 Michael Barber. Can I ask you a quick question? Sure, who's speaking? Michael, sure. Yeah, I might go ahead. I'm not clear from the end of yesterday whether I was supposed to send my written comment or whether it was going to be pulled off the recording. I think we ended up what's going to be pulled off the recording. So Christina was going to send the court reporter the final section of the hearing. So good morning everyone. I believe that it is the eight o'clock hour and we'll get started. First things first, I want to announce that at 4.30 today there will be a public hearing and if we have any time at the end of today's hearing, which it'll probably be unlikely, we could take some comment at the end of this hearing, but it might be more appropriate for people to join into the time period specifically allotted for public comment. Today's focus is the MVP QHP filing and for the purposes of today's hearing, I am hereby appointing Michael Barber, the hearing officer and at this time I will turn over the meeting to Mike. Thank you, Mr. Chair. So good morning. As you heard, I've been designated by the board chair to serve as the hearing officer for today's hearing. The purpose of this hearing is to take evidence and argument on MVP health plans 2021 individual and small group rate filing. The docket number for this case is GMCB-006-20RR. The Green Mountain Care Board has jurisdiction over this matter pursuant to Title 18 of the Vermont Statutes Annotated, Section 9375 as well as Title 8 of the Vermont Statutes Annotated, Section 4062. Representing MVP today are Gary Carnady, Ryan Long, and Michelle Bennett of the Law Firm, Premier Piper, Eggleston, and Kramer. Representing the Office of the Healthcare Advocate are Jay Angoff, Kylie Kuiper, and Eric Schulteis. I also want to recognize the board's Associate General Counsel, Amron Aberjaley, who will be conducting the direct examination of the board's actuaries. Gavin Boyles is also on the line, I saw. General Counsel for Department of Financial Regulation. Because we are holding the hearing remotely today, before I go any further, I want to make sure all the board members, all the attorneys for the parties can hear okay and can be heard by everyone. So, I'm just going to do a quick roll call. If I call your name, if you could just let me know if your system is working okay. Mr. Chair, we already heard from you, board member Holmes? Yes. Board member Lunge? Yes. Board member Usper? Yes. Board member Pelham? Yes. Amron? Yes. Mr. Carnady? Yes, and I have a watching on the screen next to me, Attorney Long and Attorney Bennett. Mr. Angoff? Yes, sir. Mr. Schulteis? Yes. And Ms. Kuiper? Right. So, as we've discussed, I didn't announce it today, but I did announce it yesterday. I know it's a little bit cooler, but I'm setting the example by not wearing a jacket recognizing the summer heat. So, Gary and Matt, if you wish to take yours off, feel free. Sorry, Mr. Hearing Officer. I appreciate that. I was sweating all day yesterday, even without the jacket. The chair could take judicial notice that I will accelerate my examinations in return for this favor. So, as we've discussed, if at any point you get dropped from the call, you have my cell phone number, please text me. I'll pause the hearing, allow you to get back on. Yesterday, we were on for a long time. We didn't really have any technical issues, so I'm hoping things will go smoothly today. We are recording today's proceedings via the Teams app. We also have a court reporter here, Ms. Carson, to just transcribe the proceedings. I should have checked earlier, but Ms. Carson, are you on? I saw you on earlier, I believe. Joanne, can you hear us okay? If you're trying to speak, you're muted. Perhaps Christina could give her a call. Do you want us to give her a call, Mike? Yeah, I think that's a good idea. I don't want to go any further unless I know we're transcribing, okay? Okay, make sure of that. Oh, I think I just got a text from her. I can hear you as someone muted her. Okay. She said she can't unmute her screen. Christina, is there a way you can try and do that on our end? There is not a way for me to unmute folks. She may need to maybe hang up and call back in, but because I can't figure out why she can't unmute herself. But she says she's good to go. She can hear fine, but yeah, if you, Joanne, if you wouldn't mind hanging up and calling back in, just, I know sometimes you ask people to repeat themselves for the record, and we're not going to be able to hear that if, okay, I see, it looks like she's leaving. So let's give a couple of minutes. It's a strange new world. Maybe people could test their muting on muting right now in case anyone else needs to quickly hop off. Yes. Some people will start singing something, a little karaoke, something fun. We're not punch drunk yet, Jess. Like four o'clock today, if we're still on, I'm expecting some singing from Gary, from Matt. Oh, I'm hearing quickly if I start singing, believe me. Give it the screen. I think we could sing the Brady Bunch. It's the story. Good morning. I'm here. Great. Great. Thank you. Sorry about that. No worries. Okay. Sorry, I'm just having a little trouble with my mouse. So it looks like we have 37 attendees in the meeting, most of whom I can see are here. We have a couple of phone numbers. The board has been basically doing a roll call for its board meetings since people may be coming and going throughout today's proceedings. I don't think we need to do that. Does anyone think we need to take a roll call attendance of people who are here on the phone? Nope. Okay. So for any members of the public who are present, like the chair said, we will be taking public comment at the close of the proceedings today. However, it's unclear when that will be. So I can't say when we'll get to the public comment portion of the meeting. And if you don't want to sit through what's going to be hours of testimony, we have a meeting this afternoon from 4.30 to 6.30 that is dedicated exclusively to hearing from the public on this filing and the other individual and small group rate filing from Blue Cross and Blue Shield of Vermont. Information about how to participate in that meeting can be found by going to the Green Mountain Care Boards website and clicking on the Rate Review tab. Additionally, you can submit written comments to the board via our website or by regular mail. We will be taking public comments on this filing through July 23rd. Please do not use the chat function of Teams if you're on the computer. That's going to be very distracting for all of us. At this point, we already did the microphone check, muting check. So the last thing before we begin, I just want to remind the board and the parties to exercise caution regarding any information in the binders that has been marked confidential, as these matters can't be discussed in the public setting. The parties have marked documents that contain confidential materials as confidential in the hearing binders. And Mr. Connerty, I wonder if you could just explain to the board how the material is designated because it there's a bit of a difference between the way MVP did it this year and the way Blue Cross did it. Just to remind the board how it's how it's set out in the binders. I'm happy to do that. I'll walk through the exhibit list and explain that in Mr. Lombardo's exam, so I can do it at that time if you'd like. Okay, so let's get into the exhibits. We received binders on July 16th with 33 bait stamped exhibits. I understand the parties have stipulated to the admissibility of these documents. The binder also contains three exhibits, HCA exhibits marked A through C that I understand the parties have not stipulated to. And on Friday afternoon, we received four additional exhibits from MVP labeled D through G that I understand the parties have stipulated to as well. Am I understanding all that correctly? I just want to check to make sure the board members have all those documents. Do you have the documents readily available that came in on Friday exhibits D through G? Does anyone not? Looks like everyone does. Okay. Okay. Mr. Kearney, I do have a question about exhibit G, which is the solvency opinion for Blue Cross and Blue Shield of Vermont. Can you tell me why the majority of that document has been redacted? I think it goes to the relevance. We basically left two paragraphs where the commissioner discusses some uncertainty around returning premium. That's all we wanted to ask about. And I thought it would be inappropriate to have the balance of information about Blue Cross Blue Shield solvency in this hearing. It has nothing to do with this hearing. Okay. You have unredacted copies available should the testimony or the questioning require that? We can certainly get those. My expectation is that anything beyond those two paragraphs wouldn't be relevant to these proceedings. I probably objected that. But we can certainly, my team can get copies of those. Certainly. Okay. So I'm assuming neither party has any objection to me admitting exhibits 1 through 33 and exhibits D through G at this time. Is that correct? No objection. Okay. I will do that at this time. So that leaves exhibits A through C. Mr. Angoff, how do you plan to introduce documents A through C? Mr. Hearing Officer, I'm sorry. I'm unfamiliar with those exhibits. Maybe Ms. Kuiper and Mr. Schulteis could address that. Sure. We would like to move the board to take administrative notice of exhibits A through C. Both all three documents are statistics provided by the U.S. Bureau of Labor Statistics. They're relevant because they speak to the price shocks that Vermonters are currently experienced. Unlike in the past we felt that because the coronavirus economic fallout is evolving so rapidly that we wanted to provide monthly data so we could get a sense of what things are looking like in May and June and that yearly estimates were not going to be helpful to the board. Mr. Carnegie, you have any objection to me taking administrative notice? I do. All three exhibits reference percent changes in the CPIU for all urban consumers and exhibit A in fact the documentation that goes along with it indicates on a technical note that not including the CPI are the spending patterns of people living in rural non-metropolitan areas, farming families, etc. So the general objection is this data relates to people who live in the city. I love Vermont but there aren't really any urban areas and this just isn't relevant to Vermonters and I would add that we've stipulated a number of other exhibits some of which come from the Vermont Department of Labor and are going into it so I don't think there's any harm this issue is filing on. So just for clarity our position is that you know CPI is widely accepted statistic. Unfortunately these numbers are not released for at a state level nor they were released by the state of Vermont. You know this is a known drawback of inflation numbers and I think rather than exclude the evidence for that we have a relatively unknowledgeable triers of fact here and that they can give the evidence the way it deserves. Last point on that I think that using your common sense these shouldn't go in if you bought a cup of coffee or a beer in Vermont in Cabin. That's a totally different experience in buying a beer down in New York City so using your common sense I just don't think that this data is relevant. Beyond relevance I have any objection to the admissibility of the documents in terms of authentication things like that. Oh no absolutely not. Okay so I'm going to admit them. I do think they're relevant to the issue of affordability and the weight they should be afforded is a question that the board can figure out. So I'm going to admit exhibits A through C at this time. So is there anything we need to address before we get into opening statements? Is it turning off? No sir. Okay then Mr. Carnady would you like to make an opening statement? Yes thank you very much. It's we've indicated my name is Gary Carnady and my law firm firmroom Piper represents MVP again this year in the 2021 rate filing. 2020 has been an extraordinary year with this pandemic. MVP the Department of Financial Regulation and this board have risen to the challenge of addressing the complexities of COVID in the world of health insurance. For this 2020 rate filing the evidence will show that the actuaries for L&E and MVP are in agreement on 15 out of the 16 factors L&E identified in its memorandum this year. The evidence will show that MVP is now seeking an increase of 6.06 percent. The evidence will show that L&E has recommended a rate increase of 5.38 percent. This difference is around 0.6 percent depending on rounding. The one issue of disagreement this year is the extent to which COVID will impact rates in 2021. The evidence will show that both L&E and MVP recognize that due to COVID disruptions even higher premium increases may be required than what they propose. As to the 0.6 difference they disagree by about 0.3 on whether pent up demand for surgeries will impact the rate. They disagree by about 0.3 so the other half on how COVID vaccinations will impact the rate. They disagree on the extent of the impact and how to account for it and the rate increase. We believe L&E is correct on 15 out of the 16 of its rate factor opinions which amounts to 94 percent which is an A but it's not an A plus. This disputed issue is very important. MVP's conclusions on COVID are actually sound and reasonable. We believe MVP is making tough calls this year measuring risk and uncertainty based on sufficient data and expertise which is what actuaries get paid to do. We believe the weight of the evidence and the common sense of the board in considering these issues will result in adoption of MVP's 6.06 percent rate increase request and a rejection of L&E's rationales on this one rate factor difference. Thank you very much. Thank you Mr. Connerty. Mr. Angolf do you have an opening statement? Yes I do. Good morning Mr. Herring officer. Good morning Mr. Chair and members of the board. This year for the first time we're asking the board to give the benefit of the doubt to the policyholder. This is not what MVP does and it's not MVP's job to give the benefit of the doubt to the policyholder and clearly that's not what L&E has historically done either. You remember last year L&E said MVP wasn't asking for enough money that they should be charging Vermonters more so what we're asking more than MVP asked for so what we're asking the board to do is for the first time to give the benefit of the doubt to the policyholder and we're asking that for three reasons first this year people obviously are suffering more than they ever have before because of the coronavirus pandemic. Second unlike Blue Cross MVP's surplus is not an issue in this case no matter what the increase or decrease that the board orders for MVP this year it'll have a minimal effect a nominal effect on MVP surplus. Now that doesn't mean that the board that if that doesn't mean that the board should disregard the facts of course not but if there's a range and there always is a range the board should air on the side and giving the benefit to the policyholder not to MVP. Third there was so much uncertainty this year Blue Cross has said it MVP's said it and won't continue to say it with so much uncertainty again that's a that's another reason that the board should give the benefit of the doubt to the policyholder. Second point I'd like to make the amount that MVP has paid out in 2020 it's already got six months of paid claims data is very very important both in determining what the rate increase or decrease should be for 2021 and also in determining assuming that the board believes it has this power and I don't know whether it does or not but if the board believes that it has this power it should consider whether to order a rebate for 2020 rates in connection with 2020 rates. So I just asked the board to look carefully at the data that MVP has disclosed about their paid claims in 2020 and look equally carefully at the analysis that L&E has done regarding those paid claims and regarding what it thinks those paid claims will ultimately result in in 2020 and to make its own decision as to the level of increase or decrease the order in 2021 and whether or not to order a rebate for 2020. MVP gives us all a terrific opportunity to see how much difference there is between Vermont which has done the best job which has the fewest coronavirus cases in the country and New York which has the most. So I think it's very important to look at the assumptions that MVP has made regarding how the coronavirus will affect claims in Vermont and compare those to the assumptions it's made as to how the coronavirus will affect claims in New York. So finally I'd just like to conclude by saying by emphasizing again please give the benefit of the doubt. There's always a range. There's no one perfect one correct assumption for any element. Please give the benefit of the doubt to the policyholder. If MVP has disclosed sufficient data that you believe it has made a clear and convincing case that its assumption should be adopted by the board then adopt that assumption but if MVP has not disclosed sufficient data to allow the board to conclude that it is that it has made that clear and convincing case please give the benefit of the doubt to the policyholder. Thank you very much. Thank you Mr. Angolf. I'm just going to check on Tom Pelham. I don't know if maybe he had a bird lying to stove again but I don't see you on video. Are you still there? You are. Okay. Okay Mr. Carney would you like to call your witness? MVP calls Matt Lombardo please. Okay let's all just take a minute to pin Mr. Lombardo if that's what you're doing. I'm doing. Okay Mr. Lombardo, are you ready to take the oath? Would you please raise your right hand? You swear or affirm that the testimony you're about to give is the truth, the whole truth and nothing but the truth? I do. Okay Mr. Carney. Thank you. Good morning Matt. Good morning Gary. Bright and early. Would you please state your full name? Matthew Lombardo. Matt who's your employer? MVP healthcare. And as I understand it the filer of this rate filing is MVP Health Plan Inc. Correct? Correct. What's the relationship between those two entities? MVP Health Plan Inc is the non-profit HMO legal entity under the MVP Healthcare Umbrella. And what's your position at MVP? Senior Leader of Actuarial Services. And