board today. thank you very much. >> thank you very much. let's go to the next slide and president breslin, i'll turn it over to you for commissioner discussion. >> president breslin: yes, i wanted to know if there are questions from the commissione commissioners.

>> commissioner canning: this is commissioner canning. two questions related. the first, mr. clarke, or madam kessler for kaiser, has the methodology for classifying out layization by our members, has it changed since the same process last year? >> yeah, i'd like to defer to kate to talk through that process. >> yeah, absolutely. and i'd like my colleague lorrainea who is our vice president of underwriting to address the board on this topic. >> thank you, kate and mike. thank you, commissioners. and president breslin. so to answer the question, we continue to use the same rating methodology year-over-year as it applies to our customers.

as mike discussed in the presentation, we use the utilization and experience from the most recent period which is 2019 calendar year experience, to determine and to project forward the projected utilization and the cost prospective in the coming year for 2021. and we use this methodology consistently for all of the groups that have 1,000 or more average members and so it's applied uniformly and across the board. does that answer your question? >> commissioner canning: thank you, i believe that it does. and the follow-up question to that, likely to be directed to you mr. clarke with regards to aon's procedure for corroborating on kaiser's

methodology. is aon's methodology consistent? i just want to make sure -- is it identical to their process or is there an industry standard that is followed for those results? >> sure, no, the underwriting process is very, very similar. i would say that kaiser is very prescriptive with things like demographic adjustments from one year to the next. and they may apply certain formulas and certain factors, for instance, in their underwriting to produce any sort of demographic adjustments or perhaps any minor design changes that may be required by state law, state regulators as an example with kadiser as the underwriting plan. as the aon actuary on the self-funded plan have a

different fund rate on our national forecast that we're gathering as well as the bay area forecast versus kaiser determining their projected trend rates and their underwriting. so, for instance, that is a difference and rate forecasting is using a specific trend that they develop, but, certainly, with my scrutiny as the actuary on that particular assumption, it just so happens that this cycle that the forecast kaiser trend in their environment is a lower figure, it's a lower perseasopercentage that apply ir underwriting than, say, i would use in the self-funded or flex funded rate productions. does that help? >> thank you, thank you both. >> commissioner scott: this is commissioner scott. i understand that you're saying that the experience during this period in 2019 was higher than expected in terms of

utilization. what kind of claims or issues were present in our population that drove this increase? >> yeah, thank you for the question, commissioner scott. i will start just based on my review of the kaiser data and then certainly encourage if i may have missed anything for kaiser representatives to comment after. so what we saw, for instance, was primarily related to both in-patient services and out-patient services in terms of increases in planned utilization. on the in-patient side we observed increases that were most pronounced in the surgical category for in-patient as well as the mental health category for in-patient. kaiser did inform us that the

level of surgical in-patient utilization for 2018 was lower than they had observed in the past and so, for instance, 2019 was elevating to more of a level that they may observe with other public sector clients. they noted that, you know, increases in particular surgeries related to cardiac care, pancreas and liver procedures and a couple of high cost, high number of stays, particularly in-patient surgeries, led to this increase in the overall utilization there. and then on the outpatient care, the items that were most pronounced in terms of substantial increases in outpatient care were in the category of mental health, as

well as radiology services. and then also some pronounced increases in the cost of care, the cost per service, for outpatient surgeries, outpatient mental health, and laboratory, all of which were in double digit percentage increases exceeding 10%. some going up as high 40%, 50% increases in those particular elements. and i'll ask a kaiser representatives if there's anything further to add on to commissioner scott's question. >> thank you. and again to just follow-up. just a few things that i'd add as mike was describing for the in-patient surg surgical catego, one of the areas that we observed was in the cardiac area

where we did have a heart transplant that we saw. we also had some other areas such as cardiac valve replacement and cranial and vascular procedures and coronary by-pass in addition to the pancreas and the liver procedures that mike referenced. so what we did see in 2018 utilization, as mike mentioned, that the surgical category was at an historic lows that we have seen and that as mike referenced that we're seeing it come back up to higher levels than what we have seen in the norm prior to 2018. on the outpatient side in addition there was also an increase just in general overall in outpatient visits for adult medicine as well as pediatric medicine which, you know, one of

the key focuses that we have at kaiser permanente is making sure that people are getting with their wellness and their care and so, you know, seeing the pediatric visits go up as well as ob/gyn for prenatal care and other different types of adult visits, actually helped us in, you know, pit greating and understanding how to really manage the care in both an outpatient and an in-patient setting. another area was that we did see an increase in the oncology and that increases not only in visits but also the radiology and lab as well.

