 Okay, good morning everyone. We're about to call this meeting to order and advance. I just want to apologize to everyone for the closed quarters. I know everybody's a little claustrophobic and like a little bit more space. We moved back several months ago to a new building and it's a great building for us to get our work done in. But the one fall back is we don't have our own boardroom. So we're at the whim of open spaces to hold hearings at. And in this particular case the larger room across the hall, which we will be in tomorrow, is not available today. So hopefully everybody will get to know their neighbor and be polite. And at the beginning I'm going to ask anyone that has not signed in that wishes to testify at the end of the day to please sign in with Agatha at the back of the room. And do we have a general sign in for who's here Agatha? So why don't you have a pad passed around the room so we can get everybody a sign in? Okay I am going to turn this hearing over to our hearing officer for today, Judy Henkin, and Judy will be running the day's proceedings. Good morning everybody. I'm Judy Henkin. I'm going to be hearing officer by designation of the board. Chair, as you just heard, July 23rd, 2008. This is docket member GMTB0918, a rate review. If you have a cell phone, can you please turn off the sound mask so I don't have to look at you with a glare at you later. We have Blue Cross here today. It's the first day of two days of hearing. Jacqueline Hughes is Jackie Hughes, I'll go by Jackie if you don't have to go by Judith, is representing Blue Cross Blue Shield of Vermont. We're doing a little bit of a different setup for their witnesses today. If you've been here in the past, we are going to have all four of their witnesses sit at the witness table together and that way the board and the HCA can ask questions as a panel we've in the past had to call people back because it was the inappropriate witness for the question that was asked. This should make our time more efficient. We're going to try to be efficient today. Also, we have a long day ahead. Blue Cross will be taking up most of the morning, if not all of the morning with their witnesses, with the cross-examination and with questioning from the board members. We have a court reporter here today, wait if you're over here, I'm sorry. This will be transcribed and will be asking for an expedited transcription of this. That will be done and it will be posted to the website after it's done. The board has jurisdiction over this matter under Title 18, Section 9375B6, Title 8, Section 4062A deals with rape review and Title 8, Section 4512 is specific for Blue Cross. I want to welcome everyone. It's going to be a little warm in here and it's a little bit of an intimate setting for this hearing, but welcome. If you are here to comment, there is a sign-up sheet. We will be taking comment at whatever time the hearing evidence is concluded, so I don't have a time certain for that. Over at and tomorrow night there is also public hearing from beginning at 4.30. I believe we have a 6.30 stop, but we will try to get everyone accommodated. I know that's been pretty widely disseminated for that public comment period and it's that sitting call tomorrow night. Written public comments are also being accepted till I believe the 28th. The HDA is here today, the Office of Healthcare Advocate, and we have a new face on the panel here. Jay Enghoff is here representing. Agnoth, sorry. No, Enghoff. Enghoff? Is that misspelled? I thought it was Enghoff and then I read it. Yes, it is misspelled. Well, I'll just change my name. I looked at that and I said, boy, I'm wrong. I had that wrong all along. Thank you. So Jay is here today. The Healthcare Advocate's Office and he is joined by Kelly Paper, whose name I'm sure I mispronounce every time I say it, and Eric Schulteis, whose name I think I'm getting right. Mike Fisher, the Chief Healthcare Advocate, is here as a table with them also. I want to also remind the parties today and the board that there are confidential documents that are within this filing. The board has been privy to those because they are may be material to a decision, but I do want to caution everyone when they are speaking about documents. They are clearly marked in the packets and to please be very aware and I'm going to also state that to the witnesses. I think at this time there are, if we can, I'll introduce also, we have our actuary will be testifying this afternoon and David Dillon from L&E is in the back of the room and we will have them testifying. We also have the Department of Financial Regulation and the commissioner is here with their general counsel. It's a thing of the front row and we'll hopefully get to them this morning, but they will be presenting testimony after we hear from Blue Cross and get through that whole morning. While we're at it, if we can swear in all of today's witnesses at once so we get that completed. I'll ask the court reporter to please do that. Okay. I can do that. Whoever's going to testify please raise your right hands please. Do you swear the testimony you're about to get will be the truth, the whole truth, and nothing but the truth to help you out. I do. Thank you. So again I want to talk about the procedure a little so everyone has this clear. We will have Blue Cross presenting first after they present their direct testimony. The office of healthcare advocate will have an opportunity to ask questions. The board will then have an opportunity to ask questions following the HCA. After that we will hear from the Department of Financial Regulation. We'll also have opportunities for the carrier, for the HCA and the board to ask questions of the Department of Financial Regulation. The testimony from Lewis and Ellis are actuary. We will have our general counsel who I have not introduced who is at the table over here, not general counsel. That's the attorney. He's the assistant counsel here. Sebastian Arduango will be asking leading the direct for our actuary and we will again allow for the HCA for the carrier to ask questions and if the board has follow-up questions also there will be time for that. And last will be the presentation by the HCA. I'd like to first, before we commence anything, deal with there was emotion in this and there was emotion concerning the testimony of Michael Fisher. There is an expert report that's an issue. It is an issue and I will note in both matters the MVP and the Blue Cross and the same arguments were made concerning the admissibility of it. In Blue Cross I'm trying to look, was there a response to that, to the motion at this point? We didn't file a written response. Blue Cross filed their motion I believe late Thursday night. We'd like to argue it now if there's permission. I'll leave a few minutes for that and get that out of the way. So Jackie I'll let you just briefly present what it's in your motion and it's a written motion. I have reviewed it. We have reviewed the other one. Do you have anything to add? I do have a couple things to add. One is to clear the air. There was a press report on the motion that I think is characterized what the motion is all about. This hearing is a contested case and is the equivalent of the trial but the board is the judge. The Vermont Rules of Evidence do apply to this proceeding and our motion in lemonade was squarely based on the technical rules of evidence that apply and addresses the question of whether certain testimony could properly be admitted as expert testimony under those rules. Our motion was not about whether the health care advocate should participate as a party and play their statutory role in the process. Our motion was not about whether the health care advocate can cross-examine our witnesses, can cross-examine the witness board, the Green Mountain Care Board, can cross-examine the commissioner and it's not about whether the health care advocate can advocate on behalf of consumers. It was noted earlier whether the Vermont Rules of Evidence permit the type of evidence the health care advocate sought to admit as evidence. However the however the Green Mountain Care Board rules we respect the role of the health care advocate in this process and we're not trying to say that they are not a participant. I believe my motion fairly states our legal grounds. There is one procedural ground that I mentioned in the motion but didn't highlight and that is the fact that the opinion was not signed. That was required under the scheduling order to be signed and it was not and so I add that as another procedural ground. And that was in that lesson you've written motion. That's that was wrong. Mr. Angle. Madam hearing officer and Mr. Chair and members we're surprised at the opposition to this. It's not that earth shattering. The case is not going to rise or fall with all due respect on Mr. Fisher's testimony but we believe that Mr. Fisher even if this were a federal court proceeding under the technical rules of that evidence would be permitted to testify but let's be clear this is not a federal court proceeding. This is an administrative proceeding and a federal court we don't have four people at as a panel responding to questions and this this body has its own rules and one rule is that evidence is admissible if it's of the type commonly relied upon by reasonable prudent people in the conduct of their affairs. I'd like to think that anyone would agree that Mr. Fisher's testimony does fit that rule. In addition the statute expressly gives the public advocate I'm sorry the healthcare advocate the right to testify at this proceeding. So we think that it's allowed under the technical rules that would apply in federal court even if it's not it's clearly allowed under the rules that apply here and number number three the statute expressly gives the healthcare advocate the right to testify at this proceeding so we think that the motion should be denied. I have reviewed the law on this and we did receive this early enough and have noticed that this was an issue at the case and I recognize it's an important role for the healthcare advocate in this proceeding. It is provided for in statute it is provided for in our rule they are an integral part of this proceeding in providing their in participating by suggesting questions they are allowed to provide a public comment under section 4062 of title eight they are a party in the proceeding however that doesn't confer expert status to their witness in this instant the document that was provided by the healthcare advocate is in its essence not based on any type of technical or other expertise of Mr. Fisher as a legislator it is a recitation of his recollection and his legislate his research into the legislative history of act 48 and it doesn't involve specialized knowledge for what he has provided there and would not be anything that adds to the case or the evidence or a fact of issue it's well settled law that the opinion of one's legislator is not representative of the legislative intent of the statute the board does have the opportunity to look at legislative history and look at and do research behind the act however here the gist and the core of what was provided is that the concepts of the review standards of affordability access to care and quality of care are separate and distinct from the actuarial standards it does not appear a dispute that they're not those are expressly provided for in the statute the legislature did put those into the statute as a separate requirement they're part of the rule and based on the plain language of the statute those do not need additional construction through a leg the legislative research that was provided by the healthcare advocate and the response in the mbp i believe was that these do have some meaning i don't believe that will need the terms that were inserted advisedly into the statute that's the presumption so yes they would have some meaning so the i have looked at rule seven or two we looked at our rules um this is patently inadmissible as an expert statement so we are going to exclude that from the hearing and the related testimony you made mr fisher then testify as a fact witness not as an expert witness but simply describing what he saw as uh as a fact witness what he saw at the legislature um would know not be that is what was in the the expert testimony so um the opinion of one legislator is not representative of the intent behind the statute i don't think that there is much in what was written that is necessarily not open to inclusion in your memorandum that follows there's a lot of legal construction of an ultimate conclusion of a lot of the board was going to make but i do not believe that that is something that mr fisher should be allowed to testify and i'm going to exclude that testimony moving on we have um stipulated two materials i believe everyone um here has a similar binder but there were some materials that were not included we had a late amendment from lukras and i do not believe that's been put into the binders and i'd like um lukas to please explain that um what's going on if that's been discussed because it is part of your filing right uh we did not put it in my into the binder because the binder only includes matters that have been stipulated that can be admitted into evidence and i have asked the healthcare advocate's office whether they would stipulate to it they said they didn't have an adequate opportunity to review it yet but we fully intend to present it as part of our case today so uh we did not we didn't presume to put it in the binder without actually being uh stipulated to it but you will offer that into evidence yes we will and we have copies here if in fact that you have enough copies for everyone all right uh we will get going then without much more discussion here any other preliminary issues that we need to review i would allow both parties i believe there is one other um and that is the parties have worked to um develop a list of things facts that can be administratively noticed um i believe there was a letter that was filed last night uh by um part of the hc18 the letter though did not have the attached documents and so we would like the opportunity there was at least one uh where we want to have the opportunity to look at the final document uh we agree in principle that