 So 142 Ms. Denath are you on the line. Yes I'm right here. I keep muting myself accidentally. Okay great. I'm ready. All right. Great. So we're going to go back on record in this meeting and I believe there are two more blue crops to shield the witnesses. So Ms. AC or Mr. Denafio could you please call your next witness. Yes we're going to call Ruth Green and I'm just checking to see if she's in the meeting. I believe it is unknown user. Oh sorry. I am here. Can you hear me. Yes I can thank you. Blue Cross calls. Ruth Green as its next witness. Okay I'm going to give folks just a minute to find Ruth and pin her. If that's what you're doing. Okay Ms. Green could you please raise your right hand. Do you swear or affirm that the testimony you're about to give is the truth the whole truth and nothing but the truth. I do. Okay Ms. AC. Would you please say your full name for the record. Ruth Green. Ms. Green what is your position with Blue Cross Blue Shield of Vermont. I hold the position of Treasurer and Chief Financial Officer. Would you please take a look at exhibit 12 and your binder. Yes. Is exhibit 12 your prefiled testimony in this matter. Yes it is. Do you affirm that it is true and correct to the best of your knowledge. I do. Does your prefiled testimony discuss matters related to Blue Cross Blue Shield of Vermont's reserves it's proposed contribution to reserves and the appropriateness of the proposed rates. Yes it does. And in your prefiled testimony did you explain why you directed Mr. Schultz to include a 1.5 contribution to reserves in the filed rate. Yes I did. As of January 1 2020 was Blue Cross Blue Shield of Vermont's reserve level below the range that is required by the Department of Financial Regulation. Yes. You discussed this point in more detail in your prefiled testimony but could you please briefly summarize for the board why it is important for Blue Cross Blue Shield of Vermont to reach the point where its reserves are within the required range. Yes Blue Cross Blue Shield of Vermont required is required to maintain reserves and stay solvent so that we can pay the claims for our members pay for their health care. And as Commissioner P check has told the board many times that insurer solvency is the most important aspect of consumer protection. Reserves as Paul indicated in his testimony. Excuse me to have the resources to be able to invest in programs and initiatives that and the cost curve also. We need the flexibility to address the needs of Vermont markets in particular the senior market and Paul outlined the investment in Vermont Blue Advantage and the Medicare Advantage market. That's currently an underserved market in Vermont with only 16 percent of Vermonters buying Medicare Advantage. But we believe we can bring that up to closer to the national levels by having a blue network in a Medicare Advantage plan. So reserves are required to allow us to serve all the markets that we serve. We also have a study that was done to determine the appropriate range for our business is unique to Blue Cross Blue Shield of Vermont. And it's based on the risk profile of our business. And in that same study that was reviewed by Oliver Wyman and DFR and resulted in the ordered range. It was noted that the place in the range that we should aspire to be on a consistent basis is 690 percent reserves that would lead to an RBC of 690 percent. So that in any given year it would reduce the chances that we'd fall outside the target range. And do reserves play a role with respect to losses in particular lines of business. Yeah. So as the testimony earlier from Paul around the purpose of reserves reserves is the protection for all of the uncertainties and risks for our business. And that's for all of our lines of business. So to the extent that the individual and small group risk pool has sustained losses over the last several years. And those have also come out of reserves. As other witnesses and the board have discussed today the COVID-19 pandemic is an unprecedented event. Has the experience of the pandemic changed the way that you think about reserves. Yes and no. I'll say no first when we think about reserves their protection against uncertainties and risk. And as we've explained before to the board the pandemics and natural disasters are a classic example of things that reserves are intended to protect against. So in some ways that's that's exactly what the reserves are there for. We need to be there when our members need us the most. And to the extent that those reserves are consistently maintained with a modest CTR of one and a half percent. That is what sustains over time. On the other hand I do think we are thinking about reserves a little bit differently. The pandemic has really been a learning experience for everyone. And as we partnered with the state of Vermont and providers and our employer customers to deal with the state home orders and the various things that had to be adapted to respond in the case of the pandemic. We really did have to focus our resources where it was needed most and reserves play an important role in being able to bring that flexibility to the health care system. In your pre file testimony you explained why the proposed rates satisfy the statutory criteria. Yes. Is it your opinion that the board should approve an average rate increase of five point five percent. Yes it is my opinion that the rate increase of five point five percent should be approved. Why. There's no debate that the rates are actually sound Paul went through that and shared the L&E view. We are highly confident that the rate reflects the expected cost of care in 2021 with the exception as Paul noted for the COVID claims. And there's no padding in these rates. There's a very modest CTR and the administrative cost ratio is very efficient and there's no profit margin included in these rates. So the rate of rate increase of five point five percent is what I would say needs to be approved. And what has been Blue Cross Blue Shield of Vermont overall experience with this line of business. The Paul went through several areas of testimony that outlined how the this line of business has lost money over the last several years. And in the exhibits that were submitted as part of the pre filed testimony we showed that that was about 12 and a half million dollars. Even if you include the litigation recoveries this line of business has significantly lost money since its inception. This is a slight change of track but as we're talking about the rates there was some testimony earlier. I think you heard with Mr. Schultz and board members regarding fraud waste and abuse. Do you recall that testimony? I do. Is there anything you'd like to add to Mr. Schultz's explanation. Sure. I thought it would be helpful to the board and the health care advocate that when we talk about and as Paul indicated in his actuarial memorandum that the cost containment programs were suspended or came to a halt. In large part that was due to the burden on providers. You want it? Sure. Yeah. It seems like someone may have forgotten to take themselves for themselves on mute. Can you still hear me? I can't hear you. I can but there's sounds like someone's driving. Could everyone who's on the line please check their computers and their phones to make sure they're muted. It looks like it could be coming from Lucy. Lucy Garen. Can you mute? Good. Okay. Okay. I think I was just following up on the testimony about the fraud, waste and abuse programs that had come to a halt. The Department of Financial Regulation issued an insurance order that required us and I made a note on March 16th it was the DFR insurance bulletin 211 that required us to sort of get out of the way if you will of the providers. In terms of spending time with them on those programs. So we will get those back into play as soon as we're allowed to. Miss Green, if you could take a look at the Lewis and Ellis report, which is exhibit nine in your binder. Yeah, I'm there. We had mentioned earlier that administrative costs for Blue Cross was shield of Vermont are low compared to other plans. Are you familiar with Ellen ease analysis of the administrative costs reflected in the proposed rate. Yes, their analysis of leave is 19 and 20. And do you have any response to their analysis. I concur with their conclusion that the revised expense assumptions are reasonable and appropriate. And I noted that as Paul had indicated, Eleni had done a survey of other blue plans that operate in the individual and small group markets and so on page 20. It does talk about the percentage on a percentage of premium basis we had lower expenses than 90% of other of the blue plans who are in their survey. But I'd also wanted to point out that the administrative costs on a PM PM basis are lower than 82% of the plans that they surveyed. What this tells me is what I already know about how we operate our, our company we are very focused on operating efficiency. That's a key portion of everyone's daily work. We're constantly looking at programs and processes to make sure that we're doing them as efficiently as possible. In fact, we have one employee based program called blue ideas that has produced about $5 million of savings over five years. And that program is actually evolving to be more proactively looking at processes and taking manual work out of those processes and making things more efficient. But as an enterprise in total, we manage our costs across all of our books of business and we've been consistently able to serve all of our customers with operating expenses at 7% less than 7% of premium on a consistent basis. When we do our own benchmarking externally that compares to other commercial insurers of about 10.7%. So that that's a median of some of those external surveys. The other thing is when we are doing the programs like the ones that Dr. McIntosh and Paul testified about. We are constantly allocating our staff towards the higher priority items and away from lower priority items or programs that have been analyzed and understood to be less of less value. So as Paul testified the rate increase for 2021 would have been 1.7% higher if it weren't for some of the programs that we've implemented for 2021. And that really does take the resources and the the active allocation of our staff to go towards fending the cost curve. You indicated in your pre filed testimony that Blue Cross Blue Shield of Vermont had not made a final decision about pay increases for 2021. Is there anything you can add to that? Yes. One thing I just wanted to point out which we've shared with the board in the past is that the impact of the average salary increases at Blue Cross Blue Shield of Vermont is in fact very, very small impact on any given years rate increases. If we eliminated the average salary increase in 2021 it would have an effect of reducing the premium increase by three 20th of 1%. Nonetheless, we do recognize the extreme financial stresses that everyone is under in Vermont and with the pandemic and the home orders and the economic slow down and everyone working as hard as they can to adapt. We do recognize we have to put a new lens on our plans for 2021 as everyone is and we're still working on ideas but the executives at Blue Cross Blue Shield of Vermont have already come to the conclusion that they will commit to not having salary increases in 2021 for the executive team and we're looking at other options. So we remain committed to a strong motivated workforce. You also indicated earlier, I believe that Eleni had found the 1.5% CTR assumption in the rate to be reasonable. Are you familiar with Eleni's analysis of the proposed CTR contribution in the rate? Yes, I am. It starts on page 20 and goes into 21 and 22. Do you have any response to Eleni's comparison of the proposed CTR to other plans? Yes, I was struck by the information that they pulled together. They looked at the filings and on the middle of page 21. They looked at the 783 qualified health plan filings and compared, looked at the average submitted CTRs. The median CTR that was submitted was 3.24 and the average was 3.45. Based on their analysis, our modest CTR contribution to reserve of 1.5% is lower than 80% of those filings. Did Eleni consider Blue Cross Blue Shield of Vermont's reserve levels as part of its analysis? Yes, they went on that same section to look at reserves. They looked at them from several different points of view. They actually compared to other companies on several metrics, four metrics in particular, and all of those assessments concluded that our reserves are low, which is consistent with what my understanding is. At the bottom of page 21, I wanted to point out one in particular point that they shared was that over half the Blue Plans had actual RBCs higher than Blue Cross Blue Shield of Vermont's targeted maximum and said another way that that means that even if we were at the top of our range, we would be lower than half the other Blue Plans where they currently sit today. Did Eleni address the Blue Cross Blue Shield of Vermont's historical CTR for this line of business? Yes, they did. At the top of that same page, this is a table actual to expected contribution to reserve. This is a table that's not unlike the table that Paul testified about earlier today. Sorry, I was just making sure that wasn't me. The actual to expected table does indicate that we've lost money on this book of business. As Paul had mentioned earlier, but I'd like to draw out Eleni's comment that Eleni believes this is right above the table, that the results demonstrate that Blue Cross Blue Shield of Vermont has successfully projected future results based on the information available at the time final rates are approved by the board. So what's important here is that when we're estimating the rates for 2021, it's important to recognize that we've been consistent in our ability to project those costs. And the other thing that this table shows is that when the board cuts the rates below the actuarially sound levels, it does result in losses to the company or at least it does not achieve the CTR and in many years four out of the six it resulted in losses. If the board cuts the proposed rate this year, will it reduce the cost of health care that Blue Cross Blue Shield of Vermont is required to cover? No, it won't. Ms. Green, I'd like to direct you to exhibit 10. Could you identify exhibit 10 please? exhibit 10 is the solvency opinion from DFR and it includes by reference the letter from Oliver Wyman in support of that solvency opinion. Have you reviewed the Oliver Wyman report? I have. That begins on page seven of exhibit 10? It does. Oliver Wyman changed its position regarding an appropriate target range for Blue Cross Blue Shield of Vermont's reserves? No, they haven't. On the bottom of page seven, they do outline that this report was an update on the previous work that they had done in support of the proposed surplus range at the time of 590 to 745. Does Oliver Wyman agree that Blue Cross Blue Shield of Vermont's reserves are below the required range as of December 31, 2019? Yes, they do. On page nine of exhibit 10, they wrote that as of December 31, 2019, Blue Cross Blue Shield of Vermont's RBC ratio of 567 was 23 points below the low end of the approved range. And do you have any response to Oliver Wyman's analysis of this point? It was important, and I think it's important for the board to understand that the increase in RBC during 2019 was primarily due to the receipt of the alternative minimum tax rebate or refund. And Oliver Wyman made a point that nearly all of the increase was due to that one time item. So that is important from my perspective because it doesn't change the fundamentals of having an adequately priced book of business. Does Oliver Wyman also compare Blue Cross Blue Shield of Vermont's reserve levels to other comparable companies? They do. On the next page, they updated the comparative analysis that they had included in their previous report, and they confirm at the bottom of page 10 that Blue Cross Blue Shield of Vermont's RBC ratio in 2019 is the lowest of all the comparative companies. They also pointed out that during the period of 2016 to 2018 on that page, the average of the companies excluding Blue Cross Blue Shield of Vermont had increased pretty significantly over that timeframe, whereas our RBC had decreased. That's important to note. What does Oliver Wyman conclude about the outlook for Blue Cross Blue Shield of Vermont's RBC? Oliver Wyman's conclusion is on page 16, but they did conclude that there's a strong likelihood that Blue Cross Blue Shield of Vermont will remain under the 590 low end of the target surplus range at the end of 2021. If the overall impact of the COVID-19 claims utilization is relatively modest, which is what Blue Cross Blue Shield of Vermont has modeled. Paul had testified earlier about the taking on the feedback from Oliver Wyman and updating the modeling and seeing that it still had a pretty significant impact. They go on to say importantly that any negative adjustment to the proposed premium levels will increase the likelihood that the 2021 RBC ratio will fall out, fall below the target RBC range. Blue Cross Blue Shield of Vermont has experienced a reduction in claims so far this year because of the pandemic. Why didn't Blue Cross Blue Shield of Vermont reduce or eliminate its rate increase for 2020 run to reflect those lower claims costs so far in 2020? As I outlined in my pre-file testimony, to take a step like that at this point would be premature. There's, we're only a few months into the pandemic and no one knows how that's going to unfold. If for some reason as the future comes to pass and there's the end result of the 2020 and 2021 claims activity due to the COVID pandemic results in monies in surplus that could be refunded. We'll cross that bridge when we come to it, but at this point it's just simply premature to take that step. Certainly with all the uncertainties that are in our current future surrounding our surplus and solvency, it would be imprudent to take that step now. Did you include in your pre-file testimony an outlook for Blue Cross Blue Shield of Vermont's risk-based capital at the end of 2021? I did and in fact it's the same RBC outlook that Paul and the board were looking at in the earlier testimony this morning. And in exhibit 12 that's page 37? Yes. It's the same exhibit that we were looking at earlier. So this, I wanted to further elaborate on this RBC outlook. There are many, many uncertainties and as you can see from scanning down through this analysis on page 37 that there are a lot of uncertainties and there are a lot of big inflows and outflows that have to do with our future. RBC level. So we put this together with the express purpose to help people understand what the 12 to 24 month view might look like and how we're seeing it. And in the interest of transparency, we're just wanted to make sure that everyone had the benefit of what we see. And what I see here is a lot of things that have yet to come to fruition and a lot of things that none of us know how to predict at this point in terms of how the pandemic will unfold. So the end result that was really to be focused on on this exhibit was the estimated RBC at the end of December 31 of 2021. And this also incorporates obviously the scenarios that Paul modeled on the pandemic, which was as Paul indicated and I can reiterate was an illustration of what could happen, not that we know which, which scenario will pan out, but just to give some sense of what the order of magnitude would look like. So for the, the five different COVID modeling scenarios and incorporating the other variables, the range at the end of 2021 is from 545 going down to 419 at the bottom. You might have heard earlier, with respect to one item that's on this RBC outlook you may have heard in Mr. Angoff's opening a discussion of the potential recoveries in risk corridor and cost sharing litigation. Would you describe those potential recoveries should Blue Cross receive them as a windfall. Absolutely not. I don't view those as a windfall at all. Those are payments that were part of the original ACA design when the qualified health plans were rolled out, and the federal government didn't come through on those payments so that is, in part, a contributor to the losses that we've experienced. There are recoupments, if you will, of the payments that we would have expected and when in my pre file testimony when I showed the losses on this book of business being a little over $12 million, I assumed that these payments came back to us so even with these payments. The qualified health plans have lost $12 million and that has come out of surplus. So it's not a windfall at all. It's recouping something that was really a part of our business strategy for participating in this market. Also on the subject of reserves in your pre file testimony, you stated that Blue Cross Blue Shield of Vermont has committed to paying pandemic costs for 2021 out of reserves. Does that commitment include additional temporary hospital commercial rate increases if the board approves such increases later this year? At the time we said that, it did not include the eventuality if it happens for special allowances for the hospital budgets. I, as I sit here today, I would not recommend those special increases and the reason is the, if it's important for us to take a 12 to 24 month view on the impact of the pandemic on Blue Cross Blue Shield of Vermont's solvency. I think it's reasonable to take a longer view on where the hospitals will end up. If the increase in claims that Paul mentioned and we've seen in our June and July results or July payments, if that continues, I do think that we need to take a longer view with respect to what's appropriate. If, if there were some special allowances approved, I'd have to say it would have to go into the rates because that is not incorporated anywhere in our, our thinking yet. Is the impact of the loss in value of pension assets, including included in the RBC Alice? Yes, it is, as we talked about earlier today. If not for the pension asset losses, could or would Blue Cross Blue Shield of Vermont have reduced its contribution to reserves in this rate? No, we would not have. Again, I'd like to emphasize that this RBC outlook was to give people a sense of the level of uncertainty that's out there. In the next 12 to 24 months, it's not an expectation of what it's not a point projection of what we think the RBC will be. But if you do take as we began this morning, if you take the pension loss out of the numbers that I mentioned a moment ago at the bottom of that page, the RBC range would be 599 to 725. And that is very much still within the target range. And it wouldn't be until we're consistently and predictably expected to be, you know, at the top or, or above the range that we would consider reducing the, the one and a half percent CTR. The one and a half percent CTR, which I say in