>> commissioner scott: this is commissioner scott. do you have a follow-up? i didn't know if you -- >> no, i'm finished. i wanted to have a broad understanding of this utilization driver. and that was pretty complete. thank you. >> thank you. so, yeah, and i have a number of questions and i want to start by thanking mr. clarke for the presentation and miss kesler for being here and available. also i wanted to just step back and to recognize and thank my colleagues on this board for the -- i think the decisive and unanimous action at our last meeting to eliminate the plan redesign that would have increased co-payments for city workers. i think that was an important thing, especially during -- during this time when everyone

is struggling. i think that it sent an appropriate message that we are not in favor of and do not intend to approve co-pay increases that burden members and effectively discourage folks from accessing health services. so i just wanted to appreciate my colleagues for that and glad that we're considering before us an option that does not include the co-pays. i am a bit concerned, obviously -- i mean, no secret that i come to this as a supporter of universal health care and i believe that health care should be free for all and working or not, wealthy or not and nothing in my lifetime has confirmed the need for that more than this pandemic and its disproportionate impact on essential workers and people of color. so i, of course, am troubled by any proposed kaiser rate increases, and also have had a chance over the last week in particular to talk with a lot of labor leaders and other folks on

the front lines concerned about a -- some of the concerns they've raised. but, you know, i wanted to ask some specific questions here on the method of calculating. i fully understand the presentation and the fact that the forecast is really based on the 2019 utilization data. i'm wondering if clarke or miss kesler can look forward -- i mean, my understanding is that we're seeing decreasing utilization rates now. so if that trend continues, is it a reasonable expectation, obviously things can shift, but is it a reasonable expectation that based on that that we should see those decreased costs and utilization reflected in our -- in the proposed rates period for the next cycle?

>> yeah, thank you, supervisor preston for the question. and i would just like to start with a short answer related to the plans that we'll look at later today for self-funded and flex-funded plans, for the rate stabilization process will help to capture some of that. so i'll defer that conversation until we -- until i present on the blue shield and the u.h.c. rates as a fully insured plan. there's no rate stabilization, and so i'd like to turn it over to the kaiser permanente representatives to address your question as it pertains specifically to the kaiser plan. >> yes, thank you, supervisor preston, for the question. and, you know, we are watching this very carefully. obviously, as a delivery system and not just a health plan that processes claims, our investment has not changed. it shifted in what we need to invest in to prepare for the

pandemic, to prepare for a possible second wave. and we don't know what will happen in the coming months with the pent-up demand for other health care services. the short answer is that we don't know yet what it will look like. but if there is a change in utilization it will be reflected in your rates in future years. so we will be watching that. i just can't tell you today what will happen. >> commissioner preston: no, i understand that there's no crystal ball, and the utilization rates are low. and my question is if that continues -- so assuming that continues, is it a reasonable expectation that we would be looking at either lower increases or no increase? or am i missing -- is that not a safe assumption? >> so i will comment and then i'll ask my colleagues to comment as well. it is a safe assumption to say

that the utilization patterns will be captured as we move forward. and if it continues in this way, that lower utilization would be captured in the future rates. however, it's also important to understand that there's the delivery system component, with the extreme costs that have been born by the organization as we are -- as we prepared for and are dealing with the pandemic. and so i'll ask loreena seagrass or cindy if you have any additional comments on that. >> yeah, loreena seagrass. so, kate, not much to add. i think that in general as we look at things starting to open back up, people will be starting to get more services, you know,

looking at having the elective procedures that have been put on hold, to start having those done. we are starting to see some of that coming back as well. but for a long term as kate said, it's something that we all need to watch very closely and we'll be working with our internal (indiscernible) to determine what that does to future terms. >> it would be my expectation that given that 2022 rates will be developed off of how plan experience changes in 2019 to 2020, that any lower claim experience that may evolve through 2020, would be reflected in the 2022 rating process for the kaiser plan.