all of those things can be noticed by the board they may take administrative notice um and i will let the healthcare advocate argue why they should be administratively noticed but i did want to point out the fact that um there is i think sort of technical glitch in that we don't have the final documents that will be provided to the board and we did have a discussion before about putting together all the actual documents or links to them i want to at least say right now that the stipulated exhibit list these are exhibits one through sixteen are entered into evidence so they do not have to be entered in singularly singularly and i also want to point out that um i did receive that list of documents and my understanding is they are in fact stipulated to as far as they can we can take administrative notice of those is that correct you may if the healthcare advocate convinces you that they are relevant and meet other standards yes and i'll go back and my understanding was we did have this discussion earlier that the carrier did not oppose the board taking administrative notice of those at this time i do not okay and we have reviewed the list and the board will take administrative notice of all of those items so those do not have to be again individually discussed and and debated at this point allow each party to do a brief opening statement before we get to the first witness okay thank you good morning um as Judy said earlier i'm jackie hughes and i'm here representing blue cross from shield this is blue crosses six as individual and small group rape filing formally known as the qhp rape filing um we at healthcare advocate uh have stipulated to the admission of the materials that you found in your binder finding the binder and this year exhibits two through 12 display the broadest list of questions that we've received today on any of our filings and time constraints will not permit us to go through all of those we have to rely on you to have reviewed them and absorb them in this hearing we plan to highlight some of our content the contents of our filing but not necessarily uh each and every piece of it we will also present an amendment to our filing it was filed last week we don't normally file amendments but this year several events made clear to us the we must in order to fully fund the 2019 rates we will highlight important solvency concerns that are applicable to blue cross as well as uh the multifaceted operational realities of our business blue cross has long been an active participant in Vermont's individual and small group markets in some years and in some markets we've been the only participant blue cross has also actively collaborated on state health reform initiatives starting more than two decades ago that promote the public's access to affordable high quality health benefits and in some of those initiatives we've been the only non-government participant and we have taken on a disproportionate share of the burden this filing reflects our holistic efforts to transform Vermont's health delivery system to one in which every Vermonter has health care coverage and receives timely effective and affordable care in order to support our efforts we need to be able to invest in health care reform initiatives and some investments seeing no return on investment and others with long delayed or disappointingly low returns if blue cross is crippled in its health reform efforts due to lack of investment capital health care in this state we believe will become less affordable less accessible and a lower quality everyone wants health care that is high quality accessible when needed and affordable and the very difficult and complex work required to make the cost of health benefits and therefore the rates are affordable cannot be done by blue cross alone nor does it make long term or short term sense to deplete blue cross's financial position to the point that it can no longer afford to protect its members from financial ruin when they need health services that is the trajectory we are currently on and and despite that we remain committed to this market the rates we present here for the 2019 benefit packages reflect the product of Vermont consumer protections and health care reforms to date together with the associated savings and costs that go along with those the rates also reflect the many millions of dollars of annual savings achieved by blue cross through its own care management and reform initiatives we we do thank Dave Dillon and the team at L&E for their efforts to conduct a thorough review of the filing once again L&E's opinion makes clear that blue cross's developed rates applied rigorous actuarial standards so that the requested rates are adequate but not excessive or unfairly discriminatory and I realize L&E has not yet looked at the amendment and passed judgment on it but their original opinion does confirm that our original filing meets those standards our approach however is not just to meet the actuarial standards it is to meet all the standards our filings have always been about meeting all of the standards the filing supports our payment obligations for necessary health services that are of high quality and to provide access for our members at the right time in the right amount and in the right place while being as affordable as the various mandates and other requirements allow the rates are designed to allow us to pay for the increased costs and the increased utilization of the provider services hospital stays prescription drugs and other medical supplies and equipment which comprise over 90 cents of every premium dollar the filing as amended will produce rates that are reasonable in relation to the benefits that are to be provided in 2019 while not being inadequate excessive or unfairly discriminatory we also thank commissioner p check for his solvency report and the sense of urgency it conveys the board's decisions over the last few years have taken blue cross in an unsustainable direction financially we do not agree with that direction and we think the rate approved by the board should cover the expected costs of the medical care and drugs that we pay for on behalf of our members the rate should also cover the taxes and the fees that will be paid and they must also cover the costs to administer the plans that means adjudicating processing and paying the millions of plans we've received each year to help providers manage our members here to help our members access timely and effective care to assure that care delivered beats high quality standards and to provide for the maintenance of the policy holders reserve fund this reserve fund is for member protection it allows blue cross to make investments in health care reform it allows blue cross to keep pace with technological challenges and that we face while also allowing us to meet the unexpected events which have and will continue to occur it bears repeating underfunding blue crosses rates is not payment reform and is not cost-containing it just and it does not make the rates more affordable it simply postpones the day of reckoning and hampers blue crosses ability to engage in health care payment reform with other interesting parties including board finally during this year and we will present the board with the evidence and support for what it is going to take for blue cross to have adequate funding to deliver the 2019 plans for tens of thousands of reminders we hope the board can see its way clear to give blue cross a rate that will allow it to continue to serve in this market thank you mr. angle thank you uh my name is jane engulf i'm with the law firm of nerlin skeleton washington dc i represent the health care advocates office i appreciate the opportunity to be here today we don't believe that blue cross has carried the burden that is entitled to this increase or any increase under the controlling statute and we'll be questioning mr the blue cross actuary and others and going into a lot of detail hopefully it won't put you to sleep but we will be going into a lot of issues but let me just address three right now first and most significant is the windfall that blue cross gets this year and next year and next year and the year after that under the trump tax bill i've got a particular interest in this law because the trump tax bill raises my taxes i live in one of those high-cost nerlin suburbs and there's a cap on local state local taxes so it raises my taxes but it gives blue cross a tremendous windfall blue cross gets $16 million back in 2019 as a result of the trump tax bill making the taxes that blue cross has paid for about the last 20 years refundable in addition the tax bill which is called the tax cut in jobs act also eliminates blue crosses obligation to pay federal taxes in the future not just this year but forever and ever now i'll be questioning uh the blue cross actuary about exhibit five in their rate filing in exhibit five goes through all the provisions that raise in blue crosses estimation the blue cross things are going to raise the amount it's going to have to pay out next year those are estimates some we agree with some we some we think are reasonable some that they aren't but on the one hand blue cross includes what it thinks it will have to pay out next year and it totally disregards what's getting back from the trump tax bill you don't see that any place in exhibit five so it's all one way stuff they raise their rates because of things they think are going to happen next year they don't know but they think but they refuse to reduce their rates not just based on a projection but based on actual money that they know is being returned so that's number one that's what i think the board should really focus on number two and i have a little sympathy for blue cross on this issue not on the trump tax bill issue but on this issue blue cross has always taken the position that they're just a passive price taker that whatever the hospitals say the rate is the rate is and they don't negotiate and it's true obviously for months a small state the hospitals have market power but blue cross has market power blue cross is the dominant insurer by far in the state hospitals cannot afford to do business if they don't accept blue cross insurer patients so we think blue cross can do more i know that the board i think quite correctly has put in previous orders that we expect we reasonably expect blue cross to be tougher with the hospitals we were absolutely right about that but i think the board should consider at least doing a little more than just get been saying we expect and actually reducing the rate not a lot but reducing the rate some in order to really give blue cross an incentive to get tough with the hospitals it's a cost plus percentage of cost business it's really in blue crosses economic interest as ironically it might seem to have costs be a little higher because two percent of a hundred dollars is less than two percent of a hundred and one dollar so the higher the underlying costs are the more blue cross makes they need a real incentive to cut those to get really to negotiate more strictly with the hospitals third blue cross reads the term affordable and the term quality of care and the term promote access to health care out of the statute blue crosses actuary says that the rate is not excessive inadequate unfairly discriminatory we disagree with that and we think we've got a compelling case we'll show why that is not the case we think that the rate is excessive but let's assume that blue cross is right that their their actuary is right in most states emerge we all states that's enough i used to be the insurance commissioner of missouri and missouri like almost all other states the test the only test is for whether or not a rate is lawful is is excessive inadequate unfairly discriminatory and if the company can come in and demonstrate that it's not excessive inadequate unfairly discriminatory the rate is lawful so blue cross would be right if they weren't any other state but vermont is different vermont statute says that you all must determine that rate not just is not excessive unfair not excessive inadequate unfairly discriminatory but you've also got to determine whether or not it's affordable whether or not it promotes quality of care whether or not it promotes access to care and blue cross is actuary uh doesn't do that blue cross doesn't carry the burden on that and i'm not weighing blue cross is actuary that's not what an actuary is trained to do but blue cross has not submitted any evidence demonstrating that this rate the proposal is not affordable so i just those are three issues which we're getting into in the cross examination periods are many more but uh based on that we don't think blue crosses carry the burden carry this burden and then i finally just two points two more points one the blue cross amendment to the filing was filed and we got notice of it at 6 46 p.m on wednesday blue cross filed in this case on may 11 there was no reason that blue cross could not have amended this much earlier even if they could have amended this earlier it's unfair to us much more important it's unfair to you and most important of all it's unfair to the people who remind for blue cross to come in two days before the hearing and say oh yeah you know we're asking for another two and a half percent so i don't think it's proper to consider that that amendment and we recommend that the committee reject the board reject that and then finally let's not forget the blue cross statute the enabling that blue cross has an obligation under the statute to provide insurance at minimum cost under efficient and economical management mbp doesn't have that obligation blue cross does it says they've got to provide insurance at minimum cost not at uh some point in the midpoint of a natural range but at minimum cost so blue crosses in a unique position they haven't carried their burden and we uh we asked the uh and we'll show during the during this hearing that blue cross is not entitled to the rate increase they propose thank you thank you you can call your first witness great um i call Paul Schultz Ruth Grain josh playman and Andrew Gardner witnesses and everyone has taken a road apologize for lack of space before you start i do want to state that we have a discussion about the procedure before