Where youre covered and under the risk share you pay the literal premium and get it 180 days. Everything being equal its a cash flow situation. Fair enough . Is the transparency the same in either . Yeah, the transparency of knowing the claims were its identical for those two. Any comments about that in. I just want to add another difference in addition to the fact that the reconciliation on the risk sharing didnt happen until after we do the pricing for last year and reconciling last year we couldnt bring it into that year and bring it into the following year and the 180 day period is done before that is reconciled. On the flex funding it allows i dont think in the clear sense its not more transparency but its comparability which is also valuable and adds to our ability to understand the costs for the blue shield versus kaiser so the flex funding model will allow us to say were paying this much at blue shield and this much at kaiser and the same services and maybe not a transparency that we would like but its a comparability. Any other questions . Commissioner lim. On last years negotiations with kaiser one of the issues that we have one of the contingencies was related to [inaudible] kaiser is not willing to bring it down to 10 . What i they think the affordable [inaudible] i understand the question presented at 10 that for the stipulation was that the understood set of charges embedded in the icm with no further clarification at that point and time and weve had several discussions. The stipulation was it was reasonable to consider that nor more than 10 at that time. We had subsequent conversations about embedded in the icm and a box that does a bunch of things that we have a slide on. What is the reasonable number . Right now the number for business assuming that we believe all items in that box are justified is 16 as percent of claims or 13 as a percent of premium so its not that the icm is incredibly more expensive than the 10 . Its a difference so were we able to get the 10 agreed upon . No, sir. Have we come further in our discussion if we were go to down a path of assuming risk would we agree those numbers are rational at this point . That depends when i do the arithmetic on the risk and its about 16 now on the claim. Are you comfortable what is in the box on the icm box . Am i comfortable or do we have agreement what is in there because at that time they give us idea what is in the icm charges that we have now. Do we have some Comfort Level . I was just going to say [inaudible] neil did pause at slide three but we were going to walk through each of the goals here and there is a slide on icm in addition to all of the other goals and maybe we could have a more indepth discussion with that. There is still more work in that area. Any other questions . Commissioner ferrigno. Commissioner fraser. I appreciate the differences but one thing you left out however is how the incentives work so once we move to a fee for Service System there is no incentive for kaiser or any payer to keep utilization in that area down so i think we need to think long and hard before we go in the opposite direction of the rest of the world which is move away for fee for service and each of these with the guise of saving money and the except the fully insured hmo we are moving in a direction that awards more service so i want to caution this board that we have to think long and hard before we move away from a fully insured. Thank you. I think that was a statement so im not going to say anything. Fair . Do you disagree . Can i do this . Ask can i. Can i ask my colleague andrew and can you respond to that. Im going to ask that you respond to it because i think its a different issue and puts kaiser on the spot and that kaiser will do things differently. If you recommend a fee for Service Versus a decapitated what incentive does it give to the provider in those scenarios. Theyre reimbursed under the agreement and fee for service it wouldnt change the patterns at all. They would collect data based on the Practice Patterns this is what the fee for Service Charge rate s its analogous to the data under the decapitated structure. They still get the same money and if the utilization goal is down and utilize it less than the average population because kaiser is adjusted by community rated theyre a huge rated plan based on this criteria so if we turn out to be the people spending less than the average then it allows you to gain the margin of the activity back into the hss trust but nothing would change in my mind, and it would be just a way of accounting for actions taken and thats the same thing when we brought to the board to hss the experience showed exorbitant margins in the rate and would be in the trust now and thats the same youre making the assumption that nobody but ulc goes this way; right . Youre saying were a free rider and kaiser will be a fully insured hmo for the vast majority of it . You could look at that position. Theyre open to doing it with everybody and the problem for kaiser if everybody did it that would be a problem but thats want the situation at hand. The situation at hand is could this benefit the trust. If were paying these funds and count up the fees and widgets and would have been it have been i understand how the math works but every example you have given today is one where we benefit and as our actuary its important to remind us risk goes both ways. Thats true. So to the extent our population utilizes higher [inaudible] thats true absolutely. Let me go back to fee for service so i still feel that you havent answered my question. I am curious to your answer. If you have a organization that moved from decapitation to fee for service what behavior change do you expect to see . From the provider . Yes. Well, if they went from decapitation to service your point is well taken and a chance to could cost more but if you do fee for service and cap the dollars which is what were talking about and dont use the plan than the average captated person and do the difference but from a interpretation of capitation for fee of service no actuary would disagree with you. I guess i am confused and you write they will pay this and plus and a real time weekly basis. Right. So when you say we are just paying capitation that is inag according to what you have written here. I want to say a few words and your questions are really important especially in the non kaiser world you really worry about the fee for service and the captated and how theyre aligned. I think that is less an issue with kaiser given the current structure for kaiser. We talked with pg e and went self funded and talking about the reporting requirements and the performance of that contract ensures that the organization of kaiser continues to focus on appropriation utilization and appropriate out comes so i think there are ways and especially under this scenario and maybe more with this than the other agreement that we have under the kaiser agreement if we pursue