do you have any professional uh memberships or certifications? I'm a fellow in the Society of Actuaries and I'm a member of the American Academy of Actuaries. And how long have you worked in the healthcare insurance industry? About 15 years. And how many years at MVP? 12 12 and a half years approximately. And can you tell the board your involvement in Vermont rate filings for MVP at the P-Mount Care Board? Yeah so um since the ACA rolled out in 2014 I've I've overseen pretty small and individual Vermont merged market rate filings every year. So this is the seventh rate filing eighth seventh eighth rate filing I'm working on. And what are your job duties at MVP? In addition to pricing and setting premium rates I'm responsible for forecasting our state programs in New York and commercial lines of business, reserving our IB&R, financial competitive intelligence. I oversee value-based arrangements and strategic initiatives. Matt, could you turn to the exhibit binder please and go to the exhibit list? Okay. And what I want to do is just walk through these exhibits. They're all in evidence now but sort of acclimate everyone to what we have and what you have knowledge of okay? Okay. So if you look at exhibits one through seven on the list that includes MVP's rate filing responses to objections and you'll also note that for example exhibit two has a 2A which references confidential so the lettered exhibits are the confidential versions the complete versions of the exhibits correct? Correct. And you're familiar with one through seven uh correct? Correct. And exhibit eight is your CV that you prepared correct? Correct. Exhibit nine is your July 7th pre-filed testimony correct? Correct. You reviewed it and are familiar with it right? Yes. And exhibit 10 is the L&E actuarial opinion of July the 7th their memorandum correct? Correct. You've reviewed that and are familiar with it? Yes. Exhibit 11 is a DFR solvency analysis letter that relates to MVP correct? Correct. And you've reviewed that and you're familiar with it? Yes. And exhibit 12 is an actual standard uh crash standard of practice number 26 correct? Correct. You've read that and are familiar with it? Yes. And exhibit 13 is MVP's calculation of L&E's July 7th actuarial memorandum rate impact correct? Correct. And uh you prepared that and are familiar with it right? Yes. And then exhibit 14 is MVP's supplemental pre-filed testimony you authored that and are familiar with it correct? Correct. And then exhibit 15 is pre-filed testimony of Jackie Lee Ms. Lee of L&E correct? Correct. And you've read that and are familiar with it? Yes. Okay and then if you would please go to the third page third page of the exhibit list you'll see a heading well let me know when you're there Matt. I'm there. You see a heading MVP health plan Inc. Do you see that? And there's there's lettered exhibits D, E, F, and G. Yes. So exhibit D that's the DFR emergency rule on COVID correct? Correct. And you're familiar with that? Yes. And exhibit E is a draft it should say draft in the list it doesn't but a draft insurance bulletin from from DFR correct? Correct. And then skip over F exhibit G is the DFR letter regarding Blue Cross Blue Shield this year which has been redacted and has those two paragraphs that you heard hearing Officer Barber and I discussed correct? Correct. And you're familiar with those two paragraphs right? Yes. So these exhibits that we just went over that we reviewed that include statements from MVP as to those you review them or familiar with them and then adopt them as your testimony correct? Correct. Okay and as we've done in prior years in the bottom right hand corner of the exhibits there should be colored numbered pages and as we go through this I'll do my best to reference those page numbers and if you could do the same please. Okay. Okay Matt so first I want to start with an explanation of the rate increase at a high level. What is what was the original request for a rate increase in MVP's original filing? In our proposed filing that we submitted on May 8th MVP requested 7.34 percent increase to our 2020 rates. Okay Matt would you please go to exhibit 10 in the binder? Exhibit 10 is L&E's memorandum and if you go to page 17 please and you see there's two tables on this page I want to focus on the one at the bottom that's entitled components of 2021 recommended rate increase do you see that? Yes and in the bottom right hand corner it shows L&E's recommendation of a total rate change of what amount? L&E's recommended rate change is approximately 5.5 percent and thank you so if you would go to exhibit 13 please exhibit 13 and on page 2 there's a MVP calculation of L&E's actual memorandum rating back do you see that the title of the document? Yes. So as I understand it this year the board asked MVP to check the math check the calculation of L&E's assumptions and run it through the rate filing to confirm that their 5.5 number as a matter of math was accurate is that a fair summary? Yes and what does this memorandum exhibit 13 show? So L&E's opinion had approximate rate changes and there were three changes that were made so everything was an approximation MVP took those recommendations from L&E's opinion and put them into our actual rate filing to see what the actual calculated amount was removing the approximation the result was that the rate increase based on L&E's recommendations would actually be a 5.38 percent increase not 5.5 as they had estimated. So that's not changing any of their assumptions or questioning anything they've done it's just double checking their math is that right? That's right. Would you please go to exhibit 15 and this is the pre-file testimony of Jacqueline Lee okay and go to page number seven please are you familiar with on page seven there's two Q&As are you familiar with those? Yes and what is Ms. Lee saying here about the change to the 5.38? In row 10 of this exhibit on this page she states we believe that 5.38 percent is a reasonable computation of the impact of our recommended modifications because our calculation was based on estimates of numbers provided by MVP. We rely on MVP's calculation of the 5.38 percent as they have all the specific figures and formulas to determine the rate change more accurately. Matt I couldn't hear you clearly it goes of age but it sounds like you said 5.3 doesn't it say 5.38? It does say 5.38. So we have agreement with L&E on the on the math threw up to 5.38 correct? Correct. Would you go back to exhibit 10 please and that on page 17 that table we were looking at the recommended rate increase table on the bottom how many rating components did L&E identify? 16. Okay and again this is high level at this point of those 16 how many did they identify changes on where MVP's rate should be reduced in their opinions? Well they they identified three changes two of them are reductions one of them is actually a immaterial increase. Okay so is the is the first change item four? Yes. And does that relate to the COVID disagreement we have respectful disagreement? Yes it does. And item 10 looks like another change oh excuse me what's the amount approximately of the COVID dispute on item four? Approximately 0.6 percent. And then item number 10 says change to risk adjustment correct? Correct. And that's a change of approximately what? 1.1 percent. And do we agree with that adjustment? Yes. Okay we'll talk about that more detail later. And then there's an item 12 this may have been what you were making reference to can you explain item 12 and the footnote and whether this is material? Sure I start by saying it's it's an immaterial amount it's 0 it's 0.02 percent and what this represents is all the plan designs submitted have to be metal level compliant per the ACA regulations. One of the plan designs submitted by MVP which is under review by DFR was out of compliance with the bronze metal level. As a result through their form review we had to make a modification to the plan design which resulted in increase in benefits. That increase in benefits has an overall rate impact of 0.02 percent. So let's go to the bottom line then go to exhibit 14 please. Okay. And this is your supplemental pre-filed testimony that was filed after you got Ellen's report correct? Correct. If you would go you see how there's Q&As if you would go to Q&A 4 which is on page 3 refer to that but my question is what can you describe to the board as a result of the agreement with L&E what the reduction is from our original filing? Sure as you referenced earlier we agree with the risk adjustment change and the change in the actuarial value. We disagree with Ellen's recommendation for our changes to our COVID assumption so if we take L&E's recommended changes for risk adjustment and the actuarial value we arrive at a 1.28 percent reduction from the 7.34 percent proposed increase for an ultimate rate request of 6.06 percent. So the delta this year between L&E and MVP is 0.6 correct? Approximately 0.6 percent. If you would go back please to exhibit 10 L&E's memorandum, exhibit 10 and go to page 16 please and do you see there's a section recommendations and then there's five bulleted items below do you see that? Yes. So again this is high level just to identify issues for the board that we'll talk about in more detail. The first item references considering updated hospital budget information you see that? Yes. And do we have general agreement on that? Yes. And the second item we've talked about that's the COVID adjustment that's where we have disagreement correct? Correct. And what is the third item and do we have agreement on that? The third item relates to the unified rate review template which is a federal template called the URRT. Essentially L&E in the instructions for the URRT it directs carriers to place the net reinsurance factor into a different location than where MVP put it. We agree with L&E that we should move it. It has no impact on the actual rates. And the next item is the updated risk adjustment which we've already referenced and you'll talk about in more detail in a moment correct? Correct. And then the final item is this updated actuarial value is that what you just discussed the non-material .02? Yes. So as you sit here today of the 16 factors we agree on 15 of them correct? That's correct. All right so let's talk about where we what we don't agree on and that would be the COVID issue. At first I want to talk about MVP's position on it and I want to talk about L&E's position on it and the differences. Okay. Okay. So let's let's go to I think you had some pre-file testimony on this. Go to exhibit 9A. I would note that's a confidential exhibit but I don't believe you'll be talking about anything confidential. I just want the board to have the whole item in front of them. And there's a section on COVID that starts at page 20 Matt if you go to page 20. Okay. I'm just Matt I'll do some pauses because I'm gonna watch the board and see if they've caught up to us when we're at okay. That works for me. I see not. Okay. How does the board like our big thick binder this year? It's really easy to go through isn't it? We're concerned that you might be charging by the page Gary. It's by the word actually but this is on the record. I should stop talking. Okay. So Matt we're gonna talk about COVID and as I indicated starting at page 20 you discussed this in your pre-file testimony. Correct. Correct. So it's an important issue. I want to expand on it a little bit and we want to talk about how the COVID pandemic has impacted and affected MVPs proposed 2021 rates. So let me ask you this question first. There's been decreased utilization in the early part of 2020. Correct. Yeah January and February were pre-pandemic levels so they were normal but we did see decreases to pay claim volume in March, April and May. In June though across our enterprise we did see paid levels return to much more normalized expectations more like pre-pandemic levels. So could you explain to the board and take your time how this the decrease in utilization in 2020 result in in your opinion an increase in utilization in 2021? Sure. So for approximately two months elective procedures were canceled due to all the state homeowners that were in place and essentially MVP analyzed the cost of elective procedures across our commercial block. They were approximately the same in New York and Vermont. It was around $45 per member per month and we recognize that COVID that number of cases is different in New York versus Vermont but the fact that there were state home orders and cancellations impacted both states in a similar fashion. Once we're all we're now assuming that providers are going to be able to increase capacity for two reasons. One is that patients need care so if somebody had a bad shoulder or a bad knee or and they deferred an elective procedure we're assuming that the provider community wants to actually treat patients that's what they do and they're going to find a way to help bring less pain or you know to solve this issue for their patients. The second item is is that we're assuming that 20% of elective procedures are just going to be outright canceled. That was based on a 2010 Society of Actuaries paper where they have a range of five to 20% of procedures were canceled so we actually went with the higher end which has the least amount of impact going forward and it basically went from a moderate scenario of five percent to a severe pandemic scenario was at 20%. So what we're assuming is that if you cancel 20% of procedures but providers increase their capacity which is based on our conversations with our medical manager team they did confirm that elective procedures are generally done at full capacity but based on conversations we've had with providers we know that they're willing to work extra hours, work weekends, etc to do exactly what we talked about which is to provide care to patients as well as make up for lost revenue in those two months. So the way we modeled it out was that it would take a little bit of time for providers to implement this increase in capacity it's not something that we assume they could turn the switch on immediately so we assume that beginning in August of 2020 providers would operate at a 10% additional capacity so 110%. And that's using two months of COVID state home orders and cancellations of elective procedures and no further outbreaks of COVID. With that assumption there would be four months of elective procedures that should have happened in 2020 that will actually occur in 2021. At that point as of the end of April we estimate that providers will all be caught up the system will be caught up. The approximate impact of that is $4.51 for the four months of January through April. Since we charge calendar year rates and we don't charge monthly rates that vary we took $4.51 and divided it out by three since it's a third of the year to get to a $1.50 pmpm impact. Could you just clarify so there's a window of time that MVP for the reason that MVP is considering that providers will perform at 110% when does that window start and when does it end? It starts in August of 2020 and it would end in April of 2021. From that as an actuary to have a statutorily adequate rate for 2021 you consider whether individual treatments or surgeries that take place in 2021 are scheduled in 2020. Is that a different way? Does it matter when they're scheduled or when the treatment and cost actually occur? Can you explain? It matters when the treatment actually occurs. We set our rates to be actuarially sound and we included an exhibit which is actuarial standard of practice number 26 which speaks to defining actuarial soundness. Actuarial soundness is when you set your premiums in such a way that we'll cover claims, overhead, reinsurance, recoveries, etc. for the time period where you're collecting premiums. In this case we're setting premiums for calendar year 2021 so if we expect an increase in claims in a portion of 2021 our premiums should reflect that to be an actuarially sound rate. Matt would you go to page 22 of exhibit 9a please and you see this is on the issues we're talking about. Do you see a 32 at line three? Yes. The second sentence would you read the second sentence please starting with according to according to actuarial standard of practice number 26 section 2.1 actuarial soundness is defined as for business in the state for which the certification is being prepared and for the period covered by the certification projected premiums in the aggregate including expect and reinsurance cash flows, governmental risk adjustment cash flows and investment income are adequate to provide for all expected costs including health benefits, health benefit settlement expenses, marketing and administrative expenses and the cost of capital. Read the next sentence therefore. Therefore MVP must consider health claims expected to occur in and only in 2021 when setting premium rates that are effective for 2021. If MVP were to reduce it in 2021 for claims that were expected to occur but did not in 2020 those rates would be considered inadequate based on actuarial principles. So what actual what actuarial concerns do you have if the board reduces rates for 2021 based on reduced 2020 claims in the recent months during the COVID crisis? The actuarial soundness of the rate that would be approved would be in question and it would be concerned. So why aren't you assuming that 2021 going to be the same as 2020? Well we did model out various scenarios but what we're really looking at is when the state home orders went in place in March and April and early May we were just learning. We didn't really know much about the COVID pandemic and we've learned a lot in the last four months and as time has gone on we've figured out ways to move throughout our lives cautiously and intelligently to minimize the spread of the virus as a result of that and we expect to continue to learn more and more about that over the course of the year and until this pandemic is squashed and you know as a result we expect 2021 utilization levels to look more like 2019 utilization levels. So we're using 2019 data or base data to set our rates projected into 2021 for any expected changes in unit cost utilization or in this case pent up demand or vaccinations. So because we expect because we we've somewhat figured out how to move intelligently through our lives which is supported by the fact in healthcare that we are seeing our paid claim volume start to go back