>> supervisor preston, i will add that we do regular check-ins with your actuary mike clarke and so there will be information as we're receiving information and we'll be providing that to them. and so we'll be able to monitor that more closely in the coming months. >> commissioner preston: great, thank you very much, i appreciate that. and hopeful that we could see a reduction in the utilization and that would be reflected when we're convening next year. but i look forward to continuing to monitor that. a few other things. one, you know, i just -- the comments around -- and some context around the earnings going back into, you know, the staff and patients. and a comment if you want, but just for as much for the benefit of the public, i want to put in context some of my ongoing

discomfort with the -- seems like perpetual rate increases. see, my understanding is that kaiser in this plan period that we're talking about of last year had record profits, had net income $7.4 billion in 2019, nearly triple what the company made in the previous year. that as of the most recent quarter that kaiser holds over $41 billion in cash and investments, according to financial statements. that there are significant funding that is coming in through cares act this year, significant in the order of $600 million through this supreme court ruling on a.c.a. and, meanwhile, on the expenditure side, while, of course, there's funds that are

going into the laudable purposes of providing care and providing for employees, at the same time, it is clear that kaiser has not really been tightening its belt when it comes to elective spending, executive compensation with over 30 ka cinch ser taking quarter of a million dollar for a handful of board meetings a year. pretty massive campaigns like the advertising campaigns of almost $300 million on advertising and the golden state warriors 20-year deal. so, obviously, there's legit expenses that any big organization is going to have, but i'm just -- just needing to sort of reflect -- and i think some of what we have heard in the public comments last time was some of the frustration of facing rate increases.

this is not questioning the actuarial work and the data that we're all relying on, i just think that in this moment when everyone is in crisis and that kaiser permanente is certainly part of that solution and i think that when we're talking about the 2019 period this is one of, you know, great increased net revenue and really lavish spending from my perspective. and i think that, you know, more than ever that with that background, and the context and the requested increase that it's appropriate that we are as we have been doing continuing to ask hard questions around treatment of staff and services for members. so, you know, i'm happy if there's comments on that. and i did have a few more specific questions about some of the concerns that have been

raised but i would like to get kaiser's response on specifically on what i mentioned the last hearing the questions around within this pandemic, the use of reprocessed n95 respirators, something that is very concerning and brought to my attention by labor leaders. and trying to -- i would love to either, you know, in this hearing if there's a response on that, that would be great, but i also want to recognize that we will get this moved through today and i will be working on this at the full board of supervisors and i'd like to also have an ongoing discussion about a few of these issues that i'll be raising that i'm sure that fellow supervisors would be -- would be concerned with, especially when asked to approve this. and so i would like to know on -- and, again, commissioners, thank you for your indulgence

with a handful of these questions. but can you, to the kaiser representative, miss tesler, can you confirm whether kaisers is using reutilized n95 respirators? >> supervisor preston, thank you for the question. and i'd like to actually address both the comments that you had at the beginning and then the personal protective equipment. so very important to understand that we are following guidelines by the c.d.c., world health organization, and infectious disease experts when determining how to use our personal protective equipment. and so i do not have the specifics, and some of my colleagues may on the reuse of the n95 masks. i know that is something in certain situations that has been

deemed safe, but i will ask if others on the call have comments. if not, we can get back to you with an expert in that area. and then i'll comment on the financial piece as well. >> yes, thank you, kate. good morning, my name is cindy, and i'm with kaiser permanente as well. supervisor preston, thank you so much for the question. i think -- i'll just say a couple of things and then i know that kate will spend a little bit more time. but each one of the items that you raised are important conversations for us to have. and i know that kaiser permanente is available and does engage throughout the year with you and other board of supervisors on lots of initiatives and dynamics that are going on in the city and county of san francisco. we're a huge employer and we're a huge provider and so we have a lot of things to talk about. each of the items that you raised i think is a good area of discussion around our finances,

and last year's surge in income which is mostly driven by investment results and the stock market. and you'll see the corresponding dip on the first quarter of this year reflective of that. and that in and of itself could be an hour conversation. compensation for our executives, and our investment with the warriors, i mean, these are dynamic and complex important items that i think that are really worthy of discussion. on the p.p.e. and part of the conversations that we can have are detailed, but what i wanted to share in addition to what kate said is that any -- we have set up ways for our employees and our union partners to engage with kaiser in various ways, specifically about p.p.e., but in addition to any other concerns that they have. they can raise them at their