the rate filing for Paul's benefit, and then also in my pre filed testimony, that one and a half percent is a long term consistent maintenance of reserves so that we ensure that the book of businesses is, is supporting itself. And then to the extent that we have other things coming and going and the reserves. We don't want to be swinging our rates around as a result of that. So the one and a half percent is really where I would have landed, even without the pension loss. Mr. Angoff stated in his opening that Blue Cross Blue Shield of Vermont is benefiting from the pandemic. Do you agree with that opinion? I take issue with the words that we're benefiting from a pandemic. I don't think anybody's benefiting from a pandemic. Our employees are working from home and trying to homeschool their children and you know, take care of their, their family while they're also serving their customers. I don't think Blue Cross Blue Shield of Vermont has benefited from the pandemic. If by way of benefiting Mr. Angoff is referring to the low down in claims as a result of the shutdown and the stay at home order. As the analysis is shown and how, as Paul described, we believe that in the fullness of 2020 and 2021, all of those, many of those services need to be paid for. And so we're here, we'll be here when those payments need to be made. It's not benefiting Blue Cross Blue Shield of Vermont. It's benefiting our customers. I'd like to also just point out briefly that not everyone understands that when the providers had the slow down in mid-March, April, May and into June and actually coming back online in June, the only monies that go into our reserves for future payments are for the insured business. We have a large book of self-funded business and so the claims slow down that comes out of the hospital revenues related to the self-funded business actually goes back and remains with those self-funded employers. So just to be clear about where the claims slow down flows through in terms of the current economy. I have no further questions for Ms. Green at this time. Okay, thank you. Mr. Angoff, do you have questions for Ms. Green? Yes, I do. Good afternoon, Ms. Green. Hello? I want to emphasize, I'm going to ask you several questions. I want to emphasize and I hope you understand, none of this is personal. It's just business. None of it's personal. Second, and please take this seriously, I'm not interested in communications between you and your attorneys. If I ask a question and something that you've said to your attorney, your attorney has said to you is relevant, please do not tell me about those. Any other communication is what I want to hear about. Do you understand that? Sure. Okay. In your capacity as Treasurer and CFO of Blue Cross Blue Shield of Vermont, are you responsible for Blue Cross's investment policy? The finance committee of our board is responsible for the investment policy, but as Treasurer and Chief Financial Officer, I am charged with implementing that. Okay, and who is on that committee? It's a subcommittee of the Blue Cross Blue Shield of Vermont board. And who's on it? So we have Scott Giles. What's his position? He is CEO of the VSEC organization. We have Joe Bradley, who is former Vermont Economic Development Organization. Sorry, not Economic Development Organization. I'll have to get you her title. We have, shoot, I'm sorry, there's five members and I can get the names for you. Can you submit those to the board? And so are you one of those five members? I'm not a member of the board. No. I'm management and I report to the board. Okay, so who makes the decision as to what Blue Cross's investment policy should be? I'm going to object on the grounds of relevance at Blue Cross's investment policies for its assets are not relevant to this proceeding. And I believe it's been noted that we have some time issues here. Starting off, what, what is the relevancy of this line of questioning? Well, we want to, I think we want to find out who is responsible. We don't want, anyway, I won't speak for the board, but if Ms. Green is responsible, then I'm happy to hear from Ms. Green, if, if, and we should hear from Ms. Green. On the other hand, if there's a committee that's responsible, and Ms. Green is not responsible, then the question should be, why are the responsible parties not here testifying before this board? Of course. So I'm not exactly sure what Mr. Angolf is talking about responsibility for. I don't believe there's an issue here with regard to the investment policies that Blue Cross uses for its, its own investment. If this is referring to the pension matter, that is a different matter. And I would make, I would object on several grounds. And the first is, we have taken the position consistently here. And I refer back to Don George's letter that went to the board members and to that the HCA received or we asked that if the board or the HCA had questions about the loss matter that we be given an opportunity to respond to them in writing. And we reiterated that in the written filing. The HCA has never objected to that, nor given us any written questions or proffered those to the board. That would have been open to them. They did not follow that. And second, I would reiterate that those questions as well are both irrelevant to this proceeding beyond the amount of the loss which has been disclosed. And to the, and you begin to move into areas that fall within attorney client privilege and work product. Thanks. Mr. Hick officer, I'll move on after just saying this. The reason that the HCA didn't ask any questions is because the general counsel to the board asked questions and asked exactly the right questions. Exactly the right questions. And the answer that the board got, as I said in my opening, maybe not too artfully was go jump in the lake. So I'm going to ask Ms. Green and see if I get any better answers. I think there's an objection on the on the table that I need to deal with it at the moment. So I would draw the question. Okay. Ms. Green, how did you guys lose $40 million? Objection for the same reasons I gave earlier. If you'd like me to restate them, I will. Okay. So let's deal with these one at a time. The grounds that the HCA did not file questions and writing or object to your request to do so. I don't think has any relevance. They are not obligated that they have the opportunity to ask questions here at the hearing as to relevancy. I am struggling to find the relevancy with who specifically is responsible for the pension losses. I don't think that is the board's role. The board certainly has a legitimate interest in that. I think I think all policy holders have an interest in that. But it's not something that the board is going to be deciding and it's in this rate case. So I realize I sent those questions out on behalf of the board, but you know, the board just like you guys can ask any questions they want. But we have a properly put objection here and I think that line of questioning is not relevant. Mr. Haring officer, I threw that question. The question pending. This line of questioning is going to draw further objections I believe so you can keep asking questions but I suspect they'll keep drawing objections. Okay, and I will explain why those objections are unfounded and the chair can roll. And the question pending is seems to me a very reasonable question. How do you lose 40 million bucks. So just to my understanding is that I objected to that and it was ruled on by Mr by the hearing officer up. Maybe I didn't follow that sustained right. What was the investment on which Blue Cross lost 40 million dollars objection relevance. Is that not in the record. I think it is in the record in the response that we filed in exhibit 22, which was a response to the questions we, we responded to what we could respond to and feel as though the information was helpful. I hope to the board to the extent that we could make those responses in that letter we do talk about. The bottom of page for the trust experienced a substantial line decline in value in February and March 2020 due to the poor performance of the assets invested in a series of funds managed by alliance global investors. A substantial portion of the 40.6 million dollar loss suffered by Blue Cross will show the Vermont as of June 2 reflects this investment loss. The losses are distinct from general market losses that resulted from the COVID COVID-19 pandemic. And then we go on to show the table so that is the extent of information that I've been told I can share at this point. Miss Green. Don't insurance companies, including Blue Cross. Have an obligation to invest in prudent investments. Yes. Okay, could you please explain then how the investment that lost 40 million dollars was a prudent investment. I'm going to object on the same grounds of relevance and to the extent and it's seeking information beyond what's provided in the written response. Mr. Yeah, I respond Mr. Hearing officer. You may. The reason all these questions are so relevant is that the board's decision, I believe, regarding this increase should depend in part. On the extent to which this was just a unique. Aboriginal circumstance. That Blue Cross could not have known about it. And therefore it was nobody's fault. Or whether it was a reckless negligent investment. That involved sophisticated hedge funds analysis. Volatility funds. Things that I don't understand about various investment vehicles, but if it's if it's a very speculative reckless investment. That I think is very relevant should be relevant to what the board decides to do. Regarding this proposed rate increase. I also also think just, I mean, the board, the board asked questions, very reasonable questions that got no response. I don't know when the board found out about this investment, but it would seem to me that it was blue crosses obligation. If they're seeking a rate increase from the board to let the board know as soon as possible, as soon as possible. What's happening? What happened to their, their surplus, which could affect the rate increase? So I think this whole line of questioning is extremely relevant. Miss AC, do you have any response to that? Yes, I have several responses. First, I'd like to read what we said in the filing on page six. The National Employee Benefits Committee is investigating the loss and has retained council to advise on the possibility of legal action to recoup all or a portion of the loss. Investigation is ongoing. And as a result, much of the information Blue Cross Blue Shield of Vermont receives as a result of the investigation reflects attorney client communications and work product. So this line of questioning goes into a very delicate and privileged area that in addition to not being relevant that poses serious problems for pursuing it in this forum. We also advise the board in our written response that the Department of Financial Regulation, who is the solvency and market regulator is conducting an examination directed at the pension asset loss. So it is within their authority and is the subject of that proceeding. And again, this is not a forum in which the questions that Mr. Angolf wants to ask have any relevance. There is not a penny in this rate request that is based on the pension loss. Well, I mean the pension loss is relevant and its impact on Blue Cross is solvency and how it impacts solvency. Regardless of whether there's a, you know, specific ask in the rate to recoup. Because of the loss because the board could decide that it would want to reduce the rate more and it wouldn't threaten Blue Cross the solvency but for the pension loss. So, I mean, I think questions regarding the loss questions about how the how the how it impacts solvency how it impacts RBC over what time period. I think they are certainly relevant. I think the nature of the investment. Sounds like it more is in the realm of DFRs authority and not the boards. Mr. Angolf you spoke about when the board knew. I expect you have questions about that or when sorry when Blue Cross knew. I have a question on that at the moment about that. So I'm not going to not going to get there, but the, so I don't, I don't think the questions about the fund are relevant. I'm sorry I want to make sure I understand the chair's objection. You don't think the questions about the fund are relevant meaning I can't ask what what this investment was. No, I think that question was asked and answered. No. Well, I'll ask this and you can rule on this. I mean, I understand what and what what stocks are an investment in stocks is understand what bonds are and what investment in bonds is. I don't understand. I believe that this investment is neither. I believe it's a very arcane and from what I've read, reckless type of investment to invest in, and I would like Ms. Green to under to explain what it is. I would think that we would all have an interest, and you all in particularly would have an interest in finding out what if you lose 40 million bucks. I would think you'd want to know what it is that was responsible for that loss. I think the line of questioning to which we object. So I'm going to board members, would you like to go into executive session to receive legal advice on this or do you. That is an option. But my ruling is that it's not relevant to the rate decision otherwise. I mean that we could not even ask those questions under an executive session. That's correct. I think it might be helpful. Mike, if we go into if the board meets with you separately for just a couple minutes to so that there's clarity among board members about the line, but I would defer to Kevin since he's the chair. This is a little awkward because I am also the, and the council I'm also the hearing officer so I don't think you should be put in the middle of this. We could meet with him or maybe. Yeah. Yep, you could meet with him or not to but if Robin requests it and I think we should because board members have to feel comfortable. Mr hearing officer Lynn comes is also on the line and happy to discuss with the board, if that would be helpful. Robin you see great value in having this discussion. I think it will certainly take us five minutes and I think it'll speed things up later on because otherwise I think board members will be asking questions which will draw an objection and that Mike will then have to roll on. So I think it would be better if board members were clear in their mind about which areas of the pension question were allowable and not and that might feed us along in the long run. If I can or can't ask by a consultation with with a staff attorney. I'm still going to ask whatever questions I desire to ask. And if the hearing officer rules me out of order then I will realize that I can't ask those questions but I still plan on pursuing a line of questions on this. And it sounds like maybe it's not going to. Yeah, let's keep moving then. Okay. Okay. Miss Green, what was the process that Blue Cross followed in deciding to make the investment in whatever investment it was that lost this 40 million bucks. I'm going to check on the same grounds to the extent it's requesting information beyond what's provided in the written statement. Well that's not in the ground grounds for an objection. So is the group. Or. Yes, the objection is based on relevancy and attorney client privilege and work products. Mr. Hangoff. I began by questioning, emphasizing that I'm not interested in communications between Miss Green or her lawyer. Lawyers. I appear to call for an attorney client privilege communication. I do think it is not relevant for the reasons I've already stated so I'm going to sustain the objection. When did you make the, when did Blue Cross make the investment that resulted in a 40 million dollar loss. I will again object on grounds of relevance here. What is the relevance of when the investment was made. Just think it's I think the board has a right to know as much as possible about this investment because how this investment occurred. And what this investment was is something that I believe is should be relevant to the board's decision on this rate increase. Would it be helpful to just bring to the board's attention the response on page four that is part of the binder that describes starting at the top of page four. That we participate in the National Retirement Trust and that's how investments are made. It's I just don't know if everyone on the board had an opportunity to spend a lot of time with that response. I don't know if that's helpful. Thank you. Thank you, Miss Green and you know maybe that is helpful to. I don't know interfere with Mr Angoff's examination but I do think the written response explains that this program is a national program that Blue Cross participates in as one of many participating plans. We did provide ample documentation to the board through the forums 5500 that provide quite a bit of detail about the National Retirement Trust and its investment over time. If that helps with them with foresawing this line of questioning I think that it should given that it does. It provides that background and that background is even more explained in the form 5500s. Mr. Hearing Officer I'll move on if the chair is going to continue to roll against me. Let me just say this. Are you all curious as to what this investment was? It's not every day that you lose 40 million bucks. The value of a fund goes down 58.6%. I would like to know how that happened. So the board members will have an opportunity to ask their own questions. But you want to ask another question. Yes. Mr. Hearing, after Blue Cross made this investment, did anyone at Blue Cross monitor it? Object to the form of the question. It assumes facts not in evidence. Did you restate the question? Yes. After Blue Cross made this investment, did anyone at Blue Cross monitor the investment? I don't think that calls for. Mr. Hearing, I'll again come back to our response in exhibit 22, which talks about that the investments are made through our participation in the National Retirement Trust. And we do receive monthly reports on those assets and the returns on the assets as they're allocated to our portion of that trust. Did anyone at Blue Cross know the details of the investment which resulted in a $40 million loss? I'm going to object on grounds of relevance and to the extent that the question is seeking information protected by the work product doctrine and attorney client privilege. So the question was what again, Mr. Hangoff? Sorry, Mr. Chair. I was ready for you to uphold the objection and so I was looking for my next question. Probably where I'm going, but I would just ask you to restate the question. After Blue Cross made the investment, did anyone monitor the investment? I'll sustain the objection. Ms. Green, are you familiar with the Vermont statute and regs specifying the types of investments insurers can make? Yes, I'm familiar with that. Okay. And do you believe that this investment that lost $40 million, complied with those statutes and regs? To the extent it calls for a legal conclusion by the witness. I just wanted to point out that the pension assets are invested as part of a trust that's under the ERISA laws. It's not under the insurance laws. Our Blue Cross, the Shield of Vermont assets are invested in accordance with the regs, the state regs, on investing. But the pension assets are invested in accordance with federal law. Okay. And do you know, you may not, but do you know whether the insurance regs also apply to the pension investments? Objection to the extent it calls for a legal conclusion from the witness. It appears she can't answer, but. Yeah. I'm sorry. Do you say it appears she can't answer? I saw her shake her head. So if she's not answering. I was going to sustain it. Ms. Green, how did you, how did you find out? Well, let me ask you, ask it, ask it this way first. Did there come a time when you found out that the asset, the investment that lost $40 million was losing money? We were notified by the National Employee Benefits Committee that one of the assets in the National Retirement Trust had lost money and all the plans in the fund that had, that were participating in that trust had also lost money. And when you were so notified, what if any action did you take? So I'm going to eject on grounds of relevance. And again, to the extent this is seeking information protected by the attorney client privilege or revealing attorney client communications. I'm not seeking any information protected by the attorney client privilege or any communications between Ms. Green or her lawyers. I would note it's a very broad question. So I might add vagueness to the question, but it's also would also add the relevant subjection as well. It's not in the least bit vague. It's directly relevant. The question is, when they, when she found out that the investment was losing money, what action did she take? I'm still at Mr. Barbara. Yeah. Again, does this go to your, the relevancy of this in your mind, Ms. Rangoff, is that fault is something the board should be considering in deciding whether or not to account for this drop in RBC or because all these questions seem to go to fault, which I already explained was not relevant. It's a fault, but also the likelihood that it could happen again, which is why the process questions are so important and so relevant. If Blue Cross has processes set up, and this was just, just some crazy thing that happened, then the board should have one reaction. If Blue Cross has processes that are set up, are defective, and it's reasonably likely that something like this could happen again, then obviously I would think the Blue Cross is going to, the board would have a definite reaction. Ms. Rangoff, what about that? That argument. I would just add or just reiterate that the points that Mr. Rangoff are making about process would be exactly the types of topics that the Department of Financial Regulation might consider and that the Department of Financial Regulation has already issued an examination order on this issue. So they are not relevant to the board's proceeding here, which is about, which is directed at the adequacy of the rates to the extent they are relevant to one of the state regulators, they fall squarely within the authority of DFR, which they are exercising. The board also has authority to issue supplemental orders to ensure benefits and services are being provided under economical and efficient management. Does this not implicate that authority? Exactly. We would say no. And again, this is not a proceeding, I think, in which that area could really be explored. And it is within the authority of Blue Cross, it is within the authority of DFR's examination order to look at the pension assets and that is happening. I think here the question before the board has to do with, is this rate actually supported and otherwise satisfy the parameters for rate review? To sustain the objection, there is a DFR investigation or examination ongoing. This seems to be directly related