to pre-COVID levels we expect 2021 to look a lot more like 2019. And as to 2020 are there do you have any concerns about as you sit here today in the middle of July what what 2020 is actually going to look like the whole year? There's a lot of uncertainty about what 2020 how 2020 will ultimately play out. As I mentioned we did see suppressed claims for a few months and in June we did see claims uh renormalized back to pre-pandemic levels and what also is known is was it deferred care or the lack of utilization for those few months where there was not only state home orders and and cancellation of elective procedures but also just general societal fear of going to the doctor or something like that until we learned more about the virus um excuse me um we we are we we do expect to see 2021 come to more normalized levels but the rest of 2020 as those services were canceled or deferred it's unclear if that's actually going to lead to a higher morbidity state which could actually lead to higher costs over time that's going to take time to play out that may not even be by the end of 2020 that may be into 2021 or even 2022 and you have the 2020 risk adjustment yeah we do not have 2020 risk adjustment we received 2019 risk adjustment uh this past friday and and how would help that help you in terms of determining what's going to happen in 2020? Rates are set to be actually sound uh or in and to be to the market wide average rate level or the market wide average risk level so we receive risk adjustment from CMS uh on an annual basis we don't receive the first five months of the year or six months of the year risk adjustment level and what we have to do is take our claims and if we're paying into the system which means we have a less morbid population than our competitor and they have a higher morbidity population risk adjustment levels the playing field so that we're on the same so that you're you're removing morbidity from the equation and how we're setting our premium rates we don't have that information for 2020 we only have it for 2019 it's unclear right now exactly how 2020 is even going to play out as a result of this but time will tell and we'll see as this time goes on. Next I want to ask you about the impact of a potential vaccine would you please go to page 21 we'll see at the top of 21 there's a paragraph that starts additionally first full paragraph that's where we start talking a bit about vaccines but I would just want to ask you to please describe your thoughts about uh vaccine and how that might impact rates. Sure MVP hopes that there's a vaccine as soon as possible and we're watching news very very closely to see how that's progressing so one so that we can return to our lives too so that you know society and people don't have to continue getting sick with this virus and potentially passing away as a result of it so we're monitoring progress of vaccines when we set our rates in May we were aware that the government was setting out expectations through Operation Warp Speed to accelerate the approval process of a vaccine we also are aware that there's it feels like almost every biopharmaceutical company or pharmaceutical manufacturer is researching and developing some sort of vaccine so our hope is that in early 2021 we don't have an exact time just in early 2021 a vaccine will be approved and widely available to the to the public. Matt would you please go to exhibit two which is one of the interrogatories and page six of that exhibit okay I'm there exhibit two page six okay Matt there were some interrogatory questions and responses around COVID and the vaccine issues so I just want to refer you to those first there's a question about immunization cost would you tell the the board about that please. Sure MVP 13, interrogatory 13 yep the wakely consulting group provided a study where they're estimating how COVID COVID vaccination costs and they use Tamiflu as a baseline for their estimate of a of an inoculation cost um MVP used that assumption but based on our own data and our own cost of Tamiflu which was 75 dollars per dose so we're assuming that each vaccine will cost 75 dollars. Question 14 goes to immunization rate would you please discuss that. Yeah so also included in the wakely paper was an assumption that 80 percent of the population would would have would accept a COVID vaccine um and we we thought that seemed like a reasonable balance between where the flu vaccine rate is of 55 percent and something that's you know vaccination that you provide to children like MMR which is north of 90 percent. What's MMR? Measles Mumps Rubella. You said that's north of 90 percent? Yes. And that's the immunization rate and then the next question 15 asks about the date when it might become available with vaccines could you talk about that? Yep um as I referenced a few minutes ago we recognize that the government as well as pharmaceutical manufacturers are working as fast as possible day and night to try to to try to you know stop this pandemic so that people can return to normalcy and no one else has to get sick from this um and our hope is that a vaccine will be approved in early 2021. There's recent news from a few pharmaceutical manufacturers that are going to enter phase two phase three trials um and we're we're hoping that those go according to plan and that there is actually a vaccine available at some point early 2021. When you say other chemists you say entering phase two and phase three what does that mean about phase one? It means that phase one proved that they were safe and um I don't know a whole a whole lot but my understanding is that phase one is a safety trial. Phase two phase three is more of an efficacy trial um on top of that. That's correct. Staying on this exhibit if you go to the next page and you'll see on page seven there's an interrogatory 17 let me know when you're there. Okay. And this is a discussion a question around this any second wave of the coronavirus would you talk about that please? Sure um we recognize that this pandemic is ongoing and that's not something that's all for so we did model out uh numerous scenarios what with either more months of an outbreak in 2020 or more months of outbreak in 2020 as well as 2021. In our modeling uh what's reflecting our rates is two months of deferred services being suppressed and canceled and then no more future outbreaks in 2020 or 2021. If we were to assume um an increase in the months of outbreak or state home orders cancellation of procedures for 2020 we would actually experience a four dollar and fifty one cent increase to our rates for the full year so that's three times the amount that's basically the 10 capacity increase that we're going to see for January through April and our assumptions. What that's essentially saying is that if there are more months of outbreak the provider system will not be able to catch up by the end of 2021 and that they could actually that deferral could actually bleed into 2022. If there is another outbreak in 2021 that will actually to a suppression of claims similar to what we experienced in uh in the in the early spring. Would you go to exhibit five please exhibit five and it's the third page of that exhibit exhibit five page three okay so uh there's an interrogatory that starts on the very bottom number eight and it asks about over defect on non-benefit costs such as travel overhead fraud that you claims adjudication etc. Would you please speak to those issues? Sure um MVPs administrative costs are in some areas they are higher because of our working from home and and uh the pandemic in other areas they're decreased. It's still too early to tell exactly how 2020 is going to play out in full but our expectation is that 2021 similar to our claims costs will look much more like 2019 pre-pandemic. So as a result we're using 2019 data with an adjustment for um any changes to our administrative costs are expected administrative costs until 2021 and no adjustments being made for what's happening in 2020. It's still too early to tell. And on that page four the next page there's a interrogatory nine which asks about consumer savings in light of there's a number of bullet centers. Yes I'd ask you to walk to those bullets explain those savings to the board. Sure um before the bullets we I will add that MVP rolled out a brand agnostic website called tritellamedicinefirst.com. It's a it's a directory of all the available telemedicine or telehealth doctors that you have in New York and Vermont. Just because we recognize that patients and members need care and when there was stay-at-home orders it was hard to go to the doctor and maybe you didn't feel safe so we we rolled this out as a as a way to help guide members into um into the right way to receive care when they're locked at home. Starting with the bullets we've been providing telemedicine visits for a few years now and in addition to providing telemedicine we've also rolled out a new service called MyERNow that's like a triage service where you can call our MyERNow app and they will they'll direct your care to either um maybe you do have to go to the ER maybe the right answer is you have a telemedicine visit maybe the correct answer is that you go to Urging Care or you just go to your local pharmacy and pick up some sort of Advil or or Tylenol. We're also waiving cost share for our telemedicine and our MyERNow app and we're also promoting prescription refills to go from 30 day supplies to 90 day supplies so you don't have to go into the pharmacy as frequently as you normally would. In addition there's also been changes to our medical management policies which are making it easier for to go through medical review or there is no medical review for a few months or was no medical review for a few months so that you could have the care that you needed as quickly as possible. We've also notified our Vermont members of the available state programs in case they do have financial needs and they they can afford their premiums in the commercial space so that's another way that we're helping helping promote and helping our members navigate through the coronavirus. Great thank you. Next I want to ask you about coverage for COVID testing. Okay. Just give me a second. So does MVP in this 2021 rate filing include COVID testing costs in our analysis? We are not. So would you go to exhibit D please? Exhibit E is in dog. Okay. And you see that's an emergency rule if you look at the top emergency rule H-2020-03E from BFR regarding coverage of COVID-19 diagnosis treatment and prevention. Do you see that? Yes. And you're familiar with this document? Yes. I want to focus on COVID testing. If you would go down to section 3A. Section 3 says coverage of COVID-19 diagnosis. Would you read the first sentence of 3A please? When medically necessary or directed by the state or federal government health insurers shall cover any COVID-19 testing performed by the Center for Disease Control, the Vermont Department of Health, or a laboratory approved by CDC or VDH with no co-payment, co-insurance, or deductible requirements for members. And this is a two-page document. The rule is two pages, correct? Correct. And that term medically necessary. Is that defined in this rule? It is not. Okay. Would you go to section 3B and read the sentence please? Health insurers shall cover provider office or urgent care visits in emergency services visits to determine whether COVID-19 testing is medically necessary with no co-payment, co-insurance, or deductible requirements for members. So in a nutshell what is 3B saying? It's saying that when COVID-19 testing is medically necessary there will be no charge to members whether it's co-pay, deductible, or co-insurance. Thank you very much. Now Matt would you turn to exhibit E please? exhibit E. Okay so this is a draft. I want to be clear it says draft across the front of it but it's insurance bulletin 214 and it's entitled medically necessary COVID-19 testing. Do you see that? Yes. And what's the date on it on the front? July 6th 2020. And again this is just a draft but would you read the first sentence? The purpose of this bulletin is to clarify when COVID-19 testing shall be covered without cost sharing under emergency rule H-2020-03-E. And that goes to this issue of what is medically necessary correct that's what the document's entitled? Correct. So if you go to the third paragraph it says in the department's view medically necessary testing includes all testing and then it goes on from there correct? Correct. And then would you please read the first bullet under that? Recommended testing for asymptomatic individuals without known or suspected SARS COVID-2 exposure for early identification in special settings. And do you have a concern about this first bullet? Well it's from a societal standpoint I understand it because you even if you're asymptomatic I mean you're showing no symptoms and you're entering into public it's a good way to help spread the disease. There's good way to help prevent the disease from spreading. That said though from a from an actuarial soundness perspective there is concern because this kind of opens up the door to testing across the board under almost any scenario. Okay so you were talking about the term asymptomatic individual correct? Correct. And looking at this draft I know it's just a draft but that's not defined anywhere is it? No it's not. Okay and the the bullet ends with early identification in and it says special settings do you see that? Yes. And you have a concern about the term special settings? Yeah it's broad and I can use an example we do have an employer group that is a school that's in New York and has faculty and students in Vermont and they recently informed us that they're going to do very rigorous regular testing to help manage the spread of the virus throughout the school year and they're estimating that they're going to do some 20,000 tests over the course of the school year. But the cost it's not it's not finalized yet but regardless even at 20,000 tests the cost could be substantial very quickly. That would be like an occupational setting do you know if that would fall under this definition of special settings? It's not defined what a special setting is so I would assume that it would fall under a special setting? You don't know because it's not defined is it? No. And are you concerned about these costs and actually figuring out the amount that would rise to an actuarial level of reasonableness so you could include it in a rape file? Yeah there's definitely concern on our part it's a it's a big unknown. What we're hoping is as we talked about earlier that there's a vaccine widely available in early 2021 that would mitigate the need for testing on a regular basis especially by asymptomatic individuals. But if the vaccine isn't approved for quite some time into 2021 we assume that there's going to be rigorous and in a high volume of testing that's going to occur until that time. And some of that could be this occupational testing correct? All right thank you let's now talk about Ellen E's position on COVID if you go back to exhibit 10 which is Ellen E's actuarial memorandum so exhibit 10 page 9. Okay so on page 9 you see a number four heading it's about four paragraphs down that says changes to population morbidity adjustments do you see that? Yes. Okay so this is the section in Ellen E's report on COVID correct? Correct. As I understand it pages 9 and 10 9 into 10 provides a summary of MVP's positions on COVID and assumptions correct? And if you would please go to the third paragraph under that number four heading that third paragraph starts with as a result let me know when you're there. Okay. And in this paragraph the second sentence makes reference to MVP relying on a society of actuary research paper do you see that? Yes. So we relied on data from the society of actuaries correct and did Ellen E have any objection to that reliance? They did not. In fact aren't Mr. Dillon and Ms. Lee aren't they members of the society? And then the last sentence makes reference to based on information from the company's medical management team and it goes on from there do you see that? Yes. And did Ellen E object in any way with the actuaries at MVP relying on the medical management team providing that information? They did not. Okay so at the top of page 10 the first couple paragraphs are MVP considering various utilization scenarios is that right? Yes. And Ellen E is just summarizing that correct? Correct. And then if you get to the sentence where it says Ellen E does not believe about five paragraphs down do you see that? Yes. This is where we start to talk about or they start to talk about our capacity disagreement correct? Correct. Can you read that sentence please to Ellen E does not believe sentence? Providers have had an opportunity to receive financial assistance. Matt I'm sorry Matt I'm sorry can you read the sentence above that please? Ellen E does not believe that the assumption that providers will run at 110% capacity is adequately supported based on the following. And then there's three bullets underneath regarding Ellen E's assumptions is that correct? Correct. And I understand you have two problems with their assumptions is that right? Two problems? Yes. So would you please read the first bullet? First bullet reads providers have had an opportunity to receive financial assistance from the government to alleviate financial hardship which reduces the financial incentive to run at greater than 100% capacity in the future. And do you disagree with this first bullet? I do disagree with that. And why? It's looking at this need to fill or to have these procedures performed as purely a financial item but it's not it's providers and hospitals they want to provide care that's why they enrolled in the profession of being a doctor they want to help people. And there's people that needed to have a service performed or surgery performed that couldn't have it done in for the few months of March April May. And so this assumption is disregarding that providers want to actually help people and to actually get their backlog of require procedures worked through they need to increase capacity. Additionally I'm not privy to these conversations but based on conversations I've had with our contracting team we are not hearing that the provider community feels that they've been fully compensated back for canceled or reduced procedures in those few months. So on both fronts I disagree