local medical office with that leadership. they can raise it at the regional level. and there's also a weekly call that happens between our labor partners and the vast majority of them are on that -- with our national leadership to talk exactly about their concerns about p.p.e. whether it's volume of supply, how they can make sure they have access to the right p.p.e., and their concerns about what is being categorized as the right p.p.e. and the re-use of p.p.e.s or the sanitation of p.p.e.s. as i am sure that you can imagine, a complex dynamic need to ramp up quickly. soy we take very serious seriously our responsibility to have p.p.e. for our frontline employees, but also not just for today, but for the next coming period as we don't know, as kate said earlier, where there would be a second surge and how that will show up. so there are methods to engage

between our employees on union and non-union employees and our leadership to express those. >> commissioner preston: so i -- let me say that -- and i appreciate the answers. my understanding regarding the repurposed n95s is that they have not been deemed safe. i am not the expert on that. so, you know, happy to engage further with information. and my understanding is that the c.d.c. has made clear that there's no data to support the effectiveness of decontamination methods and repurposing them. and the f.d.a. has not cleared them. so this is a major concern. i understand that you stated that they've been deemed safe. i'm sure that offline we can get to the bottom of that, but i think that the fact is that this has been raised. and let me say that more generally is that as we go

into -- with this board and the board of supervisors approval of the contracts that, of course, are dictated by last year's experience that we're also in today's reality, right. and looking at some of these things. so i appreciate that we can have both conversations. >> absolutely. and i'll just add, you know, we are following both the c.d.c. and the f.d.a. protocols around re-use and sanitation of masks. so i think that is a worthy conversation for us to have. and then the other concept, and, again, kate can add more -- you know, she mentioned in her statement that we're slightly different because we're not just processing the claims or the health plan, that we're actually the hospitals and the providers. so our dynamic is going to be a little bit different. while we have certainly seen areas where utilization have dawn downgone down, and we haved

many elective surgeries but not all of them. we have not closed our emergency rooms and our urgent cares or, you know, large medical centers and not able to provide services. so we still feel very responsible for delivering the care and we just have to do it in a bit of a different way. and we also have, and i mentioned this earlier, that we are working right now on our re-entry back into what our next normal looks like. we are significantly committed to prevention and wellness. so delaying mammograms or colooscopies any longer is concerning to us as to our members. so those are priorities for us. we expect to get caught up with those things that we pushed off to a later date for safety concerns.

we expect to be caught up in those -- during this year. as soon as possible, but we do expect to see quite a bit of utilization increase, appropriate utilization, that needed to be delivered but hasn't yet been done between now and the end of the year. and so it's not just a matter of we need to start providing care and it won't be seen as an increase, there are lots of services that we will see happen and spikes later in the year, but when you smooth it out over the year it will look much closer to a normal year. that's our expectation. but as kate has said several times, you know, unclear whether there's a second surge and we need to be -- you know, careful, etc., as we reopen the state. but i appreciate the comments and i look forward to that conversation with you and other board of supervisors. >> commissioner preston: thank you. and just a few other questions and then i'll try to keep them short. i know that other commissioners

may have questions. and i expect that we'll have some public comment as well. another thing that was brought to my attention was in the last week in discussions with labor leaders what was the claim that asymptomatic covid-positive nurses were being told to complete shifts rather than being sent home if they were asymptomatic. and so i want to know if you can confirm that kaiser's policies is that a nurse is testing positive or a symptom attic during this crisis. are they to continue working or sent home or do we get that information elsewhere? >> i have not heard that. so i will follow up with you. we -- i certainly would expect us to not have anybody who tests positive with a covid-19 test to

be providing care to our members. but i have not been asked that question before. >> commissioner preston: okay, i hope that is the policy and this is from kaiser south facility that serves a lot of the residents so i look forward to clarification on that. another question on -- specifically on the issue of behavioral health and -- without getting too far into the kind of weeds of service delivery, obviously some critiques around the delivery of timely and appropriate behavioral health services is ongoing discussions with n.h.w. and others around those issues. and i think that my question is just how the service delivery side relates to the rates. so just as a hypothetical, if services -- and maybe this is a