to their authority. So please move on Mr. Rangoff. Ms. Green, does the Blue Cross Association get to keep a percentage of the assets that Blue Cross member companies invest with it? So the National Retirement Trust has a number of fees that are charged by the people that are charged with managing the assets. So to the extent that those fees, some of them might go to the association, it's possible, I don't know the amount. What percentage of Blue Cross's surplus went into the investment that lost $40 million? The accounting for pension funding has to do with the pension valuation that happens once a year. So over the many, many years of the pension being in existence, each year end, the fair value of the assets is compared to the projected benefit obligation and that surplus or negative amount is included in the Blue Cross to shield a Vermont surplus and that's accumulated since the inception of the pension plan. Okay. So at the time that Blue Cross made the investment that lost $40 million, what percentage of Blue Cross's surplus at that time did it account for? I'm going to object to the form of the question because it's assuming a fact not in evidence and object on relevance grounds. At the time, let me break it up then. Ms. Green, at the time that Blue Cross made the investment that resulted in the $40 million loss, approximately what was Blue Cross's surplus? So the Blue Cross contributes its required contributions to the pension fund each year and so to the extent that the assets that had the loss during March of this year, I would not know when the actual inception of that investment was without looking into it. So I'm going to have to, sorry, interrupt your flow there. We have a board member who appears to have dropped off the call. So we're going to take a pause until we can get board member Pelham back on the line. May be a good time to take that five minute echo break for the afternoon. I'm back. I don't know how it got caught off, but all of a sudden you guys were gone. Kevin needs five minutes. That's fine. I don't know. I'm good. I was just, I didn't realize you were already back, Tom. Tom is back. Go ahead, Mr. Angolf. Yeah. I believe there's a question pending, which is what percentage of Blue Cross's assets at the time this investment was made to the investment account for. I believe Ms. Green answered that question. I don't believe I heard an answer. What I responded, Mr. Angolf, is the Blue Cross will make contributions to the pension fund over time. And I would not know what timeframe that investment began. I don't know what the inception of that investment was. Okay, Ms. Green, could you give us a range? No. You couldn't give us a reasonable range. So it might be, it might be a tenth of Blue Cross's surplus. Objection, I'm not, I don't understand the question. It's vague, ambiguous, as well as relevance. It's completely relevant. If it's a huge percentage of their surplus, that's a very big deal. If it's a tiny percentage of their surplus, it's not so important. So I think the, I think the witness stated she does not know, but Ms. Green, could you restate your answer? Yes. My, my answer is that Blue Cross will shield Vermont makes contributions to the pension trust each year based on minimum funding requirements. That's the extent of what we do in terms of funding the pension in terms of knowing what the date was that the investment was made or what the inception of that investment date is I don't have knowledge of. Okay, at the time that the investment lost $40 million, at that time, what percentage of Blue Cross's surplus was that $40 million? It's huge. It's a third. A third. Yes. That's not something that we, we've communicated that and that is we've been talking about that since this morning. Is Blue Cross taking any action to ensure that no loss like this occurs again? So, I'm going to object to the extent that this question is calling for any attorney client privilege communications or work product. And I'm also going to object on relevance grounds. So, help me understand how it calls for attorney client or work product, as it doesn't appear to you on its face. This is in, as we indicated in the written response, this is potentially a pre litigation matter. I think the work product doctrine sweeps quite a bit broadly, more broadly than it would in other contexts. And so I'm just cautioning the witness that to the extent any anything that this question treads on falls within the work product doctrine that she should not reveal those privileged matters. I'm also going to object on the grounds of relevance, which is a separate point. So to relevance, Mr. Ang off. I assume this is going to your issue before is how does how does. How do we know this isn't going to impact solvency in the future. Exactly right. Thank you for your question. Miss green, please answer, but I, I were at three o'clock. I really do not think we're hitting on the issues that need to be hit on before we were scheduled to depart at four. I don't think we're going to get through all the witnesses. I think this is taking up a lot of time dealing with objections and I really wish we could move on to the questions of the hearing. So Miss green, could you please answer the question? I'd like to just point out that the, the reason why these objections are important is that we are doing everything possible to protect the interests of our policy holders in terms of a possible recovery of any losses. That's what was outlined in our response that the National Employee Benefits Committee is investigating the last and that's, that's the source of a lot of the inability to share the details, not because we don't want to share them or even that we know some of them, but to protect the eventuality of recouping something in terms of happening again going forward. Like with any of our processes, we always review them and, and make sure that the appropriate reviews are there. The National Employee Benefit Committee has communicated to us what their review process is and what they'll be doing going forward. They have as an example are looking at the investment advisors that they've been using and looking at possibly changing those out. And so that is the area that we're in. I will do everything in my power to make sure that this doesn't happen again. But again, I didn't think this was going to happen either. So that's as much as I can say. Mr. Herring officer, I will take your advice and wrap this up. Miss green. Can you assure your policy holders that they will never pay directly or indirectly for the $40 million loss that we've been discussing. I think we talked about that. Others talked about that this morning and I am not in a position to guarantee anything about the future at this point. I, as we just mentioned a moment ago, we're doing everything in our power to make sure that we can see if we can recruit some of the losses, but I can't make any guarantees about the future. Okay, Miss green. Would you like to take this opportunity to apologize to your policy holders objection form of the question argumentative sustained. You have any other questions for this witness. No more questions. Mr. Okay, I'll move to board members. Okay, I think I'm off mute. Hello, how is how are you doing over there doing okay. Okay, I do have a few questions that also relate to the pension but I think I'm taking it out a little bit of a different, different angle, which is, I know the past policy, or the policy has always been to take whatever the losses or gains are and put that through to your surplus account. And just a couple questions on, you know, obviously this was unexpected massive, massive thing we could go back and forth about why that happened but I understand where you're coming from. You know, as far as some of the things that have happened, but I guess a couple questions would be, you know, how is the policy how is the program funded as far as being underfunded or overfunded. You know, I know last year just looking at the numbers I think you had a 15 million gain on this so it went from like 54 to 69. Obviously this year there'll be a huge, you know, reversal going the other way. But I just wonder if you're also going to look at any other way to maybe put this through to the RBC, whether that's looking at how much funding needs to be there, whether this all needs to be taken in one year. I don't know if you thought about that at all. Yeah, if I can clarify the the accounting regulations require that the valuation at the end of the year will get reflected in the surplus so there's there's no options around that in terms of looking at the future liability that pension benefit liability. We are doing a complete review of that in light of the circumstances and that that work is just beginning. And so we are looking at opportunities around the total pension liability for the next valuation but once the valuation happens the accounting regulations require us to put that in the financial statements and that would reflect any changes that we we arrive at through our review. Okay, so if there were any changes to the valuation because of how much needed to be funded etc you wouldn't do that until you wouldn't make those adjustments into the RBC until you till that changed. Yeah, so if I can distinguish between funding so cash funding to meet the federal target attainment percentages and it's called F tap. Those calculations are underway and are independent from the valuation that goes into the surplus accounting so the surplus accounting at the end of the year will be a function of the fair as fair value of the assets at the end of the year and the fair value of the liabilities at the end of the year and then the level of funding is a cash flow consideration that's required in order to maintain the benefit features of the pension. So we could choose to fund it at 80% or choose to fund it at 100% the amount that goes into surplus will be the same regardless. Okay. And did the of do you know did the other blues that are participating in this plan. Are they reflecting similar losses. Yes, they had losses along the same degree as what we experienced percentage well. Can you ballpark what 100 RBC points is equal to in a rate 100 RBC points in a rate. I'd have to pull in my chief actuary 100 RBC basis points is 21 million. And if we take that on the premium that Mr. Pellum mentioned earlier today. Give us 300 million I'll just use that as a. It's about seven percentage points. Okay. And just to be, you know, transparent I mean the reason I bring that up is I do understand that in this rate filing. Right now, this hasn't rolled through and that at this time your RBC is still below your range. But should this 180 go through as projected and I know there could be lawsuits there will be lawsuits and you know there will be adjustments to this but come next year. We should be depressing the RBC by 180 basis points where there would have been a possibility that we would have been we should have been at the top end of the range or exceeding that range at that point. We'll know more about COVID a lot of things will played out. You know what one thing when I look at all these I say it does catch up we will know what happens with COVID we'll know what's going to happen. These things at some point in time so we can debate a lot about what we think but in a year or so we'll know. And you know that that is where it's very concerning because had we gotten up into a higher range over 700 for a period of time, it would have gone back to rate payers. And so I'm just going to put that out there because you know it clearly is a direct impact at some point right now we're not there right now I agree it's not in this particular filing. Because even if it were in there you still would only be at the top of the range but you know it's very unfortunate but I do think it is relevant to the rate payers and it and it over what time frame should they be paying for this and things like that because because it will impact but just just touching on a little bit about the you talked a little bit about the salary increases and looking at 2021 and looking at the executive group but can you give a perspective on what percentage the executive groups compensation their 3% increase would make out of the total change. I don't have that off the top of my head but it would be a reasonable percentage on in total we have about 420 folks at the company and I can certainly follow up with that detail for you. And what prevents anything from happening on those things in 2020 I mean we're for 2021 where we're only in July. Most companies we're seeing in the economy are struggling with everything that's happened with covid we see hospitals furloughing people cutting back on salaries. We see educational institutions cutting back on salaries you know not and not and you know not giving an increase. We're talking cuts we're talking that everybody across the board taking cuts and I know of a lot that have been announced in Vermont. And you know we're not seeing that sense of urgency from across you know and we're all going to be in every company is going to have issues with recruiting people and everything else but you know I think it's almost a tone deaf to have the executives and everybody else in 21 continuing to get increases when this is going on and I want to find out what would prevent you from incorporating that now even if it was in this rate filing as something different. Well there's nothing to prevent us from considering those options as I said in my earlier testimony that we are looking at all the options. We haven't concluded on anything beyond just the executive salary increase which will be zero next year but we certainly are taking it very seriously and we can we can share further. So it was zero is it zero for 2022 or 2021 2021 I'm sorry did I just speak for 2021. Okay so they're going to have for 2021 and just because obviously if you read all the public comments to I mean most of the people that are purchasing insurance are paying higher premiums and making less money you know so it's just a little bit of a disconnect when when they're seeing you know everybody over at Blue Cross getting an increase or a large percentage of people and you're paid a little bit differently so you're you're have that flexibility to take those increases and put them into rate or you have that flexibility to not take those increases and even if it's a small amount in rate even if it's 0.2 or 0.3% in total it sends a message. We also just I'd like to point out that we do have a large contingent of folks at Blue Cross for Silver month that are hourly and do work do make you know much less than some of the higher paid folks so we're working through what's appropriate to make sure that we're finding the right balance there because there's certainly some some folks in the central Vermont area that we want to make sure we're we're doing right by. Okay. And then when we look at when we look at the premium and we look at the components of the premium medical inpatient outpatient things like that. What percent of the premium not premium increase the total premium is related to the Vermont hospitals. What percentage and that's a question I'll have to follow up on. I don't have a certain amount of the green mountain care. The sorry the Vermont hospitals but I don't know what that would be as a percentage of the total premium. Yeah. And the reason I'm asking that question is you know how do we correlate the massive shortfalls that we're seeing out of the hospitals knowing it's across all three payers but we're seeing their revenue down significantly across every payer because of utilization knowing some of that might come back next year. But you know how can we correlate that and what you're receiving now and what you receive next year. I don't know if you have any thoughts on that. Well I do. I made a note. Well I'll take the follow up question for the percent of premium that is related to the Vermont hospitals. I would like to just clarify what I said earlier that when when the hospitals and I think Paul mentioned this as well on his question and answers that when the hospitals absolutely are experiencing a drop in revenue but that's across all of the Medicare Medicaid and commercial and then to the extent that a large portion of our book of business is self funded. The hospitals are experiencing that decline as well. But that is not part of our rates. So it's important to understand the broad categories of the revenue shortage with where where that slowdown in claims is is residing at the moment. So several of the large self funded entities in Vermont are in part feeling the benefit of that slowdown in claims in the short short time sorry short term. So that that is when you add up the revenue shortage at the hospitals and look at where is that coming from that self funded group which is a good thing in the sense that those large employer entities are not having to pay their health claims because they're they're going to be deferred to later. So that that helps them from a tiny timing point of view. So I think that would be a good thing to kind of keep keep in the mix of of that view. Yeah. I guess in the self funded world they get it back now. You may have to pay it later. But in the QHP world you guys are holding on to that so that we can pay it later. Yeah. Yeah. But you know we don't know. You know it's they get to make that option. But just just looking at your pre filed testimony on page seven and eight on seven where the statement under the statement what are the most significant factors related to the pandemic that could affect potentially affect the reserves. And then when you go to page eight of that exhibit 12 it says claim costs could increase due to COVID allowance is given to hospitals in the form of commercial rate increases as temporary adjustments to compensate for fiscal year 2020 utilization that was not realized due to the pandemic. And that statement seems to contradict what you said in your opening that you think those should be included in the rates. And so I'm not you know we're not saying how we're going to affect for that yet. But we're looking at that as a COVID adjustment. You know we are looking at that as saying we definitely can see that the hospitals didn't get it. We're going to have them adjust for all of their funding they receive and then looking at commercial only what would make them whole over a two year period. So in theory the math should be the same in theory. So I would then support that that increase shouldn't be added to any the COVID only increase shouldn't be added to a blue cross rate because it should come out of reserves because it's related to COVID and this statement to me supported that I was that's good. But in your opening statement you specifically said something different than what I'm interpreting here. Yeah this this list was highlighting at the time we submitted this list was highlighting the risks to our reserves. What I testified earlier this afternoon was that I really think based on the analysis that the actual burial team has done that we really should take a long view because if it is kind of a wash through 2020 2021 and early 2022 we wouldn't want to increase the cost of the health care system only to have to figure out how to get that that money back out of the system later on. So it was included in my pre filed testimony as one of the risks to surplus and it is. Okay, and I guess to counter I guess in a perfect world I can see what you're saying. We've looked deeply at the hospitals of the 14 hospitals that we have and the number that are losing money and several of which almost ran out of money during this period prior to getting some relief. It may not be and the ones that are now hitting into bank covenants and you know they're missing bank covenants and things like that. It's probably not realistic to say that they can suffer all these losses additional losses this year and just wait until it comes back if in fact it comes back. That's that's part of the problem with the mismatch right is the hospitals lost all their services. It doesn't mean they're going to come back to all those hospitals and those that didn't get it. So it's I agree we're looking at their but they're they're they're losing a lot of many of them are losing a lot of money. If I may, I'll just comment that and I think someone mentioned this early in the testimony that we have advanced payments to hospitals who express some concern in those April and May timeframe where they were really suffering from the lack of payments from the commercial book. And so we have 10 million we've advanced 10 million dollars to facilities and independent providers to help them through the worst of those times. So I just add that to their perspective. It's it's a difficult situation to figure out but we have been trying to help out as we can. Okay. I think I'll leave the other questions to other board members so thank you. Thanks. Hey board member lunch. Sorry, I have one follow up to what Maureen just asked. Can you give us a list of those payments by hospital. We can I don't have it here handy but I can provide that. Great. Thank you. I don't have any other questions. Remember Helen. Hello. I want to start. I only have a couple of questions but the first one, looking at exhibit one page 55 you don't have to go there. I'll read what is that I think is significant. You say Blue Cross Blue Shield Vermont is committed to providing insurance coverage for our members at the most affordable rates possible. As a result, even though it is impractical to react to enrollment shifts by immediately right sizing, we nonetheless remove from our projections the entirety of the variables associated with reduced enrollment. So I read that and then I go over to page 163 of exhibit one, which shows your member month track record from 2014 to 2019. And I see from, and I'm going to start at 26 2015 from 2015 down to 2019 that's going from 768 plus 1000 to 520 plus 1000. And that's a downsizing rate of 9.3% a year over a five year period. So I'm just wondering, you know, in the context of that language that I read earlier, what right sizing things have has Blue Cross Blue Shield done, you know, since 2015, because this decline in membership has been at a pretty rapid rate, more than 9% a year since then. A couple of things, if I may be the member months that you're looking at on page 163 is just with respect to the Vermont individual and small group business, the right sizing that we referred to in the actuarial memorandum talks about as we look at our total book of business and understand where in membership might be increasing or membership might be decreasing. We, we right size the staff with that full picture in mind, and I did look back, and thank you for submitting your questions ahead of time. In light of this question, I did look back at the enterprise level membership and that's also gone down, I admit, but it's only gone