>> health service board is now in order. please stand for the pledge. i pledge allegiance to the flag of the united states of america, and to the republic for which it stands; one nation under god, indivisible, with liberty and justice for all. >> madam secretary, roll call, please. >> roll call. president breslin? >> here. >> vice president lim? >> present. >> supervisor farrell excused. commissioner fraser? >> here. >> commissioner fraser excused. commissioner scott sf >> here. >> commissioner shlain? >> here. >> we have a quorum. >> thank you. ~ item number 1, please. >> item 1, action item, approval (with possible modifications) of the minutes of the meeting set forth below. regular meeting of june 13th, 2013 combined with rates and benefits committee. >> are there any corrections? no corrections. >> i move adoption of the minutes as distributed. >> i second. >> any public comment on this item? having none, all those in favor? >> aye. >> opposed? it's unanimous. >> item number 2. >> item 2, discussion item, president's report, president breslin. >> we are now on sfgov-tv, channel 26 and 78, i believe. and we want to thank sean tai who prior to this has done the videos for the board meeting. and would you please come up to the podium? thank you. the health service board would like to thank sean tai the founder of zty media for his excellent service documenting health service board meeting since october 2010. we commend shane for his professional dedication and technical expertise. this creation of the hss youtube channel has provided meeting access to hss members, elected officials, news media, and others who could not attend in person. these recordings were also used to document requests and questions posed by the board and public comment. in addition to his work for hss, we would like to acknowledge sean's commitment to the oakland digital arts and literary center, a nonprofit that empowers students and small businesses in undeserved communities to succeed in the digital economy. we encourage sean tai and zty media to be among the vendors that bid on other digital video services proposals issued by health service system. the members of the health service board wish sean tai the best of luck in his future and professional endeavors. thank you. >> thank you very much. >> thank you. (applause) >> also, as you know -- probably know by now, the board of supervisors recently passed a resolution requesting that kaiser improve transparency on rates and rate setting. they also requested that our board and staff build upon their process of consulting with public employee unions and hss retirees. we do want transparency from all insurance providers. the resolution specifically requests kaiser to do so. the city charter gives the health service board exclusive negotiating rights and also states that we must supply benefits without special favor or privilege. the resolution [speaker not understood] retirees public employee unions. however, we are responsible to all members of the system. we are planning at our september meeting and then maybe october also to dedicate an agenda item for information and input from our members so that they can introduce and formulate objectives well in advance of the rates and benefits deadline. so, encourage everyone to attend and to spread the word. and lisa will be talking more about this in her director's report. thank you. and that's all i have on this report. is there any public comment? seeing no public comment, item number 3. >> item 3, discussion item, director's report, lisa ghotbi. >> good afternoon. lisa ghotbi, acting director of the health service system. july was a busy month for us. i think i have just a few things to review. we are interviewing for the cfo position and we expect to fill this position by september. that's really good news for us. once again, we want to thank our interim cfo gregg sass who has not only helped us with the interview process, but has helped us get ready for the audit that's upcoming and will help the new cfo who comes in with her -- his or her transition. we are also working on -- we just posted the wellness [speaker not understood] yesterday and we are working on posting other clients -- contracting compliance manager position within the next few days and we have a few other positions that we're in the process ofing. we have several new positions. it will be a busy fourth quarter hiring and bringing new folks up to speed. ~ posting in the operations department we've been quite busy with several activities, some of them in terms of focusing on 2014 open enrollment. the emerge, working with emerge consultants to rebuild the flux credit product for mea and executives and we are i think a good probably 70% of the way down the road for that. so, we should be fine for open enrollment. we also responded really within three hours of the supreme court ruling on doma to communicate on interpretation to our members. we were getting questions immediately on that, and there is some report on that end. the operation powerpoint presentation will review same sex domestic partners to ensure any married couples in the system will now have the same benefit for pretext coverage for all other family members. we reviewed member files to determine if any same sex partnerships had previously submitted the marriage certificates to hss and if so we changed the family status from domestic partner to married effective the next available coverage period. so the staff was very proactive and we immediately