Ventura County Medi-Cal Managed Care Commission (VCMMCC) dba Gold Coast Health Plan Commission Meeting AGENDA

Transcription

1 Ventura County Medi-Cal Managed Care Commission (VCMMCC) dba Gold Coast Health Plan Commission Meeting 2240 E. Gonzales, Suite 200, Oxnard, CA Monday, April 22, :00 p.m. CALL TO ORDER / ROLL CALL PUBLIC COMMENT AGENDA 1. APPROVE MINUTES a. Regular Meeting of March 25, CONSENT ITEMS a. DHCS Contract Amendment 4 & 5 b. Line of Credit (LOC) 3. APPROVAL ITEMS a. Intergovernmental Transfer (IGT) b. Podiatry Services c. Kaiser Contract for Healthy Families Transition d. Medical Management Systems Selection Update e. Vacation Benefit for Certain Employee Classes f. Attorney Services Meeting Agenda available at ADMINISTRATIVE REPORTS RELATING TO THIS AGENDA AND MATERIALS RELATED TO AN AGENDA ITEM SUBMITTED TO THE COMMISSION AFTER DISTRIBUTION OF THE AGENDA PACKET ARE AVAILABLE FOR PUBLIC REVIEW DURING NORMAL BUSINESS HOURS AT THE OFFICE OF THE CLERK OF THE BOARD, 1701 LOMBARD STREET, SUITE 100, OXNARD, CA. IN COMPLIANCE WITH THE AMERICANS WITH DISABILITIES ACT, IF YOU NEED SPECIAL ASSISTANCE TO PARTICIPATE IN THIS MEETING, PLEASE CONTACT TRACI AT 805/ REASONABLE ADVANCE NOTIFICATION OF THE NEED FOR ACCOMMODATION PRIOR TO THE MEETING (48 HOURS ADVANCE NOTICE IS PREFERABLE) WILL ENABLE US TO MAKE REASONABLE ARRANGEMENTS TO ENSURE ACCESSIBILITY TO THIS MEETING

2 Ventura County Medi-Cal Managed Care Commission (VCMMCC) dba Gold Coast Health Plan April 22, 2013 Commission Meeting Agenda (continued) PLACE: 2240 E. Gonzalez, Room 200, Oxnard, CA TIME: 3:00 p.m. 4. ACCEPT AND FILE ITEMS a. CEO Update b. February Financials 5. INFORMATIONAL ITEMS a. State and Federal Budget Update b. Tatum Work Update c. Financial Forecast Update d. Affordable Care Act PCP Rate Increase Update CLOSED SESSIONS Closed Session Conference with Legal Counsel Existing Litigation pursuant to Government Code Section Hernandez v. Ventura County Medi-Cal Managed Care Commission, VCSC Case No CU-OE-VTA Closed Session Conference with Legal Counsel Existing Litigation pursuant to Government Code Section Lucas v. Regional Government Services et al, VCSC Case No CU-CE-VTA Closed Session Conference with Legal Counsel Anticipated Litigation Significant Exposure to Litigation pursuant to Government Code Section (b) (One Case) Closed Session pursuant to Government Code Section 54957(e) Public Employee Performance Evaluation Title: Chief Executive Officer Announcement from Closed Session, if any. COMMENTS FROM COMMISSIONERS Meeting Agenda available at ADMINISTRATIVE REPORTS RELATING TO THIS AGENDA AND MATERIALS RELATED TO AN AGENDA ITEM SUBMITTED TO THE COMMISSION AFTER DISTRIBUTION OF THE AGENDA PACKET ARE AVAILABLE FOR PUBLIC REVIEW DURING NORMAL BUSINESS HOURS AT THE OFFICE OF THE CLERK OF THE BOARD, 1701 LOMBARD STREET, SUITE 100, OXNARD, CA. IN COMPLIANCE WITH THE AMERICANS WITH DISABILITIES ACT, IF YOU NEED SPECIAL ASSISTANCE TO PARTICIPATE IN THIS MEETING, PLEASE CONTACT TRACI AT 805/ REASONABLE ADVANCE NOTIFICATION OF THE NEED FOR ACCOMMODATION PRIOR TO THE MEETING (48 HOURS ADVANCE NOTICE IS PREFERABLE) WILL ENABLE US TO MAKE REASONABLE ARRANGEMENTS TO ENSURE ACCESSIBILITY TO THIS MEETING

3 Ventura County Medi-Cal Managed Care Commission (VCMMCC) dba Gold Coast Health Plan April 22, 2013 Commission Meeting Agenda (continued) PLACE: 2240 E. Gonzalez, Room 200, Oxnard, CA TIME: 3:00 p.m. ADJOURNMENT Unless otherwise determined by the Commission, the next regular meeting of the Commission will be held on May 20, 2013 at 3:00 p.m. at 2240 E. Gonzales Road, Suite 200, Oxnard CA Meeting Agenda available at ADMINISTRATIVE REPORTS RELATING TO THIS AGENDA AND MATERIALS RELATED TO AN AGENDA ITEM SUBMITTED TO THE COMMISSION AFTER DISTRIBUTION OF THE AGENDA PACKET ARE AVAILABLE FOR PUBLIC REVIEW DURING NORMAL BUSINESS HOURS AT THE OFFICE OF THE CLERK OF THE BOARD, 1701 LOMBARD STREET, SUITE 100, OXNARD, CA. IN COMPLIANCE WITH THE AMERICANS WITH DISABILITIES ACT, IF YOU NEED SPECIAL ASSISTANCE TO PARTICIPATE IN THIS MEETING, PLEASE CONTACT TRACI AT 805/ REASONABLE ADVANCE NOTIFICATION OF THE NEED FOR ACCOMMODATION PRIOR TO THE MEETING (48 HOURS ADVANCE NOTICE IS PREFERABLE) WILL ENABLE US TO MAKE REASONABLE ARRANGEMENTS TO ENSURE ACCESSIBILITY TO THIS MEETING