this to make sure that our concerns about inappropriate utilization because right now paying on self funded can be controlled with performance guarantees and reporting. Okay. With that being said we go over to slide four which is additional items that we want to just briefly share with you which is if you were to consider the risks what your risk exposure under risk sharing arrangement you may the premium and up side, down side of 25 relative to the premium and under flex fund its the same and capped at 125 . Thats the maximum liability. Under self funded the risk exposure you bear the entire risk if utilization was horrible and under that you would of course stop loss to mitigate the exposure. Another thing discussed in the budget discussions if you move towards risk under kaiser there is administrative complexities and require more manpower at hss. Lastly the last two items are pertinent to transparency, the maximum data for transparency seen under self funded and under all of the items insured or constructed as insured but give reconciliation of experience and pay all of the taxes to the federal government and under self funded you do not. With that we have three one item that we need to decide upon at this point of course we will bring you in april the fully insured quote from kaiser and risk sharing defers the ability to utilize any positive gains if gains occur they put you in the position to have to fund the gains. Were not recommending pursuing that further but we would like your approval when we bring you the quotes bring you analysis about what we think is available under flex funded and self funded. Yes . Im sorry neil youre not at the recommendation page. Im sorry. Its coming up. This is what were saying is coming up. Sorry about that. All right. Any questions about item one, goal one . I wonder if the hit tax, how much is that . Administrative 4 and 5 that you have to pay, but not the hit tax. Hit tax for most non kaiser people is 2 . Under kaiser its less than 1 its around 1 , one and a quarter of premium. So administrative costs bigger. Add 4 and minus the h it and only 1 . You dont pay premium tax. Any other comments on this . Okay. Thank you. All right. Lets move on to goal two. As you know and brought up in the discussion icm was a discussion in the spring per the renewal for 2014. Here are six items that are considered to writing Core Services presented under oo. Cm. There are statements about what it is. It roughly runs 16 and we talked about before and that is several million dollars. Its 30 middle annually for this population. We have a statement as was shared by lisa and peter. Kaiser is committed to continue communications on this topic and appreciates the opportunity to get feedback and input that would be valuable to hss and as was stated earlier negotiations are ongoing. Now with that this is the page on icm. Any additional questions . Okay. This is where we are on this item. Commissioner scott. Yes, sir . In regard to this and i have been party to some of the discussions, not every one of the meetings in the prenegotiation phase of this i still come away from the process slightly disappointed recognizing there is more work to do around this topic, and i say that publicly because i will be sitting in a chair during the rate as chair of the rates committee and i will raise rigorous questions. The fact is some of the elements, the icm, arent clinical in nature and compare it to other plans doing for city and county of San Francisco and the others that are part of the system it doesnt make a lot of sense and i have heard the explanations and they have been thoughtfully presented but we really need to keep our eye on this and i am not entirely persuaded to where we are at this moment. Any other . Commissioner fraser. I am concerned which ones uryoure talking about . I am talking about the whole icm. There are elements that kaiser talked about that are part of the icm and i recognize were still under going and having conversation about them. Im just putting this particular stake, if you will, out there so we get to a place of resolution and comparable iciality of these elements that we can see with the other health care providers. Okay. Thank you. Okay. Now lets move on to goal three, the profit pledge. So at the time that we had the renewal process for 14 the question was posed whether or not Kaiser Permanente would offer a profit pledge. These are statements from kaiser they will not read now but under these options and risk and flex and self insured and go to [inaudible] all gains and losses. This is in my opinion correct. Okay. Any questions up to goal three . Dr. Ghotbi. Im going to pick up from here in terms of reviewing the efforts around goal four and five, the performance guarantees, and goal five, the incentives programs so the goal in four was to evaluate and improve guarantees and guarantee all expectations of hss and specifically we wanted to make sure that our performance guarantees were consistent across the vendors. We had work to do here with kaiser and we made significant progress in 2014 expanding our clinical performance guarantees with a few examples listed here in terms how the commitments on the care for our Members Around diabetes, the measuring and we have the assessment on obesity around our children and adolescents and an additional set of reporting to help us understand the clinical illness of our membership along with an ongoing everyday for 2015 to continue this commitment on insuring that the performance guarantees are par with the other health plans and focused on outcomes and prevention. On goal number five, on the incentive programs this was again an effort to in fact a relationship. With the clinical leaders of the Kaiser Organization consistent with our relationship with our partners for a better understanding of the Health Care Needs of our members and tailoring our attention and efforts accordingly so we didnt in previous discussions with kaiser had the opportunity to really talk with their physician leadership and their nursing leadership on what they were seeing in our membership and what we could jointly work on together in focusing on health care and we now have a structure and a Engagement Pilot Program that will allow us to do just that and i think this adds significant value to the city and the membership and were looking to do more work on designing what this will exactly look like, so thats goal five. Any questions on four or five . Commissioner scott. Yes. On goal four i think it needs to be noted that at least the proposals that i have seen to date there has been a decided shift between what i describe as administrative metrics versus clinical metrics in the overall tabulation of these 21 measures that are being talked about. Phone abandonment rates and all of the things that you normally expect a plan to do were a large part of last years discussion about performance guarantees. Those kinds of administrative metrics are what