 Thank you, Mr. Chair, I have a few announcements. First, I just wanted to review the order of business for today. We have a very long meeting schedules. We're going to start off this morning here at 9 AM. And then when we finish up with the hospital budget discussion by our internal staff, we'll recess for lunch and then we'll come back at 1 PM. And we're going to hear from UVM MC and the insurers. And then that will take us out until about 3 o'clock, depending on how long that goes. But we have the whole afternoon scheduled here as well. The other thing I wanted to mention out front is on the table, our copies of our March schedule for board meetings. They're also listed on our website. We're going to have a busy month in March. March Madness is at the Green Mountain Care Board. So please reference that listing out front and on our website. The last thing I want to announce, and I think many folks know this, is that our Director of Health Systems Finance, Andy Polito, has announced his retirement from the state government. After a 26 year career, 15 of which were at Corrections, which I think is probably needs to be highlighted. We are very, very sad to lose Andy, but very happy for him. And that he'll be now the Dean of the Community Colleges of Vermont. I got that right, right? Close enough. So I think we should give Andy a round of applause for all of you. Speech. I would just say, Andy, that I'll always remember you telling me that your father always thought you'd get into Corrections. He just wasn't sure which side. And that's all I have to report. OK, the next item on the agenda is the minutes of Monday, February 26th. Is there a motion? I'll move approval. Second. So it's been moved and seconded to approve the minutes of February 6th about any additions, deletions, or corrections. Any discussion? Seeing none, all those in favor say aye. Aye. Any opposed? OK, so at this point, we'll turn the meeting over to Dean Warmer. That's an animal house thing. Thank you for that. I appreciate it. It's hard to end 26 years when we do the same thing day in and day out. Not only am I obsessive-pupulsive, but I'm a very mutant-ized person. And so changing a routine after that, like the time is, well, I'm sure by March 20th, it'll all fade in the distance. But anyway, thank you. I appreciate everything the board's done. And it's been fantastic. It's a fantastic way to end my career being in there. It's been great. Unfortunately, I have to listen to me for the next two hours normally, so by the end of it, you might be able to get them out. So just a quick reminder of what we're going to do today. This afternoon is dedicated to the 2017 Actuals. You'll hear from the Health Network about their overage on the ampere and why. You'll hear about utilization and the potential for 18 and whether or not they think. They'll be over or under again. And then 19, what you'd likely to see in their budget proposal. And we talked at the board meeting last time about a potential for a rate cut. Because in fact, they were over, as a network, about $40 million, half of which went into cost, so they're over about $20 million. So that's just in 2017. And I think it's important to drill on whether or not they think it'll repeat in 18 and then 19. But right now, that's what you'll hear from me. Then after that, you'll hear from Blue Cross and MVP. If we were to do a rate cut, where you can see that likely in the filing that's due to us in a couple of months. So we're not going to show it, so as a way to put the money back into the system. So that's this afternoon. This morning is dedicated to the 2017 Actuals. This morning is dedicated to 2019 guidance. The process, we've sent these instructions. This guidance out to the board. It's on our web. What we'd like to do is walk through, I want to say, a page at a time. But not all of it is really, some of it's about inputting it in the system so we can go around time fast. But this is a big, last chance to really drill in more. I hope to get the final guidance posted tomorrow, if we can, at some point. And open for public comment. And then when we come back on the 14th, take a final vote and get the guidance out right after that. After we do the guidance, we'll have a conversation about NPR. Tom Crompton has pulled a few economic indicators. What we try to do is broadcast the indicators similar to how they did the state budget with the rolling average. But we'll get into that after. So it's OK. I can just start going through a page at a time. I'll highlight the changes, specifically the ones that came out of the CFO meetings. A couple of these are from board members that I might turn it over to them to address the individual pieces. So this is page one. Page two is just a table of contents. A lot of this is framework from prior years, so it's not changing a heck of a lot. Unless there's any comments, I'll just keep moving along. Page three is our timeline, probably the biggest piece that is for the board. It's first, we're opening it up to have the input down by earlier June, the numerical sections. We gave till July 2nd mostly because of the narrative. The narrative requires a little more total stuff from the hospital. So we're hoping that the hospital team can do their analysis starting somewhere at the end of June and give us a little bit of a jump on it. Then we've committed to July 30th for questions from GMCB and the HCA. And the HCA has put a memo in this guidance, which is new this year that will hopefully really ramp down on questions between the entities. So that should be a significant change. Then back to us on the 10 responses, which will allow the board a chance to really read what the responses are well in advance of the board meetings last year that was a two day turnaround, which, you know. So, and then these are the hospital budget hearings. This is Monday, Wednesday, Monday, Wednesday, and the thought of Monday and Montpelier, Wednesday on the road, Monday and Montpelier and Wednesday on the road. So that's kind of the journey, and the rest of it's just to read them. So unless there's any comments, I'll just keep moving. But that's the schedule. Page three, the big change here is on the second half of the page, which is presentation instructions. This is a combination of things we talked about at the CFO meetings and then what we talked about at the board meeting last time. So I'm going to just walk through these quickly, and if there's anything I'll stop. But basically an introduction and overview, hospital issues and risk and opportunities. These are areas that are specific to each hospital. We wanted to allow a little bit of time for the hospitals to kind of give their nuance, what makes them their hospital access and wait time. We've gotten comments about creating a metric for access and wait time for each of the hospitals. Then some financial framework, which is profit and loss, cash flow balance sheet, and then the state and out of state mix that we talked about the last time, allowing each hospital to come in and give their nuance on what the state and out of state makes. And then expense drivers and cost attainment. One thing we heard from the CFOs or the CFO meetings that they all have cost-attaining efforts over here in order to live within the NPR. We thought we'd like them to talk about it. But the response to the quality measures that we will be putting out, and the quality measures, there's a framework. Is there an approach to that? Data-sharing framework? You know what, I think I forgot to bring it to us. It's basically 20 indicators along the lines of the three outcomes of the all-payer model, which are, I don't know if you know this all, but, so that's, if our original design was to have the indicators done by the middle of March, that may or may not be possible. What we'll do is put at least a framework in by the middle of March when setting the guidance out. And at some point, either towards the end of March or the middle of April, we'll addend it. Pat and Michelle will put out the actual indicators. We didn't want to rush them too much, because really, we're about done. So these are the exact indicators that the volunteers in this room are working on? Exactly. There's nothing new here, and all we're asking the hospitals to do is address them. We're not asking them to buy someone like that. And then the community of these assessment progress on ACO, reform investment outcomes, I'm so sorry, the reform investment outcomes has to do with priority. We think hospitals have come in, they've asked for the 4%, we want the 0.4%. We want to know how they did. And then there's a change this year when they propose reform investments, how you can indicate, how do you go to measure success for the board on those outcomes in future years? You can look back and say, yeah, that was worth a given investment, where are we going to improve future investments? CUN updates to talk specifically about what is affecting the balance sheet, and you can state this year, and maybe affect it in the future year. Because one of the things the financial teams have been talking about is the cash on hand. What's a metric to measure cash on hand, and that actually feeds into this. Then talk about long-range financial outlook. Outlooks sort of how Brattleboro did it this year, where they were concerned about moral health money, just to let us know it's coming over, and how it'd be done in compliance with our body guard. That'd be better, close, also nice, so that's all we're going to talk about. Just a couple of questions. Are we giving specifics, and we've come out with what that wait time measure is going to be? Are we still working on that? We haven't, we haven't, we're going to have them come in and report on what is your wait time. I think that we should standardize that, because I think if we throw it out to 14 different hospitals, they come back to different wait time measures, I think it doesn't allow them to happen. Do you have a proposal? Yeah, my proposal will be the time to third visit. I'm sorry. Time to third visit appointment, how long it takes to get a third appointment. Because what they say is what I understand is that, because there can be some same day cancellations, it doesn't always, you know, the next visit appointment doesn't always really measure the true wait time. Silly call, the third next available. The third next available, thank you Mark. I knew it was the third next available. So I think we should just be standardized on that. So I'll change this to, with the time waiting measure and then the parentheses time to third next available visit. Thank you. And I'm just wondering just, in presentation wise, does it make sense to combine four and six, because it's really all quality, so when they're responding to the 20 quality measures, I think it could be lumped in, also to be amounted to access and wait time. And then the other piece that I would just add to this, I think is, I think number 10 is great to have the CON updates, but I think having a slide about the capital expenditure plans, just in general, long-term capital expenditures, because there are some capital expenditures that don't fall under CON that we should be hearing about, I think. Particularly given there's some legislation moving now that moves purchases of non-medical equipment out of CON. So that's gonna be something that would have been in our CON conversations that if that's passed, we'll not. And we had suggested that would be part of our hospital budget process. I think it should be in the presentation. Okay. Is it sufficient just to say slide on capital expenditure plan? Then all right. Okay. I think we may want to talk some more too about that measurement on wait time. Just based on the feedback we got from the public at the last meeting and feedback that I've heard anecdotally from different homeowners, I get the concept of the first versus the third, but if you're someone that has, for example, in Melanova, and you can't get in for that first visit for more than half a year, that's problematic. We might need to have a couple measures there. It's just something that we should be discussing. Well, what we can do is we can throw it back to the hospitals if you're comfortable. So time between the third next develop visit and other wait time measures to allow the hospitals to come in. Because what we might find is one of the hospitals we can do like we did last year, cherry pick one indicator that we like. So I have that kind of comment. I don't know what your comfort level is with allowing the hospitals to have a little bit of... Well, maybe the simple statistic is the wait time for the first visit and the third just have those two measures. Okay. The other idea would be on that is since we are gonna be in a public comment period, that's okay to make a suggestion to us during the public comment period and we can make a final decision when we vote. Is it gonna be an action? Yeah, if you're good to get that input from the hospitals and the doctors and the state. Because if I can just add Jess and Robin before there was a full five member board, we did a whole segment on access. Remember that board meeting and there were different ways like Dartmouth handles wait time. They don't do whatever it's next third equipment, whatever it is. They use a completely different system. So I agree with Robin if they could provide their input the hospitals on what measurement is gonna be the most accurate and then we can assess it. I mean if I would just add on the CON update to make sure that also includes how they're tracking to what they've presented in their CON. So it's gonna talk about the current CONs that are running and in the future but they submitted a CON. How are they doing against the performance they had put forward in that CON? Other variances. When we talk about the long range financial outlook to the extent, and I know we may or may not do this but to the extent that we put out a two year NPR that they're tracking that as well in there. In their long range financial outlook. Let's do Adam. I don't know what Marie just said. Looking at the long range planning, we are 2018 as you know it's the first year of the all bear waiver in 2019 is the second year. And so as part of that long range planning outlook it will be helpful just to have a clear view of what targets are that we're trying to hit and how we're doing all of those targets. And I think just one more thing when we talk about you know the standardized presentations must include the following. You know I think we just also wanna say hospitals need to be telling their story and so whatever else needs to be included they should be putting that in there. So to the extent like I agree with Jess their capital expenditures that should be in there when they're talking about their cash flow balance sheet. And you know so these are the things that we wanna make sure are covered but of course they need to put in anything they think is relevant to tell their story that year including more financial metrics, more quality metrics but it must include these slides. Yeah I'll put something in there about other items. I think there's an opportunity where something happens after you wanna know that they brought it to the intentional board or at least had the opportunity to encourage me over the word. Okay. I think I got it on. Is there a narrative instruction? There's some changes in here as well. And they are starting at number two. What we are asking in this section is about the all pair model. Whether or not they've signed on with one care how much they expect the fixed perspective payments to be we asked about a risk and how it's accounted for on the financial. Our thought on this when we get the financial submissions from the hospitals to take all of the revenues off the hospitals that are attributed to the ACO and pass some of them on to Kelly to one care and ask them as a starting point is this seem to make sense because we wanna know that revenues are flowing down through and into your own hospitals. We know the change, but at least as a starting point seeing the risk we wanna have some kind of an affirmation that the hospitals are aware of the risk and that we can look at their cash balances and make a determination as to whether or not it's kind of within a band. We also ask about E about the reformer quality addition of payments so that we can also see where those are present in the financials. Then we ask again about the community of needs assessments. Great jump, sorry. In 2A, I think I'm gonna add this whole question, if no, why not? So has the hospital signed a contract with one care and no, why not? I think it's important for us to understand why hospitals would choose to be in or not. Okay. Just when we talk about risk with the hospitals that they separated into two different areas. One area is the risk they're assuming or the attributed lives that occurs outside their hospitals. So that's typically the risk number that the ACO is presenting, about the $28 million. That's kind of the risk that falls in under fee-for-service. But then within the hospital laws, they receive a certain amount of payments for those lives for the hospital. And how do they perform against that? And is there a way to track that? Because I think that's the risk we're not really always talking about, or we're talking about the risk for fee-for-service that's occurring, not necessarily within that hospital, when that person goes somewhere else. We won't know that for, we won't know that for this submission. That'll be a question, if I understand the question. That'll be a question for next year's submission because they won't know that until, so the first year of end this December and then there's a reconciliation that takes anywhere from three or four months. So by the time they submit in June of 19, we should know that definitively how the risk order has worked out for them and then make a determination. So I think that's a question we need to include on next year's. I think they'll know that they won't know what the risk is, but they'll know in 19 that they're receiving a certain amount of money from the ACL for their hospital. That has a risk inherent to it. And then on top of that is the amount of risk. We can talk about that after this. Yeah, because the way I understand it is the risk, you won't really know until the year ends and then they go through the reconciliation process. So you could be up on the front end of the year and down on the back end of the year or the other way around because the payments are staggered through the year but the service is not that good. That's what we're going to know. But I wanted to put something in if you want to word it. We can talk about it. Yeah, we can talk about it. I think, yeah. Okay. Then on number four, we start to get into, let me go back to number three. Number three is again, population health goals and the community health needs assessment and then the AAPM network framework. And then number four is the question regarding mental health patients and care. Some of this comes from, we kind of, I plagiarized off the HCA on this question because we've talked about it in a couple different ways, framing some questions around mental health. When we have toured, we've heard about mental health and what just costs in hospitals, in the mountain, in the intensive care and so the stuff. We, the HCA put this question forward and I took it for hours and I don't know if you wanted to change it. Basically, how many beds do they have? How much weight time? How much are they spending on it? And was it because of an available mental health or so on and so forth? So this is just a way to start to dig into this issue that all hospitals have talked about over the last few years. And Andy? Yes. Can I add one more? I don't know. So E? E, yeah. I think if the hospitalists could estimate the average cost per day for patients waiting transfer, then if we get the number of patients and how long they've waited and how much it costs per day, then we're starting to get an overall estimate of the total cost of the system of these ED holds that those average costs may differ by hospital. So it'd be helpful to know. So if the board wants to- So if we're looking for that, we should say average total cost because there could be a lot of different ways to interpret the equation to figure that cost. It's just for the individual patient, but there are oftentimes other costs related to that. So. Okay. And I guess when you say D, the total number of patients who waited in the ED for an available mental health bed at this hospital or another facility, what is another facility? Community for a chance to stay in a hospital or a bar, bar, bar, bar. Oh, okay. Sorry, I'm just misinterpreting that. Got it. Okay. And they're waiting at another facility, not that hospital. How would they know that? Okay, I got it. So that's it for number- Can I ask you a question, Andy? Sure. On these metrics, have we talked with the Department of Mental Health to see if they're consistent with whatever metrics they're already collecting? Just because I'm wondering about if hospitals are already reporting this to Department of Mental Health, it might be easier to just collect that and ask DMH to provide it to us instead of recollecting it from all the hospitals. And if we're coming up with metrics that are different than other statewide metrics, that could be confusing. Okay. Well, on that one, if they are different, then we should be asking ourselves, why are they different and should it not be collected? Yeah. They don't pay in which file. So just back to number four, I know from my past life that they do track the number of people that are waiting at an emergency department. I don't believe, I could say with 90%, they don't ask about cost. You know, the total number of mental health beds, that's a pretty static reporting requirement. But I don't think they're asking about costs, they're asking about patients that are waiting. Because I know that whenever DMH testifies, they can answer the question, how do they have waiting in mental health in an emergency room for mental health bed? But I can take a look and see what DMH publishes and if it's repetitious. So I would say the cost piece is... The only thing is I don't think that, I don't know that I've ever heard them reported by the hospital, but they must have it by the hospital because they're given a macro number, but... I think the cost piece would help policy makers with better decisions, especially with geographic location of additional beds or just additional beds in general, and also to give them a clear indication of what the costs are in the system by not having the proper number of beds. Yeah, and I wasn't suggesting we not ask about cost, I was just suggesting that if the data's already out there, that they collect it directly from the other state agencies. Moving on to substance abuse treatment program. This is about M.A.T. number of patients enrolled in M.A.T. and the number of M.A.T. providers in the public hospital, this again. There may be existing V.D.H. data on this. I can take a look and see if they have any published. I'll read it. Then on number seven is health reform investments. This is a question about what they asked for of a 0.4% in 2018, what are they doing? How they're monitoring and how they're monitoring success. This is basically setting the framework for moving forward for when they request health reform investments. How are they gonna monitor and report back to the board on what actually happened? This is just for everybody to ponder about. We've had this 0.4 health reform investment after several years. So I'm wondering whether this is an opportunity for them to look back beyond just one year because it takes a while for these investments to actually return. So why just one year? There was an original proposal. So the HTA had originally asked for that to go back three years. And the general counsel changed it to one year. I'm open anywhere you wanna do it. She felt like it was a lot to ask the hospitals when I basically told her where I put her forward this way. But I could simply say extended under 2016, 2017 and 2018. Well, I guess I would welcome other feedback on that. It seems like we've asked for it after several years and I know it takes time for investancies to plant and come to fruition. So it'd be helpful to know what of the programs that they've invested and have worked, what hasn't worked, we can learn a lot from it. I think the HTA asked for three years in their original. This is there, again, I think I've already heard this from that. So this gets back to the concern I've had that I've expressed that it's been what I think too loosey-goosey. And I think we need to have a line here. What are the metrics that they're gonna use to measure their new investments as well so that we can see what type of results they get in the future. And if they can go back, like Jessa suggested, I think that would be very useful information because what we're trying to find out if something works at one hospital, is it something that can be duplicated at another hospital in the state and try to learn from the efforts that people are doing so that we don't make the same mistakes, but if something has done that results and good results, we really wanna try to get that information out as rapidly as possible so that others can implement it. So