4 Ventura County Medi-Cal Managed Care Commission (VCMMCC) dba Gold Coast Health Plan (GCHP) Commission Meeting Minutes March 25, 2013 (Not official until approved) CALL TO ORDER Chair Gonzalez called the meeting to order at 3:02 p.m. in Suite 200 at the Ventura County Public Health Building located at 2240 E. Gonzales Road, Oxnard, CA The Pledge of Allegiance was recited. ROLL CALL COMMISSION MEMBERS IN ATTENDANCE David Araujo, MD, Ventura County Medical Center Family Medicine Residency Program May Lee Berry, Medi-Cal Beneficiary Advocate Anil Chawla, MD, Clinicas del Camino Real, Inc. Lanyard Dial, MD, Ventura County Medical Association Laurie Eberst, Private Hospitals / Healthcare System (arrived 3:14 p.m.) David Glyer, Private Hospitals / Healthcare System Robert Gonzalez, MD, Ventura County Health Care Agency Robert S. Juarez, Clinicas del Camino Real, Inc. EXCUSED / ABSENT COMMISSION MEMBERS John Fankhauser, MD, Ventura County Medical Center Executive Committee Peter Foy, Ventura County Board of Supervisors Catherine Rodriguez, Ventura County Medical Health System STAFF IN ATTENDANCE Michael Engelhard, CEO Nancy Kierstyn Schreiner, Legal Counsel Michelle Raleigh, CFO Traci R. McGinley, Clerk of the Board Sherry Bennett, Provider Network Manager Guillermo Gonzalez, Government Relations Director Charlie Cho, MD, Chief Medical Officer Andre Galvan, Vendor Contract Manager Lupe Gonzalez, Manager of Health Education & Disease Management Steven Lalich, Communications Manager Debbie Rieger, Consultant Melissa Scrymgeour, IT Director Lyndon Turner, Finance Manager Cassie Undlin, Interim COO Nancy Wharfield, MD, Medical Director Health Services GCHP Commission Meeting Minutes March 25, Page 1 of 4 1a-1

5 Language Interpreting and Translating services provided by GCHP from Lourdes González Campbell of Lourdes González Campbell and Associates. PUBLIC COMMENT None. 1. APPROVE MINUTES a. Regular Meeting of February 25, 2013 Commissioner Glyer moved to approve the Regular Meeting Minutes of March 25, Commissioner Chawla seconded. The motion carried. Approved APPROVAL ITEMS a. Tatum Contract Amendment CEO Engelhard reviewed his written report with the Commission and stressed that the work the consultants are doing is essential to continuing with the progress the Plan is making in the operations area. The Plan is heading into the fourth quarter of the fiscal year and several critical projects are approaching, including the Healthy Families Program transition to Medi-Cal, planning and implementing more than one plan-to-plan subcontract, and preparing for the implementation of Medi-Cal expansion. The COO role is a critical position and once it gets filled with a full-time employee, the consultant would be transitioned out. Commissioner Eberst arrived. Commissioner Juarez expressed concern and added that the decisions made by the consultant continue to negatively affect his organization. Commissioner Dial moved to approve the Tatum contract with regard to the COO position. Commissioner Glyer seconded. The motion carried. Approved 5-3; with Commissioners Berry, Chawla and Juarez voting no. Discussion was held as to the fact that the Plan has used Tatum consultants for a year. Commissioner Araujo expressed concern that they were to be used temporarily and to show the Plan where there were problems, not to be used as employees. CEO Engelhard concurred, but also explained that the Plan experienced extraordinary gaps in senior leadership that needed to be filled. Numerous high-level positions were unfilled for much of the past year, including the CEO, COO and Director of IT to name a few. Commissioner Dial moved to approve the Tatum contract with regard to the Senior IT operations consultant for up to ninety days. Commissioner Glyer seconded. The motion carried. Approved 5-3; with Commissioners Berry, Chawla and Araujo voting no. GCHP Commission Meeting Minutes March 25, Page 2 of 4 1a-2

6 b. ACS Contract Ratification CEO Engelhard reviewed his written report with the Commission and explained that this would extend the contract through the calendar year and may be extended if needed, though that is not the Plan s intention. ACS s medical management system will stay in operation while GCHP reviews MMS systems and implements a new system with a target date of January 1, The new rates in the contract extension will save Gold Coast Health Plan more than $200,000 compared to rates in the current contract. Commissioner Juarez moved to approve the ACS Contract Ratification. Commissioner Araujo seconded. The motion carried. Approved ACCEPT AND FILE ITEMS a. CEO Update CEO Engelhard reviewed his written report with the Commission. Of particular note was the discussion regarding the Healthy Families Transition and the upcoming contracting efforts, including those with Kaiser, the Ventura County Health Care Plan and certain IPAs who currently see members of the Healthy Families program in the county. Commissioner Araujo moved to accept and file the CEO Update. Commissioner Eberst seconded. The motion carried. Approved 8-0. b. January Financials CFO Raleigh provided an overview of the financials and noted that they had been reviewed in detail by the Executive / Finance Committee on March 7, Commissioner Araujo requested that the Total Expenditure YTD chart be changed to a graph to allow tracing of information as it changes. Commissioner Eberst moved to accept and file the January Financials. Commissioner Araujo seconded. The motion carried. Approved INFORMATIONAL ITEMS a. Tatum Work Update CEO Engelhard briefly highlighted the Tatum work plan and accomplishments. b. Medi-Cal Expansion / Bridge / Covered California Government Relations Director Guillermo Gonzalez reviewed his report and noted that the basic coverage option under the Patient Protection and Affordable Care Act (ACA) was postponed until California Legislature is reviewing a Narrow Bridge plan for those in Medi-Cal who become ineligible due to an increase in income. There are still questions and concerns, such as how managed care plans would collect premiums and how long someone may stay in a bridge plan. GCHP Commission Meeting Minutes March 25, Page 3 of 4 1a-3

7 CEO Engelhard added that the program would be to bridge people from Medi-Cal to the insurance exchange. He added that there may be a requirement to have a Knox Keene or a waiver in order to participate, but that many of the final rules have not been written yet, nor has the bridge plan been approved at this point. COMMENTS FROM COMMISSIONERS Commissioner Berry reported that she had attended the Consumer Advisory Committee (CAC) Meeting which had been extremely informative. CLOSED SESSION Legal Counsel Kierstyn Schreiner explained the purpose of the Closed Session items. ADJOURN TO CLOSED SESSION The Commission adjourned to Closed Session at 4:55 p.m. regarding the following items: Closed Session Conference with Legal Counsel Existing Litigation pursuant to Government Code Section Sziklai v. Gold Coast Health Plan et al, VCSC Case No CU-WT-VTA Closed Session Conference with Legal Counsel Existing Litigation pursuant to Government Code Section Hernandez v. Ventura County Medi-Cal Managed Care Commission, VCSC Case No CU-OE-VTA Closed Session Conference with Legal Counsel Existing Litigation pursuant to Government Code Section Lucas v. Regional Government Services et al, VCSC Case No CU-CE-VTA Closed Session Conference with Legal Counsel Anticipated Litigation Significant Exposure to Litigation pursuant to Government Code Section (b) (One Case) Closed Session pursuant to Government Code Section 54957(e) Public Employee Performance Evaluation Title: Chief Executive Officer RETURN TO OPEN SESSION The Regular Meeting reconvened at 5:44 p.m. Legal Counsel Kierstyn Schreiner announced that there was no reportable action. ADJOURNMENT Meeting adjourned at 5:45 p.m. GCHP Commission Meeting Minutes March 25, Page 4 of 4 1a-4