down to 2% per year level and we have been able to reduce staff through attrition over time when we formulated the budget. We suspected that we were losing membership again. And so we, we took several positions out of the budget to make sure that we were calibrating in total so that that gives you a sense of how we think about the right sizing of staff. Okay, so, so let's just focus on individual and and small group I'm, you have submitted your supplemental health care exhibit for 2019. That's in the record here, but 2015 isn't and so I went back and looked at that. So what you have in terms of covered lives going from 62853 and 2015 to 42699 and 2019 so that again is a 9.2% average annual year drop. What caught my eye was is that the combined premium which would be line 1.12 on the supplemental and the, you would think with a decline like that, that you'd see some significant difference in the premium amounts claims amount in general administration amounts. And that's not so that the, the premium amount went from 322.8 million to 319.2 million, which is a two tenths of a per percent year drop. And the claims went from 292 to 292.063 to 292.984, which is an eight tenths of one percent drop. And the general administration went from 24.8 million to 24.3 million. And a premium per covered life basis claims per covered life basis and expenses per covered life basis. All of those. I mean, respectively those are 9.8% 10.2% and 9.5%. And so it seems to me, you know that, you know that obviously, you know, within this, this book of business, you know, the covered lives, the member months they are falling away, but the expenditure amounts have stayed pretty flat. And that just seems odd to me. Well, I think if, if the membership had stayed level just hypothetically, we do know that over the course of the years there has been increases in claims, whether it's the pharmacy increases that Paul testified to earlier, or other types of increases. We also know that the, the shift in membership between the issuers is such that the cost per member for our book of business has grown over time. Paul indicated that it wasn't so much the case this year. The analysis, which is good means that those trends might be alleviated to a degree, but it is something that we take very seriously in terms of the sustainability of this book of business. Okay. Again, on the 2019 supplemental, it shows 1.63 million in cost containment. Yes. So what, what is, what do you do with that 1.6 million bucks? Yeah, so the way the supplemental health care exhibit works is that as Paul indicated earlier, it's a statutory form that we fill out and its purpose is to begin the mechanism for the, the minimum loss ratio calculation. It's not actually the basis for that calculation, but it's the beginnings of that. And one of the things that the regulators like us to, to parse out of our administrative costs are the costs and what we spent them on, whether it's cost containment or quality and so on, because that makes a difference in how they calculate the MLR. So that 1.6 million is, is through our cost allocations, what we believe internally are involved in the cost containment activities. Thank you for that. Now I want to focus a little bit on, and I've referred to the page, but the print so small you can't read it. So there's no sense. But unless you've got a blown up screen, it's exhibit one page 225, which is your consumer adjusted premium rates. And I don't know, I don't know if you saw it but diva last year for the last two years they've done a very good presentation on the on the premium cliff at 400% of poverty level, comparing 2020 read the last one I saw was comparing 2020 over 2019 rates. And you can see that with the Vermont premium assistance and the advanced premium tax credit that things are actually pretty reasonable below 400% of poverty. But, but when you get to above 400% of poverty, it's a it's a different story. And so I'm looking at, you know, from that exhibit on page 225, I just took a look at the same plan that diva used in their analysis, which is the Vermont deductible plan, which, and these are the numbers that you'll find on exhibit one page 225 for a single person is $572.05 for a couple it's a thousand one hundred and forty four dollars and 10 cents. Family is $1,607 and 46 cents. And so right at 400% of poverty, the present of so you're just above and and you don't have any of the advantages of the subsidies. You're looking at a 13.7% rate for a single, a 20% rate for a couple and an 18.7% rate for family. You know, those that plan doesn't begin to get affordable by the federal standard, until for a single person is 70,000 little over 70,000 for a couple is 141,000. And for a family is 198,000. And so, so that is the context to me there's a big problem there at the lower end of that scale just above 400 to 500% of poverty. There's a real class remoders and and and it is so striking that somebody at at the 410% of poverty can look over the shoulder at someone at 390% of poverty, and there's this vast, vast difference. I know that Blue Cross Blue Shield was involved in the crafting of the 2019 report on health insurance affordability immerse markets to the legislation that went to the legislature. It was conducted by Diva and DFR, and it cites Blue Cross Blue Shield as a consulted stakeholder who are stakeholder. One of the recommendations and I'll read it of that report was there was an array of ways to address this premium cliff, but and some of them are pretty cheap so I'm going to read the cheapest one here for additional premium subsidies 2.2 million would be needed to lower premiums for enrollees between 400% to 500% of FPL, while 9.3 million would be needed to lower premiums 10% for all unsubsidized above 400,000 FPL. The 10% reduction translates to about to around an $800 in savings per member per year on average. And so my. Here we have a study was done by Wakely. I'm sure reasonably actually rarely sound. And, you know, at the low end for $2.2 million, you you could lower rates for those between 400% and 500% you know by 10% or 800 per member. So I don't expect this to come out of the pocket of Blue Cross Blue Shield, but I would hope that Blue Cross Blue Shield and you have some great people on the hill, you know with the always looking for a ways to advance, you know, the cause of that, you know, to help payers and rate payers and and help rate payers achieve, for example, these subsidies I mean when it came around to silver loading, and that's when I first came on the board there was activity like a beehive in order to put that advance premium, you know, tax angle in place and so, you know, I follow the state budget as a bad habit I guess. And so I would be in the Medicaid area mentioned them this morning that in Medicaid they were running at 63% of the appropriation, and that's after a budget adjusted appropriation, you know, last January, they were running 63% when they're coming out of the year. You have the audit of the state auditor that found more than $2 million in claims and unpaid premiums by a small sample of those in Dr. Dinosaur and Dr. Dinosaur, you know, premium rates are lower today than they were in 2004. So that's for time if you could. All right. So the question the question is, you know, has Blue Cross Michelle followed up with any of the recommendations in the in the report to lower premiums for modern income for monitors above 400% of poverty. Yes, I it's my understanding that we were advocating for the recommendations that came out of that report you make a good point about the cliff between or after 400% federal poverty level and we agree that that that is a barrier to too many people out there trying to afford coverage. My understanding is that the barriers is where will the money come from to the extent that there's you have ideas, but we are very much an advocate of some of the recommendations that came out of that report. Well, good luck. That's it Mike I'm through. Okay, thank you. Remember home. You're on mute. Let me try and take you off. No questions. No questions. Got it. Mr. Chair, do you have questions? Unfortunately, I do. Good afternoon, Miss Green. Good afternoon. Earlier today, I asked Dr McIntosh and she referred these questions to you and the questions were. Well, first of all, thank you for not kicking any QHP member off for their inability to pay during such a crazy time so thank you to Blue Cross for that decision. But can you tell us how many members are in arrears and how that compares to pre pandemic times, maybe this this time period last year. Sure. So, as you as you mentioned in your question that at any given point in time, we often have people in arrears. So one of the things that we did in preparation for questions, we get this question from others as well. And so what we did is we looked at the number of customers who were so far into arrears that they normally would have been canceled but then because we didn't cancel them. How did they sort of work their way through that and get back current or how many are still not able to get current. So that's a slightly different way of answering your question than just statistics about who's overdue. Hopefully you'll find it useful. So we had around 560, 559 to be precise customers as of the end of June this analysis was done. That needed some sort of flexibility of some sort across all of our book of business for the individual and small group customers. There was 300 just over 300 311 and the that breaks down about 191 for individual and 120 for small group. The number of customers within that 311 that were delinquent to the point where we normally would have canceled them but we didn't and now they've actually been able to figure out how to get current through getting back to work or for whatever reason is 173. I look at that as a very specific example of how taking a situational approach to you know had we canceled those folks they needed their coverage it would have created a whole bunch of stress and they would have had to reenroll anyway so so I think that that's a really good example of how sort of remaining flexible for our customers makes sense. That said though we do have 169 customers as of the end of June who are still delinquent within the individual and small group book of business that were delinquent to the point where we normally would have to have canceled them but we have not. So they still remain covered and will remain covered until something changes in terms of the state home orders and the emergency order. When the pandemic was really escalating a few months ago and the federal government reacted with the 1200 stimulus checks. Did you see just the opposite effect though people being afraid about their health care so they paid more timely. Well it's interesting you should say that I think in the very early stages we were kind of bracing for the worst but we did and I don't know why but we did see that people were able to stay current in that very very early stage. We do have a number of folks in our call center who talk with people on a day to day basis if because some of our communications has said call us if you have issues we can work with you. They are they did find a number of folks that were sort of waiting for that stimulus check or they were waiting for the unemployment to come through or there was something that they were the timing just wasn't working out for them. So we were saying OK well just call us when you have an update and we'll stick with you. Did Blue Cross Blue Shield pursue paychecks protection funding. It's a good question. We seriously thought about it. We even gend up the paperwork to get going on it and about the time that we were getting going on it. We realized that probably the the well first of all the funds were short the first round and second of all we felt like the small businesses and you know the main street businesses were probably better served to have those folks get that money. So we we made a strategic decision to not try and get into the second round when it came around. OK. Is Blue Cross seeing significant savings like other organizations around the world as far as the reduction in costs for travel sending people to conferences fewer office supplies less occupancy costs like HVAC and electric etc. Yeah we I believe we answered a question and answer around that. I think it added up to around 275,000 as of the date that we sent that in maybe through the end of June. The you know we have a very modest travel and conference budget to begin with. So yes it is a savings but it's small in comparison to some of the other costs and and stresses that the organization. Or others at the providers and the customers are experiencing. How long is Blue Cross Blue Shield going to continue the policy of allowing people to work from home. Are you going to wait till vaccine or what is your your plan. I would really have to defer to Dr. McIntosh on that she's in charge of kind of figuring that out but based on the company updates that we get regularly on this. They are with the back to school planning that's going on for many families. We're kind of plugged into trying to be as flexible for folks while also being safe about it and recognizing the numbers of people in close proximity within the building etc. So the we call it the pandemic planning team that team is working through those plans. Okay you use the term executives will not receive pay increases this year. Where do you draw the line is middle management included in that. Are you just talking C sweet. It's the vice president level at the moment that's what the decision has been made as I mentioned in response to the question earlier from. Board member use for that. We're we're looking at all all different options at this point. But right now that is the vice president level C sweet if you will. Will the pay freeze eliminate any incentive pays bonuses etc. We don't know yet but that's part of the analysis. Okay how much do board members get paid for the role as a board member. Board members get paid a stipend. I don't know the current per meeting stipend level but I think it is disclosed we can certainly get that to you they they get paid per meeting and if they serve on a subcommittee they get a payment per meeting for for that as well. Okay how often does the finance committee meet the finance committee that you referenced when it came to investment and pension decisions. The finance committee meets on a standing agenda three times a year once in January once in March and once in October. But as you can imagine with all of the financial topics that are at issue we have been meeting much more regularly at least monthly and sometimes more depending on the topics. Okay and so I have interpreted it correctly that this one finance committee makes both the investment decisions and the pension decisions. Now they make the investment division decisions for the Blue Cross Blue Shield of Vermont investments. They review the asset allocation for the pension but not they're not overseeing the asset management manager selection for the pension. So we're they oversee the the total portfolio and look at the returns and we determine the asset allocation and review that once a year. So you talked about being in compliance with state regulations as far as your reserve investments and you talked about ERISA being the federal governing law that oversees the pension. And ERISA specifically refers to plan trustees plan administrators and members of a plans investment committee. Help me to understand what Blue Cross Blue Shield believes is their investment committee. Is it this delegation to this national organization or is it your finance committee. So if you keep the two things separate the pension plan as part of the National Retirement Trust the National Retirement Trust would have an investment subcommittee and investment advisors for that trust. That is not the Blue Cross Blue Shield of Vermont's finance committee. The Blue Cross Blue Shield of Vermont finance committee is the oversight of the reserve investments. So in in and if I could just I don't know if this helps or not but in the response that's in exhibit 22 we indicated that the form 5500s we shared with you for the National Retirement Trust and some of those roles and responsibilities are outlined there. So I think that's a good point for the National Retirement Trust. Well I don't pretend to be an attorney but I can say that in doing research for this meeting today I could not find any ability to delegate to a national organization that would relieve you of certain responsibilities to make sure that risk is mitigated on these funds but I'll leave it at that. You prepared the July 16th or at least you're the one who signed the affidavit that your attorney submitted to board council answering questions. Were you also involved in conversations about the letter that was received by the board on June 26 from Don George? Yes. And were you also involved in whatever took place in March where DFR was notified? I we were meeting with DFR weekly in March or after the pandemic began in March and so at one of the weekly updates I did provide an update that we had had a loss in the pension fund and that we were looking into it trying to find out more. So it seems like you've been intricately involved in this and I'm just curious why you chose to wait 90 days before you notified the Green Mountain Care Board? I'm just going to interject and caution the witness not to disclose attorney-client communications or work product in any response and I do feel like I should reiterate our relevance objection here. I think Ms. Green well understands the line between what we've been able to provide information on and what with respect to protecting our stakeholders has been a concern of ours. So I'm comfortable. Perhaps some more. I do want to caution. I'm sorry Chairman Mullin I do want to caution the witness on that point. I was going to say something snide and I won't so but I will say this that perhaps if Blue Cross had answered the questions that the board had put forth in their letter to Blue Cross instead of the perfunctory response that we received back. I think Mr. Angoff was very kind when he called called it telling us to go jump in the lake my response was a little bit more severe than that but I'll leave it at that. Well hold on. I mean there was a question there was an objection to form or sorry there was a question objection on relevance. And I do think that the amount of time it took to notify the board is relevant. There's a letter about CTR and impacts on solvency and this was not among them. So I would like the witness to answer the question please. Well the time it took us to respond is purely a function of us getting a full understanding of what we knew and what we didn't know and what the approach was going to be at the National Employee Benefit Committee level. And so the communication to the board was you know in the interest of transparency getting that over to you. But I think it was it was as quickly as we could have given the circumstances that we were looking into at the time. At the very least it's a lack of courtesy to one of your regulators but I'll leave it at that. So under the federal whistle laws there are reduced there are rules for fiduciary conduct. And is it your belief that those rules for fiduciary conduct lie within this National Association which you chose to put your investments into and not with your organization itself. I'm sorry you broke up at the beginning of that question. So I could I ask you to repeat the question. Sorry. There are rules that fiduciaries must follow under a rest of law. And I'm curious if you believe that any violations of those fiduciary responsibilities are to rest solely on the people at this National Association which you chose to lay your trust in or does anybody at Blue Cross Blue Shield want to take any personal responsibility for this. And I apologize for interjecting. But I think I do have to interject here with an objection that it's asking the witness to draw legal conclusions and delving into attorney client and work products matters in this area sustained. How many years ago was it that Blue Cross made the decision to go with this national organization. It's well over 20 years ago it's when when the pension when the pension was offered originally the mechanism for offering that pension was through the National Employee Benefits mechanism. And do they have to notify of you when they make changes to their investment strategies. So I'm going to caution the witness please. They have to we sign up to be part of the plan. I don't think this is an area that I don't think is not something that we can go into. Okay I'll drop my line of questions. Thank you Mr. Mr. hearing officer. Okay. Do you have any redirect. I do not. We should talk about time since we're 15 minutes from the scheduled end of the hearing and we have four witnesses remaining. What is folks availability to go beyond for do we need to reschedule or schedule a continued hearing in this matter or do you think we can get through the next couple of witnesses in a reasonable amount of time. I think Ellen ease testimony is going to be I expect fairly brief based on Mr. Fisher's testimony last year I'm anticipating fairly brief testimony from him but how long do you think Mr. Garland might take. I think that in terms of the direct we can cover quite quickly with Mr. Garland and probably try to move very quickly to the executive session. And it's possible if I had a couple of minutes to confer with the team we could come up with an even better strategy. But certainly I think from our perspective that testimony does not have to take very long. I don't know if this would be time saving but we did put the basis for going into executive session in the pre file testimony and if the board wanted to go directly there perhaps we it is possible that we could start there. And then see if there's any questions that we want to cover outside of the executive session afterwards. So Mr. from my perspective. I don't mind going as late as people possibly want to today but I don't think we should go past five. And one suggestion would be to get to as far as we can get to today and adjourn till one o'clock on Wednesday. Wednesdays are normally board meeting days so I would hope that all the board members might be available on Wednesday afternoon and that we could finish it at that time but I don't know as to the parties of their availability. Well I'll just say for myself staff has grabbed up my time in the one o'clock. Rain so I'm actually I can try to reschedule meetings that I have between one and two but I do have a health care appointment at three 15. Mr. Chair I'm available at one on Wednesday and also Mr. hearing officer that's any help. I have no questions for Mr. Garland. Maybe we don't look at is it possible to not look for a hard stop at five but see if we can wrap it you know 536 I mean at the