I'm gonna make the change to 16, 17, 18, just metrics going forward to measure success. They come in and say here's what we're gonna do and you can expect that you'll see these indicators move up or down depending on what the investment is. The other thing I don't see here is I'd almost like to have something that would tie those to a movement towards population health and wait for the fee for service and really looking at our ultimate goal which is looking at per capita hospital service areas, thems. So I'd like them to give us a narrative on how that's gonna help any of these reform investments, how it's gonna help to get us to where we ultimately wish to be. I think that description is in the budget, the net patient revenue guideline on nine. Okay. The only other, what I hope would be maybe a friendly amendment on Kevin's suggestion would be if the investment is tied to the ACO program, that the metrics be consistent with the all-pair model metrics since that is currently our way of measuring success in that program. Certainly a friendly amendment. Could you just repeat that one more time and... If they're tied to the ACO program, we would want the metrics to be the metrics that we're using in the all-pair model. And actually related to that, although I was gonna bring it up at the end, but in the narrative here, I didn't see, unless I missed it, but I didn't see any specific request to respond to the Green Mountain Care Board quality indicators and wait times, even though I know it's in the presentation, I didn't actually see it broken out in the narrative. What I'd really love to see is potentially the health reform investments tied to their response to the quality indicators that we're seeing. It doesn't have to be, but ideally, if this is a hospital service area that is really low in one of the 20 measures, it would be great if then the health reform investments are tied to trying to move the needle on that. So I think it should be a separate line about how they're responding to the... So you're talking about making future investments tied to specific outcomes? No, I'm talking about having the health reform investment request be to some degree, although I'm not, my personal opinion is not the mandate that it is, but it would be great if once there is, we are asking them to respond to the quality metrics, right? Although what I'm saying is that in the narrative instructions, I don't see that broken out. I didn't see that as... Number six, I see one in the narrative instructions. That's in the presentation, but I... Yeah, yeah. Okay, so I'm saying I think it should be in the narrative instructions, a section that says, please respond to the free mountain care board quality indicators and the wait times. So adding that to the narrative instructions and then ideally, the health reform investments are somehow related to their response to the quality indicators, although not a mandate, obviously. They may have other health reform investments that are more pressing, but... Got it. So before I go on to number eight, do we have the bridges tour? Or are we gonna... Do we have the what? Bridges tour. Yeah, can you hand it out to me? You all right? So for number eight, we've got a chart called the bridges chart. It looks like this and has a backside. This is the chart that Maureen worked on with us about monitoring expenses. And so basically for revenue stream breakdowns and sort of like that. Basically, look for eight speaks to their NPR and now they're submitting their NPR and now it's broken down by a payer, by, it comes across and down. We went through this chart the last time. The only thing I... I'm not sure what was going to be part of the system. Yeah, that's it. Thank you. Okay, so we have the floor up. Yeah. We talked about this last time. The only piece of feedback that we've gotten, one of the pieces of feedback that we've gotten from some of the hospitals and bosses concerned about the second half of the first page. And I think they brought this up the last time. And I'll put this to you for consideration, but they've talked about bottom half of page one. They don't think they can break this out because of the way services move through the system because what we heard from the hospitals, some are some make money, some, who's one of the birthing centers that's always under water, that some of the other services flow in. Warring was kind of driving at, we kind of like to just see that. So you've talked about it. Is there, if you're making a statement, you must have some type of data. And so, where we settle is we understand you may not be able to fill this out. Top to bottom, lots to right. But address why you think some of these services move money, some of them wait money. So the only thing I'm throwing in front of you is that potentially the hospitals will come in this summer saying they couldn't fill this out. But I think they could at least address it verbally or something like that. Maureen, do you want to talk about it a little bit? Yeah, I think, you know, some of the discussions we had, each hospital doesn't have this information necessarily broken out this specific way. The challenge that we would bring back to the hospitals is each of the hospitals has an understanding of where their revenue is driven from it. They may not break it out this way. So it was really trying to kind of tell that story of the hospital of where are you getting your NPR? What are the changes here over a year in that NPR? And what's driving that? And so it may not be this specific way, but when they talk in their narratives, they typically say we had more orthopedics or we had more charges for pharmacy or we had different big buckets where they had some changes. So it was really trying to say, almost what drives your business? What are the areas of the hospital that are driving your business? And how are they changing year over year? And particularly as you talk about the long range plan and things like that, how will those things shift? So they think they're gonna be more orthopedics over time, more at their cancer center, less in their birthing. How does that change how they're giving care to the patient? So it was really, this was one hospital to this specifically, but whether they have it in cost centers, whether they have it in units within the hospital. And I think part of the issue we heard was it's not always broken out necessarily by payer type or at this level and they can't break everything up specifically. It's really trying to say what's going on? What's changing in the hospital? And this was a way to try to talk to it and maybe said we're not gonna hold them to this specific format if they can't do it in that format. But really it's just trying to say rather than just look at revenue by commercial Medicare, it's looking at revenue by where is it coming from? What are the areas? So I think I put it to the board if there's no concerns, we should talk about that otherwise. I'll keep moving. I think you can keep moving, but I think that at that part 12 meeting where the hospital solicitation has been been talking to the board that maybe a proper timing. Perfect. Perfect. It's a number eight, this is a number eight. So item A is about it's a typical language that we've had on NPR. Then item B is about any cost savings. This is going to be repetitious of what we asked earlier on about talking about some of the cost savings and the issues you proposed. So if we give you a target, how did you get to it? Show us the ups and the downs, if you will. Historically, the state budget, you do, you start from a number, you do all your ups and then in numbers, and you take it to get down to the bottom on target. You guys know this because you just know through this, but basically the same look for hospitals and then changes in source. This is all, I think, there's continuing stops with all the same language last year about NPR rate, two pages. NPR rate, if you receive the budget action, I think this is all the same language from last year up until item number 13. So if there's any concern with that, I'll stop for the rest of this. We haven't got to do the NPR number yet, which is a little separate. Yeah, I do have a thing that I want to add for being, you know, going through the budget process, I really thought one of the things that was missing was looking at, you know, where they think they're going to be against the current year. And, you know, as we now have received the actuals for 2017, that continues to be a concern. And I think in the budget process, I want to, I think we should put in that they need to give a reconciliation for where they are for 17, for the current year, up or down. As we look at the actual results compared to the budget versus where 17 came in, four of the hospitals came within that 0.5% that we allow, kind of, you know, if you come in with 0.5, you're okay. Six were under. I'm as concerned about the hospitals that were under as over, because six of those hospitals, several of them were 10% under their budget number. And when you build your budget, you build your expenses, kind of, targeted toward that NPR rate. And several of those hospitals are now showing, you know, deeper concerns on operating profit going further negative. And so, you know, I don't want to just look at a hospital and say, okay, you get whatever our NPR rate is, 3% off your budget. When they're tracking way under or underactual, we should be pushing it a lot harder to make sure that number is consistent and supportive of where they're going to come out, because they're building those expense ratios towards that higher spend, and then it comes in a lot lower, and they go negative, because they're staffing and everything. On the other side, we had four hospitals that were over, several of them, you know, significantly. And when they came in at budget, they were showing some of them quite a high number above where they thought they were going to come in for the current year. But we didn't really address that, so we kind of let that go through. And, you know, we're in a situation now, and I know we're going to talk about it later, where, you know, UVM has to be below in 18, where they came out in 17. And if we've gotten ahead of it a little bit at the budget time and really looked at where your action was trending, what's going on, maybe we could have taken some action at that time, you know, rather than now. So I want to see a reconciliation for where they are for actuals. And when we do the budget, I understand when they submit the budget in July and when they've prepared their budget, they may have only had three or four months of actual data at that time, you know, based on the cycle. However, the presentation is in August, and I would imagine each of the hospitals has a pretty robust budget to actual during the current year. So when they come in in August, they should be giving us a pretty live update of where they are trending against their current year budget. And then we can use that as another data point to see how that flows to the 19. Because going budget to budget, just doesn't really work as a metric, you know, year over year. And we need to consider where they're coming in for the actuals and then that would drive any change. So what I'm below number eight is about under number nine, which is reconciliation 2018 has submitted, actually we hasn't proved, to year-to-date actuals for 2018 with a year-end projection for 2018 actual, has explained any variances with the positive or negative. Because I think I've done a point where you asked a question about, to your point, what's the effect of the balance sheet? Because that's really the bottom line concerning them. Right. We're going to go ahead and look forward to expect that when the actuals come in, we're going to look back and say, you know, where did you guys say you were going to be, you know, come that August, and where did you end up at your September year-end period at that time? Okay. Because of the issue that you brought up, so we want to know the recon of the actuals, that should be in the narrative. But for their July submission, but then in their presentation, is to update that even more because they have two months more of actuals for one. Their response. Yes. I mean, you know, their response coming right against the budget is going to be a pretty easy chart, right? If they're coming in significantly above or below, that should be a consideration for us as we're looking at where their NPR rate is year over year. Particularly, it's easier for the ones that are lower, right? If they're coming in lower, I don't think they should be getting whatever NPR increase on the budget. You know, if they're significant. We have several hospitals 10% below year over year. I'm asking, do you want it in both the narrative and the presentation? Because if the narrative comes in in July, the presentation comes in in August, the timing of that information can change. Yeah. The next piece is the salary. There's a little bit of an error. Actually, Andy, before you go to that, when I was going to suggest to follow up on what Jess had said about the presentation, we may want to just add language from the bill around the non-medical equipment, just so that it's very clear that we are looking at that in this process. So, I think, you know, Mike or I can pull that out of the bill. Because now that those, you know, what exactly we're looking for, because I think that would be a good way to show that it's happening. So now, we're in attempt with salary information. We originally met with the CFOs. We've had concerns around the process of receiving the 990s, posting them online, then taking information on the GMC and staff taking information on the 990, posting it on the internet. There's a couple of different movements there. We thought we could streamline it. Some of this actually comes from the recommendation from the CFOs that they could reconcile, because we really only asked for a couple of other limits on the salary. They recommended to put the whole salary in. This would tie the 990 by total dollars here and total numbers. So you could tie it back to the 990s. Now, we would still get the 990 and post it on the web. But this would be for, I think I need to change the line of order just to make it clear. This would be for fiscal year 17 actions, so it ties to the 990. And I need to just change the footnote because the mistake even says number 13. But, so this would be at this point, all we're asking for is the 990 to be posted on our web and then this to be submitted in the web. So I'll throw that open for conversation. Because I've gotten different feedback from different board members. I guess my question is I'm very cognizant of asking for information and thinking about how I might use the information. When I see this table I'm not sure what I'm going to do with the information. And here's probably why. I think what probably board members are looking for is some idea of salaries, wages to some degree interest in that area because we know labor costs are really high. But I think instead of asking for this table because honestly I'm not sure what I would do with it I think what we should ask for from each hospital is their policy on executive compensation and on staff compensation. Do they use an outside HR consultant to benchmark? What are their peers? What are their goals? What are the institution's goals? To the extent that are they targeting salaries at the median? Are they targeting salaries at the 60th percentile against what national and regional peer group? And what are the actuals compared to what their benchmarks are? Because I think at the end of the day what we care about is that hospitals are not paying too much and not paying too little. We want to make sure that they're weighted or collected in some sense that price needed to attract motivate, retain, gifted people. And so I think we want to make sure that they're benchmarking, that the benchmarks are reasonable and that they have a policy. And that's what I would like to know about. And if they're, you know, where they fall actually relative to their goals. I'm not sure what I do with this table and this information. And I to be totally frank, I'm against public shaming people's salaries. So... The other thing I'd add is that on number two on page 25 which is the HCA's question and asked about financial incentives bonuses in hospitals. I guess it's something that Maureen had asked about whether hospitals aren't incentivizing their staff to blow by the PR and then there's about hospital buying basic incentives and so on and so forth. Yeah, incentives are very interesting. So I think asking about incentives is a great question. But I also, I go back to, I think we should make sure that hospitals have a benchmark policy. What are their goals? What are their target salaries? And where are they relative to those targets? To make sure that they're not paying too much or paying too little to attract and retain the people that we think will deliver high quality care in our state. So I'll give the contrary thought. I actually think that as a form of transparency having the names is important. And I think that these are not private companies. These are non-profit companies that are really community efforts. And members of the community are often asked to make donations and volunteer and things like that. So I think that the expectations of transparency are higher within these organizations than in other organizations. And I for one found tying the amount to the names somewhat informative because it became clear that at least in one institution I believe they are tying higher than average salaries compared to their peers in the state to the fact that it's a profit center for the hospital and is able to help with other areas. And there's nothing wrong with that but I think it's information that people should have access to. So on this one I support full transparency. I'd like to basically support the chair on this. This chart was meant to avoid the shaming of the 990s in a way. And just deal with straight budget information that we get in aggregate but it's not broken down. The cohorts here tie exactly to the cohorts used by the tax department in their reporting of the incomes by cohort. And if you are in the cohort at $200,000 and above you are in the top 3.3 percent of incomes for providers. I think that's important information and I don't know what we'll find here. You could be right that we won't find anything but we might find something that would be very interesting to the public about their hospital system that then would lead to a discussion to either validate it or have concerns about it. But this is an attempt to not be linked to the 990 process. Obviously we can link those on our website as a public document and it's helpful. But when I began looking at the issue of using 990s sometimes it does get focused on personalities rather than the context. This is a chart hopefully to take the entire salary benefit high and break it down in a way that we might understand relative to the total population that is followed by the 990s. But to the extent that really what you're interested in is I think are we paying certain providers or certain segments of the medical care profession to want you to a little bit more of a benchmark. What labor markets to some degree function pretty well in those ways to reflect the price needs to attract, to motivate the provider. So how do we make sure that we're actually benchmarking? That seems to me a more interesting question and how many people are in for each hospital in each of these categories. Because it could be that some of them are too low, it could be some of them are too high. We don't know unless we have some sort of benchmark. We don't even have the data to benchmark yet. And this is an attempt to build that information in a way that because it is a public concern up there it's obviously made headlines a number of times. But that's been on the personality basis as opposed to taking the whole pie and looking at it breaking it down and having a thoughtful discussion about whether the direction we're going on. Obviously labor costs are a big part as they are in the state budget. And I think this chart would be helpful to keeping the focus on where the money is being spent rather than where the money is being spent on. So just go ahead. Yeah, I would just add, I think this is definitely an area where the board has different opinions and I think that's great. I support more where Jess is at. I don't think that we should be managing the hospitals down to who's getting paid and how many are in those buckets because without relationship to something else I don't know what that means. If there are 10 people in the 400,000 plus bucket, what I do think is we should be looking at how their total expenses and how we can control the expenses and push them on that and salary increases and things like that. To a point that Andy was referring to on the bonuses I think we should have an understanding on are the bonuses that the executives pay tied to what we're regulating them to. So how does we give an NPR target of X and a hospital comes in higher or lower to that how are they rewarded on that? And that would be interesting to know if there's a pretty solid reward when they beat the number that kind of goes against what we're trying to push. So it's really to say are they in alignment? So are there financial objectives for bonuses in alignment with where their regulatory guidance has been set? So that I would like to know not this way at a person level but just a concept. And there I haven't been able to find that when I look at the company is that's very transparent. The CEO is paid on whether it's top line gross margin EPS but it's really clear and the guidelines are real clear. I haven't seen that other than to see that they need to be focused on financial operational and quality metrics but what are those metrics and are they in alignment? So just to follow up on the earlier statements one of the things that is problematic sometimes with benchmarking is somebody may come in with what's the average salary in the northeast which would include Boston and New York and I think that most people recognize the fact that in many fields in Vermont you are making less if your peers are elsewhere. It reminds me when I was on the Rockwell Town School Board many years ago we reached in past with the teachers we had had a history of trying to be the better payer in the region but after back 60 past it became clear that we couldn't be the better payer because of the new rules of the game and when the Vermont NDA negotiators came then the first thing they tried to do was benchmark Rowland Town to South Burlington which at the time had the highest paid teachers in the state trying to make the arguments that Rockwell Town was similar to South Burlington I know this is a totally different field but I'm just that kind of does at the back of my brain when I think you could make an argument no matter how you want to do it for if you have a particular position you could make an argument for being a $290,000 position or a $540,000 position based on the information and tools that you use to make your argument I just feel that in this particular case I'm not trying to micromanage the hospitals I'm not trying to tell them what to pay I think I see our role as providing the information so that the board members were trying to do civic duty and all these different institutions can have a point of contact on the Greenland Care Board website where they can see what others are being paid and I just think it's useful information I would definitely never try to use that information to cap salaries or anything like that but I do find the information useful so this is a little big case to what's been gone on my cubicle for the last time so here's what I was thinking and I'll just offer this up the question from the HDA is on the standard unless we want to get to the point where we're sanitizing this area I'm not sure we're going to do that so they asked me a question about bonus compensation which I think is directly responsive to more of these points but there's basically three in my mind there's three things that the board needs to make a decision on one whether or not we're going to receive a post to the 990s I don't believe that you are just agreeing on that does everybody agree on getting the 990s information so I'll give you this one what if we took our straw poll on the 990s at this table and then taken the 990s and Q-ringed at the expression does that get too fast I'm not ready to do a straw poll yet because one of the things that I remember but I don't have in front of me is the amount of information of each binder that had a lot of information about employees and I thought there were some benchmarks but I could be remembering wrong so I need to look at that because I want to understand all of the information we're currently collecting and how it fits together or it doesn't and I'm happy to collect additional information but if we're not going to use it it's about how much goes into salaries at a whole dollar or not it doesn't break it down by a number of important I mean you could back take a look but it doesn't break it down in the income room like this does or the number of employees in each of these groups so there's I think a differentiation between