gets you to the party. Theyre not the things that measure outcomes and i think that kaiser heard that during the course of the prenegotiations. They have been diligent in trying to refocus these and to tailor them to the experience of our members and that was a bit of a push but we got there and i think were on the right path as a result. [inaudible] okay. Were now on slide six, goal six. Goal six. Please bring up the presentation. Oh please bring up the presentation. Goal six is a fee assessment. If you consider taking risk it is my responsibility as your actuary to evaluate the sc. Here are numbers that we received from kaiser. We evaluated them and these how they compare to medicare and just the last statement is presently where we are. Were in the process. We havent finalized the process of the fee schedule and it says the validity of taking risks under these alternatives we will have a substantial understanding of the fee schedule so if you consider taking risks we can share our opinion as to whether or not we believe the fees that will be used to consider what your costs will be under those funding alternatives are within reasonable within the marketplace that we now reside so with that any questions about the fee schedule . Anything . Okay. Now to the recommendations, so i think this has been an interesting discussion. Thank you for allowing me to share my opinions and as you know we will bring you in april a fully insured and here are the items that we are considering pursuing. Flex option and pricing and comparable to blue shield and lower premium pricing could be possible and it should say if there are gains you will receive the benefits of the gains and itemizes some of the other items. The hit tax is applicable. Pursue self funded and so thats item three in the bullets for recommendations and outlines a few of the criteria there and goes on to say we will continue to review the icm and then the last item is work with kaiser to develop a Collaborative Care Program for 2015 and targets important clinical areas so the items on the table are icm i think were going to go forward with that and recommend that we continue that per your acceptance and the other one is the collaborative care engagement so what i want to put in front of you is you will get as part of the process a fully insured quote in april. Given what i presented today i know i went fast, do you want us to do the calculations for taking risks under these programs or just see a fully insured quote in april and thats it . We dont want to take risks under kaiser or we want to look at it and share and give us your opinion. Any comments from the board as to the direction . Commissioner. I think in the order to not be in the same kettle of fish last your we need to take a broader look and i think and i dont speak for the whole board but i think we should look at all of the options and i dont want to comicate your life and side by side comparisons in easy to read charts. Yes. I think thats critical sore we will be here forever trying to figure it out so the graphics folks have to do a masterful job to cause me to understand what youre talking about, and then if youve did it that well beforehand i am hoping to convey it to our members. Yes. Okay. Anyone else . Commissioner fraser. I am dubious about the self funded epo. Okay. I will tell you honesty i understand what essentially saying we want to be a free rider on the way kaiser is organized for most of the rest of book of business so in a self interested way maybe that the system will do that. I really worry that is a longterm bad idea for kaiser and also potentially a longterm bad idea for other kaiser members so i think thats a short term potential gain, could be a loss, so im dubious about that. I have no objection to having the information presented but i think its important to think of these as policy implications in the longterm and not short term and not with rosy glasses on, not what is going to happen next year but moving from i believe most experts believe the payment model that tends to drive innovation and keep costs low which is more capitation and less fee for service is a worry some trend. Any other thoughts on this . Im noticing here youre not recommending the risk sharing option, so do we want to even have more information on that . I dont see why we want it if its not a good option. I think we felt administratively the problems of not having one year settled why we were pricing the next year and rolling it into the following year would be beyond what we would want to take on, the benefit, the benefits versus the work, and tracking all of the finances didnt seem to be advantageous and we would be able to get to a similar savings model with the flex funding arrangement that would allow us to see that and bring the pricing from the last year into the pricing for the next year. So are we thinking about taking this on for 2015 or the following or looking forward . This is for the 2015 renewal cycle. And actually considering going that way for the 2015. Okay. Commissioner. Just a comment on what commissioner fraser was saying and i would like [inaudible] fully insured, the flex funding. I have some references with the fully insured and might give impression to the members and assuming it comes out and lower Everything Else and this is what shes saying and short term and give impression to the members why didnt you go with this one, so i have reservations with fully insured but just one question for you when you bring all of the comparisons what data are you using . 2012 season or how many years of data are you bringing . Well, as we did with the flex funded work for blue shield we would look at 36 months of data as current as we can get it. Up to 2013 . Yeah, up to the end of the year. That would be our goal so we basically built the template for this for flex funded and if you go to the website the same analysis and side by sides that we presented before and i understand your opinions and i personally off the [inaudible] and maximize the trust for my client and specific and thats my optic and i understand that and i appreciate it very much what was said and i understand that whole argument. Its absolutely fair to say but i am charged with one role to maximize assets of the trust and find the money and bring it to your attention. Now, fully insured you could do that and we could see that or see if there is money to put it in the trust and is this better for kaiser in the long run . I will answer that question. You didnt ask that. Kaisers preference is still fully insured and run their organization that way as one big kaiser family, not we take advantage of this and do that and i want that on Public Record that is absolutely and i can say that without looking to kaiser and thats their prerogative so with that do you want me to look at it or stick with fully insured or this and there isnt a lot of difference between the two and its up to you guys to decide what you want to do