with that bullet point. So and when you talked about well it's a I think you were talking about a desire to promptly treat patients that's what health care providers have correct? Correct. And that's not just your your opinion that's based on information that your team has heard from medical care providers is that right? Yes. And is it fair to say you talked about the financial piece that they do want to generate as much revenue as they can in 2020? Yeah they would like you know they set a budget at the beginning of 2020 and I assume that they are trying to meet that budget revenue expectation. And have you heard from anybody in MVP that medical care providers intend to sit back and live on government assistance? I have not. So this is the first problem that you identified with the assumptions correct? Correct. Let's go to the second third bullet. Would you read the second bullet please? There is an immense uncertainty regarding how long social distancing cleaning and other safety guidelines will continue into 2021 which limits provider capacity. Okay and would you read the third bullet please? Vermont had a quicker than average turnaround from shelter to in place shelter in place to reopening which potentially sets the stage for all deferred care to be recouped in 2020. Okay and is your second problem relate to these two bullets and what's being said there? Yes. Would you please describe to the board what your issue is? The second bullet discusses how much uncertainty there is regarding how long all of our social distancing and increased cleaning and other safety guidelines will continue so there's uncertainty about about all of this but then the third bullet is stating that because Vermont has had a quicker turnaround on shelter in place to reopening that Vermont providers will be able to provide as many services needed in calendar year 2020 to recoup all their deferred care. So one is an uncertainty where they're saying we don't know how long this is going to go on the other is acceleration and get it all completed in 2020. Well to be clear the second bullet says immense uncertainty doesn't it? It does. And then in the third bullet Eleanor is going on to make their own assumptions correct? Correct. Getting some feedback. Yeah some people could go on mute. Everyone please check their mics. I'm sure they're muted. Is that better Gary? Much better. Thanks. Matt did you hear me? I think so. Would you please read this sentence that starts Eleni recommends under the three bullet. Eleni recommends that the adjustment for COVID-19 pent up demand be reduced to 0.0%. So is Eleni recommending that we do nothing with our rates as it relates to COVID next year? They're recommending that in regards to pent up demand that we do nothing to our rates for it. And do you disagree with that and their rationale based on the two reasons we just discussed? Yes. And in considering capacity and pent up demand is MVP actually attributing a number to it? Yes 110%. So MVP has stepped up and measured the risk correct? So let's go back to exhibit 10 and I want to talk about Eleni's views on vaccines please. So on page 10 where we were at the very bottom Eleni the very last paragraph starts talking about their views on the vaccine correct? Correct. And that goes on into page 11 correct? And as I understand it they don't dispute any of our assumptions regarding timing of availability of the vaccine correct? Correct. For the vaccine cost of 75 dollars they don't dispute that correct? That's correct. The dispute is where we say there'll be an 80% vaccination rate and they say it'll be 55% is that right? That's right. Let's go to that sentence please. It's the third full paragraph. Would you please read that first sentence? Eleni recommends a vaccination rate assumption of 55% consistent with flu vaccination rates. So that's consistent with flu vaccination rates that's how they came up with a number? Yes. And why do you believe actually I guess we've talked about that already why you believe that's wrong correct? I think we touched on it but essentially the flu while it is it can be bad it hasn't caused the entire world to alter the way it approaches a day-to-day life and staying at home quarantining so on and so forth and we expect a much higher vaccination rate for COVID than we do for the flu but we aren't assuming the max as I mentioned earlier for measles lumps ravella we see a higher vaccination rate than 90 percent so we're kind of in the balance of the two we're in the middle some more in the middle. The next sentence in that paragraph references reducing the rate increase from 1 to 0.7. Do you see that? Yes. So is that as to the vaccine issue is Eleni disagreeing with us and that disagreement amounts to 0.3 on the rate? The vaccine is approximately 0.3 and so is pent up demand. So it's vaccine issues half of our dispute this year basically right? Yes. And the other half is the pent up demand correct? Correct. I'm not sure Barbara are you yeah I saw you hold your hand up. Yeah I just we're getting some real noise or something. Again could everyone just check their their mics to make sure they're muted except for Mr. Tarnady. So much in an area because the jets are flying so what it sounds it's if you can hear me it's the court reporter it's me and I'm having trouble with my mute. I don't know if Abigail or Christine whoever set this up if you can mute me on your end that would help. Yes I can mute you Joanne this is Christina I'm nervous that if I mute you you may not be be able to unmute you. I can I can text you quickly if I have trouble so I'll text you but okay I don't know what's going on with mute today but it's in charge. Okay sorry about that. Okay it looks like she's muted you and I don't hear any noise so Mr. Tarnady proceed. Thank you very much. Matt next I want to talk about medical trend assumptions it appears we have agreement with Melanie but let's go through that if you would please go to stay at exhibit 10 and go to page 6 of the exhibit please. If you look there's a item 3 trend from 20 to 21 in the middle of the page do you see that? Yes. This is where their discussion of the trend starts. I want to go to page 7 please and you'll see a heading at the top medical unit cost trend do you see that? Yes I want to focus on the medical trend if you would please read the first sentence of the paragraph underneath medical unit cost trend. MVP computed its allowed trend as a weighted average of the medical claim unit cost trends in 2020 and 2021 for inpatient outpatient and physician claims based on known and assumed price increases for MVP's provider network. Read the next sentence. This approach is consistent with prior rate filings. And then go to the second paragraph and read the first two sentences please. Since the 2021 hospital budget review is not yet finalized MVP has assumed that hospital increases will match the 2020 increases with a few exceptions by facility these expected assumptions for hospital budget increases are based on information from MVP's contracting department. And then would you please read the text in the box to the right there? The header is GMCB hospital budget review says the overall unit cost medical trend of 6.0 percent includes one a trend of 6.2 percent for facilities and providers that are impacted by the GMCB's hospital budget review and two a trend of 5.5 percent for all for other medical facilities and providers that are not subject to the hospital budget review. And would you read the sentence below the box to the left? L&E believes the assumed unit cost trends are reasonable and appropriate. So we have agreement on that correct? Yes. Next I would ask you to go to page 8 please. Okay. And does I understand that the second paragraph involves L&E summarizing some independent trend calculations that they did? Yes. And then if you could read the third paragraph that starts based on? Based on the above analyses L&E considers the assumed utilization trend of 1 percent to be reasonable and appropriate. Okay so we have agreement on that correct? Correct. And then would you please read the first sentence under total allowed medical trend? Based on the information available L&E considers the total allowed medical trend of 7.0 percent to be reasonable and appropriate. Okay so we have agreement on that correct? Yes correct. And then on the next paragraph it's the fifth paragraph on the page. Would you please read the last two sentences of that paragraph starting with due to? Due to the disruptions from COVID-19 it appears likely the submitted hospital budget request will be higher than last year. If this is the case it may mean that a higher premium increase is necessary. And you agree with that? Yes my understanding is there's an additional item included in the proposed hospital budgets to account for COVID one-time adjustment for COVID loss revenue. And would you please describe to the board if you're familiar with the challenge of the timing of the hospital budget process and also talk about what the board is having us do differently this year in terms of briefing that issue? Sure so every year there's a little bit of a timeline issue where our rates are submitted in May and approved in early August and the proposed hospital budgets come in during that review period and then the final approval is after rates are approved. This year due to the pandemic there's a little bit of a push the proposed hospital budget timeline has pushed out a little further but it is before the approval of our rates will happen. So the board is allowing carriers to provide a little memorandum summarizing the impact of the proposed hospital budgets on our rates. I'd like to talk about the risk adjustment. I believe there's agreement if you would go to bullet number four please. It's on page 16. Okay so that's the reference to the updated risk adjustment. I'm sorry I want to bring your right to it. We agree to a reduction of approximately was it 1.1 or 1.2 on risk adjustment? Hi we agreed with Alanis calculation and that was 1.1 percent. So I apologize I took you to the wrong page. So go to page 10 please. Excuse me page 13. That's the last mistake I'll ever make. Page 13. There it is. Finally. So on page 13 you see an item 10 changes to risk adjustment. Do you see that? Yes. Okay so would you explain to the board the information that we relied on and the information that L&E relied on and then recent information that's come in on risk adjustment? Yeah so earlier I talked about how we have to include risk adjustment to level the playing field between the carriers to remove the impact of morbidity differences in our populations. When we set our rates in May the only information that we have is CMS's interim results. That's what MVP included in its proposed rates. After our rates are submitted shortly after that we have final files from CMS's edge server that we share with L&E as well as Blue Cross and they compute what the risk transfer amounts will be so that we can discuss that during the break review process. We received our actual risk adjustment results from CMS's past Friday and on over $20 million of a payment L&E's calculation was within $160 so no material difference in the two calculations and we agree that we should be putting in the actual CMS results into our rates to normalize our claims for the market wide risk. We have agreement on that after these most recent numbers correct? Correct and I did say it was 1.1 percent before. I know that in this file there's that table on I believe page 16 that shows 1.2 down to 0.1 which would show 1.1 and then they reference 1.2. I'd like to clarify that I don't know the exact number but I just agree that we should be putting in the actual CMS final results and whatever that impact is it's 1.1 or 1.2 percent and we agree with L&E. Thank you. Now I want to talk briefly about administrative costs you go to exhibit one please which is our original rate filing exhibit one and then go to page 119. Okay. And do you see the fifth paragraph downs as general administrative expense load including QI component do you see that heading I'm just waiting to make sure the board is caught up okay and in the first sentence there's a reference to there's a number and a reference to PMPM can you tell the board what that is? Yep so PMPM represents per member per month we take total claim dollars divide by our member months that we have available to us to compute a PMPM so that normalizes out for differences in membership and we are proposing to charge $43.75 per member per month for administrative expenses 49 cents of that charge is because due to the pandemic we're rolling out credit card payments to small employers previously only individuals could pay via credit card we had an uptake rate of around 20 percent for individuals we're assuming a 10 small employer group uptake rate which will increase the admin load by 49 cents because we do have to pay 2.8 percent credit card fee. So the PMPM for this year our administrative expense load in our original filing is 43.75 PMPM correct? Correct and let's see what Ellen E said about that if you would please go back to exhibit 10 and go to page 14 we're talking about administrative costs so you'll see heading 13 changes in administrative costs let me know when you're there I'm there so there's a discussion about administrative costs and then if you would go to page 15 would you read the first full paragraph please? The administrative costs assumed in the 2021 filing are consistent with MVP's recent individual and small group administrative costs as reported in the last three years of the company's supplemental health care exhibit the company's expenses have decreased since 2013 when they were $46.57 PMPM. Okay so that $46.57 compares to this year which for 2021 which is 43.75 correct? Correct and just generally what is Ellen E talking about in the next paragraph that's the second full paragraph on page 15? They're referencing our growth in the Vermont market but our contraction in the New York market and overall how that's impacting administrative costs because a lot of our costs are fixed and spread out across both states. And would you read the last sentence of that paragraph please? Considering the reduced administrative costs over the recent years Ellen E considers the assumed 2021 administrative costs to be reasonable and appropriate. Okay so Matt in summary of your opinion if MVP adopts the recommendations we've identified the Ellen E recommendations and the resulting change from 7.34 goes to 6.06 is that rate 6.06 actually sound and reasonable? Yes. And I want to talk about reserves and solvency uh this year MVP has a CTR proposal of 1.5 percent correct? Correct. So if you would go to exhibit 11 I want to see what DFR says about that. Let me know when you're there exhibit 11. I'm there. So this exhibit 11 is DFR's letter to chair Mullen regarding solvency this year for MVP correct? Correct. And you've reviewed this and you're familiar with it? Yes. Would you turn to the second page and read the sentence under summary of opinion? The proposed rate filed by MVP HP would not negatively impact its solvency and the company otherwise meets Vermont's financial licensing requirements for a foreign insurer. And would you please read the third bullet under excuse me do you agree with that what you just read? Yes. And would you please read the third bullet under MVP HP solvency? Finally in 2019 all of MVP holding companies operations in Vermont accounted for approximately 5.7 percent of its total premiums written. DFR has determined that MVP HP's Vermont operations pose little risk to its solvency. Nonetheless adequacy of rates and contribution to surplus are necessary for all health insurers to maintain strength of capital that keeps pace with claim trends. Would you agree with that? Yes. And then would you read the sentence under impact of the filing on solvency? Based on the entity wide assessment above and contingent upon GMCB actuaries finding that the proposed rate is not inadequate DFR's opinion is that the proposed rate will not have a negative impact on MVP HP solvency. Great. So let's let's see what L and E says about CTR if you go to exit back to exhibit 10 and go to page 15 and it's item 15 so let me know when you're there. Okay. And you see in the second paragraph there's a reference to a reasonableness check. Do you see that? Yes. What's that about please? Small group and individual QHP filings are available on the societal website. L and E reviewed three years of rate filings in 2020 there were 783 of them. In 2020 MVP's proposed CTR of 1.5 percent is almost 2 percent below the average CTR submitted and it would rank 630th of 783 filings which is around the 20th percentile. Our CTR proposals in the last two years have also been in a similar percentile range around the 20th percentile so 80 percent of filings have a CTR that is higher than what MVP is proposing. In your opinion did we pass the reasonableness check? Would you please read the in the last paragraph it's the first sentence. L and E believes the CTR and bad data assumptions are reasonable and appropriate. So L and E agrees with us on the CTR correct? Correct. In your opinion will the decrease from our original filing of 7.34 to 6.06 which adopts all the recommendations of L and E except for COVID adversely impact the solvency of MVP healthcare. It will not. Although our proposed rates are reduced our CTR remains at 1.5 percent correct? Correct. Do you anticipate that contributions to reserves will require a change depending on the hospital budget? I'm talking about contributions to reserves. Our rate may need to change but the CTR load of 1.5 percent would not change. So in the framework and context of contributions to reserves could you tell the board about the interplay between vaccines next year and testing and how that should be viewed in the context of the CTR? Yeah CTR it's there's one there's minimum solvency requirements set forth by regulators and two the point of reserves is to be able to provide consumers with peace of mind in case there's adverse claim events. The 1.5 percent in addition as claims increase which leads premiums increasing that means that our our adverse risk but the magnitude of it will increase that's why we need to continue to add to our reserve levels. Costs in healthcare are very right tail skewed meaning that there's a few people that incur most of the cost and those right tail events are becoming more and more challenging to predict and could be more and more impactful as there's new breakthroughs in pharmaceuticals and technological breakthroughs. Thank you I want to touch on briefly the non-actuarial issues that we need to consider the board needs to consider at the hearing if you would please go to your pre-file testimony exhibit 9a and please go to page 4 of that document and let you know when you're there give the board a minute catch up okay Matt do you see that there's a Q16 why don't you read that please. What steps says MVP taken to lower costs and established that's proposed rates promote affordability access to care and quality of care for Vermonters. Okay so those are the non-actuarial issues correct okay and in in this response there's a long list how many items are listed there. 