physician and non-physician and it's done the whole dollar and it's a 49 any comment or philosophy on executive compensation and or general staff compensation where are they trying to target yeah and I don't remember ever seeing that in any hospital budgets I agree with that and that to me is more relevant information to figure out where are they trying to target their salaries than this I agree the context is important because I think the there's two contexts that are important here one and I think part of the split is based on which context you're more focused on so I think the national and regional context is important because it quits the recruitment and retention conversation up front but there is also the context the Vermont context where I think to Kevin and Tom's point that people the general public may not necessarily understand that if you're paying regional or national salaries in this industry that is necessarily going to put these employees at the higher end of the Vermont income scale and I don't know I guess where I'm at is I think both of those things are important I don't know sitting here right now what I think is the best way to collect the information there is my ending I'm bridging the gap I guess I would say that I could be persuaded that we could include this table if we also had the context information of the benchmarking information so to the extent that we put it in a larger context of the benchmarks and with the philosophies of benchmarking from each hospital are then I would feel more comfortable with that doesn't make sense to me I would support that I just think from a way we always hear these issues about affordability and this chart was made or designed to actually do two charts one for medical staff and one for non-medical staff so that and it's all in it's a complete pie and it ties back to the budget it's the actress on the budget so it's not some free-floating piece of information it is the number and people can see well maybe this is what folks are getting paid by these incredible salaries they can see it all and I just think that context is important but I agree with you that the medical community operates in its own context and so getting those benchmarks having those benchmarks for New England region or the nearby states those I think is a good idea do we have what we could do I'm trying to get to a decision we could do some so what I'm going to do is I'm going to even in as it's written exactly there's a couple of edits out there even in as it's written and then when we send the final out about 12 that'll be the time when we come back on on the 12 on the 14th or so whether or not we want to leave this in as it is very much I want to just add leave it as written and then just add another thing to say give their policy most places do have an HR policy what their range is that they'll pay and how they come up with that some people use outside consultants that's what I'm looking for I think to have that is fine I would say when we reviewed this in our meetings with the CFOs they did I believe they could provide the information that's why I'll give a point of view whether they should be or not but that this information could be provided it was something that could generate their systems I think that makes sense I think everybody agrees the context is important so having that context makes sense to add that for the next meeting and I'll also just say this because it would be an area of potential public comment is could we also look back at that other information and determine whether that's necessary if we're getting this as well the information that's in the budget but currently well that would be for you to determine whether I would think it's official I'm just saying let's have the mock chart with the materials so that we have it all together so I've been asked to take a break so that we can try to straighten out the sound so I guess let's break for about let's break till 10.15 we're getting to the more mundane parts the year over year part and then we'll build for the some of our MPR organizational structure we ask for every year including a section on the healthcare advocate which we'll talk about in a minute and this is all about adaptive input it's basically generic this is where we'll specify the MPR targets and what it will say is as of March 14th which will be when we finally vote we set an end to our limit and then an additional allowance for health reform investments we talked about the last time so that's what this page said then page 10 is about to be on the MPR investments I would just be very clear that the increasing access to primary care preventive care etc. that those are tied to the APM agreement just so that there's no confusion where that's coming from I think that's more of a technical addition yeah I would also just add I think this is Kevin's point earlier but I think we should just add language specifically that says any investments must be accompanied by a specific plan to measure or a law what measures will be used to measure success of any HRR health reform investment adding that language any investments must be accompanied by a specific plan to measure return on investment what measures will be used to measure success of the reform investments just exactly what I was trying to say but she did it much better if we're tying investments specifically to the all-care model measures shouldn't those metrics be the APM metrics so this is narrower than what we did last year last year it was broader and a lot for investments in the community health needs assessment this is not so narrow as to only require it for ACO investments so it is broader but I would think even if you're doing an investment outside the ACO to meet these metrics that the metrics should be what we're already measuring in the APM agreement I'm looking at Pat to see if that makes sense certainly just identify yourself for the record Pat Pat Jones health care board staff I think if you look at the table at the end of the guidance there is a specific effort there to link the health care reform investments to the all-payer model quality metrics we specifically are asking the hospital to identify which of the 20 metrics that they will tie the investment to so that piece is there the ROI I think goes beyond that I think the Robin has brought up is an important point because we all need to be rolling in the right direction these are the metrics that we believe get us rolling in the right direction so I think tying it in makes sense and what I would say about the ROI is that the ROI if you will in the all-payer model is reducing the rate of growth for total cost of care at 3.5% Okay I'll question a little bit more Ben on page 10 this is a repeat of last year on recruiting open needs assessment language 10 and 11 then we get into basically 8x12 which is a repeat of what we did with the NPR was there any feedback from the hospitals where the needs assessment is appropriate as a wrap-up? No, I didn't get anything I did not get anything I guess silence is gold Silence is a group Page 12 the only thing I mentioned this is kind of coming out of rule 3 the only thing I mentioned is just to remember whatever we said for NPR hospitals are considered to be compliances over as long as they're around 1.5% plus or minus but this is just a repeat for the hospitals rule 3 then physician transfers all standard language reporting documents a lot of this is adaptive Ben you can't just go back sorry back to the health performance investments well I'll agree that we can totally agree that I think some of the measures are at the hospital service area and I can imagine a hospital taking on a particular program that is targeting a particular chronic morbidity and what we want to see from them is that that particular hospital specific program is having an impact so what's the starting point at whatever measure they're using and then how does it end next year so that they're really dialing in on their particular program it may blow up or link with the hospital service area quality metric that's being captured there and maybe another metric that they can use but the impact on that larger metric in a year may be small but it may be larger on that hospital's specific metric so I guess I would still encourage us to ask the hospitals how are you going to measure the success of your particular hospital based program along the lines that hopefully are aligned with the overall model but they may be more specific to the measure we can use because you can see for example what the hospital might program might increase spending in the community and decrease spending in the hospital or vice versa that could definitely be it so I just think we should actually allow the hospitals to figure out how are they going to measure the success of their program without just saying well of course it's just going to be measured by this these 20 measures because it may be there may be other ways to measure their success and I think we should give them an opportunity to do that and have them think about it ok sorry that makes sense to me I think as long as I just want people to really start thinking on a hospital service area level that could be hard to find something that doesn't fall within those 20 quality measures anyways and I keep being reminded of what our consultant Mathematica told us that really in any given area I should be focusing on no more than three things at a time if you really want to be successful so there there may be different focuses around the state but I would hope they would all fall within the 20 that the quality team has moved forward so we were I would look at just on that second paragraph just kind of we were on page 19 20 so this is how you change your budget from last year basically this is how you see it you can jump it so far ahead of us so I'll go back to a little quick so 14 this is about position transfers and acquisitions because there's a process that's existed and that allows the hospital to develop that separately to the extended effects of NPR and adopters have to supply with the 17 into the reconciliation of how that information is reported to us and then at 17 and 19 19 is the policy for renewing position transfers so if one happens during the year then that's no so and so forth because it happens kind of outside of the NPR and is this identical to what we used and none of this is changed and this goes back a few years 20 again hasn't changed it's about a hospital with single modifications to their budget order once it's written the process is going out 21 starts to go every CEO of every hospital and they'll never cut the sign because they're mentioning in front of board they submit their narrative to us so 21 22 is what they say they submit along with the budget to review from last year 23 is the process for which hospitals can seek a public exemption I think what we agreed to last time is to move it in the hospital budget on the 23rd of July or whenever that date is if they initially report or somewhere in there we'll let you know which hospitals meet this criteria and then you can decide whether or not you want to allow the exemption based on the number or so on and so forth maybe on one hospital and maybe a handful so it depends on who meets the criteria this allows them not to appear before the board last year because of the new board members we decided to have them all in the industry but we'll move it in this is the standard reporting on 24 for the health reform investments this is the EP from prior years and then 25 so 25 what we did this year is rather than give the hospitals a couple different sets of questions we invited the health care advocate just to give us their questions early on and submit them to the hospital in March so that this is a a lot of the questions that were asked last year we took a few with them and then the health care advocate gave us the remainder I wouldn't know because I know the health care advocates here every time we have to take this document the date on the membership change not necessarily I don't know Kevin if you want to ask the HCA to make a comment it's a particular couple of changes that you may have made we'll definitely invite them to comment as soon as it's on their letter we'll make sure so that's the end of the budget guidance same in the MTR because it's a separate conversation that's the end of the guidance part of this and if it's okay with you I'll move to again we would like to have this done hopefully by the end of the day tomorrow and then out to public comment I'm sorry Kevin I have a quick question do you ask the hospitals for a fair amount more this year and I'm just wondering in the meetings that you've had CFOs and whether there were things that were the data input that sort of decided was not usable things that we used we had three meetings with the CFOs I opened the first one with that there was data that anybody thought that we were getting that was not useful to let me know that doesn't mean it's a one-off time opportunity I would say that as you go through the process in the case of data we don't use as a decision-making process that can be a copy of the score 2020 so we'll see the changes we're going to have one thing from somebody that says hey get through this that's what I'm just curious thank you during the three CFO meetings if you go back to the notes there were many more things that we talked about including but again I don't know if silence is accepted but this is where we end up and the other way and the only thing I would say is they were concerned by the bottom of the second chart on the page one of the British chart but other than that frankly we originally had on the salary chart about $2,000 $3,000 basically but I did not thank you that's great you want to talk to my engineer? yes national public rating I'm going to talk about these charts that you have there are four paragraphs or maybe a chart I'm going to turn this over to Tom what we're trying to do is look at that point and then also look at how you can flatten out the ups and downs and create a linear chart okay and this was also these are this is just a rough linear regression data for energy and NPR and it was trying to smooth it out over the six years rolling out for the state budget so the first one you can see there's a lot of noise going back and forth the NHE which is the national health care expenditure and the power of Vermont NPR so it's a national number for Vermont it's trended out for a few years the farther you go out the less accurate it does become if we take a six month or a six year rolling average we can smooth it out quite a bit and that's where the numbers are projected to at that point so all the numbers are on the chart for a while and then the next graph is the US hospital CPI versus NPR over more noise than this one and this CPI is hospital inpatient outpatient and no UVM and they're there to use different medical costs so slightly different and then the next chart just smooths it out as a six year rolling out so here's what we're driving towards we originally came in front of the board we've been talking from the last last meeting about setting an NPR rat based on the governor's six year rolling average which is down around 2.36 percent you asked us to go back and look at some hospital data and expenditure data which we did and we tried to create again kind of a more longer period rather than just a year over a year and create a flatline for what it would look like so what it would suggest is that in 2018 we would be similar in a 3.7 where we were still below the healthcare expenditure in 2019 in the APM side we set a 3.5 on the non-future service non-future service revenue stream what we're trying to do is figure out a way to not be back at this table again next year or time because we set an NPR data counselor inflation but not utilization from most hospitals the bigger hospitals the utilization year over year is up so when we talk about the inflation period we're going to talk about one price piece we're going to talk about utilization so I would offer somewhere maybe this is just a recommendation we're going to have to vote on this today I'm simply trying to get the board to a point where we set on an NPR I think last year we were at 3.4 and we're at this table this afternoon talking about a miss of about $40 million when we take it down so we'll fill it less than that but it's still above the 3.4 that it's still above the 3.4 that it's still above the 3.4 that it's still above the 3.4 something the above the 3.4 that it's still above the 7 that it's still above the 3.4 that it's still above the 3.4 that it's still above the 3.4 that it's still above the 3.4 that was said in 2017 again in 2013 in 2018 we're at 3.4 again I can't see as many of the data that I'm saying that we're seeing that health now itenge be good this afternoon where you're not going to have a similar miss when you're not going to have a similar miss and a couple other opinions that are coming on the table. And just a straight utilization price, it's up. So if that's, I'll throw that out in the conversation. I'm hoping we'll do at least kind of narrow a single point of a week to come back on the 14th and say, here's where we think we're going to go. And your question is to pay. So are you saying those percentages are just price? No, this is expensive. So we're not at the point of public questions. OK, let me just clarify for the poor, this is all total expense. It's just total year over year spending. We'll see what's coming then. And this is based on Tom used the act. This is nothing to do with budget to budget, but it's still kind of a linear count. So do you guys? Yeah, I just had a question on how does the actuals for 2017 was 2.8% on the NPR? 1%. So where is that showing? We didn't put that in because we didn't have the other 7.4%. Sorry. This is not from the 64. And don't forget, this is a rolling six year. So again, we tried to parallel the state budget where we could change this to the individual. But this is a rolling 6, 6, 7, 6. So if you're looking for feedback, I think that's what you asked for. I do. Yeah, my feedback is that until we have health care growing half or below the growth of the state gross domestic product, I think that we're failing. Because what we have is a path towards unsustainability with the monitors already paying about a fifth of their economic dollars on health care. Until we get that under control, I think that we're jeopardizing the system more by giving the latitude for it to continue to grow at higher than that rate. So for me, I just can't see possibly going above 3% combined. But that's just my feedback is going forward. OK. I guess what I would say is for me, I need to understand how our recommendation ties back to the all-pair model 3.5% because we agree with the federal government to a goal of total cost of care at 3.5%. Cost of spending is obviously a bigger part of total cost of care. And in this process, I mean, there's lots of disconnects in this process. It's both in-state and out-of-state all-pair model. And that brick is just in-state. But I need to understand how any given recommendation fits into and would impact on the all-pair model, total cost of care. I would also be interested in potentially splitting out different percentages for hospitals who are participating in the all-pair model and moving more towards a fixed budget because I think that's more predictable. And it allows for greater likelihood of cost containment. And if others were interested in that, where I would be heading with that is pushing down on the fee-for-service NPR and being more generous for folks who are agreeing to change their business model to add predictability and stability. Other board members? Yeah, I'd like to add to what Robin said. One of the requests, Andy, you guys were still working out with something I had sent over, which is if there was a 3.5% for the all-pair model piece, what would the balance be for fee-for-service to what would that generate? And I know that varies by hospital, but first doing it in total. If 25% was going to be fee-for-service, 25% was going to be the all-pair model at 3.5%, then that by default generates what fee-for-service would have to be. So if you wanted to be at 3.5 in total cost of care, you would split up the total fee-for-service to be 3.5, right, because 3.5, 3.5, 3.5, but if you're trying to cruise into a different board. Well, except that hospital spending's a greater percentage of total cost of care than the physician spending, right? That's all right, that's all right, that's all right. Yeah, just my feedback on building a number was coming up with different components. One component being what do we think the medical trend for hospitals would be for the state of Vermont doing nothing? So just would that be at 2.8% this year, and that includes some of the community health programs? Separating that out, what do we think that trend would be? Then adding to that our community health, if we come up with 0.5, adding to that to that number. And then we talked a lot about some of the expenses like salaries and things like that, and rather than micro-manage those, push to get an additional savings, I know all the hospitals already do savings, but they have to dig deeper, because if we're gonna bend the curve on the cost to Vermonters, it really, it's a math equation. I mean, it comes up to what their expenses are as well, so then put a factor on, and I had suggested 0.25, which across the system of 2.5 billion is actually not that large of a number, and generated additional savings. So there is math to that from a medical trend, which is different than just looking at what the budget is for Vermont, 2.38 and tying to that number, because I'm just not, I wanna tie it to where everything's gonna go, because when we look at what happened this year, utilization was the big driver that drove over in those hospitals, and how does that factor into the equation? So really kind of saying, this is where we would be trending with whatever the utilization inputs are, then adding on the community health, and then pushing back and saying, we need to have additional cost savings that will contribute to driving down the number. I mean, I guess I'll just echo Robin that's oriented to some degree, and I think we need to have that tie in to what we already agreed to 3.5, backing that out, what will be the NPR that would allow us to reach that 3.5 in terms of hospital spend. I also like the idea of a different NPR for hospitals that are in the model, realizing that they're assuming some different risk and switching over to a different business model, so I can imagine generating what the base would have to be to get to that 3.5, total positive care, and then allowing for some small percentage for an additional risk if you're in the ACO model, and then on top of that allowing for the health reform investments. I also wanna, and I know we're asking for in-state, out-of-state revenue, but we don't seem to be doing anything with it in our NPR guidance, and to the extent that really what I'm most interested in making sure that we're containing is fee-for-service in-state revenue, yeah. So how do we really carve out fee-for-service in-state revenue? So when we asked for it in the presentation, we were a little inconsistent last year on how we treated in-state and out-of-state, and I'm not sure we had a very good definition on the vast end, or if they wanted guidance, if they wanted, and we've created this revenue, if they wanted an exception for in-state and out-of-state, they have to commit with something more, I think, than a pie chart, that says this is in-state and out-of-state, that's the one that's out-of-state. I think they need to commit data that suggests we can track payers by zip code and pay, I'm sorry, patients by zip code and pay, and then you can make a determination that's truly an out-of-state payer, okay, all of that, I think that's the side. I think that's the way you should go. So hold them to the 3.5 in revenue numbers, or come up with a hold them to the NPR growth, and then if they can even say, well, the 10% of our is out-of-state, we calculated that based on the following calculation, and there wasn't consistent feedback from the hospitals on how they actually calculated it, could calculate it, or will calculate it, I think, in order to make an exception like that, to burden them on the community with proposals, and then you can say, or the team can say, yeah, okay, so three, or whatever the number is on top of this amount there, that's your NPR grade, plus the out-of-state from the NPR grade. The way that's gonna look though, is total hospital revenues, if 20% is from that state, you don't set any kind of cap on that, and say it grows at 10%, but the other 90% grows at your NPR, when you publish your NPR, it's gonna be a much higher number than the number you approve of that standard. Better than that, but that's, so I think we did put it back on that and come in and make a case of this. Just think it's gonna be a little tighter than that. One other thing we need to talk a little bit about is how do we address the hospitals that are way under their budget numbers, and is there NPR based on that, or a lower number when we track to that, because we had several hospitals, two hospitals that were over 10% below their year-over-year, and