this hearing and we will be asking questions of each of these four and then the hca will be asking questions i believe was agreed upon process and then the board will ask question after that thank you um my first set of questions are directed to Paul Schultz um mr. Schultz what is your position with blue cross i'm the chief actuary of blue cross and before i give any further i'll know that the witness microphone is over on the board table i'm not sure it will be helpful to have one of here if you guys can hear me loud and clear for the recording thank you um so i'm chief actuary of blue cross uh in that role i have oversight of the actuary health services and underwriting departments uh that includes a number of things including pricing and preparation of rate files for for all of our products including the individual and small business products and is your curriculum v-tag uh part of exhibit 15 pages 13 of 318 and 319 yes that's correct can you tell us what your professional credentials are i've been a fellow of the society of actuary since 2001 and a member of the american academy of actuary since 2000 and are you familiar with the filing that is under consideration today i am it was prepared under my supervision and i certified it meets all actuarial standards and also that it complies with all federal and state rules and regulations and is that exhibit one of the binder it is and can you review for us how that filing was prepared sure as with any pricing exercise there are many component parts uh the largest and most meaningful of those is a projection of allowed claims costs so to do that projection we start with 2017 counter to your experience uh for the qhp population that's over 800 000 number ones within those plans um we then trend that that exceedingly trend that claims experience forward to 2019 we adjust for any anticipated or known population changes as well as any known regulatory changes and finally we apply a set what are called allowed factors or allowed adjustments to translate allowed claims to paid claims paid claims or amounts paid by the health plan as opposed to those paid through member cost sharing uh to go to providers for providing care to uh members of these plans so that projection of claims accounts for about 90 percent of the premium dollar through that we had a number of components administrative costs come in at just under seven percent of premiums again for those we start with 2017 as our base year for experience we remove any one-time items that are not expected to recur and then we trend that forward for that we use inflation wage growth to trend those numbers forward to 2019 we also have to add taxes and fees to that total with it's about one percent of premium this year that's lower than it has been in the past because of the one year hiatus of the federal insurer fee so one percent there and then at the direction of management we add one and a half percent for a contribution to member reserves um additionally we add zero point one percent for what we call the cost of bad debt which is essentially members who drop their coverage during the year and sometimes haven't paid their premiums uh until that time sorts of uncollectible premiums arise it's worth zero point one percent and does that contribution to reserve include profit uh no there there is no profit we're a local vermont non-profit company we don't have a parent company we're not be holding the wall street there's no profit in these rates did blue cross file an amendment to its original filing yes we did we filed an amendment on july 18 and why did blue cross do that there were a number of changes there were two statutory changes in vermont that affected 2019 or will affect 2019 benefits and therefore rates uh there was also regulation that was promulgated by the federal government after the date of the filing regarding association health plans the vermont department of financial regulation is expected to promulgate emergency guidance also with respect to AHPs um because of these changes we need to make an amendment to our rate filing and are you familiar with the contents of the amendment that was provided to you for yes i am i also supervised the preparation of that amendment and would you describe the contents of the amendment yes so we actually started with the uh lewis and ellis recommendations which we did not oppose so that formed the starting point of our amendment from there we added the cost of two new vermont state laws that impact 2019 benefits one having to do with chiropractic co-pays the other having to do with breast imaging um that those two things combined added an average of about 0.1 percent to rates not a huge amount we then layered on top of that the factor for association health plans we do expect there to be a pretty significant migration of small groups from qualified health plans to association health plans in 2019 because of these recently released federal and expected state rules um those changes increased the rate by about 2.1 percent on average and does this amendment include any change of the recent federal actions regarding the risk adjustment program that's being headlined in the news uh no there's nothing in the amendment for that we did so the federal government has suspended payment of risk adjustment amounts for 2017 and that's expected to impact 2018 as well however we did not believe that will have any impact on 2019 risk adjustment therefore we did not include anything in the amendment for that so i'm going to show you what has been marked exhibit 17 for the record mr. Schultz can you identify for the record what the exhibit 17 is that is the uh rate amendment that i just summarized at a high level and was this amendment provided to the board to Lewis and Ellis and counsel for the health care advocate on July 18th yes that's right and was that the first that the health care advocate knew that we were interested by the amendment um i honestly i don't know the answer to that so i move for admission of exhibit 17 under the record mr. Ancombe we we object to think it's improper we uh if it is going to be admitted we would ask for a substantial extension of all the deadlines so that we can review it and challenge it i have reviewed the document and the justification for the document as to the timeliness of the information and the timing of the filing of the initial the initial rates through surf going to admit the document i do understand not only has the hta not had the opportunity to really review the document the board members have not our actuary has not we do have a provision that allows for up to 30 additional days for the board's decision we this hearing today we will leave this issue open while we await some responses from the carrier on the amendment we can discuss it today and if we have to reopen this hearing for open discussion we will do that also but we do have up to additional 30 days and i'm not going to extend any deadlines at this moment and we will discuss that at the end of today's testimony so uh exhibit number 17 of blue cross is admitted into evidence just like reading so mr. Schultz in your professional opinion was this amendment necessary yes it was uh because of substance and actions taken by the government legislature and also some regulation that was released by the federal government and it's anticipated to be released by dfr this amendment was necessary to meet with all the rules around this rape property specifically rates would have been inadequate in the absence of this so as you developed filing and the amendment what was blue cross this objective our objective was to return a contribution to member reserves of our target of one and a half percent and to do that while using actuarial assumptions that are reasonable of individually aggregate and also in complying with all state and federal regulations and rules now i want to expand on that a little bit i want to make it clear so we've talked about ranges of reasonable assumptions i want to make it clear we are not filing at the high end of the range of reasonable assumptions we are not filing to try to recover the csr dollars that were refunded in late 2017 and through 2018 those are in the past none of that is part of this rape filing we are filing for a one and a half percent contribution to reserves which is the amount that's necessary to maintain reserves at an adequate the modest level of solvency that our solvency regulator has insisted that we maintain so can you give us an overview of the assumptions other than trend that went into the filing and the subsequent yes there are a number of those so i'll start with population changes and that had a number of component parts there was a very small change for newly insured members there was a much larger adjustment for members who left us from 2017 to 2018 there was a fairly significant migration away from blue cross and it turns out that the healthier members are the ones who left us so that has an increase on our claims cost that increased was almost perfectly offset by an expected increase in risk adjustment receivable additionally we took a look at continuing members and for continuing members we've observed over time that the risk pool the the single risk pool in vermont has been aging at a pace that adds about a half percent per year to claim costs and so we reflected that in our assumptions and finally we include an assumption for selection which is members make tend to make financial decisions that are in their best interest we need to reflect that in our rates so all those assumptions are in there beyond that we had to make assumptions for a number of new federal regulations the first of those i mentioned the defunding of CSR benefits which are cost share reductions available at low income vermonters the federal government no longer funds those in response to vermont passed what we refer to colloquially as our as our silver solution so we are loading the silver on exchange plans with the cost of those CSR benefits premiums are higher for those plans but members in those plans are protected from premium increases because the the federal premium subsidies will increase at the same pace we also have now silver reflective plans which are off exchange plans that look almost exactly the same as the on exchange plans but are available at rates there that are more coordinated with what the rates have been in the past so they don't include the cost of those CSR benefits because of all these changes we needed to include assumptions as to how members would migrate from plans that are becoming silver loaded into some of these other plans whether that's reflective plans or they might stay on the exchange and instead choose a bronze plan for a lot less money or a gold plan that'll have them really close to the same price tag as a silver plan so there'll be a lot of membership movement we had that we had to reflect that additionally the federal the federal government also had a couple of the things i mentioned age fees that's part of our amendment for association health plans as of 2014 vermont decided i'm sorry vermont decided that as of 2014 associations would no longer be able to help offer health plans to small groups small groups could only purchase insurance through the exchange recently federal regulations have kind of changed that paradigm they've stated that small groups who band together in association can be treated like a large group for rating purposes so with that new regulation a number of associations who used to offer health plans prior to 2014 and have continued to operate they've continued to exist as associations to offer many other benefits other than health benefits to their employer members they've approached us with an express great interest in getting back into the health benefit market they want to offer these association health plans starting in 2019 so our sales department worked with these associations to develop reasonable membership assumptions based on expected my expected pricing differential between qualified health plans and association health plans we expect about eight thousand of our qhp members to migrate to a hps association health plans in 2019 we did make we basically said those people will come from all across the small groups second with one exception we did take note that there are a number of small groups that offer only platinum coverage to their employees this is similar to prior to 2014 there were some associations out there that offered very rich coverage typically that's also augmented by hra's or hsa's we believe that these small groups who only offer this very rich coverage will not be interested in association health plans that are expected to have much cleaner plan designs than the platinum plan for that reason we think these platinum groups as we're terming them will remain on the exchange but these four these i'm sorry these eight thousand members will come from across all the other benefits including individuals who are in platinum plans but weren't in a group that offered only platinum plans we assumed all these folks would migrate to a hps did you in any way address the appeal of the individual mandate yes thank you we um we did also do that as part of the changes due to federal regulation the penalty associated with the individual mandate was repealed at the federal level i'm sorry it was made zero at the federal level the individual mandate still exists at the federal level the penalty associated with it is now zero so as a result of that we expect there to be a number of healthy individuals who drop their coverage in 2019 to come up with these assumptions we look at a historical experience for members who had no or very low claim costs and we assume that these members would would make a decision to drop coverage for many of these members would make a decision to drop coverage in 2019 um vermont has recently passed the law in with the individual mandate specific to vermont that starts in 2020 it will have a yet to be defined penalty associated with it we do not believe that uh the this will impact any anyone's decision in 2019 because of guaranteed issue members can drop their coverage in 2019 and then re-enroll in 2020 with no penalty i also want to point out that the assumptions that we made are in line with best