22 items and then if you look at the list some or many of those items have a cross-reference to an additional Q&A correct correct and those additional Q&A's drill down on the issue is that fair that's fair so with these items in your pre-filed relating to non-actuarial issues evidence some of them these steps to lower costs promote quality of care and access and establish that the rates proposed are affordable to Vermonters. Matt would you go back to the exhibit one this will be brief it's our original filing and go to page 112 of the exhibit so exhibit one page 112 and you see there's a heading for market slash benefits do you see that yes and do you see the fifth paragraph down there's a reference to a wellness benefit do you see that yes would you tell the board about the wellness benefits. So standard plans and non-standard plans are offered in this market standard plans mean that all the carriers so two carriers and in vermont merge market offer the same set of benefits to provide an apples apples shopping experience for consumers non-standard plans after me metal level compliant but they provide carriers with the ability to differentiate themselves in some way and a way that we're differentiating ourselves is through a wellness benefit which can provide up to $600 of reimbursement for subscribers that take personal health assessments live an active lifestyle things such as that. On the non-actuarial issues would you agree that how MVP manages its administrative cost makes its insurance. Yes as and will MVP take steps to lower costs promote quality of care and access and establish that the rates proposed are affordable to Vermonters. Yes do you have an opinion on whether short term quote affordable and quote underpricing will make insurance affordable in the long run. My opinion is it will not. But Matt each year we need to walk through the statutory criteria I'm going to do that with you quickly and we're just about done okay. So I want to frame these questions around the 6.06 which is the revised rate all right the rate that we're proposing now at 6.06 are you with me. Yes each of these questions relate to the 6.06 rate okay. Okay. Do the MVP rates meet the standard of affordability based on the rate filing other evidence in your testimony today. Yes. Do the rates promote quality of care and access to health care based on the rate filing other evidence in your testimony today. Yes. Is this rate filing unjust unfair inequitable misleading or contrary to law based on the rate filing other evidence submitted in your testimony today. It is not. Are the rates reasonable based on the data that we have. Yes. Are the rates actually sound and fairly charged premium for services covered. Yes. Are the rates excessive inadequate or unfairly discriminatory. They are not. Are the rates reasonable relative to the benefits that are offered. Yes. Do they provide for payment of claims administrative expenses taxes and regulatory fees and have reasonable contingency and or profit margin. Yes. So they are adequate. Yes. Do the rates exceed the rate needed to provide for payment of claims administrative expenses taxes regulatory fees and reasonable contingency and or profit margins. They do not. So they're not excessive. That's correct. They're not excessive. Do the rates result in premium differences among insurers within similar risk categories which are not permissible under applicable law and do not reasonably correspond to differences and expect expected costs. Can you re ask that question and cut out for a second. I'm sorry. Sure. It's also the triple negatives right again. Do the rates result in premium differences among insurers within similar risk categories which are not permissible under applicable law and do not reasonably correspond to differences and expected costs. They're in compliance with the law. So they're not unfairly discriminatory. That's correct. So Matt there's one last issue I wanted to touch on turning up a reference that in his opening and that is this question around return of premium. So this relates to 2020 not to your rate filing but I wanted to touch on it and have the board hear MVP's view on any anticipated return of premium in 2020. Okay. So go ahead. Tell them your view. It's too early to tell is generally MVP's perspective. As I mentioned a few times we did experience reduced claims for a few months but in June our paid level is back to where they were in January and February pre-COVID levels. There's also concern about the long-term implications of deferring care that could lead members to being in a higher morbidity state. As time plays on we're going to keep reviewing the situation and monitor both those items paid volume as well as member health if we're seeing an escalation in morbidity. Until that time it's too early to assess the situation of how 2020 will play out. And Matt would you please go to exhibit G which is in evidence. So I'm just going to identify it and have you confirm this is July 7th 2020 letter to Chair Mullen. You can see that on page one. Correct. Correct. And this this is relates to Blue Cross Blue Shield's solvency opinion from the DFR for this year's filing. Correct. That's correct. And then on the last page it's a three-page exhibit. This show the signature of Commissioner Pechak. Correct. That's correct. And everything is redacted in the letter with the exception of two paragraphs that talk about this issue about the return of premium. Correct. Correct. These are the only two paragraphs that you're familiar with in the letter. Correct. That's correct. So what is what is the Commissioner saying about this issue? So from the first paragraph the question being asked is have her monitors overpaid for their health insurance in 2020? And the second paragraph addresses that and says due to the current uncertainty around COVID-19 it is too early to answer this question with confidence regarding health insurance. Simply put some effects of COVID-19 are clearly positive in the short term for company solvency while some of the longer term effects are likely negative. The scope of these effects cannot be known at this time. So generally does the Commissioner of the Department of Financial Regulation agree with us that the premium return decision is too premature? Yes. So Matt just a couple of closing questions. The big issue we believe in the right fine this year is the COVID impact. Correct. Correct. And there's some uncertainty about this impact on rates in 2021. Correct. Correct. But in your opinion is MVP reasonably assessed that uncertainty based on available data? Yes. In your opinion you've also relied on the professional opinions of the actuaries at MVP like yourself, correct? That's correct. And that is what actuaries are required to do measure uncertainty, correct? Correct. And then would you agree with me that the statutory criteria that we just went through are interrelated? Yes. They're not siloed, are they? And any adjustments to a rate increase for whatever reason all feed into a final number, correct? Correct. It's important that that final number is actually sound and reasonable, correct? Correct. And in this case you believe that number is 6.06 percent, correct? That's correct. If the board cuts the final number on non-actuarial grounds, is there a risk that the rate could be no longer adequate? Yes. In contrast based on your testimony and the other evidence that we've put in today is the insurance product we provide affordable within the 6.06 increase and meet all the statutory criteria in your opinion? Yes. That's all the questions I had from Matt at this time. Okay. I think this is a good point to take a short break before we get into cross. So why don't we reconvene at 10-10? We're doing okay on time. Thank you very much. All right. It's 10-10. Before we go back on the record I just want to text the court reporter and make sure she's back at her computer. Yes, I'm back. Oh great. She might have been muted. Okay. So we are back on record in the matter of docket number GMCB00620RR in BPHP's 2021 individual and small group rate filing. Mr. Connerty just finished the direct examination of Matt Lombardo and so now Mr. Angoff to have cross-exam questions for this witness. Good morning, Mr. Lombardo. Morning, Mr. Angoff. I hope you're doing well. And are you? I'd like to start by asking you a few questions about the relationship between 2020 and 2021. I think you said in the middle of your testimony that it would be actuarially unsound to reduce rates in 2021 based on MVPs having paid out less in 2020 than it projected. Is that correct? It's correct. Our rates are set so that the premiums that we're charging will cover our expected claim costs in calendar year 2021. Okay and I was a little unclear as to what your view was if it should turn out that 2020 that in 2020 MVP pays out less let's assume substantially less than it assumed in its rate filing filed in 2019. Are you saying are there any conditions under which you believe that a refund of 2020 premium would be appropriate? At this time it's too early to tell. We're monitoring the situation and that's a decision that would not be made by me as the actuary. My job is to produce an actuarially sound rate and project what 2021 will look like and that's what we're doing in our rate filing. Okay so it's not your decision. Well it's the board's decision but you can envision a situation can't you under which MVP when all the data are in MVP will have paid out substantially less than it projected it would pay out in 2020 correct? It's it's still too early to tell. We only have data paid through June and we did you know as I mentioned in my testimony we did see a suppression of claims in March April and May but June is back to pre-covid levels in January and February actually ran very unfavorably for us across our enterprise so it's if we look at the whole year it's it's something that's unknown at this time. Okay then talking regarding paid claims through June 2019 through June 2020 could you please take a look at exhibit one and turn to page 113 okay and you see the chart there at the bottom? Yes okay and that shows paid and incurred claims between January 2019 and December 2019 correct? That's correct. Okay just very briefly the difference between the paid claims and incurred claims is pretty nominal but could you explain why there is that difference? Yeah there's there can be a lag and when a claim is when a claim is paid relative to when it's incurred so for example if I were to go to the doctor today for a visit that claim may not be paid out until August September October November in a future month so if we were looking at it that visit that I had would show up in the incurred line of if there was a July 2020 it would be in that line but it would not be in the paid line. Okay um could you tell the board and me where your data is for paid and incurred data to the extent it exists for 2020 by month? It's not in this table because we're using 2019 data normalized for risk adjustment to set our rates. Okay um didn't Ellen E ask you for that data? I'd have to go back into the interrogatories and look um well can you point me to any uh any place in your rate firing where 2020 paid data by month appears? Off the top of my head I would have to go through all the exhibits to see exactly where that information is included if it is included. Well please do and Mr. Lombardo so we can shortcut this if you should come to the conclusion that Ellen E did not ask you for that data please say so. It's going to take me some time so I do not see it in the exhibits that I've reviewed. Okay so you're reasonably certain then that Ellen E did not ask you for the monthly paid data in 2020 correct? Well there's hundreds of pages I haven't read through them all thoroughly I don't recall that being requested throughout the review process um I wouldn't say that with 100 percent certainty but based on my brief review and my recollection I do not see that information. That's fine um can you tell us now approximately how much MVP did pay out month by month or if you don't have it month by month for the total first half of 2020? I don't have that information at my fingertips that's not readily available. As I mentioned January and February came in worse than expected March, April and May were suppressed due to COVID and June is returning to more normalized levels. Okay so of March, April and May were they suppressed by 20 percent? No the exact number off the top of my head to speak to that exactly. Could it have been more than 20 percent? It could have been less it could have been more. Okay rather than playing 20 questions will you please submit for the board even though Ellen E did not ask for it would you please submit for the board's consideration your paid claims data to the extent it's available by month for 2020? I'm going to object I don't think the purpose of cross-examination is to ask the witness to be submitting exhibits. This could not be more relevant to what the board has in front of it and I assumed that based on their expertise Ellen E would have asked for the monthly paid claims data for 2020 if they have not I think it's it's it's really pretty important for the board to consider that data. I'm going to further object on the ground that Ellen E had an opportunity to submit interrogatories to the board forward to MVP. They could have asked them they didn't this is a tight administrative process with tight deadlines and I think it's an appropriate object. So I I think the question is a fair one whether MVP would submit that data so I would ask the witness to answer and then if we need to have a dispute about authority to compel we can do that so could you please answer the question Mr. Lombardo? We have the data if it's required to provide it we could provide it it is it's important direct to remember that 2020 is not completed there is no risk adjustment baked in 2020 is not part of the rate setting process for 2021 to produce an actuarially sound rate. Thank you. Mr. Lombardo you talked quite a bit about the costs that MVP would incur based on your estimates in connection with a coronavirus vaccine correct? Yes okay and you hope and boy I sure hope you're right you you hope that a vaccine would be available in 2021 and you are including in the rate filing an amount based on a vaccine being available in 2021 correct? Yes that's correct. Okay and I'm sure everybody here totally agrees with your hope that that will be the case but we don't know that that'll be the case correct? It is not fully known at the time if it were known it would be approved already. It's all of our hopes. It's an assumption and yes it's it's a hope. Okay but you are charging your policy holders based on a hope correct? It's based on data that's available to us whether it's federal government funding FDA accelerated process of expediting approval the fact that the science community is almost fully focused on this it seems it's based on all that data it's not just something that's pulled out of the air. Okay and not to be a doomsayer but you've also heard people say haven't yet and man I hope they are wrong that there's not going to pay a vaccine for four years that that would be fast I mean you've heard those statements right? I've heard people reference the normal approval timeline of a vaccine is usually somewhere in the multiple year range but I know this is a different situation. Well I hope you're right. You also assume that the cost of this vaccine would be paid by MVP and it would be $75 a shot right? Yes. Okay but we don't know do we assuming that there is a vaccine whether or not the government will pay for it. Do we? That's not known. I haven't seen anything come across my email that suggests that that's going to be the case. I have not seen anything regarding that. Okay but you assume the $75 cost that would be paid by MVP correct? Yes. Okay and then you also assume that 80% of the 80% of the population would get the vaccine right? That's correct. Okay and again I hope you're right but you've heard about the anti-vaxxers right? Yes. Okay and I know there's not much of an African-American community in Vermont but have you heard that among in the African-American community there's a substantial skepticism about a coronavirus vaccine? I have not heard that. Okay but once again none of us know what percentage of people will take up the vaccine assuming that there is a vaccine correct? We do not know the exact percentage but the fact that a vaccination like MMR, measles, mumps, rivella is higher than what we're assuming that would suggest to me that the anti-vaxxer community is less than that percentage wherever the MMR uptake rate is. Well again I hope you're right but remember we you talked previously a little bit about your administrative costs. Correct? Correct. Okay and MVP has had very substantial growth in Vermont in the past several years hasn't? Yes. Okay and all things equal when a company has growth in its business growth and its growth and its number of policies growth and its premium its administrative costs per member per month should go down shouldn't they? It's enterprise-wide we have not experienced growth in membership in Vermont we have but the decreases in New York have more than offset it for a decrease overall in our membership and there's a lot of costs that are shared amongst both states and they have to be spread across both states. I use our claims operating system or our license with Microsoft that's not specific to Vermont that is something that's spread out regardless of how many members we have across both states so that items such as that they have