then the same thing is gonna happen this year, because we're kind of continuing that cycle going from budget to budget, whereas we've talked about maybe they somehow get a lower number in there. Well, what we'll do is we'll go back and take, as a system, take out the ACO revenue, put those kind of in a bucket, and then below that will be fee for service. We'll indicate what the ACO revenues are gonna grow, and then make a recommendation. So if we say we want the total revenue to grow at least around 3%, you know, the ACO revenue is going at a higher rate than that, the fee for service revenue can have to grow at a much lower rate than that. I'm not sure we want to do that as a service. We can take a look and see how that works, and then make a recommendation based on some of the inflators. That's the way that fee for service revenue should grow. I will mention that we received a letter from VAHS, they spoke at the last meeting, and they sent this to the board chair. We've posted it on our web, and you guys all have a copy of it. It's on our website, especially the concerns about setting a NPR that was, what we talked about the last time, it was 2.8%, more like 2.9 all in, with the 2.3% in the government budget was half a percent, and they're making statements about participating in a kind of inflation, and that this is the old paramount, and we have to bring this again inside our web. This is just a piece of information in this conversation. I think that one thing that would be helpful is for us to think about is whatever NPR target we have is to parse out what is due to price changes, and what is due to utilization changes. Building it that way, to some degree. Is price driving it, or is utilization driving it? How do we figure that out? So that's the reason I think we want to hear, is this trend is all in. When we talk about NPR prior to this, we were talking about basically the expression. This is what the all in, utilization trend would look like, based on the situation that we deal with. If the other one is, this is hospital, this is CPI, which is basically the same, it's a little higher. Yeah, there's a health care that's come out with the national health expenditure projections, for the nation, and it was the annual increase is 5.5% of which they attribute 2.5 percentage points to medical inflation. So that's the breakdown for national health expenditure, so it'd be interesting to think about that corollary to NPR. What is the component that's driven by medical price inflation, and what's the component driven by utilization, and particularly with our state of aging population, we're hearing about increased utilization from the hospitals. How does that affect you? Yeah, that is an important point, and I think that 5.5 and you're saying 2.5 is medical inflation, and in the current year that just passed, I think it was around 5.4, 5.5, and the hospitals were 2.8, so what's that correlation as well? Because we tended to trend, we trended under that for this year, how do we think that would project to? And just one comment on the note that Baz put forward that I know you put out there, there was a comment on, in terms of the financial stability of the hospitals, setting NPR rate too low, and that we have, in 2017, eight of the 14 hospitals have negative operating margins. I believe that six of those hospitals, when I like to check, were the ones that were dramatically under their budget, and I'm not surprised if they have a budget and they come 10% under that budget and they're spending a higher rate, they're gonna have negative operating margin related to that, so at least several of the key ones that have an issue are partially because their top line was too high to where they came in and they can't change the spending, so I appreciate that statement, but I think we need to look at which hospitals were the ones that had the operating margin issue and how that related to their underperformance to their NPR. Yeah, the other thing to think about is, depending on what the second news conversation goes, yeah, I think you have a year-over-year utilization problem historically in UVM's base, in the health and wellness space. If you were correct for that, it would insinuate that you accounted for the zero-over-year problem. It could have been a lower NPR, I don't know if that makes it a better zero-over-year problem, because we've had this base problem in UVM at least the last couple of years, so a one-ten adjustment in that might lead to a good amount of kind of what we can set the NPR, because it's a more each point. We set a 3.4, they all live with that, we set a 4 in that world, which is predominantly the utilization of it. When you think of your recommendations, you'll be right to hear very, yes. Okay, so that's it, I'll get, we will get the final draft to be hosted by the end of the day tomorrow for public comment, we attended a comment period, and we'll come back on the 14th with those public comments, final comments, and then at the final NPR recommendation, and we will be hearing from the boss on the 12th. Right. Are there other questions for Danny Steen from the board? No, but a huge thank you, because I know a lot of work is going on, a lot of work is going on in the background and thinking through and meeting with hospitals and all of that, so thank you. I would agree, and I would just like to say that I think this year's guidance does a terrific job of tracking with the all-pair model and the health reform landscape, so I really appreciate that. Definitely good, I was to every member of the team. At this point, I'll first open it up to the healthcare advocate, and from there, we'll move on to other members of the public who wish to comment or ask questions. Oh, thank you, and I first want to say I really want to thank Danny and his team, and we really appreciate the opportunity to make questions part of the hospital guidance process. I think it'll be better for everybody, it'll give the hospitals more time to respond, it'll give us more time to review the questions before the hearings, and I think it's a much better process. There's been so much discussion today, and I don't think I had an opportunity to review the exact draft that's here that I'm not exactly sure. I think I need to wait for another draft to respond to a lot of detail, so the one thing I wanted to just mention is as far as the health reform investment goes, it sounded like, so we had proposed a several-year look-back, it's been edited into one year, and I think it's really important that it's a several-year look-back period for several reasons. One of the things we were trying to get at is that if hospitals have been allowed an overage for health reform investments then, and then they discontinue the projects, then they shouldn't be baked into the base, so we want to make sure that we want to see where they've accounted for that as they've discontinued the program. In addition, I think, well, there's been a lot of discussion today, and we're in agreement that we want to know whether the projects have been successful and we're sensitive to the fact that the more the more stringent the process is for tracking success, sometimes it's too much of a burden on the project, so we wanted to just sort of get a baseline to get answers from hospitals on have you been tracking it, do you have any evidence, do you have anecdotal evidence, do you have specific metrics that you've been looking at, and then we also just think that it's important for the hospital, they're all nonprofit hospitals, they need to be sharing their outcomes, and we want to know, okay, you tried this, it was really successful, you tried this, you didn't think it was successful at all, and so we can kind of see what we should be encouraging other hospitals to pick up on, what maybe we want to see something similar done, but some changes made because we have some lessons learned from other hospitals, and then I lastly wanted to say that we did reserve the right to take back any questions that were edited out of the board's questions that we had suggested that were edited to the board's questions, if they're edited out, we reserve the right to take them back, so we may ask that question if you guys decide to leave it to a one-year look back period. Thank you. I would say it really changed in the first three years, the three-year period, 16, 17, and 18. That's what I thought it was. Okay, and then the second thing is, I know that THC hasn't had a chance to look at this, but maybe if you could just give me a heads up on where your major concerns are, I mean I can see if we can put your names in the final guidance, so we get it all done by the end of the morning. I'm going to watch. Sorry, sorry, is that a specific question? No, just a request that if you have specific things you want to see added back at least, let me know if those are, and then I can go through. Okay, that's it. Okay, at this point we'll open up the floor to questions and comments from members of the public. Just start by standing up, coming forward, and state your name, and speak loudly. Can I stand here? This is a long way out there, I'll be loud. My name is Hamilton Davis, I just write about healthcare. I wanted just, my comment is that I think that the question about the salary levels for executives on the 990s is totally important, but nobody mentioned that it's federal law, and so the availability of that information doesn't depend specifically on the Green On-Care Board at all. I think the importance of it. It does in some respects, because the availability is tied to almost like a one-year lag. Okay, but that's okay, the reality is that those salaries are available, and they're out there in a general range of it, and the importance of it lies, it's one of the most critical questions for the board, it seems to me, is whether or not the board and the state of Vermont wants to have a healthcare system that is bifurcated where you have two tertiary centers, UVM and DARK, who will have to recruit personnel in a national market as opposed to a local market. That's just one point. If they don't want to do that, then that's gonna change those numbers at the 990 level. If the second thing is that the single, I think the whole idea that not only the 990s, but the obvious need to put this together with the context which was discussed fully by the board here is critical because the single most poisonous element, if you will, factor in the political environment in Vermont over the last three years has been based on that salary schedule, okay? And getting real information out there is critical to that. It started with the Jessica survey that changed the fact base of that political debate, but that political debate still goes on. And I think that it's one of the board's failures, excuse me, one of the board's failures is, as the inability or whatever you wanna call it, to be able to communicate with the public. It communicates with hospitals, all right? They're hanging all over it on every word, but it would be very helpful in the political environment if the public, the press, which actually highly exists in the legislature would have a solid fact base in which to have political arguments. Thank you. So I would just say, Dan, that our board expert, Jessica, has testified before at least two committees, including each body. And unfortunately, because we have a bare-bones breast corp in Vermont, if that doesn't get picked up on, I don't know where to go. Can I say, yeah? Well, Mr. Chairman, I understand that probably better than most, I've been spending much of my working life in the press and it's a tragedy actually and just something we have to live with. It takes time, this is just my opinion, Kevin. The last week, literally last week, that survey was been out there for how long? A good while and talked about it and so forth. It was the first time a committee, two committees actually, on the basis of one piece of testimony from Jessica. First really began to get what that was about. That was both Senate finance, okay, which still has a bill out there based on a total fantasy about what's actually going on and Senate health and welfare. So it's just hard, I know it's hard and I don't have an answer for it. I don't know what to do either. So House Health and Welfare was given that testimony weeks before the Senate? No, I understand. Try it out, Kevin, you're a pro. You've been in the legislature. Go talk to those people on the House of Health, they'll talk to you and see if they really understand it, they don't. We have talked to them. You think they understand it? I believe they do. The House of Health care? Listen, they were very impressed with the testimony that was given and at least from the members who were present because they were not all present, but the members' presence in my mind understood it completely. Well, you may be right. And you know this legislature way better than I do and you may be right. Are there other members of the public that wish to make a comment or a question? Sure, Mark. Mark Stanstaff from the University of Vermont Health Network. You know, more just statements for consideration. As you talk about access to care and third and next available visit, I think it might be helpful to just say what you're trying to get to. What you're trying to get to is if the person calls up the phone, when can they next get in on average, okay? And I would stress that you break that down between primary care, understanding what urgent and expressed care is because that's a specific need that we are having in this community and understand what those needs are. And then, you know, break it down to some of the specialties care. And there is an urgency on some of the specialty care types. So, you know, if there's an avenue and I'm not saying I'm a numbers person, I understand a hospital operation's pretty good, so just keep that in mind. But if there's a specific, if there's a different avenue, if somebody has that specific health need that's needed to be seen immediately because it's more urgent, is there a process that the hospital's set up? I just think that if you leave this to the hospital, she's gonna be all over the place. So, I would suggest pick some specialty cares to test the water. This is new to all of us now or all of you on how do we provide new data to the board that they think is relevant, you know, for the conversations. I will put out there that, you know, sometimes access is gonna be hitting up against this NPR target, regardless of how you do that. So, you need to be sensitive to that, okay? I mean, those aren't two linear lines that work together. A lot of times will they work against each other. So, you know, I don't have the answer for that, but that's more of a statement. Just a general comment on the ACO risk, we'll wait in the morning. At the time we submit our advice, we're only gonna have one month of data, so really for 19, the hospital's gonna be very dependent on the one care budget to tell them the numbers. You know, we'll have better information the following cycle, I think for like what Andy spoke to, but basically all of our estimates are gonna be based upon, you know, what one care tells us because we just don't have that run rate to draw our own conclusions. As you think about the split on the NPR between, you know, what I just called fee for service versus all payer model, just knowing the 18 budgets for Medicare and the commercial, that only represents nine months of that. So, you know, so when you apply that target to 19, you're gonna have to annualize that out. The other thing that I would be conscious is there are specific waivers that the all payer model got from the federal government and you just need to make sure that whatever the process says, it doesn't trip any of those because that's something that everybody signed on. A basic concept of the all payer model that I didn't hear talked about at all was the PMPM. How do we try to talk, take this back to the patient level? All of this is total spend by entity and that's a different animal that I think that needs to be regulated differently. And the all payer model is all about PMPM. So just, you know, I don't have the answers for that yet, but you know, we'll probably make some little suggestions on the investments as far as the health reform investments. Basically, I would say, you know, when this investment is made, exactly where the benefit is, I would keep it that simple. At what point do you expect to see it? That may not be attributed back to the individual entity. You want to focus on how is that attributed back to the population spent? So because, you know, on investment here, you know, the spend could come somewhere's outs, you know, like if you invest in skilled nursing and get people out of hospitals, you know, sooner, there may not be a benefit to the skilled nursing facility, but the benefits here and you need to look at things combined, but you know, just have a speak to that on a very general basis. And then I think what I would say is when you look at all of this data, this is all actual to actual to actual to actual. Our budget process in these current targets, NPR, go back to the first budget guidance, okay, that created an NPR cap. I believe it was in 2011, okay. These percentages are applied against those budget numbers that were just compounded year over year over year. And our patients have changed, those patients shifts have changed. So there's never been any of the rebalancing done. So I just want you to know that because our budget process doesn't work like that. It takes a number applies it to budget and that can be carried back all the way back to the 2011 budget with some small changes for outside providers moving into the hospital systems. So I think that's basic. Oh, and then I think there's nothing in here about the aging population, which is real. So I would just put that out there, but generally I would think this is a very good conversation. It's nice to have this open conversation about all of these levels out. Myself as a numbers person on the salaries, I'm not gonna get into the political piece of it, but if whatever you ask for just need to be very clear on how it's calculated. So I'm speaking from a numbers person about exactly what's possible. I mean, if you're asking for salaries inside our budget, those are salaries that are yet to be paid just so everybody knows those budgets are done six to nine months in advance. But so I think that words are gonna be important on what we put around those numbers. And that specific guidance is gonna be very important how it's calculated, like I said, I'm not speaking to any of the political piece of it, I'm just speaking to that. If my boss asks me to calculate it, do I have the information available to calculate it and then submit it to you accurately? Thank you for this opportunity. Thank you Mark, good points to bring up. Other members of the public, sure, Ken. Okay, Lyretop, there is an awful lot of material here and it's a little humbling to try to just pick out a couple of issues, but I'm gonna try to do that. I wasn't intending to, I'd like to focus a little bit on number four, the mental health piece. But before I get to that, I would say, don't listen to me, listen to Hamilton Davis when it comes to the issue of salaries and Mark very seriously, the political damage that's been done by not fostering at least transparency if not action. And it's an issue that, frankly, I've raised since the Green Mountain Care Board started. I think it's fair to say that the initial board was absolutely non-responsive to the issue to the point of taking no action for a number of years. So I guess we could say there's at least progress in attempting to figure out what's right. Having said that, I have to say that anything short of total transparency here is an enormous mistake on the part of the board. And I urge you, as you consider this, obviously not everybody shares that perspective to realize that this has collateral damage way beyond just the issue at hand. The issue at hand is there are no sacred cows in healthcare, but the Green Mountain Care Board has allowed administrative costs to be a sacred cow, in my opinion. It's a very bad mistake and it has all kinds of implications. Whether or not the board decides to intervene in the internal operations of a hospital is something that you'll have to determine. On this issue, I think steps should have been taken to address this issue and the failure to do so is a failure from my point of view in terms of regulation of the costs of healthcare. The salaries are just part of the cost and to avoid them or to hide them or to shade them does no good in terms of the larger issue. It's no great secret. I think many of the salaries are outrageously high and we could have a whole day discussion about how you get there. I'll just remind you that there's no sacred cows. The boards of the hospitals, frankly, on this issue have done an incredibly poor job and while they do many wonderful things, I was involved in cases where the board failed and Fletcher Allen is one of the examples. And when I had an opportunity to talk to almost every board member when Bill Fletcher was CEO there and they rallied around their CEO at great expense to the healthcare industry. So that's my commentary on the transparency around salaries and as we switch over then to number four, which was the mental health piece, part of this discussion is not only about healthcare and hospitals and costs and projections and transparency, but it's also redefining and defining the role of the board. And this is an incredibly complex one, but it's evolving as we discuss these matters. And I think that this kind of document is in a generic way a good step in the right direction compared to three or four years ago. And I think that that should be recognized and appreciated. Having said that, let me just make a few comments about a couple of the questions on number four, which regards mental health patients. So starting on a positive note, the fact that there is something mentioned about mental health obviously as a person who spent a lot of decades working on that issue, mostly in the legislature, is a positive thing. But I have to say that you are the czars of healthcare now. You have enormous power, but to a large extent, there's often, I think, a failure to use the power that you have. And I'll just say that as it relates to mental health. The board over the last five years or six years has been incredibly interested in the mental health issues and the last few years have adopted the term the mental health crisis, which we've become part of the lexicon of just discussion of here, the legislature and the public. But frankly, the board has very rarely really engaged on this issue and has to some degree said, but it's really not in our domain. It's part of the public system or the legislature has to deal with it. You have the power if you want to use it to get more involved. For example, I would give is a year ago, front page story in every newspaper and every show, people sitting in emergency rooms for 24 hours for days and in some cases even weeks. And again, in some ways, I would argue very little has been done a year or a year and a quarter later. We still have the situation, frankly, because of the lack of oversight and coverage by anybody, I don't think there's anybody in this room that can tell you what the current status today is of the waiting rooms issue, other than this understanding that it continues and it's a challenge. So I think it's good that you're asking some questions as you do in number four, but I would say to the board, it's way past the time for the board to look at this and say with the hospitals, not in opposition to the hospitals, do you agree with us that anything longer than a 24-hour stay in an emergency room is unacceptable and is somewhat of a red light crisis and we want to set up a protocol to deal with that because it's hospitals, it's money, and more than anything, it's your neighbors, your family members, it's people in your community who are in this situation, if any of you had a broken leg or had a heart attack, it would be unbelievable to think that you would sit in an emergency room for 24 hours. I mean, even eight hours is very painful. So somehow I would incorporate in this question to be sure how many people in your hospital have experienced a weight of more than 24 hours to get access to psychiatric care. It's just sort of a no-brainer and to lose that opportunity to me would be a shame. Another question that I would add is what have you invested in the last two years? You've had hospital budgets come before you and I've raised this issue before. You should be asking how many beds or how many services you've added in the last two years as part of your initiative is a hospital network. We have people sitting and waiting in emergency rooms and I think it would be very useful information. It's obviously not just what's the name of whatever you've done, but how much have you invested or what is it that you've been able to accomplish and how many people have served, something like that. And I think that a harder reality is understanding the shell games that go on in healthcare and in some ways, this is an unhappy story because in some ways we're all victims and perhaps you're victims too. The operational way, the way things have really worked is that