estimate assumptions um that were developed by an actuarial study that was published by the board and by dmr and do we know more about the risk transfer program after the filing was made we do so there were a few other assumptions that went to the filing uh risk transfers are one of them at the time of filing we had an assumption based on the information we had available at the time uh after the filing more knew more about the 2017 risk adjustment this was part of our amendment and part of the l&e recommendations um so it was included in the amendment um we also had to make some assumptions as to administrative costs how are those going to trend forward over time we included a three percent assumption for wage increases and a zero percent assumption for all other items and did you consider paying to allow factors for the plans we did that's so that's another set of assumptions so i mentioned we started with we started with allowed claim costs paid to allow the adjustments take us from allowed class to paid costs so paid claims so that are the portion paid by the benefits that we offer as opposed to member cost sharing so there is a pricing actuarial value i want to make sure we distinguish that from the metal level actuarial value the metal level value is based on a federal calculator with a nationwide set of experience data within it and that defines whether a plan is bronze or silver or gold or platinum the pricing actuarial value is developed specifically based upon vermont utilization within qhps and that calculates how much of a given plan design will be paid by the blue cross benefit as opposed to member cost sharing also as part of that there's a benefit richness adjustment and that basically reflects that members in richer plans can use their benefit more frequently that particular assumption is based upon federal factors so that was the non-trend assumptions can you describe her trend assumptions for the board sure so trend is probably the most meaningful assumption that we make and i'll discuss medical and pharmacy trend medical trend we split into two pieces we have utilization trend and unit cost trend as part of utilization trend that not only includes the number of services it also includes the mix or intensity of those services so to develop a utilization trend we look at past and emerging patterns of care and in doing that we developed a utilization trend assumption of two percent that two percent has been corroborated by dr clavin our chief medical officer in terms of the drivers of that two percent trend and those include a few main ones that i want to go through so pharmaceuticals dispensed in a medical setting have increased by about 15 percent from 2016 to 2017 so it's a pretty huge jump these are similar to specialty drugs on the retail pharmacy side that we know we're also increasing at a very past fast pace these are life-saving medications but they are very expensive so these include things like cancer drugs rheumatoid arthritis drugs and immunodeficiency drugs always again these are wonderful things for our members they in some cases cure diseases or increase quality of life but they are very expensive and they're driving up utilization trend the second thing that we noticed was an increase in office visits and preventive care those went up four and seven percent respectively from a utilization perspective this was primarily driven by an increase in mental health professional services which we see as driving care to the correct setting and getting people the care they need and that will prevent higher plane costs in the long run we also saw a pretty significant uptick in colonoscopies which also is a good thing the the evidence it actually does not indicate that this will reduce costs in the long run but it will identify cancers earlier and it will save lives so for that reason it's it's important that folks get their colonoscopy screenings so we see that again it's a positive development even though it is driving utilization upward finally we saw an increase in diagnostic services x-rays labs high dollar imaging we think that's associated with the increase in in primary care and office visits that we saw so that's utilization trend unit cost trend consists of a few pieces as well a portion of that about a little over 50 percent of medical costs are for facilities that fall under the jurisdiction of the Green Mountain care board in their hospital budget review process so for those facilities we made the assumption that increases would match those from last year except unless a facility had made a public commitment to a commercial rate increase that was lower than what they had last year in that case we worked it into our projection we also have other providers with whom Blue Cross directly contracts and we have out of area providers that are accessed through our blue card system we don't directly contract with those out of area providers so where we contract we included anything we know about ongoing contract negotiations in our unit cost trends and for everything else we provided i'm sorry we relied upon a Blue Cross Blue Shield Association trend survey that demonstrated how costs are increasing elsewhere in the country how about our pharmacy trend is that one of the trends that you were it is that you include yes so pharmacy trend we used a similar approach to what we did for medical utilization of trend looking at past and emerging patterns of care but we tempered that in a few ways one thing we did was to look specifically at drugs that are losing their patent protection and moving from brands to much less expensive generic utilization so that became part of our trend excuse me we also took a look at specialty medications these are similar to the medications that are dispensed in facilities and that they're very high cost but often life-saving drugs they make up almost the entirety of the drug almost every drug that you will see come out over the next few years will be a very high cost specialty medication these are curing previously incurable diseases in some cases and in all cases the greatly improving quality of life we cover those for our members that has a pretty profound impact however on the pharmacy trend so with all those considerations pharmacy trend in total is 13.3 percent we did separately consider our negotiations with our pharmacy benefit manager in terms of pricing so 13.3 percent is without those pricing considerations when we add in those that pricing it has the impact of reducing the 13.3 percent trend down to about 9.9 percent and did you make any subsequent amendments to the trend reflect the cross initiatives we did have another change that impacts trend i want to avoid i think they used the word amendment this was not part of our amendment but in our original filing we included the impact of a cost containment effort that we're implementing in conjunction with our providers and in conjunction with one caregiver and this effort has two primary goals one is to reduce hospital admissions by four percent by reducing read emissions two is to reduce emergency room visits by five percent and we're going to achieve those things through a coordinated through a collaborative care coordination process that in some cases directs care more appropriately to primary care providers this initiative is expected to have an impact on trend if you if you include it within trend of about 1.1 percent so reduce our trend from 2 percent utilization trend for 2018 to 0.9 percent utilization trend for 2019 um that in turn has an excuse me has an impact of about 0.8 percent on premiums did eleni offer any opinion on your trend assumptions they did um they opined that our both our medical and our pharmacy trend assumptions matched their best estimates they were in the midpoint of their expected ranges and do you agree with that portion of their opinion i don't i think it's misleading for eleni to have included our cost containment strategy as part of trend that's a separate initiative trend is a look at how costs have been changing in the past and are expected continue to change in the future in the absence of some sort of external event that acts upon them so when they looked at utilization trend they agreed that 2 percent was the best estimate and they provided a range of 1.6 percent to 2.4 percent they similarly agreed that 2.7 percent was our best estimate for cost trend when you put those things together you get a range of 4.2 percent to 5.2 percent that's different from the range they published in their report because in their report they threw the cost containment into there so the distinction i want to draw is that blue cross is moving trend from an expected range of 4.2 percent to 5.2 percent in 2018 we are in the midpoint of that at 4.7 percent in 2019 we are moving that down by the 1.1 percent i mentioned for the cost containment efforts so our 2019 trend is 3.6 percent that's well below the 4.2 percent to 5.2 percent range in fact it's even below the range that they'll be published in their report that i think is misleading because it did incorporate those efforts already so we are making efforts to reduce trend below the bottom point of the range in the past the board has made adjustments to trend to move it to the low point of the range that would be clear error this year because blue cross is already taking the initiative to implement programs that will move that trend on below the low point of L&E's range similarly on pharmacy trend i noted that the 13.3 percent trend which L&E agrees is best estimate is before blue cross blue shield contracting efforts those contracting efforts will have the impact of moving that trend down to 90.9 percent which is far below L&E's best estimate what contribution to members reserve was requested we found a 1.5 percent contribution to member reserves that is a long-term assumption that is that's the minimum long-term assumption necessary for us to keep pace with the increase in medical claims as well as unforeseen adverse events and can you give us examples of unforeseen events that have actually occurred yes we actually answered that question it's part of the q&a that's in section nine of the binder starting on page 258 we've provided quite an enumeration of a number of unforeseen adverse events that actually happened to us over the past five years it's a long list i don't want to read the whole thing for you but i do want to highlight a few of these just to show kind of the variety of unforeseen events that can occur so i kind of just picked one from each year so federal regulation has been fairly dynamic shall we say under the Trump administration we kind of never know what we're going to get in some cases we're able to react to that and go to interrates in other cases we are not csr defunding occurred in late 2017 we were not able to build that into rates as a result we expect about a seven million dollar hit to surplus for for us living up to the promises we made to members and covering them for those cost share reduction plans those monies won't be refunded by the federal government they won't stay come out of surplus about seven million dollars um if we look at 2017 the green mountain care board made explicit cuts to utilization trend that were below the recommendation of their actuaries that lower utilization trend did not materialize and we will have to use about four million dollars of reserves but we did in fact use about four million dollars of reserves to cover those additional claims beyond what we were able to put into rates in 2016 within the large group line of business we covered premature twins who were born in late 2016 and required several months of intensive care they were eventually discharged and we paid a medical bill about a million dollars for those twins obviously we can't include that sort of thing into rates so that million dollars essentially comes out of surplus if we go back to 2015 actual projections can be challenging in a time of significant change or uncertainty in other words we're not always right so when the aca was first implemented once we were able to look at experience we noticed that individuals were making plan selections that were right for them financially but our rates did not include that within premiums we therefore needed to make an adjustment moving forward we started making that adjustment with our 2016 rate filing that's the selection adjustment I mentioned earlier it's still in our filing today but because we didn't recognize that that adjustment needed to be made for 2015 that cost us about seven million dollars so again that money comes out of reserves the final one I want to point out if we go to 2014 because of issues with the rule out of Vermont Health Connect in early 2014 we had a number of members who did not yet have their ID cards so what Blue Cross did is if members showed up at the pharmacy they didn't have an ID card but they said that they had tried to enroll through Vermont Health Connect and into a Blue Cross plan we covered their medications free of charge so that program was about $200,000 which is not the largest number that I mentioned but we can only implement those sorts of programs to help see Vermonters through difficult changes in their health care if we have an adequate level of reserves so what does Blue Cross's average request rate increase? um our average requested rate increase is 6.7 percent 6.9 I'm blanking 6.9 percent thank you and that that is the amount that Vermonters were actually feel okay so when you think about sort of loaded plans those rates are going to be giving up by 20 percent very nearly on average but because federal premium subsidies will go up uh at the same amount at the same pace or in our case probably even at a faster pace than that Vermonters won't feel that change so concentrating only on what individuals in small businesses will feel we're at 6.9 percent that's after the amendment that we filed and since 2014 what is Blue Cross's actual realized contribution reserves for this business through this line of business it's negative 1.2 percent and what did Blue Cross expect after regulatory action for the same time horizon we expected positive 0.7 percent and what was the Green Mountain Care Board's approved CTR for this period an average of about 1.2 percent so why