to be weighed across the entire enterprise. Okay so you're saying Vermont policy holders despite the fact that Vermont business of MVP has grown will be paying your enterprise-wide administrative costs which include the New York business that has decreased correct? Yeah Vermont is part of our enterprise Vermont members are part of our enterprise so are New York members so yes everybody it is it is a shared cost. Do you see any practical way of separating out any of those costs so that Vermont policy holders don't pay for your entire enterprise costs? Not the ones that are shared across both states if it's something that's specific to Vermont then yes that is something that could decrease as time goes on but if it's if it's a shared cost such as like I said our claims operating system or Microsoft license that's not something unless we have overall increase in our membership enterprise-wide at that point we could decrease our PMPM and if we can decrease our PMPM we can offer an even more affordable rate and a more competitive rate and try to gain more market share. It is our goal to work towards efficiencies and reduce cost because that flows into our premium rate and our competitive position. Okay so do you see any practical way without unfairly affecting your enterprise-wide costs of reducing Vermonters the amount that Vermonters paid for administrative costs? Of my head I mean it's just a matter of how our variable costs and how quickly we can adapt to our variable costs so off top of my head I don't have a specific item that I can speak to but again to the extent that we can offer a more competitive administrative fee then that will help make our rate more affordable and more competitive. What was the trend assumption you used in this current filing the total trend assumption? I believe it was 7 percent I'd have to refer back but I believe it was 7 percent. Okay and what was your trend assumption last year what was your trend assumption in the 2019 filing for 2020 rates? In front of me so I couldn't speak to that but our trend assumptions reflect the expected change in our costs from the base period of 2019 into 2021. That's based on known increases as well as conversations that we've had with some of our provider partners and assumed increases which are generally set equal to in the for the Greenmount Care Board Control Hospital budget items they're generally set equal to the prior year rate increase with the exception if we've had a conversation with a facility or provider group that's indicating otherwise. Okay and that is something we do have a strong preference that the trends reflected in our rates are well aligned with the approved hospital budgets so to the extent that information becomes available that is our preference even if that results in a decrease of the trend then we accept that that would still produce an actually sound rate. Our concern is if trend is higher than we're anticipating and an adjustment isn't made that would produce an actually on sound rate. Did Eleni ask you what your trend was for 2020? Well part of our rate filing has so our 2020 rate filing uses 2018 base experience it has a 2019 trend component and a 2020 trend component so the 2020 portion of our 2020 rate filing is included in our rate increase in this filing. Okay I may have asked a bad question let me let me ask what I hope is a better question. Did Eleni ask you what trend assumption you included in the filing that you made in 2019 for your 2020 rates? They did not specifically ask that but that is available and what that said to produce an actually sound rate what happened in that rate filing isn't relevant unless it's there's a significant disconnect between what actually the trend the actual trend is in 2020 versus what we're building in to our rate. Okay well whether it whether it not it's relevant is something that the board will decide but let me just ask you then can you tell the board right now what your trend assumption was in your 2019 filing for 2020 rates? No. You're in this filing you assumed a utilization trend of 1% correct? That's correct. Okay and could you turn please to exhibit 10 which is the L&E report and turn to page 8. I'm ready whenever you and the board members are. Okay and before asking you a question about about that page let me ask you about volatility in your rate filing you said that the volatility of the utilization trend has been too great to use for medical utilization trend purposes. What could you tell me what that means and why that is? Yeah as you referenced we have grown our membership in the Vermont individual and small group market and with that we have a population that's changing over time and also with that if we only isolate the one portion of our experience that's been with us for the past two to three years it's not a it's not representative of what we actually are rolling what our population is enrolled in right now. Additionally utilization trend is something that's more market-centric than specific to the carrier so I know last year L&E took utilization data from MVP as well as Blue Cross. They did their own independent calculations and arrived at a trend a reasonable trans assumption of I believe they referenced 1 to 4 percent and we had zero percent last year and they recommended that we increase it to 1%. That's what we're assuming in our refiling for this year for similar reasons because of the volatility. I well recall L&E's recommendation that you increased your trend assumption last year could you read the first bullet on page eight. Jay what what what exhibit are we on? That's exhibit that's exhibit 10 the L&E letter of July 7 2020. Thanks. The three-year annual utilization trend was approximately 0.0 percent. Okay so do you believe that the use of a zero percent utilization trend in this current rate filing would be unreasonable? Based on the data that L&E analyzed there were there was there's been increases in recent times of trend those parents continue zero percent would be unreasonable. Using L&E's four years of data to produce a the last bullet a regression analysis using all four years of data produce a fitted utilization trend rate of approximately 1.2 percent so we're we're assuming 1 percent which is below that figure. Okay so your so your position is that a zero percent utilization trend would be unreasonable. Based on L&E's analysis using the market wide data yes zero percent seems like it would be a little bit short. In your rate filing what did you assume regarding the number of coronavirus cases that would occur each day in Vermont for the rest of the year? In 2020? Yes. I'm sorry you're referring to a specific assumption in our rate filing could you just provide a little bit more clarity please. Sure obviously you made you made in formulating 2020-21 rates and in determining how the coronavirus would affect both how much would pay out for the coronavirus related claims and how much you would pay out for non-coronavirus related claims and deferred claims you had to make some assumption didn't you as to how many coronavirus claims there would be in Vermont in 2020 so all I'm asking you is what did you assume as to the number of coronavirus claims per day that would occur in Vermont in 2020? We didn't make any assumption about coronavirus claims per day in our rate filing. What we're looking at in our rate filing is the impact of canceling services for two months and the impact that could have on pent up demand that would flow into 2021 that is not specifically coronavirus related claims. But when you agree that the number of coronavirus claims that occur has a relationship to the amount of non-coronavirus related claims that you would be responsible for? I guess I'm not clear on that question I'll answer the best I can but we're assuming in 2021 that there will be a vaccine widely available in early 2021 which would prevent and mitigate the number of actual coronavirus claims that we would incur in 2021. Okay so you made no assumption as to the number of coronavirus claims that would occur in 2020 in formulating your rates for 2021 is that correct? Our rates are assuming that 2021 will be a normal pre-pandemic year so the 2020 there is no adjustment for coronavirus specific claims that we had to make for that we're assuming 2021 will be a normal year with a little bit of pent up demand for deferred services and vaccination costs. I get you and then so similarly you're making no assumptions because in your view it's unnecessary to make such assumptions regarding the number of coronavirus related hospitalizations in 2020 correct? That that doesn't have a bearing on our 2021 rates based on our data and our view of the world when we set our rates in May. Okay and did you follow the same philosophy in formulating your New York rates? Our New York rates assume the same COVID-19 assumptions which is pent up demand and vaccination costs. Could I ask you please to turn to exhibit four? Okay and Mr. Lombardo you're familiar aren't you with the litigation in which MVP is a plaintiff regarding the risk card or program? Okay and you're familiar aren't you with the Supreme Court's decision in the industry's favor regarding the risk card program litigation correct? That's correct. Okay to what extent if any did you include the risk card or payments that you will receive based on that litigation in this current file? So short answer is we did not assume anything but I think that is that requires you to understand what the risk corridor program requires an explanation. The risk corridor program was rolled out in 2014, 2015, and 2016 when the ACA rolled out. The risk corridor program's intention was because there was a lot of uncertainty about risk adjusting, what the individual market with these new rules would look like, small group would look like with these new rules and it was a really challenging time to predict costs. So the risk corridor program was intended to help mitigate gains and losses that would be that would occur because of that uncertainty. So the reason why we're due to receive this 1.785 million dollars is because we had costs therefore financial losses that exceeded our expectations in that time period that the government told us they would reimburse us for and they did not. So and it's not 100% of the losses recovered it's just a portion of those losses would be recovered. Agreed but so am I correct in understanding that the total amount that MVP is to receive based on the risk corridor litigation is 1.7 million? Assuming that the Supreme Court decision doesn't face any more barriers and things and payments are actually distributed which is still unclear at this time whether or not that's going to happen we would receive 1.785 million dollars. Okay and is that for enterprise wide MVP or just for Vermont? This is Vermont specific. Okay and you're not including any of that in the rate in this current rate file correct? That's correct. Okay and you said it's not clear what's going to happen despite the fact that there's been a Supreme Court decision saying that you all want correct? That's correct. Okay well there's no appeal from the Supreme Court decision is there. That's my understanding. Okay and then you say or your counsel says in this on page three of this exhibit could you please read the second sentence beginning on the fourth line in complex litigation beginning within complex litigations? Yep in complex litigation such as this it typically takes a great deal of time to work through a number of procedural and process issues and is likely there will be no resolution of the risk corridor litigation the foreseeable future much less when or if payments will be made to health insurers. Much less when or if payments will be made to health insurers. Mr. Lombara will you agree with me that to put it kindly that statement is a little bit of an overreach. I object to the extent that he's asking the witness to talk about litigation and legal issues it's beyond the scope of this witness's expertise. I would draw the question. Mr. Lombardo if the proposed increase by MVP this year were approved to what extent would that affect MVP's RBC ratio? So with the adjustment from 7.34 percent down to 6.06 percent our overall enterprise wide RBC would not be negatively impacted. Okay and if the board were to order no increase this year to what extent would that affect MVP's RBC ratio? It would have a negative effect on it. It certainly would the the magnitude of it not I'm not sure of but we do set our rates to be self-supporting and self-sustaining so that they can stand on their own. Right that would not be. My question was to what extent would the board not approving any increase for MVP this year affect MVP's RBC ratio? It would negatively impact it. By how much? I haven't done that calculation so I don't know that it's just the fact that if claims exceed our expectations and we have no premium to cover it that would not be an actually sound rate that would have an adverse impact on our reserve levels. Would it affect your RBC ratio by one percent or more? I can't speak to that. You don't know that could it affect it by 10 percent? That's a calculation that we could perform. It's not one that I just have off the top of my head. Okay I have no more questions. Thank you Mr. Lanzarro. Okay let's move to board questions. Before I do I just want to note for the board there was some questions about data for 2020 claims. I expect that in past years you've issued follow-up questions after the hearing for questions that came up. I anticipate that may be one that you consider when you're considering what follow-up hearing questions to ask. So with that I'm going to start with board member Holmes. It feels like a little bit of a lottery. We never sure who's going to be called upon next. I win. Thank you very much for your testimony. Very very helpful. Appreciate it. So as you said the big issue seems to be COVID and the COVID impact and there's a lot of uncertainty related to the potential costs of COVID. We've sort of gone over that for the last few hours, last few days. So my question to you is with current unemployment rates and furloughs and wage stagnation who do you think can better afford to absorb potential downside financial risk associated with the COVID uncertainty? MVP or the individual policy holder? It's a good question. Depending on the magnitude of it I mean the logical explanation would be that MVP has more money in the bank than most people. But that doesn't get to the point of what an actuarially sound rate is and that's what we're establishing as an actuarially sound rate. Failing to increase premiums commensurate with the way claims are increasing could potentially adversely affect reserve levels and solvency issues and being able to provide members with peace of mind. But it is a really thin line that we're walking and it's challenging. I appreciate that. So we've also heard varying assumptions about deferred care and pent up demand and how pent up demand may be managed over the next year. Differing assumptions and sadly pent up demand is actually not new to Vermont at all. For years Vermonters have experienced long waits especially for specialty services. So why if providers have not expanded hours and worked weekends to meet excess demand that we've had in the past do we expect them to do so now for an extended period of time for nine months? Yeah similar issue does occur in both states where we operate New York and Vermont where it can take six months again with your specialist. The concern is that the backlog has grown so much that it's going to be unsustainable. It's going to be kind of like an unbearable strain on the system. So that's why we're assuming that this is a unique circumstance that's going to actually accelerate and lead to increased work hours working over weekends items such as that. It's a unique circumstance. Have you had specific conversations with providers and hospitals that have said that they're opening up extra hours and expanding weekend hours? I mean do you have data to support that this is actually going to happen? Personally I have not conversations I've had with MVP employees that do have those conversations that speak with providers, hospitals have discussed extending hours working weekends items such as that. Switching gears a little bit has MVP tried to estimate the dollar value or the amount of waste or unnecessary care in the Vermont member population just in general low value care unnecessary care waste any estimate of that that you have tried to do? So we have I'm not familiar with us putting a dollar amount on that but we do have a couple of different items we have an SIC unit special investigations unit that researches potential fraud patterns and abuse of the system. We also have quality and credentialing so we have NCQA credentialing for our Vermont population and that ensures that we have that we're being a strict set of quality metrics to ensure that we're providing quality provider experience to our members. If providers don't meet those minimum requirements then they're not allowed in the network and to actually be able to identify specific cases I'm not aware of any analysis but we do have the framework in place to to ensure that we're not letting bad actors into the system other than through our SIU unit. So with that SIU unit can you tell me a bit about the percentage of claims that you typically recover as a proportion you know or you know as a part of that SIU unit what you know percentage of claims you might recover for fraud or waste or abuse. 