very often hospitals are at capacity. So when somebody calls or the commissioner calls or doctor calls or even a legislator calls and Central Vermont says we have no beds, Central Vermont Hospital in responding to your questions will say, we don't have a waiting, we don't have people waiting in our hospital. That's because to a large extent they've been told don't come here, try other hospitals. And then there are cases where hospitals don't want to deal with some of the acuity levels of patients that are being projected. It's an issue that has been true for a number of years but nobody really has jurisdiction to deal with it. And it's hard to get a hold of that and I don't think these questions are easily gonna do it and it might have to be some case studies. Everybody seems to say mental health is the number one healthcare crisis in our state. You have the power and waiting on the legislature, I know how things work, but it's time for somebody to take an issue like this, like mental health and say we are going to be more determined in fixing the issues. And particularly when it pertains to the hospital, you can ask more probing questions as you do this survey and I hope I'll draft some questions to take a look at. Thank you. All the members of the public who wish to have a question or a comment, am I missing anyone? Okay, with that I'm gonna recess the meeting till one and we'll be back this afternoon. So we're gonna get started, get a team from UDM and get them to set that table. We're gonna introduce this on the matter, right? Yeah, sure, yep. Never, never, we can never hear you again. So what we're gonna hear from is UDM, the health network is starting in their overage in 2017 on our actual versus the NPR that was set in the budget guidance. So we're on the agenda I think from one to two and I think that you're gonna hear the response or recognition of the questions that we sent them after the board meeting a couple weeks ago which are posted on our website and the problem will be due across the ocean right now. John, the floor is yours. Thank you. John Bromstead, the president CEO of the University of Vermont, the health network and CEO of the Medical Center in Burlington surrounded by our finance guys. So if the questions get deep or technical I will be pitching them left or right. And thank you for the opportunity. We were here a week and a half or so ago when Mr. Toledo ran through the results through 2017 for the whole Vermont health system and we were invited back to go in greater detail than the analysis that we presented on January 31st. So I believe as Mr. Toledo just said we'll answer most of your questions. We'll try to get through this in an hour of the time for the questions. We'd like to point out that we have Eric Miller, Eileen Whalen, Jen Bertrand and Fred Niffin from the University of Vermont Health Network affiliate organizations here. And again, if there are operational questions with your permission I may pitch it to them. So here's what we thought we'd do with Ties Loosley with a narrative we put in on January 31st about how much people died on the University of Vermont Medical Center briefly touched on quarter medical center's performance in 17 center Vermont's performance but really do a deep dive on the medical center again as pointed out a week and a half ago just from a scale and the amount of variance to budget in actual dollar terms. That's really what the discussion is. We want to take a step back and review how we develop budgets at the University of Vermont Medical Center. There was some question about the fidelity of the process that we go through so I'd like to touch on that. And then do much more of a deep dive than we did in that narrative on the factors that demographic factors largely that are out of our control that are driving the utilization I think type back directly to what we see at the whole system level. And we certainly will make our recommendations explicit. They're just that recommendations. So, Delta Bright End Quarter Medical Center is coming up on their one year anniversary being part of the University of Vermont network family. You can see that historically going back to 2010 they've actually been significantly under their new projections relative to budget in 2017 was the first time in since 2010 that they actually went over, was present for the budget presentations for 18 and you appropriately as the board pointed out the dramatic change in improvement in the management at quarter. One year just not a trend make. There's still lots of moving parts there including the fact that they are participating in all three of the at risk programs and we believe given the constellation of events and the data that we have in front of us that we can commit to quarter being coming into the commercial rate increase that's right around medical inflation no more than that and we'd like to see them have their margin target hit several years in a row so that we can get them to a trend and not just a one year happening. Center Vermont were essentially, would like to recommend the same thing but it's a very, very different story. They were in the midst of a leadership change through this year and their revenues actually were over budgeted by close to two and a half million but they suffered an operating loss and when you look at that relative to their budgeted margin a significant loss of 5.6 million dollars and that obviously to anybody that's tuned in speaks directly to an expense issue and things loosely managed. Anna Nunin was brought in as president, COO in May and they're actively engaged in turnaround efforts. Two examples, they have engaged Visient to come in and do a cost center by cost center productivity review and that's cross hospital, hospital outpatient they brought in a group that's very expert in looking at physician practices and they're reviewing the physician productivity, the ADP productivity and the efficiency the structure of the practices and so we'll have both of those for to inform the 2019 budget. They also are in the midst of all of this stepping into the risk world with us. They're in all three programs and percent of Vermont we believe that a proof course is to give them time give us time to sort through the operational and clinical issues and we would commit to having a commercial rate increase no greater than medical inflation. I think it's important to stop at this point and put this in the context what we're gonna talk about for the UVM Medical Center the context of the entire Vermont system and how we did in 2017. This was pointed out by Mr. Polito only four organizations, three of which are UVM Health Network organizations were over their revenue targets. The rest of the presentation deconstructs that and compares that to national performance. I would say that if you look at the bottom line with all of the moving parts that we do have control over the things that we've watched as far as programs collectively and the things that you're gonna see about the demographics that are not within our control that coming in within 1% at a system level is remarkable performance and I think the regulators and those being regulated can take a lot of pride in that accomplishment. Anybody that believes that year in year out we can do better than coming within 1% of what the targets are honestly just don't have experience in budgeting or particularly budgeting in healthcare. So at a system level we're doing well and I think that what the question that was asked of us is why the University of Vermont Health Network organizations are the ones that are positive in this family of organizations. I want to take a brief step back and talk about our budgeting process at the Medical Center and you can, this budgeting process is the same one that's used at the Center for Vermont and budgets are built from the bottom up department by department which makes in the Center for Vermont's case very important to do that productivity analysis. Really critical, the next slide will go into the specifics of this. We build our budgets four months October through January of actuals and that's what we extrapolate forward. That's pretty much what we have. We also look at prior years. We look at the year to date actual annualized that's what we have four months of. The prior calendar year and a rolling 12 months and then there's multiple levels of managerial and governance review through a finance committee that's at the network level and ultimately the network board approves the budget that we submit to the Green Mountain Care Board. So here's the development of the 2017 budget and not seeing a pointer but the in-degree are the data elements that were available to us when we crafted the 17 budget. So fourth from the left are the first three months of annualized and these are for inpatient discharges but if you take any other measure of utilization outpatient services, RVUs for the practice they follow this exact same trend. If you take the next one over that's actually we added a couple of months and we're still at the level of emissions that you see and then the check back on the calendar years is the next one and rolling 12 months that go February to January of 16 and then in the blue is what we budgeted. So you can see that that's totally in lock step with what all of our predictors and our predictive modeling and what the way we've been building budgets for a long time would lead us to those utilization measures and then you see what actually happened from March on through the rest of the fiscal year in 16 there was a dramatic increase and that flowed forward into 17. So that's the budget process and how we ended up with the budget figures that we did come up with inside of team. That's been a three year cycle where we've gone through the numbers. How do you end up at that point there? Well I can let Mark weigh in on this but it's the same thing that we did see and we brought to the attention in 2015 and in the 16 the big jump from 14 to 15 and so we brought that to the attention and there was some attention paid to that as far as dollars that flowed back into the community and some rate but this is the same process that we've been using and as you'll see there are clear drivers behind why the utilization keeps climbing in this region. I don't know Mark if you have a comment. I think the primary story here is to understand is the primary driver of the variance that we saw on the previous slides is all related to use. This is new information that came available after our budgets were submitted. This growth trend happened in a six month period from March on. So this is the same trend that happened the year before and the same trend that happened the year before. We're happy to look at other budgeting methodologies but where I come from you budget what you know and look back on actual is the closest that you can get what you know no more than we could anticipate the decrease from 2013 to 2014 to the increase to 2015. So I mean and the key here is this is done at the bottom of the people that are closest to the patient contact and there's checkpoints from the top down. So I mean I think this is the best job that anyone can do we know given the complexities and this is new patient volume that came up after the budgets you know. So let's talk about drivers for that new patient volume. The Vermont population track from 2010 to 2016 largely but certainly didn't grow. And population increased in only four counties. And I'd point out that those counties are in the primary catchment area of the UVM medical center as a community hospital and all of this growth will be captured in use of the UVM medical center as a tertiary and primary care center for these folks that are in Northwestern Vermont. So this is shipped in county by county population obviously to the left those counties are decreasing by those percentages in population and to the right those are counties that are increasing in population. And that's resulted in direct correlation more people accessing services at the UVM medical center and the bar graph on the left, the horizontal bar graph on the left is the same one as before on the previous slide only as actual numbers not percentage increases. And interestingly we saw that in each of the years along with the population and demographic shifts we've seen increased unique patients treated at the UVM medical center. And this says to me again a week and a half ago when we had the second half of the meeting was on access we're being asked to see many more patients were swimming up a very swift current but we're actually making some progress against that current and it's still not enough. Okay, so put this in that these demographic shifts and these use rates are not just gonna magically and mystically go away. So more patients shifting to the primary catchment area we all know as well that the amount is aging and there's a direct correlation between aging and utilization. If you go to the bottom line to the left in the blue is the under 55 population statewide shrinking by 30,000 and go to the right in the orange and that's the 55 plus that is growing and you can see the impact in virtually every, in every county in the state including those in our primary catchment area. So take away here more patients in the primary catchment area aging statewide and to go to a national slide just to state the obvious that the older we get the more services we use. On the left is the share of the population based on age brackets. So the green and the blue added together are the over 55 nationally, so that's 28%. And then the share of the cost of care on the right and you add up the over 65 and the over 55 and that's 38%, 28% using 58% of the healthcare spend and the cost for caring for folks 55 or older is 2.4 times. And this is a place where it's not good to be in first place for a whole host of reasons. We're tightly main for the state with the highest percentage of a population that's 55 and older. So this is a driver. Those folks, us folks use more services and more intensive services. This is what we see at the trend, the UVM Medical Center and the blue is 2013 actual and the orange red is the 17 actual total case mix index. Just growing up a tenth of a point doesn't seem like a lot but in case mix index that is a big driver of cost because that really is the measure of how sick people are, it's their acuity. And if you pull out the real driver here which is the Medicare only which is the next set over significant increase and that translates into the folks are longer stay in the hospital which again directly correlates with cost. And so we're faced with more patients, they're older in our catchment area but we're also the catchers met only in state tertiary and quandary care centers. So we get the influx from a big chunk of the state for the tertiary and quandary care. As these shifts happen and we're seeing more and more patients, my chief quality officer DNA goes to, with all that increased activity, how are we doing from a quality and efficiency perspective, we certainly don't want those things to erode because we're seeing more patients. And so here's some measures of external validation of how we're doing, delivering value, quality access over cost. Vizient which is the academic and academic health system trade organization nationally as a very empirically derived quality survey and do every year, our medical center has been in the top quartile for the past seven years and a number of those years we've been in the top decimal. You all commissioned a study from Optimus that used the all payer or the all claims database and those data you published a year ago showed that there was lower per capita costs in the Burlington hospital service area that we had the lowest spending by commercial payers on a population basis and the lowest use of inpatient services. And again, back with how the system did in 2017 from a patient service revenue perspective, we all should take a bow for the performance yet again of the healthcare delivery system. Very well done, repeated every couple of years studied by the Commonwealth Fund, very well respected. Vermont has been first during the top two or three with Hawaii and Massachusetts as long as I've been following this report. So from a quality and efficiency perspective with external validation, we feel that the increased volume has not diluted our ability to really deliver value. But the medical center, we're focusing on that but I believe that in Central Vermont and Porter as well. So let's jump to national and the first thing to point out is how Vermont hospitals are managing costs and you cannot find, at least we cannot find, benchmarks or ways to study how we're doing nationally with budget to budget or budget to actual comparators. You have to do year over year actually what happened. And that's the metric that we would follow. And on the left of the screen is a bar graph and the blue is the Vermont hospital system 14 through 17 and the orange is national and this is healthcare spend, the combination of price and use. And you can see that the blue bars are lower than the orange bars. So we are actually, our spend is not increasing greater than the rate nationally quite the opposite. If you go to the right, the orange bars on the left are deconstructed so that the total spend is broken down into the blue which is the price increase and the orange which is the use of the volume increase. And you can see that the 4.2 and the 5.7 are the same on the left and the right. And what this shows clearly is the same thing that we're experiencing. Volume is allowing us to buy down price. Volume increases are allowing us to buy down price. So how does that translate closer to home and relevant to this conversation? In the blue is the whole Vermont system. In the green is UVM Medical Center. Orange is the national trend. And you can see again that the Vermont total system seems to do well. We don't have the 17 national but everything that we see is that it's probably higher than 5%. And I think CMS is definitely coming in in that range. But you can also see that the UVM Medical Center again back to the value. We are spend increases year to year actual to actual our trending under national it goes back and forth whether we're under over the Vermont standard. I'm not going to compare it to national. I mean, wouldn't we need to look at the population change there as well just to get within the state of Vermont because the trend national is going to be higher than the state. So that would be one reason why we would be back down there. I would think that the trend nationally would, you wouldn't see the aging factor and you really shouldn't see the shift in population factor nationally. It all sort of comes out of that level, but I'm interested. Yeah, I don't think we would see it. I agree with you the aging would be the same, but in Vermont we're showing it down in population growth and in the country we're showing the increase in population growth and then you could factor into that aging. I mean, it's great to be under, I'm not saying that, I think that's a good sign. I could just say they're not necessarily apples to apples because the population of the country's growing we're going down. So that's one of the reasons that you show why the medical would be higher than the rest of the state because population is changing. It would be similar to. I absolutely agree and it gets into trying to find the right benchmarks and comparators. That's why we tend to use a family and not a comparators and not just a single one. Clark says we can get that. We can share with you all of this, Dan. So. Sure. In response to that, because I think the other factor then if you look at the national population, you really want to be looking at the insured population and Vermont's uninsured rate is much lower than the national uninsured rate, right? Because the national health expenditures are going to be impacted by that as well. Yes, but it may actually work just the opposite because the higher the insured, the higher the use rate. Right. And we also have that information. So this really gets back to the medical center in the 2017 actual to budget summary. Just looking at the top line numbers, the patient service revenue for the medical center was $38.3 million above budget. The other revenue was $10.5 above the expenses were taking care of more people, $28.2 million above. And just doing the simple math, a margin of 20.6, and I'll take you through briefly what actually related of that 20.6 back to the patient service revenue. But if you jump back to the patient service revenue, as we've talked about, 26 million of that, 38 million is Medicare. Vermont Medicaid actually was under by close to 3 million, 8 million out of state Medicaid. So if you put Medicare out of state Medicaid together, it explains 90% of the patient service revenue overage. You go increase over budget for the major commercial payers of 17 million and then increase in bed that charity care to take that out and that deconstructs that 38.3 million. The takeaway is vast majority out of state Medicaid and Medicare. Other revenue is 340B program. Expenses against the 38 million, close to 30 million was related to direct care expenses, that longer length of stay, increase case index and just the gross increase use rates. We've talked at our budget presentations last couple of years about moving into the world of taking financial risk and the prudent way to do that is to mitigate and reduce all other risk that we face, particularly on the balance sheet. And so 16 million pension liability was reduced directly to get us into shape to be able to take financial risk. And actually all other expenses were positively and well managed. And I'll take you to the lower right hand corner and we can come back to this if you have questions and I probably would punt to Mark or Todd on that. But of the net patient revenue or the patient service revenue overage, 8.6 million of that actually flowed to the margin. And again, I'm kind of a task master but that degree of closeness to what we thought we were gonna have happen, it even satisfies me. Thank you. Good budget. So that's the actual to budget summary, it's out of team. So quite a flip, I thought that was a good question. The first NPR 38.3 million, does that mean that your out of state commercial was either under budget or right on target would that fall into the minus 10 out of state commercial? Because I didn't notice you didn't break that out. Yes, the majority of that. Majority was under budget probably. Sorry, but not related to that. I mean, that is a bucket of many different things and that's presentation. I mean, there's so many different things in that you know, that bucket. I think we saw our out of state commercial rates coming about on budget. There was a budgeting convention item, I think that drove the majority of that 10 million. We talked about that separately. That's really getting to the details. Okay, thank you. So again, we jump up to the whole Vermont system in 17 and look at where the patient service revenue came in different than the overall budget by payer. Again, very much a Medicare story and the commercial essentially came in exactly on budget. Remember the whole revenue is 2.4 billion. So coming in that close. And concerning to me for our whole system is that even with a slight overage, 100% overage in patient service revenue, the margins at a system level were under water, which I think deserves some scrutiny. So if you remind the board again, what was the exact amount of that commercial for what we have on this? 17.2 on the previous slide. There was a press story that ranked premiums by person, by state, Vermont was in the top five. And you could explain that if we had the, we were in the top five of the lowest deductibles over the warrant. So what is driving Vermont to be at the forefront of insurance rates in the country? Caution, underfunding is a Medicaid program. So when you have somebody from New Hampshire or from New York, isn't it true that if somebody from New Hampshire comes in that you could even less than somebody from Vermont for Medicaid? Yes and no. So because we live in two states, New York and Vermont, one of the things that we've done is we started to do comparatives of the Medicare, Medicaid rates as well as the commercial rates. And what you find is that you would assume that Medicare reimbursement would be consistent between the two, but there are variables in there that compensate in different ways. Medicaid to your point, I would agree that New Hampshire pays a lower percentage of cost than Vermont does. New York is kind of closed, it's not quite as bad as New Hampshire, but the commercial fluctuation tends to bleed in different ways. So we are seeing similar patterns across the different states, but the allocations between payers some offset each other to a degree. So within... You're higher than our neighbors to our east and our west. How do we rank overall as far as Medicaid reimbursement compared to the other states in the country? What would you rank there? I have to get a recent study, I haven't seen one in a while, but we would all be, the Northeast is notoriously for being in the lower quartile. And when I say that, New England and New York state. And I also would just throw in, it's a, the out of state Medicaid is almost totally New York. I mean, there's very little