doesn't the approved CTR match the expected CTR the Green Mountain Care Board sometimes orders reductions to assumptions below those that were recommended by their actuaries in this case we absolutely implement them into rates but we don't build them into our forecast of expected results and of those the CTR are you talking about other assumptions so trends and assumptions other than that and what do you conclude about those results well I think it's clear that our rates have been inadequate over the past four years I'd also say that it's very clear that since actual results have been an average of two percent lower than expected results that our assumptions have not been at the high end of the range in fact if anything they've been too low and can you walk us through the numerical components of the 6.9 percent yes so as with any projection or any any assessment of how rates change from year to year we need to start with actual experience so if we look at 2017 experience and compare it to the 2017 experience implicit in last year's rate filing we find that they're almost exactly equivalent which is good news we also find that risk adjustment was significantly higher in terms of a receivable to us than what we expected so in combination those things drive a reduction of rates of about one to three percent far away the biggest driver of the increase in rates is trend trend increases rates from 18 to 19 by about 7.3 percent that consists of all the different components I talked about earlier so for utilization trend as you recall the word last year reduced utilization trend from two percent to one percent we reexamined that this year we continue to see evidence of a two percent utilization trend so in restoring that to a two percent level and projecting it forward another year that impacts premiums by about 2.3 percent it's for utilization trend for unit cost trend those increases drive premiums up by about two percent pharmacy trend which i indicated was was 13.3 percent before our contracting efforts drive an increase of about three percent of premiums so those three things together were about 7.3 percent we had a number of other factors i talked about the population adjustments that we made there were also some benefit tweaks that were made to the plans including the recent recently enacted statutes all those things combined increased rates by about a half a percent looking at CTR restoring CTR to an adequate level increased rates from 2018 to 2019 by one and a half percent administrative expenses and other fees increased rates by about one percent that includes 0.6 percent in terms of an increase for blue cross blue shield administrative costs so to kind of frame that in a somewhat different way if we were not projecting any increases in claims and we did not have to restore CTR to its adequate level we would be looking at a 0.6 percent rate increase as part of this filing finally there we talked about the number of federal changes that we had to take into account one was good for premiums the federal insurer fee was suspended for a year that lowers premiums by two percent the other two unfortunately were not helpful to qualified health plan premiums the individual mandate had the impact of increasing costs by about 2.2 percent increasing premiums I should say by 2.2 percent and association health plans coming on the market and giving small groups an alternative to QHPs is expected to increase the cost the premiums for QHPs by an additional 2.1 percent so it's a lot of numbers if anyone was keeping a running tab what you get is an 11.6 percent rate increase I testified that our actual file rate increases 6.9 percent the difference between those two are rate mitigation actions that were taken by Blue Cross Blue Shield of Vermont there are a number of these first we made good on our promise to Vermonters that all realized benefits of tax reform would be passed along for them so we lowered premiums by 1.1 percent in recognition of tax reform secondly in terms of pharmacy contracting we work very closely with our pharmacy benefit manager to do two things one is to significantly improve our discounts at retail pharmacies and mail order pharmacies also our discounts on specialty drugs additionally we worked with them to maximize the rebates that we received from drug manufacturers all those things together benefited rates by about 2.3 percent and finally I discussed earlier the cost containment efforts that were undertaking conjunction with providers and with one care of Vermont on the medical side those items decreased rates by another 0.8 percent in total that's 4.2 percent of rate mitigation that Blue Cross has worked hard to achieve over the past year which is about 16 million dollars in rate reductions so mr. Schultz do you have what has been labeled exhibit 18 in front of you I do and can you please identify that for the record record yes this is a graph showing the components of average file Blue Cross premiums over the past three years this is this was prepared under my direction from information that's readily available in each of the last in this in the previous two great pilings before the board and is it a summary it is and what is it a summary of so this is a summary of the various components of average file premium and I can describe that so we have and does everyone have this so I would ask that exhibit 18 be admitted into the record and we have not seen the record yet and not heard from Mr. Anko would you like no objection no objection 18 submitted into evidence mr. Schultz can you briefly describe the contents of the graph starting with the axes yes so the vertical axis is average premium in dollars per member per month the horizontal axis axis is time so just each of our three years that we observe the various areas within the graph at the bottom the blue area represents administrative expense and contribution to member reserves that we fired in these three years the green area above that is representative of claim costs for each of the three years at the very top we have a red area that shows the taxes and fees that were inherent in each filing you'll notice that kind of varies from year to year the big difference being the federal insurer fee was in place in 2018 it was not in place in 17 or 19 and finally there's this this yellow triangle at the top this shows the impact on 2019 rates of various federal rate federal regulation that has come out over the past year so that's not that's association health plans that's also the removal of the penalty for the individual mandate that also shows csr dependent this this is prepared while i talked about the impact felt by Vermonters in my previous testimony this is the overall average increase so it does include that's the silver load so that's what that's what's in the yellow so what is this graph show in terms of average filed premium increases so i what it shows is that the vast majority of average file premium increases 90 percent as i testified earlier is due to the accused because of app payments made to providers for care that they've provided to vermont ursen these candidates and you're familiar with the recommendations prepared by the board's actuary yes i am and is that exhibit 13 of the binder that is exhibit 13 of the binder and how many recommendations has the person else i mean there are five recommendations and if you describe the nature of the first four recommendations the first four were recommendations for changes to actuarial assumptions having to do with population changes and do you oppose recommendations we don't oppose any of them in fact we incorporated all four of them into our amended file and what about the fifth recommendation the fifth recommendation is that the green mountain care board should consider hospital budget submissions as part of their decision as well and are you familiar with the hospital budget submissions that were recently filed with the green mountain care board yes i've reviewed a summary of the commercial rate increases included in those submissions that was prepared based on information publicly available on the green mountain care board website and what impact would those hospital budget submissions along with any other known contracting changes have on your unit cost trends we would need to increase our unit cost trend from 2.66 percent to 2.99 percent i can split that out a little bit we would need to increase our unit cost trend for for providers under the purview of the green mountain care board hospital budget review to 3.2 percent and we would decrease the unit cost trend for other providers to 2.8 percent and what about uvm mc right so the the largest driver of that is uvm mc they publicly committed to a zero percent commercial rate increase and that's what you'll find in our filing their hospital budget submission includes a four percent commercial rate increase and was that commitment made to the board in February it was yes do you intend to resubmit the filing to reflect the increase in unit cost trend represented by these changes no we don't intend to and they were not included as part of our amendment either we believe that the board will be able to manage the unit the commercial rate increases for these hospitals down the level that was included within our filing and are there any areas of disagreement between you and the board's actuary with respect to their explicit recommendations there are none with respect to their recommendations as i mentioned earlier uh we we do have a disagreement with them in terms of how they presented their range for for trend so turning again to the market that provided the board and contains the exhibits that have been admitted into evidence are you familiar with exhibits two through twelve yes these are all the responses we provided as part of the q and a process questions submitted by either Lewis and Ellis the board's actuary by the board themselves or by the health care advocate and were you involved in drafting the responses to those questions i was i actually i signed the responses to two through eight and to eleven and twelve and i was involved with the responses included in the binder as nine and ten not familiar with their contents so exhibits one through twelve and seventeen all of which are now in evidence does that comprise the complete final that the board has under consideration yes that's great are you familiar with Vermont's standards for rape approval yes i am and in your professional opinion are the rates as filed including the amendment adequate actuarial standard of practice number eight provides guidance to health care actuaries who are submitting rates as part of a filing a review process within that standard of practice they define rates as adequate if they provide for payment of claims administrative costs taxes regulatory fees and a reasonable contingency or profit margin these rates are not inadequate and are they excessive neither are they excessive the same standard of practice defines excessive rates as those that exceed what's required to pay for the things i just mentioned claims administrative expenses taxes fees and a reasonable profit or contingency margin are they unfairly discriminatory they are not and are they reasonable in relation to the benefits that will be provided in the 2019 plans yes they are reasonable and are you familiar with the other statutory standards that apply to this filing i am they include affordability they and promoting access to care promoting quality care and do the rates as filed meet the standards of promoting access to care and promoting quality care they do meet those standards we we did provide some of those responses within the q and a that has been admitted into evidence and my colleagues will expand upon those standards in their testimony and are the rates affordable it's an interesting question so to address that i'd like to first turn to exhibit 18 again i want to address some lines on this exhibit that i did not address earlier there are three dotted lines on the page and i start from the bottom work my way up bottom dotted line is the blue line above the blue area in the graph this shows the maximum administrative expense in ctr a combination of those two things the carriers are allowed under federal and vermont laws what's notable here is that our actual admin and ctr is about 60 lower than that maximum if you go to other jurisdictions you will find for profit carriers in those jurisdictions filing rates that are much closer to that maximum dotted line similarly if we move up to the gray dotted line it's above the red area that shows what premiums we have been had we filed at the maximum allowable sum of admin and contribution to reserve the rates are about that we did file are about 10 lower than that gray dotted line finally there's a purple dotted line at the very top graph the difference between the gray and the purple lines are blue cross blue shield care management and fraud waste and use efforts notably these efforts in 2019 reduced premiums by about eight percent they would be about eight percent higher if we didn't have those programs and they weren't part of what we do notably that eight percent is very close in fact it's within a dollar of the administrative costs and contribution to reserve that we include in the filing so in other words we essentially pay for ourselves through our care management and fraud waste and use efforts I also want to consider as part of this graph again I want to return to the green which represent along with the yellow green plus the yellow represents payments to providers for care they provide to Vermonters again this is 90 percent of the total premium since these rates are not excessive they can only be unaffordable if the underlying cost of care represented by this green area is unaffordable now when the green mountain care board makes cuts to rates that are below the recommendation of their actuaries they're effectively requiring the blue cross fund the difference out of surplus and in doing so are creating a conflict between affordability and solvency in the absence of such rate cuts that conflict does not exist the department of financial regulation has opined that solvency is the most basic aspect of consumer protection in fact I would say that solvency is the most basic