19 of what you're also anticipating for 2021. So we do not I don't know those numbers off the top of my head but I do remember that question being asked last year and the follow-up was that it was not a really large number it wasn't something that would swing the the percentage increase by you know by a by a significant amount. We could follow up with additional information for the current year but if it's consistent with what we see in prior years it's a non-zero amount but it's not an amount that is actually going to swing our rate increase to be something materially different than what it already is. So I would really appreciate a historical look back at at the percentage of claims that you do recover with that SIU unit and then what you're anticipating for this year and how that's baked into your rate would be appreciated. What annual increase in wages and salaries is assumed in the 2021 administrative expenses? That detailed item I would have to follow up with our financial planning team. I know that there is a small increase but I'm not sure what that specific number is. Okay I'd appreciate that follow-up as well. Another question in the if you could go to exhibit six page two. Let me make sure I'm on the right page. This is an answer to a question about the comparison of actual to expected pharmacy allowed trend over time and just in looking at this the actual materialized trend is significantly less than the expected trend year after year after year by a fairly large margin which suggests that the expected trend rates seem to be you know overestimated year after year and those are presumably baked into premium rates. So can you speak to me about why the miss is so large and why we should believe whatever the expected pharmacy allowed or pharmacy trend for 2021 is? Yeah so it's a great question. The pharmacy trend in and of itself is not telling so when we produce our trend when we receive our trend forecast from our PBM it's assuming a static population where we're not basically whoever we had in the and I believe we use 20 it's based on 2019 data it's assuming that there won't be any changes to that population in 2020 or 2021. Because we've grown and our risk profile has changed those trend figures the actual trends need to be normalized out for risk adjustment changes. Unfortunately risk adjustment doesn't get to just the specific one specific item that you can say this is pharmacy related that everything's kind of interrelated but what I can speak to is the fact that our actual trends have come in favorable yet our risk adjustment payments have increased over time. So what that's telling me is that the morbidity of our population is healthier so that would lead to a lower trend but then we're paying back into risk adjustment larger amount to normalize ourselves back. It's something that you can't really decouple it into one item or everything is intertwined but it has to be looked at with market or morbidity changes of our population as well as risk adjustment. And there's no way to quantify the net effect. I would say that's not that I'm aware of and I've thought about it and my team has thought about it and there's not a specific way that we've figured out to identify that. If you could turn to exhibit nine another set of questions pages 17 at the bottom but really the top of 18 in which MVP talks about the significant cost savings that have been materializing because of the high use of telemedicine in particular the substitution of a telemedicine visit for an urgent care visit or an emergency room visit substantial cost savings significant cost savings to use your words and I'm just wondering how you've factored that into your cost estimates medical cost utilization estimates for 2021 is the you know assuming that telemedicine is here to stay how has that factored into your trend going forward for 2021? So we've definitely seen an uptick in telemedicine usage as the COVID pandemic has broken out. It's still not relative to our overall cost of our book of business it's still a very small amount and we are assuming that once as people are learning how to navigate through the pandemic more intelligently we're assuming that 2021 is going to look more like 2019 so as a result there isn't any sort of explicit adjustment being made for continued higher utilization of telemedicine even with that I would say that the overall cost relative to the total projected claims for telemedicine even if we did assume an increased utilization I don't I wouldn't anticipate an overall material reduction to claims in the aggregate. Even though you talk about here a significant cost savings associated with telemedicine. In a total dollar amount it could be it can appear to be something like a substantial number on a percentage basis and when you spread it out over 35,000 members it's a much smaller figure. Okay and my last question was did you factor in any additional administrative cost to implement the separate abortion billing that at the time that you submitted this filing MVP submitted this filing it was referenced but has now changed so I'm wondering is there a specific administrative cost associated with separate abortion billing. I know that is something that was considered I don't know specifically how much that is actually worth in the overall projection I would have to follow up with our financial planning team on that item. Okay that would be great. I have some questions that are in some of the confidential materials but I'm assuming we'll go into an executive session so I will hold off on that does that sound good? Mike? Barbara? Yeah let's um let's get through all the non-competential questions you have and then we'll go through the steps of going into executive session for any confidential questions. Okay then I am done thank you. Thank you. So just to let board members know the order is however you are organized on my screen so the next up is Robin. Great hi Matt. Hi Robin how are you? I'm great thank you um so I just have a couple of follow-up questions which largely overlap with the areas that Jess asked about so just to start with telehealth um you uh in your actuarial memo provided some information about website traffic and number of sessions oh actually I'm sorry that's in your prefile testimony um do you have data on how many of the visits are with Vermont providers as opposed to either MVP staff or out-of-state providers? That is not something that I've seen that breakdown that doesn't mean that it's not available if requested it's just not a breakdown that I've seen. Okay um and so it would be interesting to know that because I understand from your list of 22 that promoting primary care and care coordination is something that you're committed to so understanding how your promotion of telehealth interacts with that priority would be helpful but I'll plan on doing a follow-up question. Yeah I um I'll just add to that a little bit in the past tele so there's kind of two non-physical visits that you can have one is we we classify telemedicine the other one is telehealth yeah telemedicine is using MVP's My Visit Now app which is using the online care group which which is a national set of providers telehealth is um is a replacement for a physical visit with the PCP or the specialist that's in your community and up the street from your house. So we we do we have seen an increase in both of those during the pandemic the exact splits I can't speak to though. Okay great thank you and I um I would and I can also do this I think as a follow-up given your response to Jess but it would be interesting to have the dollar figures and the percentage that you referenced in your answer to her question about the magnitude but we can include that in a follow-up. Okay um do you know how many MVP uh policy holders have COVID related claims? Across our enterprise I do not specifically interested in Vermont of course. Yeah I know that we have somewhere around 50 inpatient admissions related to COVID as of the end of June uh for Vermont commercial members. Great um asked a lot of my same questions so I'm just jumping through them um so then to follow up on your answer related to the source of information about providers working nights and weekends I know you didn't speak to them personally but do you have information or data from your medical management team in terms of who they spoke to in Vermont? Which providers? How many providers? That's something I would have to speak specifically to um other people at MVP about. Okay um and then the last question I have I think maybe you may it's not specifically in the confidential material so I'm gonna ask the question and then have you pause so that your attorney can indicate whether or not this should be a confidential answer um because I don't want to bring it out if it's supposed to be confidential but I'm not sure so um I know that MVP has been um moving towards implementation of the ACO program. I was interested in your future plans around participation including uh potential changes to payment methodologies and risks. I wonder if uh not knowing what my uh esteemed witness is going to say in response to that I wonder if we could just ask that question in the confidential session if we are going to be doing that in any event that's possible. The reason why I'll just for Mike's benefit the reason why I thought it might be uh included in the confidential portion is because in the answers to some of the questions about the ACO program things like um the risk pro the risk quarters and the type of arrangement were marked as were marked as confidential so I I think it's similar. Yeah I I think you're right um we do need to figure that out before we go into executive session though because we should not be asking questions that call for non-confidential responses in the executive session so Amron does that sound right to you as the one who's been kind of working on the confidentiality request? Yes it does and I would say if we get a non- confidential answer during the executive session we can re-ask the question once we're back out. I think that sounds like an appropriate approach. Thank you. Okay um let me just check my cookies. We have one more question about the medical trend um so Matt you had indicated in your testimony that you used the um information you had about the Green Mountain Care Board approved hospital budget rates with some exceptions uh with information from your contracting uh department. I believe that one of those exceptions related to the UVM health network. Again if that was something that was in the confidential section who we have conversations with that's okay. All right well then I will ask about that specific negotiation the confidential section so that's my last question. Thank you. Okay Maureen. Thanks I'm at you I think that also would go into confidential but um the ones that aren't can you give an idea of what percent of admin costs are fixed? Um I believe that's something that L&E had asked us to provide in their memo data set and it is around 50 percent. 50 percent okay that's what I would that's that seems like a fair number um can you tell me what does one percent hospital for the Vermont hospitals what does one percent hospital rate increase translate to to a total rate increase? I would have to pull up our exact utilization we do have that it's not it's going to be something that's less than one percent obviously for each year. Right. To simplify it approximately 80 percent of our claims are processed through our medical claims 20 percent are pharmacy give or take five percent and um then there's a subset of them that are subject to the Vermont hospital budget so it would be something one year is something less than one percent a one percent impact on trend um on hospital on the hospital budgets for one year would be something that's less than point eight percent is my approximation um probably point five to point seven but that's that's an estimate that's a calculation maybe point three to point five because we also have to remember that only half the half of your volume comes from Vermont hospitals I think right so whatever we take for I'm saying for Vermont hospitals yeah there's a one percent increase but maybe you can get back to us on the number yeah you know what I mean I'm saying I think you have about half is outside of Vermont or maybe a little less than that half is inside of Vermont yeah my my mind was going to UVM physicians because I know they're subject to it and that they do take up the physician costs so um but that's a calculation we could do and you know it doesn't seem unreasonable around a half percent right a little under a little lower I think but we'll get the number yeah um and then just I guess and and maybe this was a follow-up that we're going to get but on the the June pre-covid um we know it's not you said it's back to almost COVID pre-covid levels but is it 80 to 90 percent is it we're not seeing Vermont hospitals back near 100 so you know we're they're coming back for sure but I haven't heard of any in June that were at 100 percent um there were many at 70 80 percent so just trying to get a read on what percent you know increase and that maybe have been a follow-up from um from Jay's questions earlier but just want to make sure we get that number okay something we can provide um and then on the schedule uh that we had looked at before under a 18 and we talked a little bit about this I think last year too where members can compare prices before which are we in which exhibit are we referencing I apologize oh sorry a page 18 the one that also had the title Madison that we're talking about exhibit number eight no a and Alfred I guess it's a a sorry thank you very right I wasn't gonna eight page 18 I don't have an eight a I have eight really just you have a what the the um consumers have the ability to check prices before they go to providers and I think we talked a little bit about here and as we know we're saying you know everyone's pocket books are stretched a I guess how can we encourage consumers to do that more to the extent it's so convenient for them to find a provider in their area who may be a lower price because often that impacts there what they pay for deductibles and out of pockets but then it should also carry forward to what MVP is paying so you know what are what types of savings are you seeing there and how can we push that how can that you guys push that harder so it should help everybody yeah so there's a few items to unpack in there first is there isn't a way that it's a separate system the online cost tool calculator from our claim system so tying those items back to to one another is it's not something that is it would take a huge manual effort to identify that but we are promoting alternative ways of of access and care whether it's through our tri-tell medicine first website or it's just through member communications because I agree as members make more intelligent decisions in terms of cost that will reduce costs overall which will pass on into premium rates in future years to specifically identify how much that's that's been impacted we don't have the ability to do that based on the way our systems are set up and can you talk about any other major cost-saving initiatives that that are in the works and when we would expect to see the benefits of those so from an administrative perspective we're taking on a lean initiative to identify areas where we can replace manual intervention with a computer robotics behind the scenes so something like if it's a case manager or it's someone in the claims processing area rather than them having to physically take copies and fax them or print them we're automating those types of items in a hope to help reduce admin in the future so those assumptions are are definitely taken into consideration when we look at our 2021 costs you know staffing levels that will fluctuate as a result of that and you know that's that's definitely a major initiative that we're undertaking to help rein in administrative costs we're also reviewing any contracts that we have because we've been we're very we rolled out Microsoft Teams about a month before the pandemic broke it worked out pretty well for us so we've had a pretty good transition to working from home um and we're we're reviewing contracts and and how are we going to approach our business in the future there are it what I've heard based on conversations is some of the contracts and leases that we signed are not short term they're longer term contracts so they may not be realized anytime in the next year or two but that is something that we are considering as an organization is how do we approach work in the future post pandemic okay and then just back to the chart on six two page two the pharmacy trend you talked a little bit about the growth in the number of people but it's it's still growing but it's it's a little more stable I would I would think so it would seem and you and you said that um you know basically it gets made up for in the risk transfer but um maybe I have it wrong but if you got the pharmacy trend right or or closer to being more accurate to which represented which what's been happening um then wouldn't just that risk adjustment less when it came came to pass I mean I I think it would be better to try to get you know this as close as you can and if the trend has been better each year um you know I don't think the risk adjustment the forward risk adjustment would already be picking that up so I just understand you know wouldn't it just be an offset if this were we had a lower pharmacy trend than at the end of the year there's a lot that goes into the risk adjustment um so it was the question was um cut out a little bit but I I'm going to answer it as best as I can based on what I heard um our rates are set taking 2019 experience and then normalizing for risk adjustment that's projected to 2021 which is implicitly assuming that there won't be a population change but because of risk adjustment we are agnostic to population changes so if we do enroll a healthier population in 2021 um then our claims will come down but in theory when we receive 2021 risk adjustment it will be a higher payment to normalize us back up to that level so I hope that answers your question um and if you ask anything differently that I didn't hear then please let me know uh I guess it's just if we know if we believe that that the trending for pharmacy has been better each year wouldn't that come in wouldn't that change some of the assumptions that you have um just as you do for utilization trends and you know on the medical side if we were to reduce our trend um expecting a healthier population we would have to make a corresponding increase to our risk adjustment payment which would basically put us back at the same point so the fact is that we're assuming a static population that's normalized for risk adjustment um and that that makes it if we were to assume population changes we'd have to also make a corresponding risk adjustment change okay um and then I understand you know that this is for 2021 then electives may come come back from 2020 into 2021 and that that's the filing that we're looking at but um can you just I guess give me a yes or no yes or no answer to that you know any benefits that incurred in 2020 for Vermonters that didn't happen um would have