New Hampshire volume that gets to us, not the same as the very large amount for my healthcare dollars that flow east into left-wing New Hampshire. So there is this $38 million of revenue above budget in 2017 what's happened after the 17 budget that is having and will have an impact on patient service revenue in 18. Things that have happened since we put the 17 budget to bed that will have an impact on patient service revenue in 18 year we're in. And I have to start with the mental health story significant increased costs with caring for people appropriately that are in our emergency rooms with mental health issues and are there for significant periods of time, five and a half billion dollars of increased expense to care for those people appropriately. And the length of stay with virtually no increase reimbursement whether they're in the inpatient or whether they're in the emergency room is directly added costs. We are like Center Vermont and Rutland looking at restructuring our emergency room so that we can provide at least appropriate transitional care for these people. And this is five and a half billion that you may see in a CON sooner rather than later that is not in any of our forecasts or our capital budget. And there is clearly called out in the reports from the agency of human services and specifically that the UVM Medical Center will be called upon to increase inpatient capacity. And when you look at the revenue and expenses associated with our two inpatient units, they lose to the tune of four and a half billion dollars a year. It's one of those services that is subsidized. So being called upon to do more of that is gonna have an impact. We also have things that are on budgeted revenue cuts. The 340B program is under fire in the auto reductions. Dish, the Medicare reimbursements and the bad debt charity care is going up. I would say that the first bullet, the medical center's risk on that 20% of the revenue that's flowing through one care and all care model is close to $10 million, which if you go back a few slides, the margin on the increase that patient service revenue was less than that. It's about eight million. So just to put this in context, something that I'm personally, professionally concerned about and that's that I've sat before you and told you that and committed to you and folks in our community that we will bring on the Miller building in Burlington, the 16 million in added costs, and we will not push that back to the ratepayers to cover. And the same thing with Epic. We're not gonna push that back to the ratepayers to cover these infrastructure necessities. If we over correct, I'm not sure that I can keep those commitments without deteriorating the financial strength of the academic medical center for month, which is obviously an asset that is very important for all of us to be strong. What we're proposing for the medical center, again for central month and a quarter that we will be at or under through medical inflation, we're continuing to do what that national slide did, which is take the increased utilization and use that to push rates down and we are gonna propose in our 19 budget that we do not increase commercial rates in Vermont. And you have heard me say that we need to be very transparent on how these very low, below in faith inflation commercial rate increases translate over to what the commercial premiums are. That is not an easy story to tell, but there has to be transparency around how that happens. And I'll put it right out there. There's been some discussion about why not make a mid-18 correction. I would caution that we have still lots of moving parts, things that are gonna impact revenues that happened after the 18 budget was put to bed. And if you ordered that to happen, I would have difficulty committing to you that we could get it done. It is, and we've had this conversation, it's like turning the Queen Mary on a dime. And it would be difficult, we might get it in towards the end of this fiscal year. It's difficult for me to understand how a mid-course correction gets back to the rate payers and not the bottom line of the commercial payers. Maybe I'm just not understanding it, but our firm recommendation. So can we talk about that? Can we talk about that? Sure. Because I'm not sure why it would have to be at the end of the year if it were to do something. Seems like it would take about a month, maybe five weeks. And wouldn't it be better to do a correction now, gauge the five months remaining in the year, and then know where we should be solidly on firm ground going forward for next years budget cycle? I'll let Todd Keating speak to that, but that's way under the time that it actually takes on a year over year basis to get the new rates into the system and actually have those starting to flow through. We start that process months ahead of time. We can't, I'm a gynecologist and not a revenue cycle person, but that is in all order to do that in four or five weeks. Yeah, so to your point, Chair McMullan, it does take on average for the payers anywhere from 30 to 60 days to make that happen. And it would have to be across many payers, not just a couple of payers. So that would even drag the timeline out longer because our contracts and fee schedules are different across the board. So you have to do it on an air-by-air basis. And that's why we drag it out. So if we do it for Blue Cross and MVP and United Sigma in Vermont, we have to do it for all the other payers that the Medical Center deals with as well. And that's why it's so time consuming. What would some of those other payers be? So we have Excelsis payers from New York. So you have the New York payers that come and do business with us. You have some other national payers that do business with us. I would say that the list is between 40 and 50 commercial payers that we do business with and would be more than happy to get the list for you and provide that to you. But that's why it takes so long. It's not necessarily just a handful of payers. It's literally 40 to 50 different payers that we have contracts with. Thank you, Tony. And I guess, and this is, please, this isn't an aggressive question. This is just a rhetorical question for all of us to consider. If we do that, back to what I said before, we need to fully understand how that goes back and benefits the rate payers and doesn't just go directly to the bottom line of the commercial pay. So on that item, John, if it was 17.2 million, I believe it was the number that you said in commercial payers. The payers have four expenses for taking care of those patients. Okay. But they've had to pay you more than what they had projected paying you based on the budget orders last year. Their rates for this year were based on that. So this would somewhat lower the hit that they took so that they're not looking for an increase in next year's rates to bring back in line, whatever measure of their risk-based capital or capital strengths are. Basically, they're solvency questions. So let's be careful about that because if you look system-wide and those commercial payers are statewide, they're not just in Northwest and it might have been 17 million over budget, not net of expenses at the medical center, but statewide it was 3.1 million dollars. So with all of those ins and outs of statewide contracts, again, I would really like to understand how coming in within $3 million statewide would somehow drive an incremental bump up in commercial rates. We don't do a statewide budget guidance. We do it hospital by hospital. We have each hospital come in and then we make the decisions for each hospital separate. So I understand your point. I think it's a good point but I also think that there would be a way and I'm not saying that we would want to do it but I just think that there would be a way that Vermonters could benefit from that. Point taken, I think we do want to go and make sure that we're looking at actuals and not the delta between actual budget and that's a point taken. So I mean, I think what could be helpful to understand that relationship is that if you go back to slide 15 and this is the actual, two actual year over year growth for both the medical center, the national trend and the Vermont health system to go into each one of those years and put what the Vermont commercial increases were. Because to truly understand that relationship you need to look at it all together because what we're struggling with is the commercial rate increases that we are hearing are significantly higher than the actual hospital trend that we are seeing, whether it's at the individual hospital level or at the statewide level. And so that's the connection that we are having a challenge making. So I'm not, I don't want to add insurers but I just want to say that it's not just hospitals that make up their rates. So for example, we know that 3% of the rate increases last year were due to the institution of the Affordable Care Act tax on Blue Cross Blue Shield. We know that prescription drug use is up. And that's why I caution people from using just hospital growth rates and trying to compare that to per capita growth rates overall it just doesn't work. But aren't we essentially doing that here? We're saying that this savings in this bucket should have flowed right through without knowing what's happening on the other side. It's just the open state. And one practical thing as well, when we talked about the payers outside of Vermont, let's say United Sigma, Edna, et cetera. If we do a rate reduction to them, we'll just get a Christmas card for them saying thank you very much. They're not going to change any rates whatsoever because they're national organizations. So that money will never flow back to Vermonters. But it's probably a fairly small percentage of your overall commercial cost. It's smaller than Blue Cross Blue Shield is and such but it's not all that small when you aggregate all the outside payers. Could you speak a little bit more to why the rate, any rate reduction would have to flow across all of your air contracts as opposed to being targeted to Vermont insurers? What we do is for entities within Vermont, we use the guidance from the Remount Care Board for all payers because what we don't want to do is to start to create, let's say, lack of parity in payer rates, what have you, because if you start to do one at one rate and another at another rate, you start to unintentionally create, let's say, market advantages that you're not intending to create. So what we try to do is keep as much parity between the payers as possible so we don't run into that problem. Thank you. So one aspect is to keep the commercial rate low. The other is to, and Mr. Polito brought this up a week and a half ago, we need to do something with the fact that we've been sticking with budget to budget caps for eight years. And as we've stuck with that, there have been really dramatic shifts in where people live and aging. And we're at a point now where we need to account for what is actually happening. So we need to look at the rate piece. But if we stick with a budget to budget increase, I can virtually guarantee you that we are gonna, and don't take into account what actually is happening. This is gonna continue to overshoot. We would say that much like you did with one care and the CMS did with one care, that 2017 actuals are a very rational baseline to try to forward from. Again, that keeps us very consistent with the model that is in the all-payer waiver and where the actuaries determined what the 2018 spend for the attributed populations would be. That was trended off of 17 action. And if we do that and take into account the shifts in the population, the aging of the population, then we can focus through the all-payer model what the costs per population for attributed life really are and get down to the things that we really can control and that we should be buying. So just to summarize, for Porter and Senator Lamont, you would propose that their commercial rates top out a maximum medical inflation. And then for the Medical Center, we do a zero commercial rate adjustment in the budget and that we do a utilization adjustment based on 2017 actuals. And I think we have a couple of follow-ups, questions that were asked around the commercial that we can reconstruct and stratify some more and provide you more information to your staff. But happy to answer any other questions. So questions from the board? You be in the team, Tom? I'm Tom Houghton, the new person on the board. And it's nice to meet you. I want to start by just saying that one of the things that caught my eye in the way of going through my first rodeo year was that your prospective payments in 2017 were $18.5 million. And for the coming year, the year we're in now 2018, dropped $162 million. So that is a clear demonstration of commitment to the transformation that we're trying to implement here in Lamont. But my questions are, I'm going to try to bunch them quickly into three areas, trying to connect some dots that I up here haven't connected as well as I might and having to do with your presentation. I'm looking here at the information in the budget submission having to do with utilization. And when I first kind of looked at these numbers and heard the comment that utilization was driving the bus here, I looked at some of the year-over-year, these are actual or actual numbers of adjusted emissions down 2.5%. Acute emissions up 1.02%. Acute average length of stay up 2.7%. And so when you get down through all of those, all the rest of the categories that they have here, that's the kind of range of the activity until you get to physician office visits. And those are up 5.8%, 156,000 units up 5.87% and just plain visits up 7.47%. So my assumption was that I'm looking at this data, is this is where the utilization component of this discussion might be captured, but I'm not quite sure I see that here. I'm gonna keep looking to my left to make sure that I can answer your question appropriately. Those numbers that are in budget, again, were built off of the information that we had at the time and they tracked with what we trended forward with whatever the data were at the time. That's just, that's our budget process. And the columns I'm using are 2017 actual to 2016 actual. Oh, I'm sorry. Speak real loud. 2017 actual to 2016 actual. Yeah, I can see the column over here of the 2018 budget, which is what it is, but I'm, and I agree that I'm more comfortable with the actual comparison, the actual budget, the budget, the budget. So I guess my simple question here is, what is a position office visit, technically when it's in a budget document and what is a visit because those are the units that seem to be having growth rates that are extraordinary. So I would have to check from a technical system issue on the exact definition because I wouldn't wanna throw out something and have to retract it. So, let us get back to you on that one because that is directly a system hold number and there's many different ways to track visits, like there's many different ways to track access too. So, let me get back to you, but I, if say I understand your question, there was an increase, the trend from 15 to 16 to 17 was lower than the trend to 18. And you just wanna understand why. Thank you. And I would say that, and again, we'll get back to the details, but the physician visits can be driven by physician practices that over that time actually came from private practice into the medical group and the network and there was one orthopedic practice in Burlington that in that timeframe made a shift and that could be a significant volume. I'm not sure it would be 5%, but that's the one practice, but we'll break that down and get back to you. If I was out and sent out, I would give them a recommendation. Absolutely. And there was one technical issue in the submissions that I think RVUs was showing up under a different category and it might have been that physician visits, but let us work with your staff too. Okay. And we'll get you that. Thank you. Thank you. So now I'm just, I have some questions again. This is actual to actual having to do with the revenue side and the expense side. And I'm just looking at the date numbers that have moved relative to 2016. And those are, and I'm trying to again kind of connect them to how those, not these numbers and changes drive utilization or are related to utilization. So that the four or so big moving parts on the income side are bad debt. It's a relatively small number, an increase of 1.9 million, 17 over 16, but it's a percentage wise, it's a fairly big increase, 8.46%. Free care is up really big going from 13.4 million to 17.7, which is a 32% increase. Deductions from revenue, I truly don't know what those are, but it's a huge number here. It's a 74 million hour increase of 5.4% increase. And then other operating revenue, which is a 13.4 million hour increase or 15%. So overall, your total operating revenue was up 67.9 million, which is a 5.6% increase, but those four items were the big ones that drive the top line. And so I'm just trying to tie that, like bad debt, free care, et cetera, to utilization. So there's a variety of different things that those numbers, so let's start with the other income. As John had pointed out in the presentation, there is significant growth within the 340B pharmaceutical revenues over that period of time, and that is the major driver of the other revenue number. One of the things that we started to see, it started at CVMC and then it's worked its way through the other entities, is that there has been a higher utilization of bad debt and free care. People have been becoming uncovered when it comes to insurance, and that has started to grow significantly. And I'd have to look into what the deductions for revenue are, because those are usually contractuals, and that can be the byproduct of the payer mix itself and the utilization and acuity mix that we have. So I'd have to go through those different things, but those are the three major drivers for the deductions for revenue. And I would just add that I think it's important for everyone to understand that bad debt and free care isn't a payer. That's actually a net patient service, that's actually a net patient service revenue that is booked as net patient service revenue, but it's uncollected. So I think sometimes- In the P&L, that's what drives down, it's a big number that drives down in your, what's called gross, that you're starting point for patient care. And so if that number was smaller, you'd have more falling to the bottom line. If it was different, you'd have less falling to the bottom. Yeah, Becker's finance bulletin that comes out on a regular basis, I wanna say is about a month or two months ago indicated that nationally, bad debt free care increased from 2015 to 2016 by almost $30 billion. So a lot of people were foregoing their insurances. Does he sense here, given the example you've made like that, bad debt free care might be going in a couple of days? So I think the initial part was, and I kind of lived through this in a prior life in Massachusetts, when people are required to have insurance, they will start to when economic pressures are put upon them due to a cost-benefit analysis of, is it better to pay the penalty on my tax return or is it better for me to pay the premium? And what they've found is that the penalty on the tax returns is far less than the insurance costs themselves. So they go on insurance to save money on the premium and then take the risk on the tax returns. And there's also a trending forward of insurance products that have very high deductibles and coinsurance and frequently that's just not collectible. So the growth in those programs, along with people just foregoing insurance or what, at this point, are being cited as reasons for the growth in bad debt and charity care. I'm just going to the expense side for a moment. You, the three or four major drivers there are salaries and non-medical up to 8.3 percent, 32.5 and pretty bad if it's non-medical up 16.5 percent or 19 million dollars. Physicians, fee salary, comp and contracts, not a big number, but it's both 5.7 million dollars but it's 3.24 percent. And then there's this other operating expense which it looked like there were two major categories that netted out to this number. And one was other non-savory expenses down 9.7 and other services up 10.5 million. But then there's this, well, the big number is other services of 221 million, which seems like a lot of money in a kind of a land category. What is other services? I would have to look at that exact same file because there is a crosswalk from the individual hospitals, you know, their GL categories to the submissions under adaptive. So, you know, to make sure that we can respond correctly to the kind of we need to draw the, you know, correlation together. There's this category non-operated revenue which was positive to the bottom line of 10 million dollars. That's a 91% increase. But there was comprised of two components, just two things, a loss on an investment of 39.6 million and all other, a 60.8 million. So my question is what was the loss, which is a big number, and what is all other? At what time period is that? Pardon me? At what time period is that? 2017 or 2017? 2016. I have to go back and look, because we did extinguish some investments, but at the same time, we did a bunch of downs in the market performance as well. So let me get that as well. Just want to make sure that everything lines up. We'll get that to you. So that was 16 to 17? No, the 17s are in 2017. Yeah. So change is 20 to 16, 20 to 17. That's your answer to that. Thank you. Yes, we'll get that to you. Okay, yes. So looking at CVMC, clearly there seems to be an extensive issue there, which I don't think is new, but I recognize that you're working on it. My question, first question is, if you're reviewing productivity at each of the cost centers as you were describing and you're identifying low productivity areas, my follow-up question to that is, what do you do about it? Because I can see two pathways. One is to increase volume to try and spread the fixed costs and cover that revenue or cover those costs or alternatively to cut staff, cut materials costs. And I'm hoping that it's gonna be an expensive reduction pathway solution. Definitely. And if you, the story of central Vermont, this is one of some initial growth that there was build up to support that growth and trend it forward and flatten out. And so this is clearly not a situation where we would definitely chase after revenue. This is a system issue. To understand, based on rational comparators, productivity cost center by cost center, largely on the hospital and hospital outpatient side and develop a methodology for unit of service costs, which scarily does not exist, didn't exist before, but is in the process of being implemented. And then that allows you to control expense relative to benchmarks and build a credible budget. I would say, again, just in total transparency, that there actually is some capacity in the employee position productivity at central Vermont. So part of the access issue may well be to better utilize that position capacity. And so you may see some growth in the coming years from that, but it will be growth that the expenses on a per capita basis will be very well controlled. I know, we know the person that we put in to be the president of that organization very well and have total confidence that she's gonna get to a cost per unit of service that is gonna be best in class. Okay. And then my second question is, sort of goes back to the, you mentioned that you were gonna explain why UVM, CBNC and PNC were above utilization. And I fully appreciate the population change in Chittenden County and I fully appreciate that the UVM Medical Center would disproportionately be impacted by the aging of the population. I'm still confused about why CBNC and PNC, given the counties that they're in, are not seeing the population change specifically that Chittenden County is seeing. So what can explain why those two particular hospital service areas are seeing greater utilization than other community hospital areas that are experiencing the same kind of demographic changes? This may be uncomfortable for some, but I'm very transparent and I fully appreciate and we have external folks that had told us that they believe this as well, that there's component of branding. You put the University of Vermont on the mark to work and there's an appropriate expectation that you're gonna get academic healthcare close to home. And I think that there is definitely a bump up in people staying at home to get their services because of that. And the work has been really, really good work on particularly important, but both of those communities do very well recruiting professionals and particularly the work that Dr. Nipin and Dr. Wolfman have done to rebuild their primary care largely and also some financial services. All of that ties in, but I'm not gonna shy away from the fact that you put the University of Vermont on the front door that there's gonna be an impact on that. People are gonna be comfortable, which is a good thing. Thank you. I'd suggest at one other point. So although when you look at the demographic information of Washington County wasn't showing the same growth as Chittenden, et cetera. However, there is something that they