latest it seems like there be an efficiencies to regroup if we can get through the rest in two hours which might be optimistic at how we've been going but. I'm willing to go all night but I'm trying to be respectful. Well let me is the commissioner on the line. Mr. Barber. I have one other suggestion. If Mr. Genofrio agrees which is since Mr. Garland is kind of a change in direction on the blue cross side if it's more efficient to move through the other presentations first. Okay. I'm going to roll anything. Mr. P check are you on the line. Yes can you hear me. Yes. What is your availability to go beyond for I had a meeting at four that I could let them know that I won't be able to participate in and then beyond that I can go beyond for or other than that. I propose we go to the commissioner because it's kind of a continuation of the solvency discussion that we've been having and then move to Mr. Garland and to the extent you could cut down on the or eliminate the direct questions. Don't you go to the executive session and do that and board questions. So I don't think Melanie's testimony will take much time. That could be wrong. And then we can if we can get through it as quickly as possible. Okay. Is there any objection to that. No, just at some point we might want to take a five minute break. Yeah, why don't we take five minutes now come back here from Commissioner P check and then move on to Mr. Garland. So come back to 355. Understood. Do you swear or affirm that the testimony you're about to give us the truth the whole truth and nothing about the truth. I do. Okay, go ahead. Well, thank you very much. Michael and thank you very much chair mullin and the members that Green Mountain care board I think I'm going to dispense with my opening remarks as I had them prepared and drafted due to the amount of time that I know, or where the time is and the amount of time that you probably would like to spend on this testimony is probably better served answering your questions. But I will just point out the high levels of our solvency opinion. You know this year is unlike others from my from my perspective, we are in the midst of a pandemic that we haven't seen the likes of in 100 years that uncertainty is on top of the normal uncertainty that does exist in this process. Regardless of that sort of external factor, you know from our vantage point this process is really designed to forecast or predict what the total expenses will be of the insurance company for the next year and there's just a great deal of uncertainty with that under normal circumstances. But now we really have quite extraordinary circumstances that we're dealing with at the moment and quite extraordinary uncertainty as well. You know, I think as we look upon and try to quantify that uncertainty that there's no doubt that what's happening across the country from a COVID perspective, can and will likely impact the northeast to some degree in the near future. We've seen cases, you know, well above 50,000 per day in terms of new infections on a pretty regular basis across the country. You know, we calculate then the last nine and a half days last 10 or so days that we've had more COVID positive infections reported than the entire state of Vermont just to put some perspective on what's happening across the country. Last week we saw the Northeast did see its case week over week case growth increased by close to 10%. So we're not immune to this in the Northeast, although from a Vermont only perspective we do remain quite steady in terms of new cases and in terms of hospital need and things of that nature. But there is still great uncertainty on the longer term horizon when we look at how the virus will grow in Vermont and in the Northeast as we move into the fall of 2020 and then as it relates to this rate hearing into the winter of 2021 when cooler weather forces us to spend much of our time indoors and potentially mitigation measures have to be reconsidered and we'll see what happens but I think that uncertainty is rather significant and will play have a huge impact on what ultimately happens here in rate year plan year 2021. Talking about pre pandemic financial position of Blue Cross Blue Shield, as we pointed out in our solvency opinion on pages two and three. Prior to any COVID impact, Blue Cross did report a positive trend that's total surplus increased approximately $23 million in 2019 year end and that's compared to the 2018 year end. Much of that surplus increase it's important to note did come from their receipt of their AMT tax credit that total just under $19 million. Similarly, it's also important to point out that they did sustain an underwriting loss for the year even though they did add to their surplus and that includes an underwriting loss in the ACA marketplace as well. And again, even though that is good news we always like to see that it reserves going up or at least staying stable. I do want to point out as Oliver Wyman did their analysis that Vermont's Blue Cross Blue Shield is the lowest of its peer organizations across the country as at the end of 2019 with an RBC of about 567. So among the 18 or so peer institutions across the country. Blue Cross Blue Shield of Vermont did stand at the lowest RBC level. All that being said there's obviously now that we're into 2020 there's obviously been a significant impact from COVID-19. How these sort of major unknowns play out in my opinion will determine whether whether the rates were sufficient for this current year and then it will also determine what impact that will have on Blue Cross Blue Shield into 2021 and beyond. No doubt that the biggest unknown and how this unknown is resolved will have the biggest impact in my opinion is the reduction. And then also the potential return of medical claims of medical procedures. Certainly medical claims have been down pretty significantly for March, April, May, and we did see somewhat of a return to normal in June. So we will wait and see how that return to normal plays out. Will that be something that's constant throughout the summer? Is that something that will roll back once the fall comes around and potentially increase cases of COVID or back on the rise in the northeast and potentially in Vermont as well? You know there are a lot of unknowns in the trajectory of the virus and therefore there's a lot of unknowns in the trajectory of the financial position of our health insurance. We also point out certainly that Blue Cross Blue Shield will also have a direct cost of treating COVID-19 patients. We've leaned on them from a department standpoint to implement policies that we think are good health policies. So for example, zero cost share on testing, zero cost share on treatment for COVID-19. We think that was morally the right thing to do but also was the right thing to do as it relates to getting ahead of the health crisis that we're facing. Making sure there were no barriers to people getting a diagnosis and for people getting treatment so that we can curb the spread of the virus. But those do come obviously with costs and Blue Cross is bearing those costs directly. Also it has to be said although not part of the 2020 or 2021 rates that the extent of the pension valuation that issue will certainly determine in the long run the solvency position of Blue Cross Blue Shield. We point that out in our solvency opinion. Just to proactively say a few things about that since I'm sure there'll be some questions. Our stance is that the pension was well funded coming into this particular event that is certainly a positive thing. Also we'll just say that what was the remainder of the cash assets were able to be reinvested at a low point in the market and the market has returned quite steadily over the spring. So I think that has to be taken into account as we look at the full year and not just the particular event that occurred. And then of course has been alluded to during the hearing the legal recourse which I won't get into much detail on. But that's also something that will play out and that legal recourse and its ultimate success or result will ultimately determine what the true impact is here. So there's a lot of uncertainty. There are a lot of factors that have to be borne out before we really know what impact that that pension issue will have on the longer term impact of Blue Cross Blue Shield. We also point out in our solvency opinion that there are a number of other smaller items that either will benefit or potentially be a detriment to Blue Cross and shorter and longer term. There's some ongoing litigation relating to cost sharing reductions referring to risk corridor payments that have a likelihood of success and there are likely recoupments of money there. I think the board is aware of this but the ATM tax credit under the CARES Act was basically fast forwarded so that the total payments will be paid out in the current year. So that's money that we all were well aware of but it is money that will be more quickly available to Blue Cross Blue Shield. And then of course there are some some things that again will have an impact the significance of which we'll wait to see but there are certain things under the CARES Act that Blue Cross Blue Shield and other health insurers will be responsible for like the payment like the payment of vaccines for example when when they are available. And I think as already has been touched on there are some other questions about the extent to which uncollected premiums from individuals or businesses that are having flexibility to what extent those are able to be paid back in the short and long and potentially the impact of any provider assistance that's been allowed by Blue Cross Blue Shield as well to the extent to which those advances are not paid back is some degree of uncertainty also. But I think without a doubt the greatest uncertainty is those direct related COVID items that we that I touched upon in testimony today but also in our solvency opinion as well. So with that I'll leave it there and happy to take any questions that anyone might have. Okay. Mr. Dinoffrio are you doing questioning for the commissioner. No thank you Mr. Barber. Thank you for your testimony commissioner paycheck. No questions. Okay Mr. Angle. Yeah just a few questions. Good afternoon Mr. Commissioner. Hello sir. Nice to see you. Sorry we can't be in person. I'm equally sorry. What if any authority does the department have over the types of investments insurer or Blue Cross would make. Generally. Yeah. So generally obviously we're very interested and concerned with the types of investments insurance companies as you know make their revenues either through underwriting or through investment returns and both of them are equally important to the long term sustainability of a company. So putting underwriting to the side when we're talking about investments we have obviously a great interest in that. We have statutes that talk about diversification and talk about the extent to which assets can be invested in certain asset classes as well. And then we have examinations that we do at the department to determine whether investment policies that have been set by the company separate from that statutory regime that I mentioned are being adhered to as well. But I will point out that what I just described applies to what are known as admitted assets. So those are assets that the company has at its disposal to liquidate and take claims for its members. What we don't have the same authority statutorily or otherwise over our non admitted assets that are the type of assets that would be in a pension trust. Those are governed by Arissa which I think everyone knows is a federal regulatory regime and also somewhat complicated regulatory regime. But those would be considered non admitted assets that wouldn't be subject to our statutory requirements or necessarily to you know those types of investment policies that the reserve assets and the assets and the reserves that are invested would be subject to. Okay, so the investment that we've been discussing much of the afternoon is something that your department has no authority over. Well again, I think the assets are not subject to the statutes that we just referred to, whether or not any decisions leading up to or whether or not the assets themselves and how they were invested is a matter of our authority. I won't get into that but it's not subject to the statutory regime that reserve reserve requirements are subject to. Okay, so blue cross certainly didn't have to get your prior approval before making the investment that lost $40 million. No. Okay, and the blue cross have any duty to disclose that investment to you at any time. So as a as a primary regulator and certainly primary solvency regulator, we certainly would anticipate an event of this magnitude being disclosed to us and it was promptly disclosed to myself and to our team more broadly in late March. Okay. And based on that disclosure. Was there any action that you took. So, as I think it has been alluded to earlier we have set up weekly standing financial calls with blue cross since the start of the pandemic. That is sort of, you know, our staff at the departments that are experts with the with the experts at Blue Cross Blue Shield talking to each other. So, not only did I not only was I interested in learning more about the loss but so were those experts and they got information on an ongoing basis from Blue Cross Blue Shield. It was certainly an evolving situation I'll call it that where information was learned over time. And we certainly wanted to be of assistance any way that we could during that period, but ultimately we wanted to understand the full scope and extent of the loss and the decision making. Ultimately, I think it's been alluded to in this hearing, we believe in sort of a posture of trust but verify and ultimately at the end of the day we decided to open up a targeted examination to look at this issue in greater depth. And I'll just point out that we had a regularly scheduled examination that was set to kick off at the end of the year. In December 2020 January 2021. That's a five year exam cycle but we decided to move more quickly, considering the scope of the issue. And when you say exam, you mean a financial exam. So it's a targeted exam looking specifically at the pension issue. It has a very broad range of questions and of interest, some of which are financial some of which are more corporate governance related, but it is a it is a broad exam that looks at Okay, and if the as you said the department doesn't have doesn't have authority to regulate those, the type of investment we're talking about right. The investment the loss $40 million that the department is not that investment is not subject to the department's statutes. That is correct to me and there's a risk of statutes and there are a lot of case law and there's a lot of risk of policies that talk about investments and what type of investments are appropriate. I will say where we do have an interest in this obviously is to the extent to which, you know, a trust or a trust fund might have a negative impact on blue cross blue shield because there are. There are requirements financial requirements that that trust has to make to pensioners and to the extent to which blue cross blue shield has to contribute monies to that pension so there is an interest for us and for all of us. But we don't have, you know, primary regulatory oversight over those over those how those investments are invested and what the policies are around them. Does the department have any remedial authority in connection with the pension investment, if they find something in the course of its target examination that it's troubled by. Yeah, I think we always have, you know, we have great authority both in the insurance arena. And also I'll just point out that we're also a securities regulator as well so if there's concern from that perspective that's something that we have great interest into. Okay, and so what would the departments remedial authority consist of, you know, the recommendations, directives, whether or not the current corporate governance structure is appropriate whether it should be reconsidered, whether investment decisions should be made within the blue cross blue shield. You know, family or whether it is appropriate to continue to delegate those I think those would be the types of issues and questions that we would be talking about here. We're blue cross blue shield as everybody knows is not a for profit company. It has no shareholders has no earnings has no dividends, things of that nature. You know, there's certainly penalties and things of that type are always available to any insurance company but in the case of one that is not a is not motivated by profit and one that is funded by Vermonters. You know that is not necessarily a course that we go down very frequently, but all of those things are available to us. Just one or two more questions Mr Commissioner. Can you tell the board what this investment that experienced the $40 million loss was can you describe the investment. Yeah, so I don't know what is necessarily public and what is private but I will, I will add a very broad level describe what the strategy was and anyone feel free to cut me off if I'm going into territory that I should not be going into but I believe this is all public information. So, the investment is something known as a derivative based investment so there are opportunities to leverage your investments are also opportunities to leverage it on the negative side so that you can limit the amount of losses that you might experience in a market downturn. I think we all know that the market downturn in February and March of this year was significant and was volatile to a point that I think it's fair to say we've never seen before we had, we had single day highs and single day lows repeatedly being met. You know within a two or three week period so all assets and all strategies were under significant pressure and some did not perform as well as others obviously. It's fair to say that the value of this investment depended to a large extent on the volatility of the stock market. It was supposed to be clear the volatility was something that was was anticipated to be avoided due to the strategy I think it's safe to say that that volatility should not have impacted the assets to an extent that one would suspect that was an it was an attempt to protect from downside risk. Because the department had any regulations or bulletins or informal practices that would limit the percentage of blue crosses surplus, it could be in any one particular investment. Of course so so what we just talked about were those statutory that statutory regime that exists. Right. So, but I want to make one point clear that the assets and the reserves that Blue Cross Blue Shield has those are within the corporate entity of Blue Cross Blue Shield. Pension assets are under the pension trust and they're separate so they're not part of Blue Cross Blue Shield reserves or surplus they're separate and outside of that reserve calculation I talked earlier about how reserves had gone up about 23 million I think they stand at something like 130 million at the end of the year. Those that is not impacted by what we're talking about now. The losses outside of that statutory surplus or reserve number. So as it relates to that number though we certainly have limitations as to the type of assets and how the type of assets and how much of those assets can be invested in based on the quality of the asset. If the pension assets are outside of the surplus calculation. Why does the loss of 40 million dollars reduce RBC. By 180 points. Because it's still lost to the corporate to the global sort of structure of Blue Cross Blue Shield, but not part of their reserves that are set aside to pay rate holder, you know, medical needs. Okay. Thank you, Mr. Commissioner. I have no further questions. Thanks. Just a couple questions when, when we look at the schedule exhibit 12 page 37, which is kind of pro forma in where the RBC could potentially go. And the question I have is, if the pension evaluation was taken out of these numbers. Right now in May they're at 695 that doesn't include the pension, and at year end prior to COVID we would have been about 733 potentially. So finally, and kind of the higher end of the range, you know, where we would have been out of being near the bottom. But I guess at what point would you intervene to talk about giving back some it, you know, certainly 733 isn't over the range yet. But when, when would you have come in and potentially said, you know, you know, we don't need to be this high. Yeah, so, so, so good question and I'll answer it two different ways. One. One, if they were over, if they were over Blue Cross Blue Shield was over its upper level threshold, and we were about to engage in the 2022 rate process, you know, we might have an opinion in our solvency review that is different than we have in the past where we say, you know, based on based on the current solvency and, and based on, you know, the need, you know, there is, you know, there is potential to lower the rate or they have the rate not be as high as being requested, even though it might be actually justified because they're outside of their range. So that would certainly be one possibility. The other that I think is something that that is that we that we need to consider is, when you look at other lines of insurance, whether it's auto or homeowners or workers comp or commercial, you know, there's certainly a reduction that's happened across the board. People are driving less people are not in their workplaces, even if they're working, you know, whatever the whatever the impact might be that people have paid for premium and under a certain risk calculation that risk risk calculation changed dramatically during 2020 and due to the due to the pandemic. So if 2020 is over, and it is clear at some point in 2021 that, you know, as we put in our solvency opinion, globally did the monitors overpay in 2020 for their health insurance. If that question can be answered definitively, which I don't think you probably can until, you know, April or May of next year in all honesty, when we have a sense of what does 2020 look like. So the rest of 2021 look like as well. You know, what's the extent of the deferred care. Then there's an opportunity to talk about, you know, potentially, you know, premium refunds or premium credits like we have with other types of insurance during the pandemic. We've, we've had about $25 million premium credits or refunds provided to monitors during the pandemic to date from, you know, from dental insurance to auto insurance to all of those things. But I'll just point out that those are those are events. Those are types of insurance where you know the event isn't going to occur in the future. We know there's not deferred. There's no accidents. For example, those either have happened or