began receiving marriage certificates from those who had not already submitted them to hss. we will also be moving to the third floor. there is a move and we've delayed that until december 1st until after open enrollment so we're looking forward to that and to also have a wellness center opening on the first floor of 1145 market. and also wanted to point out that it was a very busy month for retirement in the health service system. we processed over 7 45 retirement applications between may and july 1st. so, significantly more than our average of about 40 a month. so, very busy for retirement and congratulations to all the city employees who retired. in the communications department, we've been very busy working on the benefit guides which will be going to print shortly. the theme for this year is partnership help and also we've completed a communication strategic plan which will be presented to the board at the next meeting and we'll be starting this rfp to help us fulfill that plan in the fourth quarter. our finance team has been working on building the rates and also preparing for the audit which will be starting next week. and in rates and negotiations we wanted to let you know that many of the unions have accepted the city offer for the flat contribution model and that model is going to be 93, 93 83 which means that the employer contribution for an e only is 93% for the e plus 1 is 93%, and for the family is 83%. that was done by the deadline of july 31st, 2013. please note the typo, not 2012. that was done as of july 2013. so, those numbers and those unions will receive a subsidy for 2014 and hss had a lot of meetings with unions and to help explain exactly what that would mean for them and there is an attached memo that we prepared for the unions laying out the numbers for them to see that's attached in your binder. under wellness, also very busy time for wellness. we've been doing biometric screenings and had a very successful one coordinated about a week and a half ago. 267 employees in the hall of justice participated in biometric screening. in addition, there was also a biometric screening at department of human resources, department of economic and work force development in may. that screened an additional 58. so, this is a very popular offering and we're looking to extend it and continue those in fourth quarter of this year and into next year. also, margaret has a very aggressive campaign for flu shot vaccinations. we have i think over 12 sites already set up for flu shots for the october and early november time frame. we have a new department in hss called the analytics and a new data analytics manager who has been on the job for about a little over a month, is very busy and working on -- she did most of the modeling on the contribution model work for the unions and has done some work on our wellness initiative as well. meetings have very busy month for meetings with both kaiser on multiple occasions with director dodd participating and also with the board of supervisors meeting with them individually on multiple occasions. also attached is some news articles that have occurred in july around the kaiser rate renewal and the links to the committee meetings from the board of supervisors. so, if there are any questions. that concludes my report. >> any public comment on this item? come forward. thank you, president breslin. [speaker not understood], former member of your board and now representing the seiu retirees. my concern actually is one with regard to actives. i think more than retire tire aloes, but the actives and early retirees, not so much the medicare retirees. ~ and that's the issue with the 93, 383. what i notice is that in that memo and the delineation of the rates that the plan 1 rates seem to be significant, especially by year 2015 where we go from $320 a month for employee only in 2014 to 925. if it was 9 to 10, but it goes from $4 in 2014 to 7.79 in 2015 which is a massive rate increase. and what we've noticed over the years when i sat on the board was that there was significant migration from plan 1 as those rates were no longer subsidized. there was a time when this board subsidized those rates because it is, in fact, the plan that you own. and money in the trust fund was used because the trader gives the health service board money to go out and purchase plans. and if you get the money -- if you get the plan for less than the city's contribution in those days, that was money that you could spend for other plans. and we used to do it for plan 1. and my concern in seeing those rates is that i would like -- i would like this board to consider perhaps subsidizing at maybe 50% to be able to stabilize those rates across the board. there aren't all that many members that are active in early retirees in plan 1 remaining any more, and i think these rates will absolutely scuttle the plan. and it is your own self-insured and self-funded plan. it's what you own. it's what you need to keep competitive. and the last group of people are clearly going to migrate out. and all of the other sf including the vast subsidizing of the risk factor for blue shield where again the trust fund is taking that risk is all aimed at preventing migration. and i think that it is something that you might consider because i think it is a great concern to see those rates go, especially from $4 to 7.79 from a thousand 78 to 1500 and from 2000 to over 2300. ~ so, thank you very much and i hope that you consider subsidizing. >> thank you. >> president