8 AGENDA ITEM 2a To: From: Gold Coast Health Plan Commission Michelle Raleigh, Chief Financial Officer Date: April 22, 2013 RE: State of California Department of Health Care Services, Contract Amendments #4 and #5 SUMMARY: State of California (State) Department of Health Care Services (DHCS) has presented Gold Coast Health Plan (GCHP) with contract amendments #4 and #5 which reflect changes to State capitation payments. The DHCS is requesting signature of both amendments by GCHP. Staff discussed the amendments in detail with the GCHP Executive / Finance Committee on April 4, 2013 and the Executive / Finance Committee provided a recommendation that the GCHP Chief Executive Officer (CEO) proceed with executing the amendments. BACKGROUND / DISCUSSION: The DHCS establishes monthly capitation payments by major Medi-Cal population groups and updates them periodically to reflect policy changes and other adjustments. Amendment #4 provides two clarifications: FY rates exclude AB97 provider rate cuts. Provides updated rates for TLIC (Targeted-Low Income Child) population effective January 1, This is to address the transition of the Healthy Families Program members to Medi-Cal. These members will be phased in over the following schedule: Phase 1 - January 1, 2013 through March 31, 2013 Phase 2 - April 1, 2013 through July 31, 2013 Phase 3 - August 1, 2013 through June 30, 2014 Per DHCS, the TLIC rates were updated (from the November 5, 2012 version) to reflect the policy change whereby the Plan would only cover limited cases of retroactive eligibility. 2a-1

9 Amendment #5 adjusts non-tlic capitation rates for FY and clarifies rates for FY as follows: FY rates have been updated to reflect the inclusion of the hospital quality assurance fee (QAF) as outlined in Senate Bill (SB) 335 and the related impact of the MCO tax. According to DHCS, QAF money should be transmitted to the managed care plans in the May capitation check which is normally received at the end of May or early June. The plans will have no more than 30 days to distribute the QAF money consistent with the terms of SB335. Also clarified in this amendment is that the State did not reduce FY rates retroactively for AB97 reductions. This is consistent with the Governor s budget proposal released in January FY rates in Amendment #5 are set to be equal to FY rates, excluding any impact from the SB335 adjustment and related MCO tax. DHCS has indicated to GCHP that updated, draft FY rates should be provided to GCHP in late April after the rates are sent to the Centers for Medicare and Medicaid Services for approval. This updated rate package is expected to reflect additional adjustments to include SB335, MCO tax, and other policy changes. The FY rates in Amendment #5 do not match the draft FY rates sent to GCHP in July, 2012 (which is what is used for financial reporting). FISCAL IMPACT: The estimated fiscal impact for the amendments is as follows: Amendment #4: o TLIC rates in Amendment #4 are very close to the rates that GCHP has used in the FY budget. Amendment #4 TLIC rates are higher than what was assumed in the budget by: $0.04 PMPM for the January 1 March 31 time period and $0.71 PMPM higher for the April 1 June 30 time period. Therefore, the fiscal impact will be minimal for FY a-2

10 o Note there will be a positive impact on the financials due to the removal of the FY AB97 rate cuts which amounts to approximately $1.9 million accrued through June 30, Amendment #5: o FY rates There is no net fiscal impact since the increase due to SB335 and related MCO tax will be passed on to the hospitals and the State, respectively. The dollars expected to be forwarded to eligible hospitals is approximately $34.3 million and the corresponding MCO Tax amount is approximately $0.8 million. o FY rates Amendment #5 reflects payments at the FY rates (excluding any SB335 impact and related taxes) for FY These rates are lower by approximately $4.4 million as compared to the draft FY rates received by GCHP in July 2012, which have been used to estimate revenue for FY However, as noted above, the State has indicated that they will provide updated FY rate packages to managed care plans in late April. Staff expects to receive an updated FY rate package from DHCS in April. Staff will further discuss impact of this new rate package with GCHP Executive / Finance Committee during the May 2, 2013 meeting. RECOMMENDATION: Staff requests that the Committee recommend to the full Commission to delegate authority to the GCHP CEO to sign both DHCS contract amendments. CONCURRENCE: Gold Coast Health Plan Executive / Finance Committee approved this item on April 4, Attachments: None. 2a-3

11 AGENDA ITEM 2b To: From: Gold Coast Health Plan Commission Michelle Raleigh, Chief Financial Officer Date: April 22, 2013 RE: Line of Credit (LOC) Update SUMMARY: Authorize and direct the Chief Executive Officer to execute a Line of Credit agreement with Ventura County to provide an additional $5.0 million of temporary capital funding. BACKGROUND: As discussed in the February 25 th Commission, and March 7 th and April 4 th Executive / Finance Committee meetings, Gold Coast Health Plan (GCHP) has requested an increase in the current line of credit held with the County of Ventura. A formal request was sent to the County of Ventura on March 14 th for an additional $5.0 million. Therefore, the total line of credit would be increased to $7.2 million. The details of this additional line of credit are assumed to be the same as the existing line of credit. A summary of these terms and conditions of the original (May 10, 2011) agreement were provided at the March 7 th and April 4 th Executive / Finance Committee meeting and are provided below: Credit Facility Type: revolving line of credit (LOC) Current Maximum LOC commitment: $2.2 million Interest rate: variable rate, equivalent to Ventura County Treasury Pool rate Effective date: July 1, 2011 Unsecured and Subordinated Loan: note is subordinated to all current and future creditors of the Plan Purpose: proceeds to be used exclusively for operations and cash reserves of GCHP Repayment: Plan must receive written approval from the California Department of Health Care Services (DHCS). Plan may ask for written approval from DHCS once it meets 100% of the minimum required tangible net equity (TNE) as defined in Title 28, CCR, Section c(6). 2b-1

12 This additional line of credit will provide temporary capital funding to assist in meeting TNE requirements. The DHCS requires GCHP to request the additional LOC per the Corrective Action Plan (CAP). It is expected that this additional LOC would be presented to the Ventura County Board of Supervisors for approval on April 23 rd. RECOMMENDATION: Staff requests authority for the Chief Executive Officer to execute a new LOC contract with the County of Ventura to provide additional capital to the Plan. CONCURRENCE: Recommended for approval at the April 4, 2013 Executive / Finance Committee Meeting. Attachments: None. 2b-2