they're not going to happen. But with health care, it's a little bit different. So you need a little bit more time to see how things play out before there's certainty as to, you know, was the pricing right or was it significantly off to a point where, you know, premium credit should be considered. So I think either in the rate process or even in that premium credit discussion, I think that I think both of those are appropriate. Whether or not they Blue Cross Blue Shield hits the top of the range or whether or not they're within their range and credits, for example, should be something that's considered as well. And I agree with you that, you know, eventually this will catch up. I mean, we can all debate should we give COVID money back now or should we wait but I guess a concern would be that let's say that it does generate favorability and we see that as we get into 2021 and beyond. But if this 180 sticks on from the pension, you know, it's going to pull them down to the lower range. And, and, you know, they benefited basically because we got back all the amt tax credits we got accelerated, you know, all these things happen that we knew would improve their RBC. It seems like there might be a dilemma then if, if the COVID piece generates, I'm going to make up a number, you know, 50 to 100 basis points, and the RBC gets hit by 180 because of the pension plan. And then they're kind of in the lower end of that range. And, you know, I know it's hypothetical but where do you think you're going to come out at that point if we know COVID clearly should have been given back there was a benefit that should have been given back to the ratepayers. Yeah, yet now the RBC is, you know, depressed by what currently would be almost a third of the RBC gone because of the pension issue. So I think I think it's fair to it. So I would consider that like a potentially a worst case outcome in terms of the pension matter right so and that's a fair it's fair to consider that. It's fair to consider that. And I think at the end of the day, the solvency component, the solvency pieces is that if, if they are if they the company sort of are at the lower end of their range for the good of their members. You know, you want them to have you want them to have that buffer and that amount of financial capacity in the event, you know, something else uncertain happens in 2021 or 2022. But I will say that, you know, I don't know how likely that outcome is. First, you know, first of all, as I mentioned regarding the pension assets so once the, once the assets were liquidated and turned into cash, they were turned into a down market where the market was coming back up. So just even that factor, you know, how does the market end the rest of the year will have potentially an impact of lowering that that loss. And then to what degree is litigation successful in returning anything to to the to the trust fund, you know, the pension fund. You know, I think we'll have to wait and see on that obviously but, you know, that's another possibility of money coming back in to fill the gap. So, I guess, I just want to, you know, sort of a long term vision that you have to have on this issue right now I think because of the uncertainty with the virus, and then the uncertainty with issues like this pension issue as well. And I mean, you know, one thing we do know though is, if you have an investment and it goes down 50%, in order to get back to the same place to go up 100 so I agree the markets going up but you know we're going up on a lower lower base so Exactly right you couldn't you couldn't have said it better. And it will be mitigated but it won't be. Yeah. Okay, thank you. That's all I have. I'm actually fine. I don't have any questions. Thanks. Member Pellum. My only sense question would be is what's your sense about when both of these coven and pension will be coming in for a landing. Yeah, so with with coven, you know, I think it's it's fair. You know, at the end of the day, what's going to change everything is is a widely available vaccine I think I think everyone knows that that we're probably not going to get to what's known as herd immunity just by, you know, rolling, racking up infections among people in the United States or worldwide or in Vermont. The disease prevalence among the population is so low. You know, maybe in Vermont there's a study that came out that said, maybe 2% of Vermonters had the virus and you need closer to 60 or 70% to get herd immunity. I don't think that's not realistic and it's also unknown how long that immunity will last from contracting the virus, which gives people real pause for that from that perspective. So it's really comes down to the vaccine and until the vaccines available, I think we're going to be living with with COVID. That means this fall will be living with COVID likely in the winter we will be as well and sometime in the spring things will likely change knock on wood if the vaccine development continues as it is but there's a there's optimism that in late 2020 and early 2021 there'll be a vaccine that's approved. But then the question is how do you distribute it and how do you scale it up so that there's enough available for everyone in the United States to get the amounts that they need. And that's a process that will take some time. So even if in early 2021 we have the vaccine, let's build in another six months until it's widely distributed. And that's just one, you know, that's just one possible path forward, you know, something could happen more quickly something could could happen longer but I think that's that's a viewpoint is we'll be dealing with it into 2021 is a reasonable estimate. In terms of the pension issue same same timeline almost to some degree I mean you know we'll have a sense by the end of this year sometime in March what what the investment returns were for the year. And then put in the other question of the legal issue is, you know, pandemic might be more certain than a legal process, which has a great deal of uncertainty or legal recourse I'll put it that way. Okay, Board Member Holmes. Okay, thank you Commissioner. A couple questions for you. What are the legal limitations on how CTR may be used. Is there some percentage or dollar value that must be retained for unexpected medical losses or, you know, what kind of guidelines are there around CTR usage for the contribution to reserves. Yeah, sorry. And you mean the amount that's asked for. No, I mean in terms of how you regulate it so you know we've heard about asset allocations and, you know, say for example Blue Cross Blue Shield wanted to build a new building, right new build a new office building, and they want to draw down from reserves to do that. Is that something that you would be regulating on your end the usage of reserves or non medical expenses and are there limitations on that and is there a minimum amount that you want to keep in there for unexpected medical losses. How does that work. Yeah, so, so the so the contribution to reserve is just something built in every year that is like. I mean, sorry. Sorry, so that's something where we obviously want to have a close eye on. So if you, regardless of it was medical or non medical related because it's depleting the amount of reserves that's available to cover, to cover, you know, medical claims so if it if it's an investment, Blue Cross has made a few investments in the last year that they think will either benefit their members from an ultimate cost perspective to make prescription drugs less expensive for example or it'll benefit the company because it's moving into a new line of insurance like Medicare and Medicare Advantage. So, so there are opportunities to make those investments and when they're wise and prudent, you know, those are those are things that we will support when it's, you know, if it's something that is less likely to result in some benefit or savings to members is something that we'll look at more skeptically. But, but yeah we're obviously very interested in how member reserves are used and spend and and even invested obviously as well. Okay, sorry. It's a little bit late. It's like what an eight hour zoom call so I apologize. Use of CTR versus reserves but I meant reserves but you answered the question. Thank you. You know you talked a little bit about insurance rebates and the different types of insurance, you know, auto insurance being different than health insurance and I'm wondering if you can just talk a little bit about why dental is different than medical knowing you know DFR approved premium, you know, relief for dental insurance. Yeah, for sure. Happy to so dental emergencies were still available during the pandemic. You know if you had a dental emergency, but I think the great, the great great percentage of usage is more towards someone's annual cleaning and and sort of those routine procedures that were suspended. So, in all likelihood if someone has missed, you know, during that window their routine procedure they're not going to be able to get back into the dentist's office until their next, you know, six month or year checkup. So there is more there is a little bit more certainty in that dental space than than in health insurance where, you know, we could get, you know, it's, you could always do have a dental emergency I don't need to suggest you can't but I think there's there's a greater likelihood that you'll need medical care, you know, either on an emergency basis or just on a more routine basis more frequently and that's harder to predict than in a dental. Do you know what percentage of dental claims are routine versus emergent? I don't have the top of my head but I do know I do think there's a significant amount that that fall into that sort of preventative routine bucket. And my last question revolves around Ms. Green testified a little bit earlier this afternoon that the March bulletin that you, EFR put out as a result of that bulletin, Blue Press Blue Shield felt the need to suspend their cost containment and their fraud, waste and abuse programs in order not to burden providers during the pandemic. And so I am wondering from your perspective whether with COVID cases now, you know, in the single digits and utilization we're hearing up over 100% in many instances, whether there's any plan from our perspective to update the bulletin to allow carriers to reinstate cost containment, fraud, waste and abuse program. Just to put into perspective, the fraud, waste and abuse program it looks like to me from the testimony we've seen and actually it's on exhibit six page 59. The suspension of that program alone as a result of that bulletin is will increase claims about $4 million above projections and has a 20 basis point impact on RBC. And it sounds like from testimony from Mr. Schultz that would also has a, you know, if they were able to reinstate or go back to the full fraud, waste and abuse program. There might be a reduction in premium of about half a percent. So this bulletin actually is having a significant impact, you know, potentially on premiums and on RBC. So I'm wondering if they're, you know, what your future outlook is for allowing insurance companies to regain, you know, reduce that those programs. Yeah, for sure. It's a great question. And I haven't reviewed that bulletin since March. So excuse me if I have this not exactly correct, but I do believe there was a distinction between routine audits and those audits that were designed to make sure that there's a sort of an emergent fraudulent issue that's happening or some sort of waste and abuse that's currently ongoing that there is an attempt to get to the bottom of. But I imagine that many of those routine audits are what ends up turning up fraud, waste and abuse as well. So I just want to make that distinction. But absolutely 100% you're right. I mean, we will reconsider that. We did it in March to alleviate pressure on providers who were transitioning to telemedicine. We didn't want to have them be interrupted in treating COVID related items. But as you all, as everybody knows, now we're in a very different position and the extent to which all of those providers were called on to treat COVID patients was different. Some had a very different experience than others in terms of their workload and capacity. So I think that 100% is something that we will consider and we'll do it in the short term. Very short term like in the next couple of weeks as we're deciding rates. Our short term is days, not weeks. Great. Thank you so much. Mr. Chair. Thank you. Good afternoon, Commissioner Pichak. Chairman Mellon, how are you? Hang in there. It's been a long day. Plan fiduciaries include plan trustees, plan administrators and members of a plans investment committee. You're a specialist in financial law. Under this scenario that has been laid out before us, it seems like everything has been delegated to this national retirement trust. Under this scenario, who do you think those three entities are that have the fiduciary responsibility? Yeah, so there isn't, well, I just want to preface this by saying, you know, we have a targeted exam underway. We're trying to get to some exact, we're trying to get 100% confidence in certainty ourselves. So I don't want to go too much into the details, but I will say this. You know, there is an investment advisor that's, that's as part of this entity investment advisors generally owe fiduciary duties to their clients. So that would be likely the trust, depending on the exact relationship and the trust obviously owns as a fiduciary duty to the members of the trust as well. So those are the two entities that strike me as owning a fiduciary duty that investment advisor and trust itself. If you are your staff at DFR received the phone call from a 60 year old Vermonter at Blue Cross Blue Shield, who has concerns about what has happened with their pension. There could have to be this set of facts, it could be a totally different set of facts where they believe that there was some interchange of funds between a related organization or something. Who do you refer that caller to since you're not the enforcer. Yeah, so we often do. Calls just like that, in all honesty, people have questions about their 401k or potentially a pension fund as well. And we usually send them to Vermont DOL and Vermont DOL has better contacts with national, you know, the federal DOL, but ultimately it's the federal DOL that's the regulator of a risk of lands. So it's labor that would have that responsibility. And would they just have criminal enforcement, or is there also possible civil enforcement. So my understanding is that that a risk is would be enforced from the federal DOL from a civil standpoint if there was a criminal matter be referred to the Justice Department I believe so I think federal DOL has civil enforcement authority. Okay. And so, clearly, ERISA rules for fiduciary conduct, say that all fiduciaries may be personally liable to restore any losses to the plan, and that courts may take whatever action is appropriate against fiduciaries, break their ERISA, including their removal. Given that, is there a strong basis for recovery from some of these entities that you have discussed that you believe would be possibly the trustees or administrators. So, I was waiting for someone to cut me off to answer that question, but I don't see here anybody doing it so I'll just at the high level just say that there are a number of people in that chain that, you know, have some have some explaining to do including the ultimate product as well, not just the fiduciaries but the ultimate product in which which did not perform as, you know, expected. So, you know, how I don't want to I don't want to get into the range of success but you know there is a there is a there is a reason for the process I'll just put it that way, if that makes sense. Okay. Going back to March and the weekly meetings that you talked about on between DFR blue cross blue shield. Was there ever any discussion about whether or not the Green Mountain care board should be alerted. So, I can't speak to the weekly meetings because they were I don't that's with our expert staff and blue cross blue shields expert staff but I did have a conversation with with Don George initially about this and we didn't we just we didn't discuss that. There's been a lot of I verbally in the media about whether or not reminders are entitled to a decrease rather than a rate increase. And I'm curious if Green Mountain care board said you're not getting any increase. Is that the in violation of promoting insurer solvency under our duties under the statute. Yes, as you know, chairman that you you have the unenviable task of balancing those two, those two, you know, somewhat irreconcilable, you know, goals of affordability and insurer solvency and we laid out in our solvency opinion the impact that various rate cuts would have to the insurer solvency so I think those obviously need to be greatly considered and done so with great caution. You know, as we've said in the past we we think a an unjustifies or a non actuarially unjustified non actuarially justified deviation from the rate, you know, would be would have an impact on insurer solvency in the long term and we still have that opinion. So, so I think that's that's something you have to balance but you know affordability is one of the criteria is that the board has to consider and we certainly acknowledge that. So this will probably be a topic for another day but just to make sure that you know that a high ranking member of the same administration that you're a member of has repeatedly said to the media that they believe that there shouldn't be a rate increase as well so I just wish that everybody would talk with each other. I just wish you don't have to answer anything there. Well, the only the only item I'll point out there is we do have at the department, you know we do have a statutory responsibility that's that's certainly different from our potential potentially our own personal beliefs or personal beliefs of others within the administration but we have to execute on that that sort of statutory responsibility that we've been. You were a member of the Green Mountain care board. And you had the statutory requirement of making sure that it promotes insurer solvency. Was there anything in the questions that we asked blue cross blue shield that you think crossed the line. I didn't hear I didn't participate in the full days hearing but from what I heard I did not hear anything across the line. I'm referring specifically to the questions that I know you were copied on we had a conversation. Oh, I see you're saying sorry I got it and I understand that sorry. You know, I'll put it this way we you know when we do our examination it's it's done in a it's done in a confidential process is not in a public process so that's one that's definitely one. That's basically the only difference I would see between. I wouldn't see your inquiries and the things that we're interested as differing substantively I would only view them different procedurally that this is a confidential process that we have the luxury of understanding and doing our due diligence and then it results in that we can or cannot make public where this is just a public process and it's difficult to have that kind of, you know, deep due diligence in this in this environment. Well I think there are capabilities to go into executive sessions and for requests for confidentiality that would have to go through our, our console but I think that we too could have kept something confidential but instead we were just denied the information. But that's a whole nother issue. I don't have any other questions. Thank you, Mr. Commissioner. Yeah, of course. Okay, I think we'll move on to the. Mr Garland. Thank you. Thank you commissioner. Yes, thank you very much. So, Bridget or Mike. Have you given any more thought to just going straight to executive session to talk about confidential matters. You're on mute. Bridget you're on mute. That doesn't mean having that same mute problem. Okay. I would guess we're fine going straight to executive session I was just going to point you and the board to page six of exhibit 14 in which we laid the foundation for going to executive session. If that's sufficient for the board to take that action then we can move directly there. If you want me to elicit that testimony on the record I will remind me what page it's on. I think it's of exhibit 14. The last question. So, board members. You need a motion. Yeah, but I think we should talk about the bases first because I think there are two distinct bases. One relates to what is in exhibit 14 page six which speaks to kind of the. So, let me back up. So there's under the Open Meetings Act, the board can go into executive session to consider contracts, but only after making a finding the premature public knowledge would place a person at a substantial disadvantage. There is also an exception to the Open Meetings Act or not exception sorry provision that allows you to go into executive session to discuss documents and I believe some of you may have questions regarding exhibits or materials within exhibits that have been determined to be confidential and that we have a duty to protect confidentiality of under our rule. So, I think that those two separate bases are important because you would need to find if you wanted to talk about contract negotiations but not specific to a confidential document in the binder that they're that premature public knowledge would place Blue Cross as a substantial disadvantage and that's what this pre filed testimony speaks to, I believe. And we need to be clear about the bases, you need to be clear about the bases for going into executive session. So, with that said, would anyone like to move to find that public knowledge of the details of Blue Cross as provider contract negotiations with place Blue Cross at a substantial disadvantage. I would like to move that discussion. Oh, sorry. I'm not, that is up on the procedural process. Any discussion. Okay, would all those in favor please signify by saying aye. Any opposed. Okay, and then I think the next step would be would anyone like to make a motion to go into executive session to take testimony about the details of contract negotiations between Blue Cross Blue Shield and healthcare providers and about confidential materials in the exhibits. Yes, I would like to move that we go into executive session on those bases. Is there a second. Second. Any discussion. Okay, all those in favor please signify by saying aye. Any opposed. Okay, so if I might interject and maybe you're going there we might need do you need to swear the witness in on the record. I don't know the answer to that, but we should probably do it anyway just in case. Mr. Garland. Yeah, it looks like Mr Garland is unmuted. Let me find Mr Garland so I can pin him and see. I don't think he has his video on. Oh, he does. Okay. I can't pin him, but you might have too many