tenant of affordability and can you explain some of the policy choices that have been made that affect affordability or the cost of the benefits and the payments that are being made to providers absolutely so affordability really can't be assessed in the absence of looking at policy and vermont has made a number of policy decisions over over this last several years that do impact affordability notably vermont decided that at the onset of the program that members making less than 300 percent of federal poverty level the premiums would not be affordable for these numbers therefore they implemented the vermont premium assistance and additional cost share reductions for members below 300 of fpl notably they did not implement similar programs for members making more than 300 of fpl as the board is aware the state has convened a working group that has been looking at a 1332 waiver that would leverage federal dollars as well as state funding to make premiums more affordable for everyone blue cross has been a very active participant of that work group i want to address age rating vermont does not allow age rating there's only one other state that does not allow age rating we're all familiar with those depressing studies that come out every year from the keiser family foundation that showed generally speaking vermont as the second highest rates for a 40 year old non-smoker those come out every year if vermont allowed age rating as almost every other state does rates for a 40 year old would be more than 200 dollars lower than they are today that would completely change the dynamic in those studies vermont would show not at the top of the premium list but in the bottom quintile of states for affordability for a 40 year old so let me explain that a little bit differently vermont's decision in policy was to make this one of the very best states to purchase insurance if you're older than 55 or so because younger members are required to subsidize the costs of older members of course the flip side of that policy decision is to make this among the very most expensive states in the union to get insurance if you're younger than age 45 or so the break even is about age 52 so circling back a little bit if we look if those studies looked at the average 52 year old instead of the average 40 year old vermont would be in the in the 10 most affordable states to purchase health insurance for an individual so vermont could very easily make this coverage more affordable for young families if they decided to allow age rating the policy decision on the other hand was to make this make these rates as very very affordable for individuals who are nearing retirement so those things that you just described can you relate them to the green area on exhibit 18 for each of those three they don't really change the size of the green area but they do change who pays the premium for that and it makes it more affordable or less affordable for a segment of the population or for the whole population there is one other policy consideration i want to address and that's the cost shift because medicare and medicaid do not fully fund what they pay providers in other words providers costs are not fully funded by what medicare and medicaid pays them those costs need to be shifted to private commercial payers that includes individuals small businesses and large groups it's arguable that large employers have the deep pockets that are necessary to bear the burden of the cost shift and continue to pay a substantial portion of the premium on behalf of their employees it is arguable as to whether individuals and small groups who are paying these costs out of the out of their pockets can or should also bear the burden of the cost shift so can the green mountain care board influence the green in the hospital budget process yes so the policy isn't the only way to make this more affordable we can also take action to accurately reduce the size of this green area the green mountain care board is a key and valuable player in that both through your hospital budget review process through your oversight of payment reform and many other initiatives blue cross is also a key player in this through our own cost containment efforts through our own payment reform initiatives and in fact it is all we do well every day is work hard at reducing the green and the blue bars we have every motivation to do so it's part of our mission to do so so we do everything we can to reduce that while still maintaining access to care so i think there are two ways that we can make this more affordable one is by prioritizing affordability over access to care and my colleagues will describe that in a little bit more detail the other way is to create policy change and change that regulatory and statutory environment blue cross is ready to and willing to lead with the green mountain care board and making those changes happen just as we have worked hard over the past years include 16 million dollars of rate mitigation in this year's rates thank you mr. Schultz i would like to reserve calling mr. Schultz in rebuttal if necessary probably won't be necessary but i just wanted to reserve that right see how our time is going we should have time to do that so miss green could you identify your position at blue cross yes i'm with green i'm the treasurer and cfo at blue cross in german i've been there five and a half years and i'm responsible for all the financial management functions of the company including treasury function financial reporting and controls as well as the actuarial and pricing function this way can you speak a little more maybe we can turn this mic around thank you kevin thank you better thank you thank you long voice and is your cv attached as part of exhibit 15 pages 320 through 322 yes it is so as c um sorry um have you read the solvency opinion that has been submitted by the department of financial regulation yes i have and is that tab 14 of the binder yes it is tab 14 and as cfo and treasurer blue cross what are the key points that you take from that okay this year as i read the dfr solvency opinion it's clear to me that the commissioner has escalated his message and concern three key elements in particular stuck out to me first the commissioner makes clear that the primary tool or fundamental element of maintaining insurance solvency is to consistently charge adequate premium rates blue cross the show of the lot knows this each and every year we've submitted proposed rates that are designed to be adequate each year the decision of the board has reduced those rates we can get them inadequate this is not sustainable clearly the second point that came from the opinion in my view this year very clearly is that the blue cross blue shield vermont rbc ratio is trending down downward this is true each and every year when blue cross blue shield vermont submits great proposals again they're designed to be adequate and include ctr that's intended to maintain our reserve level each and every year the green mountain care board reduces that rate making it inadequate and thereby putting pressure on our rbc ratio this is also not sustainable the third point that i'll draw out is the commissioner outlined in some detail the unprecedented uncertainty uncertainty in the federal health reform environment this creates increasing financial risk to us as an organization and clearly the solvency opinion this year was a comprehensive walkthrough of how this trend is continuing so each and every year blue cross blue shield vermont has done its level best to navigate these changes the federal changes happen on short notice and in ways that have not been foreseen and we do our level best to navigate these choppy waters each and every year the board when they cut their rate cut our proposed rate it weakens our reserves and our ability to sustain those hits if you will and so i would like to draw attention to the overall message that i took from the solvency opinion was that something has to change so what is the recent history of rate advocacy for blue cross blue filers under the board's jurisdiction and its recent decisions the board for example in last year's qualified health plan rate filing they pointed out that their their task is to strike a balance between the leanest possible rates and protecting the insurer solvency or financial health i don't believe that there's a it's a misnomer that a balance can be had there they add the fundamental tenant of adequate or fundamental tenant of solvency is that we're consistently charging adequate rates so it really is inconsistent to think that you can chip away at the rate and maintain financial health that it can't do both further board has consistently cut our rates believing that they're incentivizing us to be more efficient and to negotiate better rates with our providers the truth is that we do every day focus on efficiency and every day negotiate and bring our market share to bear on our provider negotiations however it is clear that our rates have been inadequate over the last several years from the period 2014 to 2017 we have lost 16 million dollars in this market segment second it was part of the pre-hearing Q&A on tab 12 page 2e2 and one of the questions that was asked of us is to provide the calculation of what the RBC would be for the QHP business only the illustration that we provided is just that it's an illustration because RBC is not a tool that's used for a particular standalone line of business that's used for the whole company however it was instructed in that illustration that the approximate RBC for the QH business only decreases from 2014 2013 sorry to 2017 the QHP business RBC would have declined 239 percentage points so clearly the rates have not been adequate to sustain the reserves that are not needed to navigate the child waters both today and into the future so just with QHP business alone if that were our only business would the level of surplus be within the commissioner's range for surplus of these determined to be reasonable it would not it would have fallen below the target range and how do you know that Blue Cross is operating efficiently Blue Cross has demonstrated to the board for through many information sessions that we work every day to continuously improve our operating efficiency a couple of data points I'll throw out your attention to in this rate filing is that we L.E. included in their report in section 13 of the binder a reference on page 303 that Blue Cross Blue Shield of Vermont's administrative costs are lower than 95 percent of the other Blue Cross Blue Shield plans nationwide and this is notable in the sense that we are much smaller than many of those plans and much economic theory holds that we would lack scale but we have worked very hard on making our administrative costs ratio one of the best we also have answered in some of the pre-hearing Q&A questions relating to the operating efficiency and again that's on in tab 12 and this one is on page 276 I won't go through it and all the detail that is in the response that's there for you to read but clearly on the bottom of page 276 we shown that our operating expenses per member per month are well below the latest available benchmark median in particular a small group and individual insured book of business is 35.50 cents per member per month and the benchmark median is $41.40102 on that exhibit so we know we're efficient we work really hard at it it's part of everything we do and having the board feel the need to cut a rate below the level that it's adequate to incentivize us is really we have no need to be further incentivized our customer we have to compete for our customers and they expect us to spend as little as possible on our operating expenses and does Blue Cross serve all of its markets in the same way yes we compete in several Vermont markets from one of the only carriers who competes across the small group and individual market the large group insured and self-funded market we also offer Medicare supplement products and we also have a Medicare Part D product all of our offerings we compete for the business that we have and we are motivated to make sure that each of our segments are operating sufficiently as possible so are the rates that Blue Cross is proposing affordable provide quality care and promote access to health care yes they are I wanted to draw attention as Paul mentioned to the answer to the pre-care questions in tab nine so if you could turn to page 235 page 9 we were asked to provide support for the extent to the extent that it exists that Blue Cross pursue Vermont is proposing rates that support affordable rates promote quality of care and promote access to health care I'm not going to go through the answers in detail here we had a lot of really great examples that we went to some length to make sure that the board understood and could see how the connection was made specifically but I would like to just draw attention to our introduction on page 236 of that answer that the three interrelated standards of affordability quality and access to care are intended to work together there's attention between those three things and the goal for Vermont is to find a balance between those three competing goals and often if you achieve more results on one of the goals oftentimes one of the other goals will suffer so Blue Cross will shield the Vermont in this answer here we were focused on these objectives and our goal is is a transformed health care system in which every Vermonter has health care coverage and receives timely effective affordable care that's in our vision it was in our vision long before the pre-mountain care board was created and we continue to pursue those objectives working with the stakeholders in the health care system in Vermont the challenge is when you pursue one of those objectives to the detriment of one of the other of the so-called triple aim sometimes you have less than optimal situation on the one that's being out of balance so Vermont has frequently pursued access to high quality care we get very high marks for the quality of health care available in Vermont and oftentimes that will come at a higher cost for health plans and has the board ever expressed its opinion on the triple aim yeah but i believe and it's in the decisions that we've had over the years that