13 AGENDA ITEM 3a To: From: Gold Coast Health Plan Commissioners Michelle Raleigh, Chief Financial Officer Date: April 22, 2013 RE: Intergovernmental Transfer (IGT) Contract Approval SUMMARY: Authorize and direct the Gold Coast Health Plan s (Plan) Chief Executive Officer to submit the necessary agreements with the Ventura County (County) and the California Department of Health Care Services (DHCS) to secure additional Medi-Cal funds through an Intergovernmental Transfer (IGT). BACKGROUND: As discussed in the February 25 th Commission Meeting and the April 4 th Executive / Finance Meeting, IGTs are a mechanism for managed care plans and public agencies, to work with the State of California (State) in order to bring federal Medicaid matching dollars to the local level. The Plan and County have been working jointly to structure the IGT and complete required documentation. The State provided final IGT amounts on April 15 th. The IGT will be structured as follows (all amounts are approximate): County will contribute $15.3 million ($2.6 million of which is a State assessment fee) Plan will receive a capitation rate increase of $26.8 million for FY rate period Plan will: o Retain $0.6 million for MCO Tax payment, o Retain $0.5 million for administrative fees (approximately 2%), and o Pay the remaining funds ($25.6 million) to the County who will supplement payments to hospital physicians for services provided to Medi-Cal members. A final draft of documents will be provided to the State on April 26 th with feedback expected from the State and Centers for Medicare and Medicaid Services (CMS) sometime between May and early June. Additional timeframes regarding the IGT process are outlined below: 6/10 final documents need to be provided to State (reflecting any feedback from State or CMS) 7/8 State sends wire request to County 7/15 - County wires money to State 3a-1

14 Plan September Capitation Check (expect receipt between 08/25-09/08) Plan receives IGT payment with regular capitation payment check Plan pays County within 30 days of receipt from State FISCAL IMPACT: The Plan will retain $0.6 million as a liability to pay MCO taxes and will retain $0.5 million as an administrative fee. RECOMMENDATION: Staff requests approval from the Commission for the Plan s Chief Executive Officer to submit all necessary documentation and contracts to proceed with the IGT funding. CONCURRENCE: N/A Attachments: None. 3a-2

15 AGENDA ITEM 3b To: From: Gold Coast Health Plan Commission Charles Cho, MD, Chief Medical Officer Date: April 22, 2012 RE: Services provided by a Podiatrist SUMMARY BACKGROUND: Medical care being performed by podiatrists is not currently covered by GCHP. However these services are currently performed by orthopedists. To improve access to care, staff is seeking the Commission s approval to expand the providers that perform simple surgical procedures, to also cover podiatrists. An overview of this topic was included in the March 25, 2013 Commission CEO Update. DISCUSSION: Many medically necessary foot procedures are relatively simple that can be performed either in a hospital or clinic setting. Currently these procedures must be taken care of by specialists. GCHP staff is requesting approval to allow podiatrists to perform these medically necessary services in order to improve access to care and health outcomes. If these cases are not properly taken care of in a timely manner, complications may cause unnecessary suffering as well as causing costly hospitalizations. Furthermore, in cases of complicated hospital cases, members might be transported to out-of-county tertiary centers for lack of willing orthopedists in the County. Many podiatrists have already agreed to Medi-Cal rates, making this approach cost effective for the Plan. FISCAL IMPACT: Estimated to be cost neutral since services will continue to be provided, but access will be expanded by allowing podiatrists to also perform services. It is assumed that savings resulting in reducing out-of-network expenses and complications when procedures are not performed in a timely manner will offset any costs associated with expanding access. Historical data shows estimated costs for these services were about $35,000 over a 12 month period but that these costs are expected to be offset from lower utilization of other services. RECOMMENDATION: Staff is requesting approval to include podiatrist as a covered provider. 3b-1

16 CONCURRENCE: N/A. Attachments: January 14, 2013 memorandum from Drs. Pearson and Fankhauser, Medical Director s Office, VCMC & Santa Paula Hospitals re: Podiatry Services at VCMC. 3b-2

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19 AGENDA ITEM 3c To: From: Gold Coast Health Plan Commissioners Michael Engelhard, Chief Executive Officer Date: April 22, 2013 RE: Kaiser Contract for Healthy Families Program (HFP) Transition SUMMARY: The State of California established contractual terms for managed care plans to contract with Kaiser for Healthy Families Program members enrolled in a Kaiser health plan and who are being transition into Medi-Cal. This item outlines Gold Coast Health Plan s responsibility in this transition. BACKGROUND / DISCUSSION: As a County Organized Health System (COHS), Gold Coast Health Plan contracts with DHCS to provide health care services to Medi-Cal beneficiaries in Ventura County. Kaiser is a health plan in the HFP and serves approximately 3,500 HFP children in Ventura County. With the elimination of HFP, and in accordance with the HFP transition implementation plan, children enrolled in Kaiser HFP will transition to Gold Coast Health Plan in Phase 3, anticipated to occur no sooner than August 1, In June 2012, the Legislature passed Assembly Bill (AB) 1494 which provides for the transition of all HFP subscribers to Medi-Cal. In June 2012, Kaiser approached the State to consider the development of an agreement whereby Kaiser will retain its HFP members upon their transition into Medi-Cal through a direct contractual relationship with DHCS. As a direct contractual relationship in the existing managed care county delivery systems throughout California is not possible due to state and federal statutes, DHCS, Kaiser and the Medi-Cal managed care plans developed two agreements to address the HFP transition and future Medi-Cal enrollment. Kaiser has consistently achieved superior healthcare scores from various organizations. Kaiser maintains an Excellent overall rating from the National Committee for Quality Assurance (NCQA) for Kaiser Permanente Southern California. The California Office of Patient Advocate (OPA) Report Card showed that Kaiser was the top-rated California HMO with a four-star rating, the only plan to achieve four stars overall. 3c-1

20 Kaiser Southern California has the nation s highest rated Medicare HMO out of 465 plans rated. Kaiser Southern California s Healthy Families program was given a Superior rating, this highest score achievable, in Healthy Families Program 2012 Health Plan Quality Awards. Kaiser s Southern California health plan has demonstrated the ability to consistently deliver high quality services to its members. This commitment to quality and DHCS s mandate to take every step possible to ensure continuity care for the Healthy Families Program children leads GCHP staff to recommend signing the proposed agreements with Kaiser. DHCS / Kaiser / Plan Agreement The first agreement is, by its own terms, a nonbinding agreement, between DHCS, Kaiser and the managed care plans. This template has already been signed by DHCS and Kaiser. It indicates that it sets forth a framework for a seamless transition of care for current Kaiser Members in the HFP and for Medi-Cal beneficiaries who were Kaiser members or linked to a Kaiser member within the previous twelve months. The three-way agreement includes the following provisions: 1. DHCS, Kaiser and managed care plans will work to develop a contract template for the subcontract between plans and Kaiser. 2. A centralized oversight and compliance process to include a uniform policies and procedures audit program will be created to oversee Kaiser's obligations under the contract template. The agreement indicates that this process will be conducted and funded by DHCS unless otherwise agreed to by the parties. 3. A process will be developed to improve the existing and future enrollment processes for Kaiser Members including a validation process (of the applicant's eligibility to choose Kaiser). 4. In COHS counties including Ventura County, the enrollment process for current / previous Kaiser Members will mimic the existing process for all Medi-Cal members. The COHS plans such as Gold Coast Health Plan will assign to Kaiser new Medi-Cal members currently or previously enrolled with Kaiser in the previous twelve months or family-linked in the previous twelve months. This auto assignment to Kaiser is contingent upon COHS plans receiving required and accurate data from Kaiser and federal and state regulators. COHS members will be assigned to Kaiser only upon verification of previous coverage by Kaiser. 5. The agreement does not restrict the ability of Medi-Cal beneficiaries to choose a different provider other than Kaiser during or after the beneficiary has been assigned to Gold Coast Health Plan. Kaiser / Plan Agreement The second agreement, between Kaiser and the managed care plan, is titled "Care Continuity Agreement" and defines the beneficiaries for whom the managed care plan will ensure transition to Kaiser. These Members include: 1. All members of Gold Coast Health Plan currently assigned to Kaiser; 3c-2