people pinned. And then people to the new ones. Mr Garland, please raise your right hand. You swear or affirm that the testimony about is the truth the whole truth and nothing but the truth. I do. Okay, so there's a couple matters we need to wrap up before we go into executive session. The first is who needs to be in the executive session. I think, obviously the board members, the board's rate review staff, the HCA's attorneys, barriers attorneys, obviously the witness and the court reporter. Is there anyone else who is necessary to this executive session? I think I would like to have some of its staff in the executive session. Mike, is that what you were going to address? Exactly. Okay. Sunny, is it possible to have this section of the hearing transcribed separately? Yes, I need a minute to open a new file. And I guess we are going to leave this and follow a different link as well. So I just need a minute to get that all done, but certainly I can come. I think we owe people who are not going to be able to come an estimate of how long we will be. All right, I'm just looking at a text. Any estimates? I'm more board members. Lots of questions, a few questions. General sense. Two or three questions, roughly. That's where I am. Two or three questions. I have four questions, but some of them may overlap with Jess's though. So that may just, I'm guessing we might have a mind meld going on. By the time those guys are done, I probably won't have any questions. Put them first. Okay. No questions. All right, so the two best words in the English language. Yeah. I'm going to, I'm going to. I think 540. Probably be about right, maybe a little bit before then. I know it's. It's time for 530. Definitely a good, a good thing to try for. Christina, can you. We talked about making a slide to share to just let folks know. If they join, although it's kind of late to be joining that we're in the executive session. Okay, is there anything else we need to cover before we jump on the other line that we have for this purpose. Just make sure you exit this line so nobody's overhearing. All right, so we're back on record in the open session. I'm out of the executive session and board member lunge has, I believe, two questions that relate to non confidential materials. Thank you. Mr garland, could you give us an update on how the fixed perspective payment program is going in your ACO program. Yeah, it's going very well a little slower than we would have liked but we launched the program in April. Of this past year, only one hospital was able to sign up in April. We have a few others that are very interested in participating, but they've been dealing with some internal it challenges that have taken them a little bit longer to resolve than they were hope hoping for and they want to be stable on their new platforms before they take the leap. I did ask our contracting provider folks for an update on the one hospital that's participating because I had a feeling you were going to ask and it's been a little over a month and or two months I guess and the feedback is so far so good. They seem to be happy. So it's a great step forward. And I'm glad you have more interest. My other question was in previous testimony we heard about utilization assumptions resulting from understanding that hospitals were doing procedures on weekends or after hours and I haven't been able to get an answer on the source of that information specifically which hospitals have you talked to that's specific. Um, can I make that a follow up. Yes, put together a document and we'll send that over to you I don't have all that detail off the top of my head I apologize. That's totally fine. And I'm sorry my good one more which was in terms of the delay of the cost containment programs that resulted from COVID. Can you speak to when you would anticipate resuming those programs and if not to what the rationale for that is. Yeah, so what we're really talking about there is is new cost containment programs I know I know Dr McIntosh mentioned a few sort of small programs that got that could sidetrack during COVID but we're largely talking about new programming and the reason for it being sidetracked frankly is it takes a lot of attention on the the plan side and the provider side to make one of these initiatives work and to make it effective so I mean the reality is the providers just didn't have the capacity to focus on this with us over the last few months. I would say that as soon as they do have the capacity will begin working on those things again. Okay, I was specifically referring to two programs that were included in the 2019 rates. That in the actuarial memorandum indicated that they had been discontinued for the time being due to COVID, but it's it would be helpful to follow up on that that's totally fine as well. Yeah, I think it would and then we can provide a detailed written answer. Thank you. Okay, are we ready to move to Dave Dylan's testimony, Jay and Bridget. I have nothing further thanks. Yes, I'm ready for Dave Dylan's testimony. I think Mr Dylan had to leave. Nope, I see him on the computer still, but he might be on his phone and not have the binders available Dave what is your. Yeah, so I got kicked out of where I was and now I'm piggybacking off the Starbucks Wi-Fi so I will be as good as long as my Starbucks Wi-Fi holds on. So we are free to proceed if I get a bad connection please let me know and I'll discontinue the video and just do audio. Thanks for hanging in there. Could you please raise your right. Do you swear or affirm that the testimony you're about to give is the whole truth and nothing but the truth. I do. Amron. Thank you. Hi Dave. I do it may take me a second but they are with me. Okay, great. Could you please state your full name for the record and tell us your employer. Yes, I'm Dave Dylan, senior vice president and principal with Lewis and Ellis. And could you please turn to exhibit 16. Okay, I am there. And you recognize this document. I do it is my pre file testimony. And could you briefly describe the information that's in exhibit 16. Yeah, so it basically goes through and discusses the process that Eleni goes through in terms of you know the assumptions we review the process we have in place and our communication mechanisms with Blue Cross. Okay, and is the information in this document accurate and correct to the best of your knowledge. It is. And is there anything in this document that you would like to change or clarify at this time. No, there is not. I wish to adopt this pre filed testimony as your testimony here today. I do. Thank you. So I know you covered this briefly in the pre filed testimony but just a few sentences if you could explain your role in reviewing this filing. Yeah, sure. So the process we have in place is we have three credentialed actuaries assigned to each review. Kevin Rugga Berg was the primary reviewer. I am what we call the kind of primary peer reviewer and then Miss Jacqueline Lee is the secondary peer reviewer. So in my role, I review the filing. Then I coordinate with Kevin to, you know, to coordinate with him on what he's seeing with the filing. Do I agree. And then we'll discuss the questions that are submitted to Blue Cross. And then once we get those answers, we'll assess that and determine if further questions are necessary and or then we'll make our recommendation that you'll see in the report based on that correspondence between Kevin, myself and Miss Lee. And the memo that you mentioned is that exhibit nine of this hearing binder. It is. Could you turn to that please. Okay. Page three specifically. Okay, I am there. Okay, you see, there's a standard of review at the top of the page. Is that any standard of review or is that the board standard of review? That is the board's standard of review are while we do everything we can to assist the board. We do primarily focus on just a subset of that review. That is the, you know, excessive inadequacy and then fairly discriminatory pieces of that standard. Okay, so when we hear testimony about affordability, did Eleni review this filing for affordability? We did not. So moving to recommendations, which I believe are on page 23 of that exhibit. What are the recommendations that Eleni made with regard to this filing. Sure, we made six recommendations. I would say a couple of them are kind of corrections of some minor errors. There was a weighted average trend correction. As we went through the filing, there was a slight miscalculation. So we recommend fixing that. The URRT, which is the federal federally required document, there was a minor error there. That is, we're recommended an update to that that does not affect the rates. We talk about the hospital budget information, which has been talked about quite a bit today, but because that is unknown. We're basically recommending that when it is known that needs to be implemented. If it's an up, down, or sideways, it needs to be implemented once that hospital budget review is complete. We talk about updated risk adjustment. That is a process, you know, where the company does not have full information about the marketplace. We made an estimate. We actually got CMS's information this Friday. So we have that final information as well. So we recommend using that. We make, we also make a recommendation against about the credit card fees. There was a minor discrepancy there that we recommend needs to get cleaned up a little bit. And then utilization trend. Mr. Schultz mentioned that earlier today that we had a slight disagreement on a couple of the assumptions regarding utilization trend. So we made that recommendation and Blue Cross has agreed to make that change at this point. So if all of these recommendations are implemented, then could you explain what the ultimate projected rate increase would be? Yeah, so it would go from 6.3% to 5.5%. And at that point, so our recommendation, our report states that we believe that that rate increase would not be excessive. We believe it'd be adequate and we believe it would not be unfairly discriminatory. Turning to some of the testimony today, were you able to listen to all of that testimony? Had a few minor connectivity issues, but I think I got the bulk of it. Yes. Okay. In your, you stated in your pre-filed testimony that you review several ACA filings a year. So given the, a lot of the testimony that today about the COVID-19 impacts, could you give us a brief summary of what other carriers are assuming regarding the impact of COVID-19? Sure. So to date I have reviewed and my team has reviewed about 50 filings. And that's a combination of individual and small group. So there's a little bit of differences there, but essentially we're seeing a range of COVID impacts between 0% impact to about 3-4% is the normal range that we are seeing. As you guys are well aware that, you know, I'd be hesitant to extrapolate that answer to Vermont because Vermont is very distinct, but it does help to give some context to see what others are saying. And we're seeing 0-4%. We have seen a few others slightly higher than that. We've seen as upwards as 8% for COVID. However, that seems to be limited to one parent company and their affiliates in multiple states. And what did you say in your memo specifically about Blue Cross's assumption regarding the COVID-19 impact? So we reviewed the additional, the original documentation. We only had a few days to review, but we did state in the report that we believe that their modeling approach to assess their wide range of scenarios was reasonable and appropriate. We did feel that all of the issues that should have been addressed were included in the modeling. So we did believe that it was a reasonable approach. And since issuing the report, have you reviewed the information Blue Cross submitted both right before your report was issued and then also the newer modeling they submitted last week? Yes, we have reviewed. You know, and essentially that was an update to their modeling based on June claims data being added. We've reviewed that and we believe that their model and their testing is still reasonable and appropriate. Okay, so having reviewed the supplemental material and listened to testimony today, is there anything that you would wish to change or add to your recommendation around CTR? No, I do not. We believe, as we said, you know, the CTR was reasonable. We provided some metrics. Those have been discussed today. I do think, you know, uncertainty is something that actuaries would tend to increase a CTR for. And we're obviously living in a very high, high uncertain environment right now. So I do think there could be some downward pressure on that, but I do still believe it is reasonable based on Blue Cross's historical results of projecting the impact that if they believe that the 1.5 is still reasonable, that the 1.5 is still appropriate. We still believe it is reasonable. Thank you. And just to cover everything you've heard today, is there anything else that you heard or have read since your report would issued that would make you want to change anything with regard to your other recommendations? No, there is not. Thank you. That's all I have. Thank you. All right. Miss A.C. or Mr. Dinoffrio, do you have questions for Mr. Dillon? No questions at this time. I'd just like to reserve the right to ask perhaps a couple of clarifying questions based on any further testimony. Thanks. Okay, Mr. Angolf. Yes, just a few. Mr. Dillon, can you turn to exhibit nine please? Okay. I am there. What page? First page. Okay. And on that page, you see that little table at the bottom, right? Yes. Okay. And it shows Blue Cross's members dropping from 70,000 in 2017 to 29,000 in 2020, right? Correct. To what do you attribute that? So there's obviously a lot of factors there. I believe the major consideration as we review both filings is that Blue Cross, when we started this process a few years ago, they had a sicker population, then MVP, and over the last couple of years, that trend has continued. So, and they also have more platinum members, which is also somewhat indicative of the health status of their population. So that tends to increase rates. And while risk adjustment does compensate for some of that, it doesn't compensate for every condition. And so I think that is the primary reason for that reduction. Did you ever consider the possibility that if their rates were lower, they wouldn't have lost so much business? So while that is a theory out there in my years of an actuary, I've never seen if we build it, they will come type approach work. Usually if you race to the bottom, you usually end up at the bottom. Is the current trend though sustainable? Can Blue Cross continue to lose this much business, one seventh of its business for the last three years? So while I have not done a formal enrollment projection myself over the next few years, I do anticipate that the two market players could end up in somewhat of a stasis in terms of MVP having somewhat healthier population. And we've gone through the growing pains of the transition and Blue Cross could end up in a fairly steady state situation similar to the way it is now. And by stasis, you mean they each have half the market? No, I don't necessarily mean stasis in terms of a percentage. It could be the same percentage now or it could be some other percentage. But I don't think it's, you know, we're definitely not on a path where Blue Cross is going to zero and MVP is 100. I think we're going to hit a point where the sicker population will stay with their providers under the Blue Cross plan and the healthier people, you know, could end up and stay with MVP. Could you turn please to page 16 of exhibit nine? Okay. Okay, there. I am there. Okay. And you see at the very bottom of the last paragraph, it says that you get an informal review of Blue Cross's COVID projections. You see that? Yes. What did that informal review consist of? So the informal review was primarily informed based on my experience with the SOA model that the Society of Actuaries has put out. So I have done some diligence while I have not done any formal COVID testing. I'm very familiar with the Society of Actuaries model and the assumptions that went into that. And so when I saw the Blue Cross model, I was relatively informed in terms of, you know, deferral rates and costs and things like that. Did you review the, did you review the Blue Cross addendum? Did you review the page by page, the Blue Cross addendum? Yes, I have reviewed the addendum. Okay. And then on the top of the next page, it says that you did a cursory review of Blue Cross's documentation. What did that cursory review consist of? So I think the cursory review is just a synonym for the informal review that we did do, just reviewing to make sure that those assumptions lined up with what we would expect. Okay. But you didn't do your own calculations. You didn't look behind the data at all, correct? No, correct. We reviewed things such as, you know, their assumed deferral rates and, you know, did an informal review based on what we have seen in those, you know, eight or nine other states and with our work with the Society of Actuaries model. Okay. What if anything did you do to review the investment that Blue Cross made that lost $40 million? We did not do any review. It is not typically an actuarial exercise to on the investment side. So we did not conduct a review there. Thank you, Mr. Dillon. That's all the questions I have. Thank you. Are there any questions from the board? I'll just skip the roll call. Does any board member have a question for Mr. Dillon? I have a question. Hi, Dave. Hi. Just a question on when you go to page 13 and 20, I guess, I guess page 20. Sorry. Page 20? Yeah, 13 and 20 doesn't make sense. I guess that's getting late. Item 13, page 20. Sure. And when we talk about the administrative costs, I guess first in the buildup of the 7.3% that Blue Cross Blue Shield requested, 1% of that increase is driven by their increase in administrative costs. So it is fairly significant to what's driving part of the change. And when you look at, you compare them to Blue Cross Blue Shield based on other Blue Plans, both on an administrative PMPM and where they rank. And when we look at, I guess the question would be maybe Blue Cross Blue Shield plans are all high. And when we look at MVP, it's significantly lower on a PMPM basis and a change. So it's Blue Cross Blue Shield is about 12% higher on their dollar fee. So just wondering if you can give a perspective on how Blue Plans compared to other plans across the country and then why wouldn't we look just in our local market as well on a, you know, comparative basis. Sure. So I would say generally speaking, there's a couple of dynamics at play there. I think one is the Blue Cross Plans do tend to be sicker, tend to have more claims. So that is one factor. And then generally speaking, most Blue Cross Plans do tend to be regional or single state. There are a few exceptions. Because of that, the smaller Blues don't have as big a, you know, membership base to spread their admin as compared to the large insurers that are more national or super regional. So I think those are two considerations that that we have that we take into consideration when we evaluate, let's say a single state Blues plan. Okay, thanks. That's all I have. Any other board members. Okay, Mike, did you have questions? Mike, do not for you. I do not. Thank you. Okay, thank you, Mr. Dylan. Thank you. Enjoy your vacation. I will thank you. Glad the video held up. So the next witness I have is Mike Fisher. Chief healthcare advocate. Good afternoon. Good afternoon. Maybe I should say. Let me just take a minute to pin you. Here. Are you ready to take the oath? Sure. Yes. Could you please raise your right hand? Do you swear or affirm that the testimony you're about to give is the truth, the whole truth and nothing but the truth. Yes. Okay, Mr. Angle. I'm sorry, Mr. Oh, did was were you going to ask questions or was this going to be a. Yeah, I think you're going to have to take the oath. I'm sorry. I hope that Mr. Fisher would proceed in the same manner as God. Commissioner. Any objections from Blue Cross? No. No objection. Okay, Mr. Fisher, go ahead. Thank you, a board. And thank you, everyone who's stuck with this. Endurance test today. Today's been a marathon. I guess I want to start with a little apology. recognize that I am experiencing a level of outrage that I would usually try and hold in check for an event like this. It's an outrage about the disconnect between the level of fear and the real harm that I believe Vermonters and small businesses and Vermont families are experiencing and how much the discussion and the discussion that's taking place here today. Thank you Blue Cross for recognizing that we are in unprecedented times in the opening. But wow I don't know how to reconcile these two worlds. It's a bit baffling to me. The board's decision the board's words in the decision on the on the Blue Cross Blue Shield Vermont large group have a couple of interesting important concepts that I just want to repeat and agree with. I agree that it is the task to strike the appropriate balance between achieving the most affordable rates possible while also safeguarding solvency. I also agree that the pandemic has only exacerbated the inherent tension in our rate review criteria. Rising insurance rates in the midst of this unprecedented crisis will compound the difficulties Vermonters are facing and make it less likely that they can afford to access the care they need. Yeah these are unprecedented times. While we've seen some recent improvements in the unemployment numbers the numbers are still phenomenally troubling. This coupled with the ending of the federal subsidy for unemployment this week adds to a new level of fear and a new level of pain. Vermont's dependence on tourism adds to this challenge. Increased costs of basic living expenses again piles on the pain. If the challenge of setting a carrier rate is balanced between insured solvency and affordability the challenge facing Vermonters represents a significant tipping of that balance. On the other hand if we accept the often repeated concept that affordability is something that you get to consider after you've made sure the insurance company is is whole. Wow we're in for more trouble than we're in for real trouble. You know if that's the logic more and more we are going to have rates that may be actuarialist actuarially sound but fewer and fewer Vermonters can actually afford. Yes in response to something Paul Schultz said earlier today it is affordability on the community level that I'm talking about here. No in the middle of a pandemic with substantial financial impacts on Vermonters in an environment where there's been substantial sacrifice. This is a time if there ever is a time when we must pay special attention to the needs of our small businesses and Vermont families. A few people have referenced the comments. I know that the