impacted the surplus for 2020 will impact the surplus so if we end up being favorable at the end of the day which I know you said is too early to call right now but uh that will impact the surplus is that correct if claims come in favorable then that does fall to the bottom line in the short term okay um okay that's all I have thanks thank you Tom do you have questions for Matt I do just a few um so my first one uh is just a very top side question oh by the way good morning good morning good morning um is uh it's a very top side question and uh if you turned to page three of the first exhibit and I'm I'm just looking at the written premium for this program at 248.9 million dollars so that uh I'm just trying to make sure I understand what that is so that is your estimate your projection at this point in time or when this filing was made of the premium to be garnered from the 2020 approved grades I would have to look if that is the projection for 2020 or 2021 well the 258 is I think the 2020 because if you add the 18.2 million onto it you come to the 267 204 274 number exactly which is your 2020 21 number yep yeah I agree page four does articulate that and break it out so the 2020 figure is 248 million right and so when that rate was approved last august this time last year the projection was 207.7 million dollars and that number that number there's also I can give you an exhibit where that number can be found but I'm not sure if it's confidential or not but that this is off you know what our website um so I'm just wondering what are the moving parts between a 209 I know some of its membership but uh between a 207.7 million dollar projection after going through all this actual real scrubbing which it did and now we're at 248.9 million is a projection which is a 20 percent difference yep that that is it's driven by membership changes so our project incurred claims at the time is our membership snapshot times our target loss ratio because we don't have a revised estimate when we're submitting our rates our membership increased by approximately 20 percent which is why the premium is also increasing by 20 percent if it's not exact it could be because benefits changed a little bit um you know maybe we saw a shift in our membership from distribution of gold versus silver versus bronze things like that but in general it's just reflecting our target loss ratio times our projected premium as of february 2020 and and and in these uh actual royal projections I mean there are estimates about what the ridership will be so it all gets translated to a per member per month basis but you think it's most of that difference is explained by the actual membership that showed up yeah and um you reference a 20 percent gain and or 20 percent increase in premium and or incurred claims that's I have 20 percent in my mind for the membership increase approximately so that that hangs together for me and just a quick question um when you're when you know at at this point in time we're looking at a 6.06 percent increase um that still is is kind of out of alignment with the all-pair model uh hope of a three and a half percent total cost of care by 2022 and do you have any insight or any thoughts about that and or is your actual royal analysis as it should be um just completely independent of the fact that the state of Vermont has signed an agreement with the federal government you know for the all-pair model yeah it's our rate is set based on our projection of incurred claims um from 2019 to 2021 our best estimate of what will actually happen in 2020 in 2021 is what's capturing our rates um the three and a half percent figure that would be great if we can achieve that um and you know if we if we arrive at that and that's that's fantastic because that will make premiums more affordable more competitive um but our rate is set so that's actually sound and our best estimate of that 6.06 okay so my next question is a quick one on um just what I call the premium cliff and I just want to give a an example the data is on exhibit one page 110 you don't have to go there if you don't want to and the other is the federal poverty guidelines in exhibit 21 so I'm looking at a um uh you know at at your chart on a page exhibit one page 110 that talks about the uh 2021 exchange rates and I'm looking at a specific amount associated with a couple which is um a an analysis that diva actually did on this exact plan for 2020 over 2019 um and so uh so the rate for a couple there is a thousand twenty dollars and 56 cents um a month for an annual amount of 12,246 dollars um and the afford at 400 of poverty the income uh is 68,960 which means that that rate is a 17.8 uh percentage 18.17.8 percentage of the couple's income and at 69 8000 that could be a couple one making 30 one making 40 you know maybe they're younger than I am but in their late 40s or 50s they might have a kid in college trying to save a retirement so I'm trying to you know put some feeling to it um do you think that that 17.8 percent rate is affordable? That rate is the rate is set to be affordable in the sense that it is an actuarially sound rate where we're doing everything we can to match costs to be um to be as low as possible and that's what we're doing and um I recognize how large those claims can seem or how high that premium can seem but it goes back to I commented earlier about how skewed towards the right tail costs are and I recognize that most people pay a significant amount of premium and don't incur a comparable amount of claims but every year there are some people and there's others that have chronic conditions that every year continue to drive the bulk of that in this case $1,020 premium rate um and our rates are being set to be actuarially sound and that's that you know as much as that 17 percent figure is intimidating that is the cost of covering our block of business and providing these benefits. Now maybe you're not familiar with this but there was this study that was done by Diva and DFR this last year it was called the 2019 report on health insurance affordability and merged markets and the report cites MVP as one of its uh uh you know contributing stakeholders so are you familiar with that report at all? I'm not familiar with that okay and um it just has some uh it was done by Wakely um and it it has profiles of some options that will flat help flatten the uh that the premium cliff and uh you know a couple of them pretty cheap um relatively to the problem um so in terms of looking at your uh trend um analysis do you have a sense of what percent of the claims are associated with independent providers providers that are independent of hospitals? We do have that breakdown um I believe it's provided in one of the confidential exhibits I just I would have to refer to it to to get to my arms if you can point if you can point me to it I you know you don't have to do it right now we can do it later on in the confidential session but um uh let's see so I I want to ask uh probably my last question Michael will be happy um it's uh I'm looking at this wellness benefit in addition uh at the $600 wellness benefit I started to ask with probably shielded about it yesterday that's I can install those stuff yet but um and then I realized it was you guys um so I wasn't clear uh where it talks about um 88 cents per member per month whether that applied to all 400 um 443,766 member months or was that just applied to the people who um uh enrolled in the rider? If you purchase a non-standard plan it's automatically included in your benefits and that 88 cent load is a plan specific adjustment so if you purchase a standard plan that load is not included in your rates if you purchase a non-standard plan it is included in the rates okay thank you um that's all thank you thank you mr chair thank you um morning mr Lombardo um can you refresh my memory does MVP own or lease the uh corporate headquarters in Schenectady? We lease them okay and you said that uh you had long-term obligations on that so like the rest of the world many people are trying to figure out who needs to go back to the office but that's a sticky issue as far as still having to have the responsibility for the space yeah I don't know a ton of details about it um but yes that is a that is something that we have a COVID-19 workforce uh task planning committee that is looking at what does the future look like what does the post-pandemic world look like and these are all items that we're considering and um did MVPC a significant drop in um expenses related to for example um travel to conferences um use of the copier um those type of things office supplies those yep there were decreases to costs those are good examples we did cancel conferences and travel and and copying is reduced I'm in the office safe for the first time since mid-march and there's only one other person on the floor that I've seen other than me um so yes reduced copy costs but we are there are increased costs for other items I know we had to boost our VPN um we the VPN that we previously had prior to the pandemic that wasn't something that could support um you know 95 percent of our workforce 95 plus working from home so as much as there are decreases to costs for certain items there are some there are offsets in other places okay um you know everything we try to focus on actuarial value and yet clearly this year the theme is uncertainty um everything is somewhat speculative in nature you've created a scenario um based on how you will see pent up demand to Matt going into the first few months of 2021 um and uh a resumption to more normal times um in that you kind of refer to how things seem to normalize in June but it could it just be that June was making up for two and a half months previous and um couldn't a likely scenario be um uh a possibility I'm not saying it's a probability but a possibility that um people will have fear to go back to medical settings so utilization will be reduced especially in settings like the ER with the cancellation of fall sports um there and not just for students but um adults and things like that that there will be a lot less orthopedic procedures and um carrying that forward even those those initial claims may fall into 2020 the PT and things going into 2021 may be reduced couldn't we likewise see a reduction in infectious disease um because uh people are washing their hands people are being socially distant they're not um driving as much um things like that so couldn't just as likely a scenario be um a reduction it's there's a lot of scenarios that can take place um based on our what we're seeing our conversations with providers with our my our internal folks we're expecting 2021 our scenario our best estimate is that 2021 will look like a pre-tent pandemic world but we do recognize that there could be cancellations or reductions because there are fewer people that are going to be skiing this year that could blow out their knee stuff like that but assuming that the the vaccination is approved early enough in 2021 we expect that for the most part 2021 will have a higher what will just be a more normal year have you seen any increase in retirements from older providers that's not something I know off the top of my head that would be something that we'd have to I'd have to follow up with our provider team um I don't know if that's something that they track I can't guarantee we could get that information but um the fear of of of COVID is is definitely is definitely a very real issue and recognizing that the elder population is higher risk that's something though that I don't know off the top of my head so we get to see this is this has no relationship to the hearing today but we get to see Vermont numbers we get to see north country numbers we get to see state of New York numbers I'm just curious how you in the capital district are doing all right do you feel safe walking the streets down there or yeah thanks for asking that it's where I live um you know it depends on where you are where I grew up it's much more urban where I currently live is much more like Vermont where most of Vermont where um there's space between the houses right and um I feel a little bit safer walking outside there it's still not I still haven't hung out with any of my friends all I've seen is my parents my in-laws you know it's a weird world uh and we're just trying to be as cautious as possible as a family and it's you know be cognizant of the people around us not just ourselves and my and my wife and my two kids but also my family and you know I um it's I hope that you guys are doing well too you know it's just such a strange world just want to get over so that people can get back to normal and be healthy again and not worry living fear so I think for the majority we all feel very grateful that we live in an area where there is social distancing just because of our rural nature so we're blessed that way I have no further questions thank you yeah thank you and I appreciate you asking that question appreciate that so before we go through the mechanics of uh an executive session Mr. Carnegie do you have any redirect for Matt on the non-confidential questions and answers I just have one question Matt how much time have you had to spend with your in-laws enough I mean you know I this is I actually have a great relationship with my in-laws I know I enjoy them um but thanks thanks for trying to corner me thank you remember it's recorded transcribed even um so so I we did this yesterday um so I think you're familiar with the open meetings act um yeah and the two bases that that you guys uh voted to go into executive session on yesterday were the confidential documents exception or provision sorry um and contract negotiations I've heard some of you have questions about confidential materials um so that so that sounds like that's a basis that you might want to go into executive session for I don't know that you also have questions generally about contract negotiations question that I asked related to some of the unit cost assumptions could veer into contract negotiations okay that's helpful because to go into executive session on that basis we need a finding that premature public knowledge would place a person that is substantial disadvantage in this case I mbp so do you feel comfortable finding that or do you need testimony to establish that fact I think just generally you based on common sense and your kind of experience I think you might be able to find that but um that's really a question for the maker of the motion and the board so since I'm assuming I will be the maker of the motion um uh why don't I just ask Matt one question related to that which is um uh earlier on Matt I started to ask you a question related to contract negotiations with the UVM health health network could you briefly describe how it might put your company um at a disadvantage if we were to ask you about those contract negotiations in a public setting and I would just thank caution you the extent that this does get into confidential information please please answer the question at a high level without without identifying any confidential information sure um it's our contracts are our contracts and our discount rates are um it's kind of like in a poker game if you were showing off the cards that you were holding it would give the the competitor or the other opponents an advantage on you and um in this case it's not something if if Blue Cross is on the phone and they hear anything about that that's something that they could leverage in their contract negotiations with UVMC and try to gain a leg up on us from a competitive standpoint thank you I'm comfortable with that answer um that's the maker of the motion can I ask if other board members need more no okay so then why don't I go ahead and make a motion that we go into executive session for the purpose of discussing um contract negotiations with a finding that public disclosure of that information would constitute would would create harm for MVP given the premature public knowledge I'll second that there any discussion closing favor please signify by saying aye aye can you oppose um and then I need to make a second motion um that we also in our executive session um discuss uh what information related to confidential materials provided in the filing second any discussion all those in favor please signify by saying aye all right any opposed okay so the board has moved to go into executive session to discuss contracts and confidential exhibits in the binders or materials in the binders the next step I think is to determine who needs to be in that executive session so obviously the attorneys for the parties uh the witness the board members board staff and Lewis and Ellis was a witness and bound by confidentiality in these proceedings anyone else we need to include in the executive session uh Mr. Carnady or Mr. Engels I don't believe so no sir actually um I'm sorry Mr. Barber Susan Greckowski may be on the line as well who's well known by the board uh I might want to have her in a confidential session as well if that's appropriate I agree and obviously the court reporter so um I don't think there's anything I mean just obviously as we discussed yesterday I'll caution everyone that really the questioning has to stick to the confidential materials if there's anything that comes up that's not confidential we can go back into the open session and discuss that so with that if everyone could uh there I'm just getting a text suggesting we might want to go to lunch and then do this um maybe do this and then go to lunch that way you can tell people when to come back I agree it's okay so if everyone could hang up this line uh we'll obviously keep the line open for the public um and then we'll uh call into the other line okay it's important right I'm sorry what I said it's really important that we hang up because you can't have two lines open yes Mike we want to indicate what time we'll reconvene for the public thank you for reminding me so um once you vote to go out of executive session why don't we take a lunch uh it's about that hour um and then reconvene at guessing the executive session last maybe till 12 30 so 1 30 is that I think we're doing okay on time I wonder if one might be a better number let the baby 1 15 yeah let's say 1 15 4 30 I think the 1 15 is a gives us that extra 15 minutes right okay let's do that so let's hang up go into the executive session take a lunch come back at 1 15 okay thank you thank you