21 2. Individuals who are eligible for Medi-Cal on or after January 1, 2014 under Medi-Cal expansion and who enroll in Gold Coast Health Plan and had been assigned to Kaiser; 3. HFP beneficiaries who are Kaiser members on the August 1, 2013 effective date of the Healthy Families Program transition; and, 4. Beneficiaries who are eligible for Medi-Cal or HFP after the effective date of the August 1, 2013 transition and who were Kaiser members or family-linked within the previous twelve months. This agreement has been signed by Kaiser but does not include aid codes on the attachments. The two-way agreement includes the following provisions: 1. Kaiser will provide rate development template (RDT) data to managed care plans for inclusion in the plan RDT for the rate setting process. 2. Effective July 1, 2013, for aid codes not directly funded through the Children's Health Insurance Program Reauthorization Act of 2009 (CHIPRA), an administrative withhold by the managed care plan will not exceed 2% of the net capitation Medi-Cal amount (the withhold may be based on the plan risk-adjusted equivalent of the net capitation amount). For aid codes directly funded through CHIPRA, there will be no administrative fee withhold. 3. Managed care plan contracts with Kaiser will be amended to include these provisions. However this Agreement indicates that it may be terminated only upon execution of an amendment to the parties, and that the terms of this Agreement will be re-evaluated in five years. 4. Kaiser may enter into a direct contract with DHCS if Kaiser is unable to reach a subcontracting agreement with Plan. Upon approval by the Ventura County Managed Medi-Cal Commission, Gold Coast Health Plan will modify its Medi-Cal auto assignment policy to accommodate the transition of HFP members and to the extent possible, preserve the provider / member and member / health network relationships. For children transitioning from other HFP health plans to Medi-Cal, Gold Coast Health Plan anticipates that DHCS will provide the Medi-Cal health plan a file that will include the incoming health plan code and name along with the primary care provider information for transitioning HFP children. In order to ensure a seamless transition of care for Kaiser members, it will be necessary that Gold Coast Health Plan receive a timely, clean file for processing. Otherwise, Gold Coast Health Plan staff will follow our standard new member auto assignment process. FISCAL IMPACT: The 2% administrative withhold provision is less than one-half of the amount regularly included in DHCS capitation rates for administration provided to managed care plans. However, the State is working on standardized audit and oversight procedures for Kaiser in Medi-Cal, which will reduce Gold Coast Health Plan s cost to administer this contract. For aid codes with no administrative withhold (i.e., the existing Healthy Families membership) the enrollment has already begun to decline and will continue to do so with time as children either age out, their families move out of area or their families lose eligibility for Medi-Cal. 3c-3

22 Kaiser s Healthy Families enrollment in Ventura County has declined by 7.0% since December 2012 for information through February 28, However, based on membership of approximately 2,950 at 02/28/12, an average $80 pmpm payment rate, and an assumed 4% administrative load, the monthly administrative expenses would be about $9,440 per month. The plan will absorb these costs beginning August 1, 2013 when these members transition into the Medi-Cal program. RECOMMENDATION: 1. Authorize and Direct the Chief Executive Officer (CEO) to execute a three-way agreement with the DHCS and Kaiser related to the transition of Healthy Families Program (HFP) children and Medi-Cal beneficiaries who are former Kaiser members or family-linked within the previous 12 months. 2. Authorize and Direct the CEO to execute an agreement with Kaiser related to transitioning certain defined categories of members to Kaiser as described in the twoway agreement. 3. Authorize and direct the CEO to enter into an amendment of the current Medi-Cal agreement with Kaiser consistent with these agreements. RATIONALE FOR RECOMMENDATION: These template agreements were negotiated with DHCS, Kaiser and managed care plans and the provisions for transitioning HFP members are consistent with the requirements included in the recent amendment to Gold Coast Health Plan s Primary Agreement with DHCS related to the transition of HFP subscribers into Medi-Cal. Kaiser has also indicated interest in serving those in eligible for Medi-Cal who had a previous Kaiser relationship. CONCURRENCE: N/A. Attachments: Letter from Kaiser dated April 11, c-4

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24 AGENDA ITEM 3d To: From: Gold Coast Health Plan Commission Michael Engelhard, Chief Executive Officer Melissa Scrymgeour, Director, IT Date: April 22, 2012 RE: GCHP Medical Management System (MMS) Replacement SUMMARY: In January, Gold Coast Health Plan (GCHP) invited ten interested vendors to participate in a Medical Management System (MMS) RFI / RFP process to replace ICMS, our current MMS solution. Of those ten vendors, nine chose to participate and moved to the RFI phase. Each vendor received the same set of questions and instructions. Upon receipt of the completed RFI documents, GCHP reviewed and consolidated the information into a scoring tool to rank order the vendor group. From that information, GCHP selected the top three scoring vendors to move on to the RFP detailed analysis phase. BACKGROUND: ICMS, the current MMS leased from Xerox is being sunset in June 2013 as it is not ICD-10 compliant. Consequently, GCHP must select, install and implement a new MMS by 10/01/14, in accordance with the CMS ICD-10 mandate. ACS has committed to continued support of ICMS until GCHP has implemented the replacement MMS solution. GCHP intends to select and implement the replacement MMS by 12/31/13 in preparation for expected membership growth beginning January 2014, due to the Affordable Care Act (ACA) expansion. Major systems implementations typically require no less than six months to accomplish. This process includes adequate programming, configuration, and data and user testing prior to implementation. DISCUSSION: As part of the MMS selection process, GCHP will utilize key selection criteria, taking into consideration multiple factors, including: Business functionality / usability Cost Technology Platform (system needs to grow with GCHP) Ability to meet aggressive project deadline of 12/31/13 Vendor experience (solution expertise) 3d-1