board members will if they haven't take some time to read them. I want to say a special thank you. To all of the over 800 Vermonters who have commented. Vermonters are paying attention. I appreciate them for taking the time to write so many thoughtful and detailed comments. When taken together this is an impressive storytelling exercise. It provides an important opportunity to have a view into the broader set of Vermonters lives. I won't read all of them today. But I will take a moment to recognize a few themes. One person said my family has been unable to access care for almost four months. Although I'm still paying the same premiums. What has Blue Cross Blue Shield done for their insured Vermonters this year aside from collect premiums. For my family the answer is nothing. Another person said a lot of Vermonters don't sort of adopt this. I hate to interrupt but I just need to release my computer just started. Just give me one second. I need to restart. Thank you. Why don't we take take five minutes and take a bathroom break and come back at 6 38. So I'll continue. Yes please. So I was spending a moment talking about some of the comments that came in. Another person said a lot of Vermonters didn't go to the doctor this year because of COVID-19. I didn't go at all this year. So if you don't go to the doctor when Blue Cross Blue Shield receives a lot of money without having to pay for any services. So why do they need to raise their premiums. I don't say these two because they're I mean to hold them out as individual ones. I say them because they were a theme. Many people said something similar to that and we heard stories like that at the Health Care Advocates Office. There was a lot of Vermonters have had the experience of not being able to get the care they need and struggling to pay their premiums. There was of course another theme and that was about the financial pressures and I'll just say a few words I pulled out of the comments and those words included cruel, appalled, unsustainable, unethical to describe the situation as they see it. Another thing we hear a lot from Vermonters is the level of fear that people are experiencing. This is a palpable fear that is driving some of their decisions. And I say that in lead to the next question that I've heard many people say today we don't know exactly what the incidence rate of the virus will be going forward. I agree we don't know. And while I'm sure it's true that our providers have gotten better at serving the needs of the COVID positive population and the non-COVID care. I also know that with an increased rate of infection comes fear and I don't have any doubt that if there was another spike of coronavirus in the remainder of this year or next year that it would come with a decrease in non-COVID care. And then lastly about the future incidents of COVID I think this has been alluded to but I don't think it's been made as clear as I think it needs to be. Exhibit 19 clearly spells out this is the health department's description of the incidence of the disease clearly spells out both the the number of infections by age and the number of hospitalizations by age. And there as we all know there is a very heavy weighting towards the older population and more specifically the above 65 the Medicare population. Lastly I've listened to the testimony today about the need for reserves. I've heard the statement again and again in past years and again this year insurance insurer solvency is the most important consumer protection strategy. I don't know what to say. Does that mean that that consumers are okay if the insurers have enough money. Do you think anyone outside of I guess the people on this call would buy that reasoning. It just doesn't add up. I hear how important it is to Blue Cross to hold all that money but I don't think there's any scenario that they or the industry for that matter would accept as a reason to spend some of that money as a reason why you know what now is not the time to build reserves now is the time to make sure people get care. So I have to admit I'm going to say something that that you know I don't understand what insurer what a surplus or what a member reserves is for. For year after year we've heard well of course we need to hold on to this money. What if we have a pandemic. Well here we are. Maybe member reserves are by definition only for a future need never for a now need or maybe member reserves are really important for something that I'm not entertaining maybe it's important for Wall Street you know or some some Wall Street rating purpose. Vermonters are struggling in an unprecedented fashion. Claims are down for the year. There's been a sizable injection of unanticipated revenue due to tax rebates and legal actions and we're contemplating raising rates. Members of the board it's raining. It's raining here in Vermont and across the country doesn't look like it. In fact it's really a hurricane. And Vermonters are looking for a little shelter. As a point of point of comparison no none of us will know what's going to happen in the state budget process for the next three months the remaining three sorry the remaining three quarters of the fiscal year. But imagine for a moment if the legislature and the governor decided to leave the state reserves intact and instead passed a tax increase to add more money. I don't think any of us entertained that that's even a possibility. I don't think it is a possibility. I don't think that that could possibly happen today. Is this entirely all that different. Given the world of hurt that is playing out in Vermont small businesses and in Vermont families the discussion of a rate increase is baffling. I'll say it to me feels tone deaf. We at the HCA usually end with don't raise the rates as much as the carrier asks for. We're going further today. I will join with what some have said before. Now is not the time for any rate increase. Now is the time for a level for a zero percent rate increase. And and I thank you for taking the time to do this very long hearing and for listening to me at the end of this day. Thank you very much. Thank you Mr. Fisher. Mr. Jenape or Ms. AC do you have any questions. No questions. Board members. I have one. Mike are you familiar with the federal requirements for exchange plans and actuarial certifications. The specifics of which no but I am aware of the well I am aware of the all of the discussion about the requirements for reserves if that's what you mean. Well if you could include perhaps in your legal memorandum how your request meets the federal requirements that are rate be actuarially found that would be very helpful. Okay. Okay. Are we ready to move on to closing statements. Yes. Strang off. Yes sir. Okay. Then I think Mr. Nafrio you get to go first. Sure. I'm going to try to be incredibly brief recognizing that we do have the opportunity to file a post hearing memo where we'll really try to address the incredible breadth and scope of the testimony and evidence you've heard today. I want to start kind of where Mr. Fisher started with some of the language from your decision earlier today from the large group. Matter and I'm going to quote raising insurance rates in the midst of this unprecedented crisis will compound the difficulties where monitors are facing and make it less likely that they can afford to access the care they need. The pandemic has also created an additional layer of uncertainty and made it difficult to predict health care costs over the next year. Insurers as well as providers are having to make plans and propose rates and budgets based on still emerging information in what is a very fluid and potentially volatile situation. This uncertainty implicates solvency and the need for insurers to be able to absorb future costs that are not currently known or quantifiable and that's the end of the quote. That's sort of a perfect frame for where we are today. The actuarially justified rate increase before you and there's really been no serious dispute on an actuarial level. There's agreement among Blue Cross's actuaries the board's actuaries and the Department of Financial Regulations actuaries. When you put that next to a few undisputed facts that you heard today I think that it argues it demonstrates why approving the rate as proposed and as modified by L&E is the right result. Now first Blue Cross chose when the pandemic hit back in March not to ask policy holders to foot the bill for the health care costs related to the pandemic. As Mr. Fisher noted you've been told again and again this is what reserves are for and Blue Cross has used its reserves in exactly that way. The fact that Mr. Fisher overlooked Blue Cross has spent about $10 million of those reserves to cover those health care costs which effectively reduced what the rate would have otherwise been by 3.2% and that's undisputed. Blue Cross has also chosen not to seek anything in this rate related to the pension loss. And as Commissioner Pichak testified that like the pandemic itself those are two events that are going to play out over time and will dictate at some point a move up or down in the rates. You've also heard that Blue Cross has continued to keep its cost of insurance, the element of these actuarially justified rates over which it has the most control at industry low levels. And you've also heard that Blue Cross has given you the best evidence that you have in this record in terms of how the pandemic might play out and what that might look like projecting into the future a couple of years. The HCA's position that I think is perhaps most clearly framed in Mr. Angoff's opening and in the questioning of Ruth Greene would actually, it would increase the volatility and increase the uncertainty that's causing so much fear for remonters. Essentially what the HCA is asking you to do is not to take that long view but to respond in the moment as events take place, events like the pension loss, events like the pandemic. Blue Cross by making the decisions it's made, not to put the pandemic costs in these rates, not to put the pension loss in these rates is giving you a path towards stability in the healthcare system in this time of tremendous uncertainty and instability. Blue Cross has protected the health and wellness of remonters for over 40 years by providing prudent financial management, outstanding customer service, first-class healthcare insurance coverage in the most cost efficient manner possible. And these rates before you are consistent with that history. So to conclude on behalf of Blue Cross and on behalf of my colleague Ms. AC, I wanna thank you board members for hanging in. I wanna thank the HCA team and everyone's staff for hanging in. And I request that you reject the HCA's logic here and approve the proposed rates as modified by Ellen's recommendations. Thank you. Thank you, Mr. Angus. Thank you, Mr. Herring officer. And thank you, Mr. Chair and board members. Four points. Number one, I hate to say it, but this system is not working. Every year since the board has been constituted, Blue Cross comes in for an increase. L and A, let's face it, essentially rubber stamps. It'll, you know, there's a little tiny bit of reduction, but it's essentially a rubber stamp. Blue Cross gets essentially what it asks for. And despite that, Blue Cross is, just in the last four years, enrollment has gone from 70,000 to 39,000. So the system has not worked for Blue Cross. And clearly it has not worked for Normanders who just every year, as if rate increases were some kind of natural law, every year pay more to Blue Cross. Number two, Blue Cross's rate filing this year is particularly unreasonable, particularly unjustified. One of the big reasons is that there are projections of what will happen as a result of the coronavirus are completely unreasonable. Vermont has been the best in the country. Vermont is a great success story. Vermonters, a lot of sacrifice to themselves and a lot of suffering have done a sensational job of containing the coronavirus. Yet the comparables that Blue Cross puts into its model include suburban New York, Westchester County, and Boston, not New Hampshire, not Maine, but their comparables aren't comparable. In addition, Blue Cross's estimate of how much RBC will be improved is completely unreasonable. And who says that? Not the HCA, but Oliver Wyman. Oliver Wyman is not some far left consumer oriented advocate. They are a very, very conservative, respected, actuarial firm. They say the effect of the coronavirus will be to raise on average, raise plans throughout the country's RBC by between 21 and 105 points. That's the average. Vermont is better than average. Vermont's not just better than average, Vermont is the best. So Vermont should be on the upside of that. Should be the 105 points, not the zero that Blue Cross assumes. Third point, and this is the most troubling to me, the board is much more magnanimous about this than I would be. You have given Blue Cross increases year after year after year, pretty much what they asked for. You asked very reasonable questions, essential questions. You guys lost 40, along the lines of, you guys lost $40 million. Tell us how you did it. Tell us what you did with that money. And Blue Cross does a couple of things. Number one, they don't answer the questions you asked. Number two, they simply give you a six-page general filing, which doesn't answer the questions you asked. And I guess the most troubling thing to me is, the CEO writes you a letter, a page and a half letter, just a couple of weeks ago. The tone being, oh, by the way, not we lost, but our assets experience a $40 million loss. As if it's the asset's fault, as if Blue Cross did nothing. They tell you that a couple of weeks ago. They knew about this in March. And what I found most appalling was the commissioner, and there's no reflection on the commissioner, but the commissioner was talking about, when he testified, discussing the issue with the Blue Cross CEO. And he said, essentially, it never occurred to us to notify the board. You all are the ones who give Blue Cross the money they asked for. And Blue Cross won't even give you the courtesy of answering your questions. Fourth point, there is no natural law that rates must be increased this year. This year, Blue Cross has behaved particularly badly and Vermonters have behaved particularly well at great cost to themselves, at great sacrifice. This year, for the first time, the board should order no increase. I believe a decrease is justified, but for the first time, let's have no increase for Blue Cross. Thank you very much, Mr. Chair, and members of the board have been very patient. So I think the only thing I need to resolve is there's a motion or request to extend the page limit on the post-hearing memo, which I'm granting. Still do on the same date. Is there anything else we need to discuss before we head off back home? Or I head off back home? All right, you guys are home? No. Additional pages, are you granting? Five. Okay. Mike, do we need to have a public comment, period? We do. Thank you for reminding me. So at this time, is there any member of the public who stuck with us and has a comment that they'd like to make? Can we also point out that there's also the opportunity tomorrow night, starting at 4.30, to offer any public comment on either this great request or MVPs in that if people feel the need to get dinner rather than commenting tonight, tomorrow might be the better spot. Yeah. How do we ask to be recognized? Oh, just state your name and provide your comment. Yes, it's Audrey Garfield. I live in Brattleboro, Vermont. I'm a consumer. And I have questions actually. I'm curious what board members' understanding of affordability for insurance is currently for Vermonters? So if any board member wishes to try and tackle that, they can, but your name again was? Audrey Garfield. Ms. Garfield. This is a time to provide comment. So not questions, but if the board would like to try and say something, you have the opportunity. So I would just say this, that the board struggles every year because under the statute we're tasked with making sure that it meets the affordability criteria, but also tasked with making sure that it promotes insurer solvency. And the two do not align. And therefore often insurers will make the argument that they were not given a rate that actually promotes insurer solvency. And the public makes the argument that they were not given a rate that is affordable. I have said previously in numerous public venues that I don't believe the existing insurance rates are affordable and that's without any increase. So as a percentage of Vermonters income, I think the rates are problematic, especially in a key demographic because those under 400% of the poverty level are given help from the federal government and making their payments. But once you hit that cliff, it is a cliff and it's very difficult for people who are working very hard every single day to try to make the payments once they've hit that threshold. So it's not something that is an easy, factor for the board to weigh because it's in direct conflict with another factor that we are both tasked with under the statute. Thank you, I appreciate you responding to my question. And again, I have many questions, I'm a lay person, but because this is public comment and not a question and answer period, I'll try to limit my comments to comments. And the idea of solvency, again, I'm a lay person, I'm looking at Blue Cross Blue Shield statutory statements of assets and liabilities. And I see that at the end of 2019, they had assets of almost $300 million, which was a $40 million increase over a year. And I really appreciate what the prior speaker had to say that each year, the board consistently gives Blue Cross Blue Shield what they want. And to listen to Mr. Dillon talk about affordability, I have to ask affordability for whom, really? It's a house of cards. And perhaps the best thing that can happen is that the board continues to give Blue Cross Blue Shield what they want until the whole system crumbles because that's what's going to happen. It's incredibly frustrating that the idea that this balance or imbalance of solvency versus affordability is in direct conflict with the board's purpose of improving the health of Vermonters. And Vermonters are suffering. We used to, I used to be really proud of Vermont and our ability to provide insurance for everybody. And that's changed. And I just don't see how Vermonters, especially given the rates of unemployment, the fact that unprecedented numbers of Vermonters are food insecure. I myself last year was unemployed for a period of time. I was on unemployment. I went without insurance for nine months because I couldn't afford to be insured through the Vermont Health Connect. And so here I am groveling before this board who holds the fate of Vermonters in its hands. And it seems like an exercise in futility. It seems like a foregone conclusion that I don't think a lot of us Vermonters have much faith in this process and that is unfortunate. So thank you for your time. And I ask you to think, to consider Vermonters more in this equation. You may not hear from as many of us, we may not have as strong a voice as Blue Cross and Blue Shield, but we're here and for those of us who aren't here, it's because we're working our second jobs or taking care of our children or trying to make ends meet with pennies. So please consider that in your decision this year. Thank you. Thank you very much. Is there anyone else who would like to make a comment? Hi, I work. Is that Dale? Yes. Hi, Dale, go ahead. I've been listening since 10 o'clock this morning. So there's just a few highlights that I picked up on. Blue Cross, Blue Shield expects Green Mountain Care Board to consider reserves when setting rates to consider their solvency. Yet they lose money, sorry. They lose money, they say, when the rate is too low, but Blue Cross, Blue Shield does not hold itself accountable to explain its management of the reserves in the pension fund as if that too can also be money that came from somewhere to come from the consumer and granted there's legal implications why they may not be able to answer some questions, but it was striking to see how they were refusing to take responsibility for their actions and answering public questions. Can they write a better reply as an explanation of what happened between parent as soon as possible with the facts, at least share what you learned from the mistake or bad decision? I would ask the board to set the rate as if the 40 million still existed since they may get something back from what they lost. It's up to Blue Cross, Blue Shield to find the 40 million not Vermont nor consumers without better answers than given. I would also comment that in with COVID going on, there is something that's happening. I didn't hear it mentioned once and that is an inadvertent rationing of care. For example, if you need a doctor's appointment, they can only see so many people per day. And that scenario, if you need a doctor's appointment and it's gotta be within three days because of the medical issue, you're probably going to the ER, I know I've actually had it happen. There is no other option, I asked and the ER becomes the doctor's appointment as well as the place you go for more urgent needs. Rates have to support the consumer and 5% annual increase does not support consumers. Blue Cross, Blue Shield solvency has become the primary issue, but is it more important than the consumer solvency? If they do get this rate increase, I would hope that someone at least considers and will testify to the impact to the consumers above 400% and below 400%, I would also hope that it is considered when looking at hospital rates, will that be as supportive and making sure that they stay solvent? And that's both on the side of the Greenmount Care Board looking at their rates and what will Blue Cross, Blue Shield do in negotiating rates with providers, hospitals, et cetera? Will they also consider the solvency issue of the hospitals? I'm not saying they haven't, I'm just saying going forward, we can't drop the ball, we have to stay with the issues. And that's it, that was just a few highlights that I picked up on. Thank you, Dale. Is there anyone else who would like to make a comment? I don't hear anyone, so just, yeah, again, a reminder that we are having a forum specifically for comments tomorrow, starting at 4.30 in the afternoon via Teams. The information for that is on our website under the Rate Review tab, probably in a couple of different places, but I know it's there. And I think we're gonna wrap up and see you guys tomorrow at 8. Thank you, Mr. Haring Officer, for staring us through a very long day. Thanks. Do we need a motion to adjourn? That's a good point, yes, you do. So moved. Second. Me, okay, we've been moving seconded, is there any discussion? All those in favor, please signify by saying aye. Aye. Okay, now I'll see you guys at 8. Bye. Bye.