breslin? >> yes. >> i wanted to acknowledge the importance of that question and to also state that plan 1 has been a plan for hss since hss has existed in the '40s and we are dedicated to bringing an alternative model to the board that will save that plan and actually help turn it into a healthy plan again. so, that will be coming forward during the rates and benefits. actually in december so the board can give us direction on whether that is something to pursue for the rates and benefits. hello, my name is gail bloom and i'd like to talk about plan 1. i don't know if this is the right time. i have a problem with plan 1 and i'd be happy to hold the question till later in the agenda when it looks like you have open discussion about the different plans. >> up to you. well -- >> yeah, you can say something now about it. it's about plan 1. if you want to hear it now, i'd be happy to bring it up. >> maybe you could talk to the staff. i have talked to your staff. >> okay. and they told me to come to the commission meeting, to the board meeting. i'd be happy to hold the thought. okay, i'm here because i'm an early retiree in plan 1 and i'm actually not getting any of the service that i had contracted for, particularly for my out of network payments or out of network coverage. i have a -- i am covered by medicare. and what i understand is irrespective of the medicare coverage, for my out of network payments or coverage -- excuse me, i'm really nervous. it should be at the 50% of the ucl rates. is that correct? as i'm understanding it? yes, okay. what united is telling me now is they will only cover 50% of what a medicare physician would cover if i were seeing a medicare physician. but i am not seeing medicare physicians and, so, for example -- excuse me -- i see a doctor who charges $225 for a visit. so, rather than paying me 50% of $225, united is now paying me $37. which, if that continues, i can no longer see my physician and i would like to be -- change policies or out of the open enrollment period if i can no longer see my physician. and paying $1700 a month for the privilege of seeing an out of plan provider. so, i'm kind of stuck between a rock and a hard place and i was hoping that the commission or the board would be able to help me get to the bottom of this. and i have gotten a lot of correspondence from them that that's all that they'll pay. >> i'd like to have our manager of member services, mitchell gray. i'd like to have him work with you on that. i've got paper. >> okay, fine. >> thank you. [speaker not understood], retired and active firefighters. i'd like to basically piggyback on what claire said regarding these rates, but also add to the city leaving themselves open for discrimination suits. if i'm a single person and i have to pay any amount of money for my health care, i'm turning around and saying i want the same benefit this person with two kids is getting because that's a benefit they're getting. and if i'm not getting that same benefit in monetary amount, then i am being discriminated against because why should somebody just because they're married get more benefits? one of the reasons why the city always kept the single employee at zero because it was to offset any benefits that the other people, married plus 1, married plus 2 got. and as i look at these rates, besides plan 1, it's going to leave the city as far as i can tell open for someone to say, i want the same monetary amount as this other employee's getting because just because he's married shouldn't affect why i don't get it as well. so, i think the city is leaving them self open for problems. i'm not saying an employee couldn't have done that prior to this, but there's going to be more incentive to do it now because it's costing them money out of their pocket. >> thank you. any other public comment? seeing none. madam secretary, item number 4, please. >> item 4, discussion item, update on financial reporting as of may 31, 2013, gregg sass. >> good afternoon. this might be my last hearing here before the commission. so, i'm smiling because i get to go back to retirement. but i have really enjoyed my time here. i have really appreciated the warm welcome from you and the rest of the city family. it's been very educational for me, in addition, knew very little about the health service system when i worked for the department much public health. and i certainly know a lot more about it today, so, it's been a good experience for me. what i wanted to do today was just give you sort of a preliminary look at how we finished the fiscal year june 30. all of our financial results, certainly for the department as well as for the -- particularly for the trust fund are subject to audit. kpmg will be starting their audit next monday. the audit will continue through the end of october. there will certainly be a number of adjustments and fine tuning that will take place between now and then. but there's a great deal that we know already about year-end results. to begin with, we know our cash balance in the trust fund. we closed the year with $167.7 million in the trust fund which is a $60.6 million increase over the same date in june 30th, 2012. a large portion of that is associated with the difference between collections and claims payments under the blue shields effects plan and a large portion of that will be reserved for current but not reported expenses. there is also a large difference between collections and payments under the city plan. and then there are a number of other