25 Status on the key MMS selection process activities shared previously with the Commission are as follows: Survey of potential vendors using a rapid RFI process - COMPLETE Secondary vendor screening (if needed) - COMPLETE Create tailored requirements and scoring tools for finalist presentations - COMPLETE Create key scenarios for final vendors to prepare for finalist presentations - COMPLETE Coordinate and facilitate onsite vendor presentations COMPLETE o Essette Demo conducted 4/2-4/3 o MedHok Demo conducted 4/11-4/13 o CaseNet Demo conducted 4/16-4/17 Conduct vendor references and site visits IN PROGRESS Create final system recommendation based on overall vendor scores 05/01/13 FISCAL IMPACT: In addition to the above activities, GCHP has begun financial analysis to determine the estimated capital spend to implement the replacement MMS, and annual ongoing support costs. GCHP intends to present a final recommendation, along with the estimated project budget, to the Executive Finance Committee for review and approval at the May 2, 2013 Executive Finance Committee Meeting. RECOMMENDATIONS: In order to achieve the January 1, 2014 implementation target for the new MMS system, the following approvals are sought: 1. Continue RFP process to select a replacement MMS. 2. Delegate authority to the Executive Finance Committee to approve final vendor and system selection based on staff recommendation at the May 2, 2013 meeting. CONCURRENCE: N/A Attachments: None. 3d-2

26 AGENDA ITEM 3e To: From: Gold Coast Health Plan Commissioners Michael Engelhard, Chief Financial Officer Date: April 22, 2013 RE: Vacation Benefit for Certain Employee Classes SUMMARY: The Plan is seeking the modification of current vacation benefits to allow for Chief-level and equivalent officers to be eligible for up to 4 weeks of vacation (20 days). BACKGROUND: When employees were transferred from RGS to Gold Coast Health Plan (GCHP) effective September 1, 2012, a review of existing employee benefits was performed. The results of that analysis were presented to the Commission. During the October 22, 2012 Commission meeting, a new benefits package recommendation was reviewed and approved. On September 24, 2012 the Commission approved the following vacation allocations: Managers and below: 10 days and Directors and above: 15 days. DISCUSSION: During the Plan s recent extensive recruitment efforts to hire a permanent Chief Operating Officer (COO), it has become apparent that the existing 3 weeks policy is not consistent with market expectations for this position. GCHP has not been competitive in this area and this has been a contributing factor to secure a candidate for this key leadership position. In addition to the existing COO search, GCHP will also begin recruiting for a new Chief Medical Officer (CMO) in the near future. CMOs and COOs are experienced professionals with years of experience in the work place. Therefore, the ability for GCHP to offer a competitive benefit is important when recruiting for these positions. In order to improve the candidate pool of applicants for these position, the CEO requests to have the authority to offer 4 weeks (20 days) to the COO, CFO, and CMO and equivalent C-level positions at the Plan. FISCAL IMPACT: The short-term impact would be to increase chances of hiring a full-time COO which would reduce the reliance on using outside consultants to fill this role. 3e-1

27 RECOMMENDATION: Staff is requesting that the Commission approve the modified vacation benefits of 4 weeks (20 days) for the COO, CFO, and CMO and equivalent C-level positions at the Plan. 3e-2

28 AGENDA ITEM 3f To: From: Gold Coast Health Plan Commissioners Michael Engelhard, CEO Date: April 22, 2013 Re: Attorney Services SUMMARY / BACKGROUND: Gold Coast Health Plan (GCHP) contracts with outside law firms for general counsel, litigation and other legal matters. Nancy Kierstyn Schreiner, an outside lawyer who has assumed responsibility for several general counsel services, ongoing litigation and other matters, is in the process of transitioning to Anderson Kill & Olick, P.C. (Ventura office). To ensure continuity and efficiency in the resolution of these matters, it is recommended that the Commission authorize the CEO to enter into contract with Anderson Kill & Olick, P.C. for legal services. RATIONALE ON RECOMMENDATIONS: To ensure continued representation of GCHP interests in certain legal matters, staff recommends that the Commission authorize a contract with Anderson Kill & Olick, P.C. FISCAL IMPACT: Hourly billing rates for ongoing litigation will be unchanged from the current arrangement. As a result, no material fiscal impact is expected. RECOMMENDATIONS: Authorize the Chief Executive Officer (CEO) to contract with Anderson Kill & Olick, P.C. for legal services as the CEO deems necessary within budgetary and funding constraints. CONCURRENCE: N/A Attachments: None. 3f-1

29 AGENDA ITEM 4a To: From: Gold Coast Health Plan Commissioners Michael Engelhard, CEO Date: April 22, 2013 Re: CEO Update Network Management Network management will be holding 3 Town Hall meetings this month that will focus on an overview of Gold Coast Health Plan (GCHP), the ACA PCP rate increase, Healthy Families transition and comments they want to bring up regarding referrals and access to services for their patients. These will be held in three locations: April 17, 2013 Academic Auditorium 3291 Loma Vista Road, Building 340 Ventura, CA 3pm-5pm April 24, 2013 Ventura County Health Services 2240 E. Gonzales Road Suite 200 Ventura, CA 10am-12pm April 30, 2013 The Simi Room 980 Enchanted Way Simi Valley, CA 3pm-5pm Government Relations and Outreach Healthy Families Program Transition to Medi-Cal - DHCS Report to the State Legislature On April 15 th the California Department of Health Care Services (DHCS) submitted its report to the Legislature concerning the Healthy Families Program (HFP) Transition to Medi-Cal managed care. This report is mandated under AB 1494 and is required to be submitted by DHCS to the State Legislature on the 15 th of every month throughout the HFP transition to Medi-Cal. 4a-1

30 The following are key findings from the report: A total of 106,443 children successfully transitioned into Medi-Cal under Phase 1B. A total of 28,390 new children received access to care under the Medi-Cal program. 11,941 children newly enrolled into TLICP and 16,449 children received accelerated enrollment % of children were assigned to a PCP (section 2.4) and 100 percent of children remained in the same health plan in Phase 1B. Approximately a dozen cases have been brought to the attention of DHCS regarding access to autism services for children transitioning on or after March 1, 2013, specifically applied behavioral analysis (ABA) and/or applied behavioral therapy (ABT) services. 51% of enrolled dental service office locations are accepting new patients and are listed on the Provider Referral list. Of the 33 dental grievances reported, only three were related to a transitioned beneficiary under the Denti-Cal program. All 8,353 beneficiary requests for dental provider referrals were successful. Denti-Cal Beneficiary Customer Service line saw a 10 percent increase in volume of phone calls compared to calls received in the previous month. In the first quarter Denti-Cal has received over 58,000 claim submissions and paid out in excess of $5.6 million in HFP claims through March 31, There were no identified issues reported for children receiving mental health or substance use disorder services. Healthy Families Transition Outreach Ventura County is scheduled to transition children enrolled in the Healthy Families Program (HFP) to Medi-Cal managed care, specifically Gold Coast Health Plan (GCHP) no sooner than August 1, GCHP outreach staff is working collaboratively with community stakeholders and appropriate agencies to facilitate a smooth transition, minimize disruption in access to services, maintain existing eligibility gateways, and maintain access to continuity of care for all children involved in this transition. Community Resources Fair Gold Coast Health Plan GCHP) will be holding a Community Resource Fair on May 19, 2013 at Royal High School in Simi Valley. GCHP looks forward to the participation of Ventura County s major health care providers including: VCMC, Clinicas del Camino Real, Community Memorial Hospital, and St. John s Hospital and many other providers from throughout the community. Free health screenings and health care resource information will be provided to attendees. This is the second fair of this kind, the first GCHP Community Resource Fair was held on October 21, 2012 in Oxnard. 4a-2