question for mr. clarke. if the services do -- are not delivered as promised in the course of the contract, how does that impact the rates? is there a rebate? factored into next year's rates? or actually not factored in the rate discussion? >> yes, supervisor preston, i'll be happy to describe what i observe in reviewing kaiser underwriting and then i'd ask kaiser to fill in anything that i don't address. all i can observe is what actually presents in the data on 2018 to 2019 changes on a per member per month cost basis for all of the service elements that roll out into the broader categories like in-patient care and outpatient care, prescription drugs and so forth. so what i observed, especially in the outpatient data for

kaiser permanente, for sfhss members from 2018-2019, were sizeable increases on a percentage basis in both costs for service and the overall average utilization of services by sfhss members. but, again, that is just simply reviewing the information kaiser presented. we have not audited that information. so i would welcome kaiser to speak on your observation. i hope that this helps at least to clarify what i see as the aon actuaries supervisorring the plan's work. but i would ask for kaiser permanente to comment. >> great, i'd like to ask lorena, could you comment please on this section?

>> yes, thank you. so thank you, thank you, supervisor preston. as mike said, we have seen a number one overall access improvement in mental health and behavioral health. and so we have seen utilization increase in those areas. and we have been reflecting that in our utilization and experience. we've also been able to look at actually better reporting on this than we have done in prior years. so we are also capturing that utilization and showing that because what we had is sometimes -- something would have defaulted into the general outpatient visit category. and now we're doing a better identification of that with our

new system of what is mental health and what is, for instance, substance abuse visits. and so all of that is being rolled up. and so in general we're seeing more utilization and better access overall in that reflective in the information. >> sorry, if i could jump in to clarify and sharpen the question. i understand that in the course of engaging with sfhss staff and in terms of, you know, whether or not the promised services are being provided and behavioral health or otherwise, right, and that's a function, obviously, that staff plays. i think that my question is just to the extend tha extent that tp in the promised services and what is provide. whenever does that come into the rate discussion? does it affect the future years

increase rates -- >> yes supervisor preston, kate again. this is -- in the utilization. so if it is -- as lorena was describing, if the services are used they're in the utilization. now as far as expectations i would imagine that you're asking about -- to see a mental health provider or a member's satisfaction -- we track that very closely. we have in-depth discussions with executive director hants that is really separate from the actual rating discussion because the utilization wouldn't be in the rating discussion and the lust eytheutilization. >> commissioner preston: okay, thank you. i'll follow up with the director and staff just around getting a better handle -- for myself -- on how that process plays out.

>> i would add, supervisor preston, that we're happy to have that discussion at any time. mental health is an area that we have been heavily focused on and have had significant investments in making sure that we are providing increased capacity. and making sure that we're investing in the facilities and making sure that we have the appropriate access. so happy to have that discussion and to get into that further. >> commissioner preston: thank you. and the last question, and this is specific and related to kaiser's interactions with health care workers in u.h.w. i understand that the members voted to ratify kaiser contract in early may and then several weeks later that kaiser has contacted u.h.w. to propose implementation of an agreement that would effectively gag the

-- a gag order on members from publicizing perceived shortcomings with the kaiser system. and there's a dispute ongoing about that. and i just want to be -- my final question is really the status update on that, and if kaiser commits to ceasing attempts to silence employees through the use of any side letter of this type. >> yes, thank you so much for that question, because it is really timely right now. i want to be really be clear on what it is that we have asked in this process. and what it isn't. (please stand by)

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. >> it is not a gag order, it is not saying that any individual employee is forbidden from communicating or sharing or expressing their concerns or positive perspectives, as well. it was a previous agreement in place since 2015 and is in place in our other labor partnership agreement that we have. >> supervisor preston: well, thank you for that. it still sounds concerning in my perspective that we rely not just on the individual patient therapists and others but the union in the long-term that there are short comings in the system, to bring those to light. i look forward to engaging with you further on that, and i look

forward to -- colleagues, thank you for your indulgence and lengthy comments and questions here, and look forward to if these rates are approved today, look forward to communicating with my colleagues at the board of supervisors there and get further answers to my questions before then. thank you. >> just, supervisor preston, if i could, just on this last issue, our reason for requesting this is really around developing that collaborative communication and approach. we really want to work collectively together and solve these issues as partners, and so we feel this is just a piece of setting that foundation. understand there are complexities and