share with what's going on within Chittenden and Addison. It actually is higher utilization of the Medicare patients. And Cheyenne had mentioned a couple of years ago that they had started to see it well in advance at the medical center. So for whatever reason, Washington County utilization by Medicare patients started in advance at the medical center has continued. So they are tend to see growth within that pair over the last three years. And again, that might be part of the same issue that people feel very comfortable staying at home with the system building that we've been working on. I mean, one of the things that I remember maybe from the budget or so ago was when there was increased utilization at CVMC, I remember one of the things you had said was in some sense the medical center was keeping people at CVMC rather than bringing them up to UVM to sort of push that volume back to their community. And so I was thinking, well, okay, maybe that's still happening now in the quarter at CVMC, but then you'd expect to see a net reduction to some degree up at the medical center, which of course you're not, which could be explained by demographic trends. I don't know, it's hard to piece all of that out. But also, I mean, another thing to be totally transparent about it, we're working really hard, and you saw one of those paragraphs to improve access. There's pent up demand for the services and what we're seeing right now is largely in the Medicare population. As we fix access, we're gonna continue to see particularly with the good work that I think Raelyn and others are doing on patient flow through the system. But again, we're not a private healthcare organization. Our entire mission is to take care of whoever comes to our doors. And I can assure you that nobody is out there trying to, you know, drum up business for all about access as part of quality. And one of the things I think this morning we talked about using wait times and getting more information from hospitals about wait times, but one of the ways in which we'll be able to measure this over time is wait loss and wait loss. That's why you do it. If wait times are coming down while utilization is going up to some degree, that's an access piece, right? So, yeah, where we are right now is we're increasing the number of unique patients for servicing, but we still have people upset with difficulty with access. John, on your slide, you're clearly asking for an adjustment of the NAICS. What would be the dollars out here without adjustment? Do you have any swag in there? I think you just look at some, also, you know, those percentages well that we saw earlier about the growth rate and, you know, potentially the 19 guidance. I mean, I would just take 17 actual and multiply it by that guidance and that's the difference in the number. It trended forward using the same methodology that one care used to develop an 18 target of the 17 actual for the attributed population. And I'll also put a plug in. I think that that is best done by actuaries. You've got good actuaries. We have access to actuaries as does one care. I mean, that's what they do. They look at actual use of population. They put in all of the demographic factors into their machine and they come out with incredibly accurate predictors of utilization. And I think that's the bedrock of the all payer models. So, just to- But during the envelope over, you know that you're just under $40 million excess in 2017. Is that close to the number that you're looking for for a replacement? I mean, you know, let me work with Andy and I think that we can get you a pretty exact number. Sure, worry. I just wanted to follow on that one. You know, I do think just looking at UBM, you know, the three year trend in 2015, you exceeded budget by $28 million, 2016 by $25 million, 2017 by $38 million. So, you know, it does look to be that that's carried forward, a piece of that each year. And I would, I do believe that there probably should be some type of rebasing. When we look at the $38 million, what the letter that you guys submitted to us, you talked about kind of $21 million in headwinds for 2018. You had, you know, Medicare B, the higher bat debt, the chair, you know, things like that that were coming in. So, how would we, you know, I could seek us considering doing a rebase, but you already kind of have an update on 18 that although you've got a higher utilization trend, you're expecting, you're expecting some things to bring that down. Some of them that are in the NPRs, not all of them. But, you know, how would we look at that piece as well? Because you were kind of already supporting it like 18. And Marie had said, I think what part does it mean by working with the NPRs. So, it's taking into account the current trend in which you identified within that base variance on an annual basis, and then taking these headwinds and doing it as an offset to it to figure out what the actual number needs to be. So, when we were talking about a 0% increase, we're talking about, you know, a number that's going to absorb medical inflation, it's going to absorb any cost shift for further reductions within Medicaid and others, such the Miller Building coming online, et cetera. It's a 340B reduction. So, it's a combination of that rate plus, you know, trying to figure out what that differential is and stuff. So, we think that, you know, that's kind of getting towards that, but not quite there yet. So, it might leave, you know, and that's why Mark's guessing it's a combination of adding those together to get the actual number. Do you have other questions from the board? Yeah, just to follow up on that comment there, kind of, you know, on the rate piece of it. Given that you were over, you know, 38,000, just looking at the UVM right now, there were efficiencies that were gained from that because you had built a budget assuming you were going to come in at a lower number and so there's a fixed variable piece. And, you know, I think that's where you're coming up with maybe the nine million dollars. But, you know, what would you say you've gained from the efficiencies of being over 38 million in the year? What would you say, the efficiencies? I guess it's a combination of efficiencies and higher volume. So, you've had a higher top arm. So, you're saying for a large amount of money? You know, something, and then you also, it's not a sort of one-for-one cost going up when you add dollars to the system because you have a fixed base that's helping to absorb some of that. Well, I would say that we basically, at this point in time, are probably around 80 to 85% fixed costs. So, once we clear that, you know, we probably have a 20% variable base from what I was going to add to you. And so, going through this number here, you know, clearly we've covered our fixed costs on our end of that variable dollar amount. So, when Mark is doing the calculation of what the margin is less than one-time adjustments, it's that pre-one-time adjustment number that is essentially the efficiencies gained by seeing these additional volumes. So, as you added back those adjustments, that would sit there and take you to what the net would be on a variable basis. Which is what? I have to go back to the slide and do the math on it real quick. But, I think it's like, yeah, something like that. One more. There you go. Yeah. And I think the only thing that I would throw on to that where that's correct, that there is a significant expense space, but when you have an increase in inpatient and when you are taking care of those patients, your variable percentage increases drastically. You're doing it through urgent pay, okay? Which is two times X-regular pay. You're doing it through over time. You're doing it through travelers, which is two to three times the regular pay. So, there's various components. So, I think it really depends on the volume, type two, Maureen, a little bit. But, on the inpatient side, I would say the incremental variable cost for inpatient, I'm talking, speaking to inpatient only, I'm staring at Eileen to make sure that, because there's nobody to my left. Okay. Is that when you talk about inpatient, a lot of the times those increased variable costs eat away a lot of that efficiency on the inpatient side, but I'm gonna pause there. I think we also need to go back to the mental health story. That, the observation costs of the emergency department at 5.9 million, whatever the case may be, that's totally on budget. Those are people sitting, watching people one-on-one. And it can be eight to 10 days. It can be two weeks. I have 10 right now. So, that compounded with the inability to get these patients back out into the community. So, our length of stay is compounded because of it. So, I really think that the cost, perspective based on all of these changes we've discussed is pretty significant. Just looking at this slide. So, with all that in there, the cost was for generated $20 million incrementally at large and offset $16 million in a pension write-off. And when, on that pension write-off, when was that forecasted in? I mean, because that was unbudgeted, correct? So, what happened to Maureen is that the medical center right now is about, I think it's 100% funded on that pension liability. So, what they're in the process of doing is they went through a multiple year analysis of de-risking the pension plan. And at the end of this year, let's say that everything aligned to sit there and make that adjustment literally in September, unfortunately. So, it was something we had been anticipating. We just were waiting for the right time to do it. And unfortunately it happened in September. Had it not happened in September, we would have budgeted for the next fiscal year because we would have been certain that it would have happened over the next 12 months. So, it's just one of those, I would say, a necessary hit. We made a very conscious decision to make that investment in de-risking the pension plan so that we will soon be able to have a little bit over 100% funded so we can tie it to an annuity and take the risk totally off the balance sheet, which is not too far away from happening. Another nice challenge we've been on is the commercial rates and how we get some of this back to the rate payers. And in your example of having a 0% change for UVM, that doesn't seem to get anything back to the rate payers at this point. There's a couple of things there. One, I do appreciate that the total system-wide, the commercial change, was not that large. However, one of the comments you made was that the commercial rates have been impacted by the cost shift for quite some time. So we know the commercial rates are covering more than the costs for the services. So to the extent we have the ability to reduce rates even more than zero, to put a rate reduction in, that would be higher than what was experienced in the year for the system. I'm okay with that because it's giving back something that's occurred over the years. But to challenge, I guess, even just looking at the UVM numbers as an example, the UVM for commercial for the year was budgeted at 703 million in NPR and it came in at 710 million in NPR. So if all of the commercial insurance companies had done their actuarial information correctly, they provided for 703 million dollars of payments. They ended up paying out $710 million in payments. So in reality, what happens is, soon we have one insurance payer, it's not that clean, they have to go up to cover the fact that all else equal, they lost. They were invested $7 million. So that's kind of the first part of it. So that's why sometimes there's a disconnect when people see the insurance rate goes up first before there's any rate decline if the prior year came in higher because they hadn't provided for that information. The other part that I just would wanna challenge is if you are negotiating a rate with an insurance company and if the rate was $1,000 this year and next year it's 950, they only get paid 950 so I'm not sure how they could make profits off of that because one of the comments that you guys brought up was you think it goes to the bottom line of the insurance companies and I just don't understand how that would work if you negotiate a price with them, that's all they're getting paid, ultimately whether your gross billing is $2,000 if they only get 950, they only get 950. So how would they be generating incremental profits assuming that your forecast was correct? So if the utilization, if the number was 700 million they were supposed to get and it turned out to be 700 million, how would they be getting extra profits from that? So first of all, this comes back to about that charity and then understanding that when you say 710 and the complexity of understanding what the true impact of a rate changes with carmer and show payers, okay? That 710 is based upon the fee schedule that's negotiated with them. Different plans have different co-pays, have different deductibles, all of that. So the insurer isn't paying all of that 710 based upon the accounting practices that includes the patient obligation as part of that plan and you need to look at that and charity how it takes away from that. So I think it's an important conversation, but in your example, when you say the 710 not all of that is coming from the commercial payers. It's coming from the payment plans that you negotiate with them but there's a patient obligation component tied to that. Okay, so and then the other piece that I can say. So if I interpret your question correctly that how does the 0% rate increase, create savings in 19 for the rate payers? And I can show you all this information from our 18 budget, but simply if you look at our 18 budget for the medical center, there was a 1.7% inflation increase. You could take a look at that, I believe it ties to our narrative. That generated about $20 million worth of additional expense, okay? Our rate increases, the 0.7 to the commercial and all of the other ones between Medicare, Medicaid, small bumps only covered 10 million of that. So the other 10 million of the 2018 budget inflation was basically that volume buying down future rate increases because those expense increases are real. And basically what we're saying is wait until we can get our arms all around this together and how do we work so we only make the adjustment once? At least, and this is a finance guy talking too. So I said, but that's how it buys down. I can show you those exact numbers from 2018 that tied to our budget submission and also our narrative. I hope and believe that in my professional lifetime, the conversation we're just having in the folks in Vermont is irrelevant because I do not believe that the payers or Medicaid or even Medicare should take utilization risk. The utilization should be accounted for actually rarely in setting targets, but he's right about deconstructing that 700 and 710 million, but that number should be set, should be set prospectively and if it's 702 million and 713 million of cost on services delivered is required, that shouldn't go back to the payer necessarily. That really should be the incentive of the delivery system working with people that are attributed to bring that number in right on budget. Again, I think the pathway that we have collectively crafted with the all fair model and the two waivers we have with the federal government, the work you did with one care to set up that budget for 18 and the fact that Mr. Pelham, absolutely right. Thank you, sir. We did take a big step forward. We are 100% committed to that model and it makes, we've got the messiness of all of this transition, but ultimately we need to get to action where early set targets with the utilization risk really on those that are utilizing and delivering the services. And just another comment on, I think one of my takeaways of going through the budget process last year really was that all hospitals are not the same because their markets are different. And I definitely appreciate the kind of population shift and showing that, diagramming that and also the point that you brought up that although in total the hospital systems were about 20 million dollars or 1%, but the operating profit was down. And that's one of the things we were addressing earlier in the meeting this morning that some of the hospitals that continue to build their budget off of the prior year budget that they're missing by double digits is creating a problem where they're going to have some operating losses potentially because they're building a budget based on a much higher level. So I do think it's something that needs to be considered. It's obviously not an easy process for hospitals that may be falling on the short end of that versus other hospitals. But I think to look at the total system where at the total system goal which we do and then to just assume that every hospital gets the same thing off of the prior year budget that at that point is not valid anymore creates problems in the system. So I do think we need to look at how do we adjust for that. I would also add to that though that the hospitals have some ownership in coming in and alerting the word when things are going up or down dramatically. And I understand you saying maybe you didn't know but when we did the 2018 budget you were about halfway there. I think you were about $20 million over that you acknowledged at that time and when you finished it was over $40 million over. How do we have this conversation earlier? Because the recommendations right now are to push this out to 2019 to make any adjustments versus 2017. So I would just put that out there that I appreciate that there are shifts. It's just when and you guys control over half of the dollars in the system. So if you're coming in higher or lower how do we get that in earlier? And that may be some of the things on the enforcement side whether it's having these conversations quarterly about where performance is and what's going on because that to me because it's been three years in a row that you peep the number if you will, the top line number. It just seems like it's three years down the road that we're addressing this. And I wasn't here for the past two years so I don't know if the story at that time was hey, after 15 was up $25 million okay maybe that was an aberration. $28 million, then 16 was up by $25 million. Now $38 million. I just think there could have been ways to come in earlier. And again, bottom line is you did make more money in 2017. So I understand 18, you have some reservations about what's gonna happen in 18 and maybe holding out to see that. But we know where 17 came in. We know where it came in over and if we wanna try to get that back to reduce costs in Vermont and to the rate payers are remaining to make action sooner on that and looking at this 11 adjustment rate. So just wanna give you some insights there. Okay, are there other questions or comments from the board? Good. Good, Tom, good. Good, Jess. Good morning. Okay, at this point I'll open it up for public comments or questions. Do we have anything? Sure, step right up, speak very loudly so everybody can hear. Well, this is Ken and I working on the healthcare advocate. Just we're speaking a lot about the effect on insurance rates from these budgets and I had two points I just wanted to make sure that I was clear on. So one was when the board approves a commercial rate increase, do you consider that from a negotiating perspective to be a ceiling on negotiations or actually setting the commercial rate for your hospital? And then the second one was I just wanted you to speak, I think you spoke on this a little bit, a little bit more on, was the commercial increase that you saw here based on more patients coming in or a higher cost per patient? I mean, I think there's probably overlap there, but if you could speak on that just a little bit more. Sure, so in regards to many of the guidance from the Green Mountain Care Board, we take that as the gospel, as to that's what the rate needs to be and as we have, as I said, multiple payers, we implement that across the board because we don't want to create pay or parity issues by having different negotiations with different rates. We kind of want to have everybody from a payment perspective packed close together so there is no advantage gained in the marketplace because if we had different negotiations for different rates, you will have pay or parity go away and there was a study commissioned by the Green Mountain Care Board back in 2012, 2013 that looked at a variety of different things and one of them was pay or parity and back around that timeframe, there was pay or parity so we're still trying to maintain that on a going forward basis so we implement uniformly across the board with our payers. And what was the second part of the question? I just wanted to be clarified to the extent that you can whether, I don't know, right, the condition of Israel, whether the increase in revenue from commercial gains from additional people coming in that heightened inpatience before or was it patients that, you know, patients, additional patients, I mean, the hospital more? On the commercial side, the biggest driver was the number of patients and you can track that back through on the Medicare side, it was a combination of more patients and sicker patients but we didn't see that sicker patients in the commercial population. Here, there are other questions or comments? Anne? This is just sort of half of the question. Speak loud. I'm sorry, this is sort of half a question. If you're thinking about John's comment that shift the whole situation in the process of reform the way the hospitals take down risk rather than payers taking down risk, I'm just curious if anybody has an estimate, if you look at just one FQHC which is the Community Health Centers of Burlington that have 30,000 lives, right in the city, right basically right in the city of Burlington, if they had been in, those lives had been attributed, this is sort of a question for John and his team, if they had been attributed, okay, then whatever portion of the 30,000 amount or two that the 30,000 contributed to this, the increased overage, what percentage, how much would the total overage be dropped if that 30,000 people had been attributed? Does that make sense? Maybe I didn't make sense. Yeah, so we'll have a significant difference and I'm calling for my memory only, but I think the first pass of the all payer model had them in, and if I remembered correctly, okay, and if I remembered correctly, that number was about 250 million, well that would have been in the fixed payments, okay, now that's down to 207 million because of them being out, so that one difference right there is 43 million and I'm calling for my memory on that one and just so everybody knows that, and I mentioned this earlier, is that the commitment in the 18 budget, I think that 187 million or that 170 million, that's really 200 million because when you sign up, it's on the calendar year versus our fiscal year, so, but if that was the driving difference, then it's about 40 million. So that's my point. That won't have to be, if the political policy perspective, somebody could push that FDAC, which is just hanging out for no good reason that I can see, then the question of who paid for this shortcoming, this overage, okay, would shift from the payors. There's no question that as we try to move towards the capital cost system, we're able to feed the service that, yes, we all have that same goal, but unfortunately, for a few years, we're going to have our right leg in one boat and our left leg in the other to use that analogy that I've heard others use and we're still going to navigate those orders. So other comments or questions from the public? I don't see any. So gentlemen, thank you very much. It was very, very helpful information and I'm sure we'll be talking again soon. And I'll work with Andy. Great. Yeah, the quicker we can get the answers to those questions, that's better. So the insurers could come up now. What's that? Do you want both at the same time, maybe? Did you not want them all at the same time? I always thought that Macy's and Gimbles were riding together. I think I might get better. I'll let the insurers decide for themselves. Would you prefer to have me together or by yourself? Okay, so, are you ready? Yes. I think we'll introduce ourselves first and then probably Blue Cross, Speedy Corpston and the second. So Sarah T. Jett with Blue Cross and Blue Shield of Vermont and Ruth Green, Blue Cross, Speedy Corpston and the second. And Susan Grieckowski and B.B. Great, so Ruth and I will, I think both be presenting and we prepared a very, very assured slide deck for you and I believe what you were looking for from us was some explanation of the interrelationship between the hospital budgeting process and the insurance premium rates as well as a little bit of the impact of the hospital budgets being over-reported on them. So that's what we attempted to do here. I'll figure it out in a second. I pushed all the buttons, so that's fine. That doesn't work. So that's the laptop. There we go. So we were focusing on three key points and messages that we wanted to make here during this presentation. The first is that higher than budgeted revenue from commercial patients, meaning commercial premiums were not adequate to cover the projected hospital medical costs. And I have one slide to talk about related to that