board shares that goal of working to find that optimum place where the tension between those through things can be brought to bear in the Vermont market so what is the Blue Cross's contribution to reserve philosophy? the Blue Cross-Pochilla Vermont's contribution to reserve philosophy is one that we like to set a long-term objective and stick with it so that we avoid any fluctuations that are unnecessary in our rates and delivering premium rates to our customers we did outline that philosophy in some detail this year it's somewhat new it was right as part of the rate filing itself in tab one we outlined on pages 180 through 181 the approach that we use in coming up with an appropriate contribution to reserve and again i won't go through that in detail it's there we outline on page 180 our CTR philosophy just so that it would be clear for everyone a couple of points i'd like to draw your attention to is the the long-term assumption had been two percent for many years and with the tax cuts and jobs act that came into play at the end of December we were able to reduce that one point for the two percent CTR long-term assumption to one of 1.5 percent and that is directly a reflection of passing the the fact that Blue Cross-Pochilla Vermont no longer pays federal over-income taxes we've passed that along in the rate through that CTR assumption it used to be one two percent it's now 1.5 percent and what is Blue Cross's adequate long-term level of RTC for space capital as in the past we mentioned to the board that our target RBC range is 500 to 700 percent and we believe that this range has served us in the past this range was put into place over 10 years ago very much before the advent of the recent volatility in the federal health care reform environment so the recent market volatility and regulatory changes this is very much an adequate but clearly not excessive target range and in Blue Cross we go through the bottom of the range what is the upshot of that so clearly if the board continues targeting to the low end of the range let's say 500 percent or so what about that it's implicitly taking on more risk than in today's environment that it might have 10 years ago if the rates go below the range our CTR philosophy is such that we have to increase our long-term assumption in a particular rate filing from the 1.5 percent to something higher in order to move our surplus back into that range clearly that sets off a possible chain of events where we're increasing our rates we become less competitive we have to compete for our business we'll lose business potentially and then that has the further detriment that we might not be able to serve all the markets in Vermont that we are capable and currently believe in serving i would like to point out to Lewis and Ellis in their report on page in tab 13 on page 304 just to put the Blue Cross Blue Shield in Vermont's RBC range into context on page 304 L&E both opined that they felt our long-term assumption that the CTR 1.5 percent was reasonable they also reviewed our double RBC relative to the other Blue Plans nationwide and they found that over half of the Blue Cross Blue Shield Plans nationwide had actual RBCs higher than the maximum of our range so our range is clearly not excessive so we could a little bit about the alternative minimum tax credit in Mr. Angleau's opening does that credit provide for increased RBC for Blue Cross today it does not provide for increased RBC today the AMT credit is a function of the Tax Cut and Jobs Act it eliminated the corporate AMT and the result is that beginning in late 2019 and over five years from that time Blue Cross Blue Shield Plans will be able to recover our AMT we did answer a question we provided details about that in our rate filing and we also answered a question on sorry tab four page 210 where we outlined it's the last page in that tab we outlined that 16 million will assuming that our results and our tax filing for the 2018 year are consistently the estimates we're looking today we estimate 16 million will be refunded from the IRS in late 2019 and then we'll receive 7.9 in 2020 3.6 million in 2021 and another 2.8 in 2022 so this recoverable is out on my horizon it's a great thing we're happy about it it's one of the federal changes that HCA's lawyer has said that you know it is a positive but it hasn't happened yet it will happen in late 2019 half the earliest it is subject to assumptions around what will be sequestered in terms of the IRS payments and we also recognize that federal payments have not necessarily been as reliable as we might think they have been over the last 20 years we have very current examples of situations where the federal government has withheld payments the cashier reductions payment was completely halted on October 12th 2017 overnight our premiums were underfunded and we also have the recent notification from CMS that the risk adjustment payments for 2017 which is the program that's fundamental piece of the ACA and those payments which are significant are frozen at the moment so even though the AOT is very much a positive thing we will record it and reflect it in the financials when you receive it and if you do receive it how will you use it as we have said in our comments about the impact of the tax cuts and jobs act all of the benefit of those changes will be passed on to policy holders and members for all of our businesses not just the QHD business when those tax AMT refunds come to us they will come in to surplus and to the extent that our surplus position is within our target range it will serve to mitigate future increases to to members and perhaps backfill some of the exactly if you just to be really specific about it in late 2019 when we received the 2016 payment the way I would be thinking about that it would first go to cover the 2018 CSI or defunding that is sitting as an empty copper in our number surplus so when we get to late 2019 to the extent that our surplus is in good shape we would have the opportunity to mitigate rate increases so what is Blue Cross's goal with this rate finally including the amendment Blue Cross the Shield's goal is clearly to have funded premium rates as I mentioned in observing the Commissioner's solvency opinion the fundamental tenant of maintaining our solvency is to have consistently funded premium rates and so we're here today to outline that that is a for 2019 a rate increase proposal of 6.9 percent that's what we need my next questions will be directed to Andrew Garland and Mr. Garland's CV is not in the binder but he was noticed as a fact witness so I would like to ask him a little bit about his background experience because you don't have a new rating go ahead please thanks so Mr. Garland where do you work Blue Cross and show them off okay what is your position I'm the Vice President of client relations and external affairs and how long have you felt that position for a little over three years and before that position where were you I was in NDP healthcare for three years as the Vice President of payment reform and network strategy and before that Blue Cross was shielded from a lot back to 2002 and did you start your career in insurance in 2002 you know in 1998 with Kaiser Permanente healthcare in California so you've heard or I should say you've read some of the Green Mountain Care Board decisions and does the Green Mountain Care Board need to provide Blue Cross with incentive to be more efficient and to lower the cost of care by cutting requested rates no the marketplace provides that incentive I think it's very important to rearticulate that every market we participate in in Vermont is highly competitive very individual and small group markets the large food market both insured and self-insured the Medicare supplement and party markets we have extremely strong and many times aggressive competitors in all of these market places as Ruth mentioned we're a small company the same infrastructure serves all of those markets so our efficiency our effectiveness in the small new market is the same efficiency and effectiveness essentially up for selling in the large food space or in the Medicare space and all of the clients we serve demand the lowest possible administrative cost and the highest value in return everybody wants a high value evolving health plan at the lowest possible cost that pressure is what drives our business every day and when you think about it might be worth taking a moment just to think about the value and the services that we're talking about it's not just paying claims and enrolling people and doing those things quickly and effectively and accurately that's a part of it but it's also providing comprehensive data and analytics across all the range of services medical care rx prescription drug care lab mental health services all of those brought together so that our clients can understand what's happening with their benefits and it involves things like claims management and fraud ways to abuse but Paul talked a little bit about a tremendous amount of money flows through our organization built to us literally by thousands of hospitals and providers of many different types it's extremely important that we understand what's happening with all of those dollars as they move through make sure that the expenditures are appropriate and accurately represent what care was delivered and what care should be paid for we are expected to provide tools to help our members keep most the most of their benefits for monitors are not looking for low access cheap fly-by-nine health care products they buy benefits for their employees but for themselves because they want the best possible care and they expect us to provide expertise services and tools that help their members access that care so that's a part of what we do they want and expect a compassionate and caring customer service team even with the best tools and the most well-meaning providers the system is extremely complex and when Vermonters get in trouble with medical bills in front of them they call us and they ask us to explain what's happening here help me solve that problem and maybe smart knowledgeable highly trained people that look at the time and putting the caring into solving those problems for them above all they want access to great care I can't emphasize this enough I must be so different from other regulatory environments where we're talking to jurors about how to get them to pay for more things in Vermont we don't have that challenge every client we serve wants the fullest most robust care that's possible and they want the best care managers have the plan to help them from their trouble help them navigate so all of those goods and services are expected to be provided by us at the lowest possible cost by all of our clients and if we fail to do that we fail to compete in the marketplace and and I think it's so important to emphasize our clients have options in the individualism of the market MVP is a strong competitor in the large food market sigma and etna they united push hard to try to take business and move to their blocks in the Medicare market etna and MVP again work very very hard to take that business our members our clients have options if we're not efficient and effective in all that we do we lose business and we fail as an organization so my my short answer to the question is that's what we do that's what we're about our mission our purpose in going to work every day is to be as efficient and effective as we possibly can that's why we exist there's no further incentive that the board can provide that the market hasn't already provided for us so you've mentioned a whole basket of activities what about the management team at the cross thank you this is an extremely important part of what we provide the system is complex and problems occur but our our members certainly and our clients expect that we have a professional aggressive management team that's working to stop those problems from happening in the first place does blue cross use its purchasing power and negotiating leverage to mower the cost of care through unit cost negotiations we absolutely do we have direct contracts with 20 or 21 hospitals now the hospital in massachusetts recently directly contracting with us we negotiate actively with every one of those hospitals most of them we negotiate with every year this is a very mature process in 2008 i took the position of director of provider contracting for the blue cross closure of ramon so i have been participating in that process directly or very closely for a decade and i can assure you that it is a well-developed systematic approach to negotiating with all of those providers we collect cost data and utilization data using all the information that we have about the claims that are being paid we look at the budgets that are submitted to you cleaning as much as we can about what's happening with the commercial spend relative to the medicare spend and medicates spend we sit down with the hospitals we let them know what we know what we see how what we pay for services at their facilities compared to the cost of services of the others facilities that we contract with and we push as hard as we can i would say given the constraints of our lack of competitive market place in the hospital side and a regulatory infrastructure that's a very successful process we produce results through that work we have a second process that's closely aligned to the negotiating which involves a very similar team of people that there's a fair amount of overlap that focuses on payment policy and this is the team that looks at how services are changing and the billing of those services is changing over time and they enact policies to manage the way we pay claims so this work very closely affiliated with fraud, waste, and abuse work is essentially meant to correct for new calls that come into the market that may permit reimbursement of things that shouldn't be paid for there are technical challenges, billing problems, or liberal billing practices which occasionally occur that team which is also existing for more than a decade is working constantly to make sure that we're managing the dollars through the door we also manage directly fee schedules for those where services aren't negotiated these are the professional fee schedule that we've