31 Outreach Conducted GCHP participated in the following outreach to GCHP Members and public for the months of March and April 2013: 3/01: Public Relation Meeting: Ventura County Health Care Plan 3/06: Presentation: El Rio Neighborhood for Learning Parenting Meeting 3/07: Public Relation Meeting: El Rio School District 3/12: Public Relation Meeting: VC-networking Meeting (St. Johns) 3/16: Event: Spring into Health 3/17: Event: Jornada Dominical 3/19: Public Relation Meeting: HCA Outreach Opportunity 3/21: Public Relation Meeting: Simi Valley Royal High Collaborative Meeting 3/22: Event: Saticoy Lemon Health Fair 3/30: Event: MICOP - Monthly Meetings 4/04: Presentation: Community Partner HFP updates presentation 4/09: Event: Baby Steps Program 4/20: Event: Día De los Niños Celebration 4/20: Event: Walking the Path Conference / Resource Fair 4/23: Event: Special Population Conference 4/27: Event: National Kids Day Health Fair Upcoming GCHP Events *5/02: Event: Saticoy Lemon Health Fair *5/03: Event: Annual Teen Voice Health Fair *5/04: Event: Oxnard Cinco de Mayo Festival *5/05: Event: Oxnard Cinco de Mayo Festival *5/14: Event: Baby Steps Program *5/15: Event: Saticoy Lemon Health Fair *5/19: Event: GCHP Community East County Health and Resource Fair *5/23: Event: Family Care & Volunteer Resource *5/25: Event: MICOP- Monthly Meetings * These events may be subject to change. CMO Update Dr. Charles Cho, Chief Medical Officer, has announced that he wishes to transition into semi-retirement; therefore we will be posting for a full-time CMO sometime in the near future. Dr. Cho will be working in his current capacity overseeing the CMO area including pharmacy operations, Quality Improvement and Health Education. Dr. Cho also manages key committees such as the Medical Advisory Committee, the Pharmacy & Therapeutics Committee, the Credentialing Committee and the Quality Improvement Committee. Dr. Cho will continue his regular schedule at the Plan until the new CMO is hired and their duties are fully transitioned. 4a-3

32 Gold Coast Health Plan - Inventory Trend Comparison From 01/01/13 thru 04/09/13 Week Open Denied Received Paid 01/01/ /08/ /15/ /23/ *inventory day late due to delayed payment run 01/30/ *inventory day late due to delayed payment run 02/05/ /12/ /19/ /26/ *Check run time moved from 5:30pm to 12:00pm. Claims processed after 12pm will reflect on next report. 03/05/ /12/ /19/ /26/ /02/ /09/ Inventory Trend January April Volume /01/13 01/08/13 01/15/13 01/23/13 01/30/13 02/05/13 02/12/13 02/19/13 02/26/13 03/05/13 03/12/13 03/19/13 03/26/13 04/02/13 04/09/13 Open Denied Received Paid

33 AGENDA ITEM 4b To: From: Gold Coast Health Plan Commissioners Michelle Raleigh, Chief Financial Officer Date: April 22, 2013 Re: February, 2013 Financials SUMMARY: Staff is presenting the attached February, 2013 financial statements of Gold Coast Health Plan (Plan) for approval by the Commission. This financial package was reviewed and recommend for approval by the GCHP Executive Finance Committee during the April 4 th meeting. BACKGROUND / DISCUSSION: The Plan has prepared the February, 2013 financial package, including balance sheets, income statements and statements of cash flows reflecting monthly and year-to-date information. FISCAL IMPACT: When compared to budget on a year-to-date basis, overall the Plan is performing better than expected, with an actual net loss of $0.7 million compared to a projected net loss of approximately $2.4 million. These results contributed to the Plan s smaller Tangible Net Equity (TNE) deficit where the actual results generated a lower deficiency ($13.0 million) than expected (deficiency of $14.8 million). Highlights of this month s financials include: Membership The Plan had 648 more members than budgeted for the month with larger than expected enrollment in the Family and Dual categories. Revenue The different distribution of enrollment led to a lower than anticipated average revenue per member per month (PMPM). Lower than expected CBAS revenue also contributed to the shortfall, resulting in overall capitation revenue of $7.66 PMPM below budget. Health Care Costs The primary items that contributed to the differences between the actual ($ PMPM) and budgeted costs ($ PMPM) were: 4b-1

34 o Lower claims inventory and improved experience, resulting in lower incurred but not reported claims reserves needed. o Accelerated collection of reinsurance claims recoveries. o Reductions in costs were partially offset by higher pharmacy expenses from increased seasonal utilization. Also note as part of the Plan s recovery efforts, an older portion of the accounts receivable was estimated to be uncollectable as shown in the claims recoveries. Administrative Expenses Overall operational costs were higher than anticipated by $1.22 PMPM. Expenses were impacted by the following items: o Higher than projected consulting fees from extended engagement of monitor. o Higher than expected general office expense including association dues and repairs and maintenance associated with continued office configuration. o Increased expenses were partially offset by lower salary and benefit costs (due to timing in hiring for budgeted positions) and lower than anticipated ACS claims management fees (driven by lower ancillary services billings). Cash + Medi-Cal Receivable The combined balance as of the end of February was over $44 million (compared with the revised budget at $48 million). The Plan continues to monitor its cash balance and began certain cash management programs. This balance includes the $2.2 million line of credit. Pharmacy: Staff has included additional exhibits for the top 12 drugs by dollar spend, number of prescriptions, and dollars spend by therapeutic class. RECOMMENDATION: Staff proposes the Commission to approve the February, 2013 financial statements. The Executive/Finance Committee also provided recommendation on this action during the April 4, 2013 meeting. CONCURRENCE: Executive Finance Committee (04/04/2013) ATTACHMENTS: February, 2013 Financial Package 4b-2