issue. The second is that unit cost and patient utilization combined equal the total hospital medical revenue. It's a simple formula, but there's certainly a lot to working it out. And the last piece, unit price adjustments made sooner will have a larger impact on hospital medical spending. So the three. So on that last item, you heard the testimony that it will take at least two months. Do you agree with that testimony? I believe I heard them, can you hear me? I believe I heard them comment though, it was 30 to 60 days for each payer. And in the basketball shield of Ramon's case, we think that's more or less accurate four to six weeks, maybe four if we really push it. I think their point was that they're dealing with all the payers, I don't really worry about that. So in your case it would be 30 to 40 holidays? Yeah, 46 weeks, yeah. And what about NVBCs and what would it take? As far as I know, it would take around the same amount of time at the Blue Cross Center. Okay, thank you. So the first chart here, we were focused on the first bullet point and what we are showing you are in the first set of two columns. If the budgeted revenue comes in the same as the actual revenue, then premiums are adequate and there's no adjustment required. Now I should back up. These are hypothetical budget scenarios. We didn't try and use actual numbers from any of the multitude of hospital budgets that you have and we made a number of significant assumptions to make this simple because we all know there's quite a bit going on here. So this assumes one insurer in one hospital and premiums and budgets match. So the assumptions made both on the rate setting side as well as the hospital budget setting side lined up. That this is the commercial portion of a hospital budget only. You know there's many, many other portions of their budget but we focused only on the commercial portion there. And the hospital medical spending, this is only the hospital medical spending portion of the premium. So 55% of Blue Cross and Blue Shield of Vermont's premiums are associated with the spending that you're working with in the hospital budgets. So all the rest of the spending is outside of your overview. Now I'll go back to the numbers. So in the first case here, premiums are adequate and there's no adjustments required because they lined up perfectly. In the second scenario, this is when a hospital budget comes, the actuals come in under this budget. And so therefore premiums should be reduced or lower to meet the costs that were expected. And in the third scenario, this is when hospital budgets are over the amount that was budgeted. And so premiums have to be higher in this scenario to cover the costs of the medical spending. So if I could just add that we oversimplified this because as you could tell from that earlier discussion on the UVM Medical Center hospital budget, that there's a lot of moving parts. But fundamentally, when we put together a premium rate, we are reflecting the assumptions in the hospital budgets. And when they come in different from that, it creates a benefit to the next year's premiums as a result of that. So as we sit here today, 2017's budget overages would mean a rate increase. So to follow up on the healthcare advocates discussion over here today, they talked about the question was, is the Green Mountain Care Board guideline a ceiling or do insurers try to negotiate less than that? And what is the practice that each of you will follow there? So we go into our facility contracting exercise, assuming that there's negotiations happening at the table. We did testify in a rate hearing last year that we do find it very difficult to move on hospital CFOs off of what's been approved by the Green Mountain Care Board. We do find that it's treated more like a given. And we have been- Were there any instances in this past year where you actually were able to negotiate a rate lower? I would have to check back on my contracting folks, but I don't recall any significant points in terms of hospitals with large volumes. We do also, just to be clear, once the Green Mountain Care Board rate orders are done, we have included all of those orders in our premium rate development. And that's reviewed and signed off by multiple actuarial reviews. And so the idea that a rate change, we don't know where it goes is not in my view an accurate depiction. And we know exactly where it goes or goes straight into the premium calculation. Does that answer your question? I can follow up on- Regardless of whether it's implemented mid-year or at the beginning of the year? If it's implemented mid-year and one of the simplified examples that Sarah and I brought today will show you how anything done earlier rather than later will mitigate the need for a rate increase as a result of the previous higher than budgeted actuarials. So we can show you a kind of illustration on that. Right. And I was just asking, when you build your budget, at what level do you do that? So you're saying 65% of your premium is based on the hospital? That was 55%? 55%? 55%. 55% is based on hospital. And then do you build that at a hospital level? Yeah, we do. And I think in our rate hearing process we published the confidential schedule that showed how each of the assumptions in our premium development tied that hospital by hospital to the three-month-old orders. And then did you do a reconciliation though? Or I'll say a reconciliation at the hospital level? What happened in the end of the year? So if you were to track 17, now six months down the road or so when Clayton went out, did you do a reconciliation? So the reconciliation that I'm hearing you call for or speak about is reconciliation of actual results. We know that the unit price increase ties out exactly. And then we estimate utilization. And it's usually the utilization, as you saw earlier, where the differences come in. Because we know that we've included the unit price or the commercial rate increase in our premiums and it's usually the utilization. And we don't do the utilization reconciliation per se at a hospital level, but we will look at the larger hospitals and we'll can see if the utilization increases or different at some hospitals versus others. Does that answer your question? Yes. Love, Maureen. Great, we got your answer. Oh, sorry to say that. So for MVP, we do approach negotiations with hospitals as a negotiation. And I would like to bring to your attention language that you've put in our last great order, asking us to be aggressive in our negotiations with hospitals to try to get lower rates and also to get to a parity. So we definitely approach it that way. I think our experience has been both in New York and in Vermont that your ability to negotiate rates really kind of depends upon your market share and your size. You know, the more volume you can bring to a hospital, the more likely they would be inclined, if they're gonna be inclined at all, to negotiate a lower rate than what you folks have approved. And our experience is the same as Blue Cross in terms of the hospitals basically say this is the rate approved by the Green Mountain Care Board. That's what the rate is going to be. We definitely appreciate you trying. Yeah. We do try. If I can share a specific example, not this past year, but the previous cycle, we were likewise instructed to bring our market share power to the negotiation table. We were doing everything possible. We got to the point where the window of time to implement a rate change got so close to the start of the new plan year that we were forced to sort of get to resolution because of the, the only other choice we would have would be to not have a contract and that would be very disruptive to our membership. So we feel like we've pushed that pretty close to where we just not willing to disrupt our membership in that way. So it is one of those things that we put lots of efforts into, but we have yet to see significant change beyond what's been ordered. Okay, so I think we'll move to the next slide. So this slide was intended to focus on the second bullet where we're talking about not only the unit price, which is what the hospital focused on, but utilization. And we believe that's really where a lot of the difference is. So I will try and talk through this and maybe Ruth will jump in, but so the first line at the top that says current shows the unit price of $100 utilization of 50 of whatever medical service that is. So we total revenue or total cost depending on your perspective of $5,000. Then in the next year, the budget should equal the premium amount. And if the unit price goes up by 1%, it's $101 for the unit. And if utilization stays the same, then the total revenue or total cost is $5,050. So the next one that says actual equals premiums increase. So this is what happens when utilization is above what was projected, but the unit price is the same. So the unit price is still 101. Utilization went up by 2%, which is more what we're actually seeing. So that moves to 51. And so the total revenue or cost of medical spending is 5,151. So the premiums need to increase in order to cover that cost. There's two ways to do it. You can do it through changing utilization, which we all recognize would be very difficult, but we have to be focused on that. But you can also do it through unit price changing. So if you reduce the unit price by 1% to 99, you can get the total revenue or total cost in line with the premiums. Right, so a couple of observations, thanks Sarah for walking through that. So the premium increase that I mentioned earlier in this simplified example would have been $101 if there was no change to the go forward scenario. It also just illustrates the order of magnitude. So if 2%, if you expect utilization to be flat or zero, and utilization comes in an increase of 2%, that's really instead of the 1% you thought you were planning for in an overall commercial increase, you actually realized a 3%. So I was just trying to illustrate the order of magnitude here that if utilization was 2% higher than you expected, you need a difference in your rate unit cost of an offsetting 2%. So it really is important, I think, especially as I was hearing the earlier testimony, that if utilization is a part of our medical spend, and it is, it really needs to be planned for and included in any hospital or budget conversations. So to the extent that we have a no-inclusion where a commercial rate increase is 1%, it's really 1% plus whatever you expect utilization to be. And I think that played out earlier this morning when someone was quoting the national rate was 5.5%, I mean, even out here, 5.5%, and the unit cost piece of that was 2 and utilization was 2.5. So I think an opportunity is to just be clear about when we talk about a commercial rate increase, what's the utilization assumption in there? Because the premiums have to cover both. And do you want to try? When their budgets are done, they build a utilization change, you know, an 8% for the other 3% at NPR, built into that is a utilization number, a rate number, and everything else to generate that number of this budget. So I think in my budget, there is a factor of course to tell us maybe like what actually happened. So I absolutely agree. I think what, I think it was you, Marie, who made the point earlier that if the overage has been kind of systematic, it probably means that utilization is higher than we wish it to be or we just want it to be in this budget. So if I can make a plea for the customers and members, they, our community-rated premiums have to pay for that utilization. So hoping that it doesn't happen, it doesn't help our premiums, it will increase the premium. On that point, I think in a fee-for-serves environment, trying to control utilization is challenging, which is why I think we are all hopeful that moving to a different payment methodology would be more successful in that area. I would, however, note that your ACO contract does not get us there in its current form. So I would encourage you to be more aggressive in your ACO program because I think that would also help this dynamic. Absolutely, I agree. Okay, so we will move to the final slide. Again, gross oversimplification to make this easier. What we're showing you is medical cost revenue growth and the red line, which is underneath the other two in the beginning, is the trajectory. The blue line is showing an earlier agreement price adjustment and then the green line is showing a later agreement price adjustment. And what we're trying to demonstrate visually here is that the sooner you make a price adjustment, the greater the impact and the sooner the impact will be felt by a lot of our members. And that is, those were the three of the points we really wanted to make. And I don't know if Susan wanted to talk. Yeah, we would also echo making a unit cost adjustment earlier rather than later, specifically not waiting until the budget order is in September. Now, it's true that if you do make an adjustment now, that will not be reflected in 2018 rates. I mean, I think we all understand why. There's no way that we can redo a rate filing and get some rate relief here. But at least the way I understand it in my non-actuary mind is those costs are in the system already. And there's the potential for it to keep going higher and higher. So if you can make the adjustment now, even though the members won't see it until we do the rate filings effective for next year, we will know what that is and we can build it into the filings for the qualifying health plans that we're gonna be submitting to you in May. So again, you know, so maybe instead of going up this much, it'll be going up this much. So because we've got that much relief in there. So on that specific topic, if there is a rate change, then some place throughout the existing year, do you necessarily have to make the changes on the beginning of a calendar month or how would that work for both your companies? Boy, you know what, let me get back to you on that. I don't want to guess. So let me get back to you on that. Did you say a calendar month or a calendar year? I think you had a month. So let's say that, you know, by two weeks from now, which is what, the 16th of March, this board has made a decision to lower the rates for the existing year. Would the board have to use a date that begins at the beginning of a month? So I think from what I've heard you say, using that timetable, May 1st is probably doable. My question is, if we set it for May 15th, is that also doable or does it make more sense to set it at the beginning of a month? I have to agree with Susan. I have to get back about those, the calendar month. I know that it doesn't matter which calendar month, but I don't know if the actual date matters. It might be the first of the month following when the decision. But I can follow up on that as well. Okay, great. We'll look forward to hearing those answers. And as a data point, each of the hospitals, they're not all in the same fiscal year necessarily, maybe the Vermont ones are, but I know that we deal with other entities that are in different cycles. So when we do our rate development, we're looking at the actual contract year and kind of rolling it through. So it's not even, each calendar year has a mix of the previous contract year and the next contract year. So our rates go down to a very granular level and include that type. That's why an earlier change to Susan's point makes a difference because it prevents, if I can go back. So an earlier rather than later rate change in this example here would right away start chipping away at 51-51 that you've already incurred by having gone over in the previous year if you believe that utilization is gonna continue to go up. In theory, you're gonna have another overage and the idea is that you're trying to stop that overage from continuing. So that's why it has an important impact on earlier. Anything more to add, Susan? Nope. Any questions from the board? I'm not seeing any. So at this point, we'll open it up to the public for any public questions or comments. I'm not seeing any. I'm just watching the University of Vermont call up now. Speak up. When you did your 2018 rate schedule, okay? Did that take into account the actual utilization from 2015? Okay, so you know, all the way through 2016. So my argument is that this base readjustment goes back to 2015. We're talking budget to budget. Those actuals are built into their rates much sooner. And this is what we're talking about. That if we do adjustment now, that 2015 utilization is built into their 2018 rate schedule and those savings should go directly to the premium payer. So that's the first statement that I would make. The second statement is the difficulty or why we say put it off to 19 is so we could pull those negotiations in and you need to factor in 19 inflation too. Because 19 inflation comes into that conversation when we have those negotiations. So that's why at least in my mind, it makes sense to pull all of these pieces together and do it once during the 19 budget process. And then that would change their premiums back on October 1st because at least what I got out of this is these premiums are not changed to the commercial payers until January 1st. I'm referring to the hospital play in here. So anyways, that's just some, but that's our challenge of going budget to budget with that process. That utilization is already built into their rates and that's why we say that that savings goes directly to the bottom line for that time. 18 rates is utilization through 16. What's not in any rate yet is the 17 increase that we're hearing about. But that when we built into our 2017 budget, our 17 budgets based on changing the 16 budget and 18 budget. So what I'm saying is that utilization increase that we saw earlier, that's built into the world, you know, famous students, all I'm saying. And that's the challenge. I may be a little bit tense here, but as I recall, we told the insurers to go back, set the rates based on what our instructions were. And if I came in 17 at 38 million over what they were using. See, I don't think it was old, okay? And here's why. Because they adjust their base for utilization, correct? And then you apply the rate, okay? The UVM budgets were never changed for that utilization difference. So that utilization that we talked about that is real, that's already built into their base. It's just not built into our budgets. But the hospital budget process is budget to budget to budget to budget. Yeah, okay. If you realign yours based upon prior year actuals, then you are building that utilization in, then you're applying that rate increase on top of increased utilization. And that's the challenge that we're having about tying the hospital budget process to the rate setting process. This is your simple example of the one hospital one insurer. If we had a hospital that was 100 in a given year and their budget was 103, but they came in at 110 on actual, then when we base the next year's budget, we're basing it on their budget, which was that 103 when we rolled it up and it goes to 107. Are you guys using the actuals? Since you know the actuals, are you using that 110 to start from? Yes. Yes. I think we have to understand that. From the previous year, so when we're building a rate for 18, we were doing it last year, so we're using 16 actuals, making assumptions for 17, you know the unit cost increases from the hospital to orders. And then, instead of the 2018 rate, so we don't have the actual 17 results yet. But it was 16 and 17. So it might be kind of a hybrid, I think what I'm saying. Yeah. It made, because they were on the upswing in 15s, 16 and 17, but their budgets were kind of going off of the budget, not the actual. I think it's probably somewhere in the middle of what you're doing, I'm not saying it's wrong, you're saying this is where we actually came out and we're going to trend it. And they're working off of a budget to do it. And if there's pretty significant swings, then that could create some type of disconnect. So we would just need to understand that. So at the risk of oversimplifying it, but the premium has, we have to collect enough premium from all the community of community rated subscribers that buy that product to cover the actual costs. Not the budgeted costs, but the actual costs. And so if the actual costs in your example was 110, the premium needs to reflect 110. Yeah, and I guess where I appreciate that, and I think where I was saying before, because UVM, when we looked specifically at commercial, came in at 710 versus 703, I was under the impression that where the commercial insurance would have netted out is that they only budgeted it for 703. And then if it comes in at 710, there's an overage and we have to cover that in the next year's rate. But that's probably not entirely true because their 16 was over too. So if you were trending off of 16, you would have gotten to a higher place than they did because they did their 16 off of budget, not off of actual. And they blew away their, sorry, but they blew away their budget in 16 as well. So if you guys were doing it off of 16 actual, would have put you a little bit ahead. The difference between 15, 16 and 17 budget. So each year, another way to say it would be when we have to explain reasons for rate increases each year when we file our next year's rate, the very first thing we do is we look at what was actual medical costs for the year that we had the premiums that started the year. And if they are higher, we have to increase the premium right out of the gate. So 16 was taken care of in, excuse me, 16 was taken care of in 18. That's one of the contributors to why our rate was higher than people thought it should be because of the commercial rate increase. And then we'll have a repeat of that as we go into 19 for 17. Okay, are there other members of public with any comments or questions? No, thank you very much, Neil. Thank you. At this point, is there any new business to come before the board? Or excuse me, any old business to come over? I wanted to just speak briefly about the individual mandate discussion that's been happening in the federal issues working group, if I may. So that group has been focused the last few meetings on the individual mandate. That question being, just to back up for a moment, folks will remember from last week the staff they even updated about the fact that the federal mandate is no longer being enforced. So there's some discussion in House healthcare about potentially implementing state individual mandate. They came out with a bill this morning which would institute a state mandate with a process for working out the penalty details over time. That process would have the board convening the work group that would work through that over the course of the summer with participation of DFR and DEVA, two legislators and other stakeholders. So I just wanted to bring that up so that folks were aware that we were asked to leave that process. It's quite frankly similar to what's been happening with the federal issues working group with a slightly different configuration of people. And the report on that would be due in November. I think there are some pieces of the work groups that we would want to recommend changes. Like for example, it has all of the technical, legal and administrative support coming from the board. We obviously can't do tax calculations. So I think we would want to suggest that the study be clear that tax and DEVA would also be on the hook for that kind of technical and legal support because we would need both of them. They're the right agencies to do the analysis. I think we could certainly pull people together and facilitate the conversation. I think we also need to make it clear to them that we will need some additional resources. Who is ultimately responsible for writing the report? We can be the stakeholder group. Who's ultimately responsible for handing it in. I think the way it's currently written it would probably be us because we're on the hook for the administrative technical and legal support. I think we need more resources. Yeah. The other suggestion we could make on that is just one I commonly used to do with reports is people don't tend to read reports often. So you can, if you provide like a PowerPoint or some sort of presentation, that's less resource intensive to put together but convey the information that the board is usually looking for. So that's another way that we could reduce the resource need. Could the other agencies also support the development of that report? Absolutely. I mean, I don't know if they would say they could but they would say they could. I thoroughly endorse the PowerPoint approach. Mark up and vote is when? I think it's tomorrow morning because to the extent that it's a committee bill, I don't know if it's a committee bill or if it's a strike ball. If it's a strike ball they could, they have through the end of the day Friday. It's a committee bill they have through the end of the day tomorrow. And you'll be there to monitor that? I will be there, yes, tomorrow for sure. Yeah, and Friday, if needed. Okay. Is there any other old business to come before the board? Is there any new business to come before the board? Would anybody like to make a motion to adjourn? No move. Second. It's been moved and seconded to adjourn. All those in favor, signify by saying aye. Aye. Any opposed? Thank you everyone.