talked about before the primary care and specialists who don't receive payments from us through a hospital contract I can assure you that our management of those fee schedules has been very very thorough and has made us few friends in the provider community and you've heard a number of sort of public outcries from the providers who are on those fee schedules which I think offer some evidence that they have been very thoroughly managed to make sure that we're not over spending for those services there is one other lever that we could pull I think that we don't it's the only one I could think of as I was preparing to speak with you today I think of this as the nuclear option this is the option where we allow a provider hospital to go out of network because we refuse to come to terms with them on the contract if we were operating in a different marketplace say suburban Maryland where we've had three four or five hospitals competing with each other in any community I suspect this would be one of the sharpest tools in our toolbox that is not the case in Vermont we don't have significant competition in any service area but we do have access standards we have standards to notify members when the providers go out of network we have many requirements to pay for care regardless of whether or not we can put a network in place so I imagine what it would be like to exercise the nuclear option and I would encourage you to think about that as well it starts with a letter to 30 40 50 thousand people saying effective extinct your providers no longer in their network let's help people in care somewhere else to me that is a scenario that is likely to cause a tremendous amount of damage and waste whether we look at the amount of money you would spend on public relations and legal fees the damage we would do to our provider relationships the number of members that we would confuse frightened lives that we would possibly endanger frankly as a result of that confusion and fray and the amount of money we would spend on a lot of network care that we would have to pay for anyway probably at a significantly higher rate we don't see it as being a value add process except in the most extreme sort of circumstance and even then we may just be under funding or moving under funding from our books on to someone else's at least we start with the assumption that by definition any hospital budget is already been approved by the board so it's adequately funded if we were to take it down significantly from funding that you approved we would be under funding it so that's an option that is certainly I would say here today has not been taken off the table for us but it's not one we would rush to there's very dire consequences for things you know about so Blue Cross is also in contract with OneCare for months ACO would they be included within the remarks that you just made that's yes they are we do have a contract with OneCare for the small group in individual lives we also have a contract with them now for self-insured pilot and we're working with them to extend to extend that contract to include more lives but that's a good example of the type of activity that we're able to do and that we frankly turn our attention to as an alternative to the nuclear option that is to work with public and private stakeholders providers regulators policy makers on alternatives that create more value through our network and this this is also worth it as you mentioned in your opening remarks and he goes back a very long time before there was a director of paper I was the I was the director of provider contract with Blue Cross for sure Vermont and I brought to our executive team a proposal that we start working on something is back in 2008 called payment court there's this new thing happening in the industry we need to be a part of that as the green on care board and others in the state have pushed paper perform value-added initiatives we participated in every one of them every pilot that that Richard's lastly brought to the table we came sat down and said how can we make this more valuable we've worked with the blueprint we've worked with the state's immunization billing pilot we've been a part of dozens of work groups sponsored by legislature for others to try to come up with better ways to pay for care to solve problems that were making administrative waste for the provider system when other commercial payers have been scarce or frankly most of the time non-existent at those at those meetings or for as part of those pilots we've been there trying to find a way to to make even more value to provide the network that we can through direct contracting maybe we've been highly successful thank you I'd like to transition to dr. playman and this is his first time before the board in this capacity in a freighter and his cb is in exhibit 15 pages 323 325 no 27 sorry um and so can you tell us what your position first identify yourself and tell us which position is with blue cross i'm josh playman i'm the chief medical officer at blue cross and essentially that means i oversee our care coordination programs in relation to this discussion okay and how long have you been doing in that position just under two years with blue cross for just under four years position in vermont for 18 years and where did you practice medicine before you came to the cross i was at different health care which is a critical access hospital and now an fqhc whether the efforts continue to be coming back to hc so tell us more about your role at blue cross uh so as i as i alluded to i oversee our care coordination programs primarily the law for our clinical programs and um at paul that paul had mentioned uh cost containment clinical cost containment activities um we feel these are vital because they really support infant space care uh and and certainly utilization moderate but most importantly help people navigate a complex health care system both here in vermont but regionally and nationally uh and so we have those connections um and you know we're uniquely positioning vermont because our goal is to ensure that our members receive the best care available um at the lowest cost from all of our providers uh and we receive information from um about care provided um some information about prices certainly about outcomes um and and we work strongly with our provider network and our care management care managers are local vermont care managers who have in-depth knowledge of the best care available at a very personal level in the national academy of medicine and institute of medicine have uh published studies where they estimated about at about 20 percent of total health care services are provided really don't improve people's health um wasted medical resources needlessly increasing costs and and so cost containment certainly is a piece of what we do that can be achieved through many different ways um while we did mention 9.7 million savings in the binder page 278 uh that was for prior verbal loan across our different initiatives with our other initiatives our estimate estimate is that for about 1.9 million of investment uh we achieved 18 18.1 million savings for this population uh the individual small group population in 2017 um this cost avoidance is reflected in the claims experience that Paul's provided and therefore they are in the lower than they would have been without those so that's care management overall can you talk in more detail about case management what does that mean and what is your role in that? Sure again it's a component of our overall care management and care management I'll just comment that care management and case management the definitions of those are in the eye of the view of the individual um so we can argue about semantics but basically case management is it's about the individual relationship between a nurse and or a social worker mental health counselor pharmacist at lacrosse and individual members and we focus on those who have high complex uh and chronic conditions as well as rare disease and those who have catastrophic events and trauma so we have a team of doctors and nurses and pharmacists and social workers and because of our partnership with Robert Tree and the health is integrated fully into our system we engage our with our members at a very personal level um our engagement rates in fact are over 50 percent whereas the industry benchmark is 27 uh percent and our members satisfaction exceeds 96 percent so once people are engaged need our help they really didn't help if they needed um and and a member of feedback is overwhelmingly positive to those whose lives we talk so I just wanted to kind of give you a case example and then this is really care management in general but certainly this is one comes from our folks as a work so we were working with a gentleman 46-year-old man with diabetes and hypertension we'd come up on as a high fertilizer in diabetes um and he had had regular primary care provider visits but his chronic disease was really poorly controlled um and and so we made an outreach to him and we developed a relationship with him and as part of that we screened him for everything that could affect their care and maybe those care this includes social detergents which is kind of like a a look into the personal circumstances that would be a barrier and we found that he was with him here before and then he was having a strange uh actually child uh in the family and so a tense relationship with the family which is really affecting his overall well-being and his own self-management of his disease state so through building that relationship um which is based on trust uh we were able to find him a mental health provider could actually see him in time in that year um helped him to make and keep his appointments and provided him kind of health education resources so he better manages own care he's able to rebuild his family relationships get treatment for his depression and his chronic disease was well-controlled um and yes he has reconnected with his family very thankful for our services um this is one of many examples we get these routinely testimonies from from our members one of the things that limits us is um information and we have made and will make technology investments um to enhance our programs um and starting in 2019 for example we're including a real-time admission discharge transfer information um which as you can imagine the claims system has a delay of as much as 60 days before we're notified it's something something has this system would bypass then and actually give us immediate access um lastly i want to just talk about care management and kind of its impact on cost containment certainly improves it improves quality care improves access um but it also saves money um what we found in our population is that members who are identified for care management who are engaged versus those who are identified and for whatever reason don't engage are actually 25 less costly because we're able to navigate that system for patients get them into the right care at the right place at the right time um and and mitigate that cost at the same time as improving their experience so utilization management is that different from the two types of management you just discussed utilization management is little part and parcel but um and we discuss this in in kind of detailed response in uh the binder pages 247 and 248 but basically what we're trying to do is guide members towards evidence-based proven therapies before the use of either ineffective or potentially investigational or research is going on therapies um this is about not just waste but harm and patient safety and we feel relatively strongly about that and so one of the ways we attempt to promote the use of these therapies is through administrative processes that you're familiar with medical pharmacy radiology appropriate use criteria using natural guidelines in which essentially is what you might call prior approval process although that can be instituted in other innovative ways which we're looking into um excuse me madam head hearing examine i had to do this but i'm going to object that they've got an invitation i know the board's been very patient but what does all this have to do with this this is a hearing on whether this increase meets the statutory standard i just don't understand the relevance of any of this well the relevance is uh and i believe the hca is asked these very questions do does blue cross promote quality care does blue cross promote access to care dr playman is in charge of the very programs that promote quality and promote access so and he is almost done and i'm going to allow the questioning and they're very much related to some of the questions that were asked by the hca and by the board through this filing you can proceed i'll finish up thank you attention um just uh comment about the pharmacy we did in opioid epidemic through instituting guidelines and standards we have seen it decreased and actually uh close to 40 percent we're using our population which is really good um and the prior approval process is streamlined and evolving so now over 50 percent of our prior approvals are automated reducing burden real providing real-time approvals in an automated fashion we constantly about involve them um uh and we retire policies and we have new policies and we work with our providers so one of the uh one of the examples is the institution of a policy around prosthetic breather lift which is a non-invasive treatment for prosthetic margin as opposed to surgery this was brought forward our providers better care better access lower cost and we instituted that policy so in summary we have a smart and targeted care management for for our members we focus on evidence-based utilization monitoring management and involve that over time and uh we often implement programs with our provider partners including the nco to maximize resources preventing duplication for either preventing duplication or collaborating uh magnifying all of our strengths thank you as it's just about 1130 i am going to give a very short break um and i think it's for the benefit of the witnesses and those who are looking at me anxiously out there um 10 minutes and we'll be back in the room at 20 till and we will proceed with these witnesses and the questioning from the nca