items that are in cash at june 30 that will just be liquidated in payables in july or will be recognized as deferred revenues, revenues that will be recorded in july. so, the 167 million is still a very significant growth over the prior year and there will be, i think, some similar growth in the assets available for plan benefits as a result. moving on to the projections of incurred but not reported expenses, aon hewitt will [speaker not understood] at the end of the plan year. if they do it at the nibr in 30 to support the audit process, and they have determined that the blue shield flex plan will require an $18.1 million ibnr reserve liability in plan assets. i'll talk a little more about that in a second. city plan is $6.2 million reserve which is actually $1.7 million decrease from this time a year ago, lower utilization with the city plan is now reflecting itself in lower incurred but not reported liabilities at the end of june. and then delta dental, a small decrease to $3.1 million which is about $200,000 less than this time last year. just going a little bit more about blue shield, the expectation when we went into the first year of the flex plan was that utilization would potentially be higher, which would therefore have resulted had we been at the level of utilization we had projected at the beginning of the year, we would have had about a $25 million incurred but not reported liability at the end of june. so, recording the 18.1 million, what that really means is a significant amount of those excess collections will drop into the assets available for future -- for plan benefits. it's not reflective of liability. it's really utilization and cost savings from the blue shield flex plan. so, that's about a $7 million difference. city plan, that $1.7 million decrease in ibnr will similarly wind up in the assets available for plan benefits. but in addition there's about another $18.5 million of collection that came in throughout the year in excess of what the actual claims and costs were. so, utilization and cost savings from things -- is really creating that difference. so, it's a very large cash difference from the city plan. moving on a little bit to the trust fund reserves, we are -- i think there's a schedule in my memo that really details this out, but we're projecting that that reserve will increase from -- by $27 million from where it was a year ago at 53.2 million to approximately 80.6 million at the end of june of this year. and that is largely coming from the city plan. funding from that, and then the net changes in the ibnr reserves is where a large portion of that is coming from. so, that is -- kind of covers most of what we know right now about the trust fund. it's certainly helpful to have a larger net plan asset number at the end of june as we go into the second six months of the plan year. it positions us for -- certainly well for the subsidy that will be going to subsidize the plan rates for next year as well. so -- and there may be some other things we're going to need those reserves for as we go forward. finally, just a couple of words on the year-end financial results. we are running favorable on personnel costs and benefits by a couple of hundred thousand dollars, little more than $200,000 and we're working with the controller's office how to resolve that year-end difference. there are some favorable variances in the nonsalary areas. most of which we hope to be able to carry forward, help us with our expenses for this new budget year. so, present, although we're showing an overall $54,000 net positive variance, most of the positive variances we hope to carry forward and where we really hope to be able to do is close out the personnel costs variances through the -- through the year-end closing process with the controller. ~ what so, if there are any questions, be happy to answer. >> [speaker not understood]. >> when you started the flex funding for [speaker not understood], how much a.m. was put in the reserve? 5 million or 21 -- 20 million, okay. so, less than what we put in the service -- >> i thought when i took the rates that were in the rate setting process, the rates that were expected in terms of pmpm expenses and applied that to the membership, it would have produced about a $25 million ibnr june this year. but the 25 million is really the difference between claims that are actually settled between, you know, by june 30 and those claims that have not yet been submitted and adjudicated. so, it might have been an estimate of more like 20 million. but the reality is it depends really on how quickly claims are paid and how many claims are deferred into future months. but 25 million is where we would have been had those actuarial rates held up at that low cost. >> thank you. >> any other comments, any other questions? seeing none, thank you very much. >> thank you. >> madam secretary, item number 5. >> item 5, action item, eliminate $75,000 lifetime cap on uhc transgender benefit for active and early retiree plans, lisa ghotbi. >> thank you, lisa ghotbi acting director. this is something we usually deal with during the rates benefits process, but this issue didn't come to light to the health service system until last week. we wanted to make sure we brought it to your attention now so we can make sure we get it into our guides and it's clear for our members going forward. it was actually a memo issued by the department of managed health care on april 9th of 2013

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