35 FINANCIAL PACKAGE FOR THE MONTH ENDED FEBRUARY 28, 2013 TABLE OF CONTENTS FINANICAL OVERVIEW MEMBERSHIP TOTAL HEALTH CARE AND ADMINISTRATIVE COSTS TOTAL EXPENDITURE FEBRUARY YTD PAID CLAIMS AND IBNP COMPOSITION PHARMACY COST TREND BALANCE SHEET CASH AND MEDI-CAL RECEIVABLE TREND STATEMENT OF CASH FLOWS APPENDIX INCOME STATEMENT COMPARISON PMPM, INCOME STATEMENT COMPARISON INCOME STATEMENT FEBRUARY YTD STATEMENT OF CASH FLOWS YTD 4b-3

36 FINANCIAL OVERVIEW Description Audited FY FY Actual July - Sep Oct - Dec Jan'13 Feb'13 YTD Budget YTD Variance Fav/(Unfav) $ Variance Fav/(Unfav) % Member Months 1,258, , ,604 99, , , ,576 9, % Revenue 304,635,932 73,225,136 76,563,668 25,291,754 25,424, ,504, ,638,594 (1,133,721) (0.6)% pmpm (4.35) (1.7)% Health Care Costs 287,353,672 71,648,550 68,967,923 22,713,884 22,894, ,224, ,669,171 3,444, % pmpm % % of Revenue 94.3% 97.8% 90.1% 89.8% 90.0% 92.9% 94.1% Admin Exp 18,891,320 4,976,867 6,036,079 2,041,565 1,918,352 14,972,864 14,328,131 (644,733) (4.5)% pmpm (0.59) (3.3)% % of Revenue 6.2% 6.8% 7.9% 8.1% 7.5% 7.5% 7.1% Net Income (1,609,063) (3,400,282) 1,559, , ,401 (692,909) (2,358,707) 1,665, % pmpm (1.28) (11.14) (0.86) (2.96) % % of Revenue -0.5% -4.6% 2.0% 2.1% 2.4% -0.3% -1.2% 100% TNE 16,769,368 16,693,841 16,308,936 16,270,934 16,219,716 16,219,716 16,477,235 (257,519) (1.6)% % TNE Required 36% 36% 52% 52% 52% 52% 52% Required TNE 6,036,972 6,009,783 8,480,647 8,460,886 8,434,253 8,434,253 8,568,162 (133,910) (1.6)% GCHP TNE (6,031,881) (9,432,163) (5,672,496) (5,136,192) (4,524,791) (4,524,791) (6,190,589) 1,665, % TNE Excess / (Deficiency) (12,068,853) (15,441,946) (14,153,143) (13,597,077) (12,959,043) (12,959,043) (14,758,751) 1,799, % Note: Jul-Sep- Health Care Costs include $7M IBNR addition. 4b-4

37 Membership 100,000 80,000 60,000 74% 73% 73% 73% 73% 73% 73% 73% 40,000 20,000 17% 18% 18% 17% 18% 18% 18% 18% 0 9% 9% 9% 10% 10% 10% 10% 10% Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 TOTAL 105,753 99, ,203 99, , ,299 99, ,522 FAMILY 78,219 72,581 73,550 72,222 72,955 73,806 72,433 73,162 DUALS 17,837 17,685 17,510 17,395 17,561 17,816 17,529 17,669 SPD 9,697 8,998 9,143 9,600 9,572 9,677 9,633 9,603 TLIC 88 Volume 4b-5

38 Total Health Care and Administrative Costs ACTUAL BUDGET ACTUAL BUDGET ACTUAL BUDGET ACTUAL BUDGET ACTUAL BUDGET OCT'12 NOV'12 DEC'12 JAN'13 FEB'13 Health Care Costs Administrative Costs $ Millions 4b-6

39 8% 13% 14% Total Expenditure February YTD 10% 7% 3% 27% 18% Admin Capitation Inpatient LTC Outpatient Professional Pharmacy Other 4b-7

40 30 Paid Claims Composition (excluding Pharmacy) Note: Paid Claims Composition- reflects adjusted medical claims payment lag schedule. 60 IBNP Composition $ Millions $ Millions Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Total Current SEP 2012 OCT 2012 NOV 2012 DEC 2012 JAN 2013 Feb 2013 Total Unpaid Prior Month Unpaid Current Month Unpaid Note: IBNP Composition- reflects updated medical cost reserve calculation plus total system claims payable. 4b-8

41 Pharmacy Cost Trend $40 $30 $20 $10 $0 OCT'12 NOV'12 DEC'12 JAN'13 FEB'13 AVG PMPM $35.13 $32.49 $31.40 $38.75 $33.53 BRAND $20.10 $18.12 $17.53 $21.98 $18.66 GENERIC $15.03 $14.37 $13.86 $16.77 $14.86 Prescriptions per 1,000 Members 10,000 8,000 6,000 86% 86% 86% 86% 86% 4,000 2,000-14% 14% 14% 14% 14% OCT 2012 NOV 2012 DEC 2012 JAN 2013 FEB 2013 TOTAL 8,977 8,589 8,211 10,279 9,079 GENERIC 7,685 7,388 7,075 8,799 7,791 BRAND 1,292 1,201 1,137 1,480 1,288 Volume $ PMPM 4b-9

42 Comparative Balance Sheet 2/28/13 1/31/13 Audited FY Notes ASSETS Current Assets Total Cash and Cash Equivalents $ 19,798,198 $ 39,161,003 $ 25,554,098 Reflects impact of cash management program Medi-Cal Receivable 24,424,503-28,534,938 Provider Receivable 3,425,664 5,743,629 6,539,541 Continued collection of outstanding provider advances & recoveries Other Receivables 786, ,415 2,148,270 Additional reinsurance recoveries and bank receivables Total Accounts Receivable 28,636,458 5,934,043 37,222,748 Total Prepaid Accounts 1,173,780 1,191, ,797 Total Other Current Assets 192, , ,000 Total Current Assets $ 49,801,413 $ 46,480,008 $ 63,337,644 Total Fixed Assets 156, , ,028 Total Assets $ 49,957,976 $ 46,640,125 $ 63,513,672 LIABILITIES & FUND BALANCE Current Liabilities Incurred But Not Reported $ 32,343,457 $ 32,454,949 $ 52,610,895 Claims Payable 11,331,990 9,278,055 10,357,609 Reflects impact of cash management program Capitation Payable 911, , ,276 Accrued Premium Reduction 2,797,445 3,169,234 1,914,157 Accounts Payable 3,268,197 3,203, ,715 Accrued ACS 1,159, ,000 Accuring ACS invoice not yet paid Accrued Expenses 232, ,724 - Accrued Premium Tax 604, , ,900 Accrued Interest Payable 2,412 1,468 - Current Portion of Deferred Revenue 460, , ,000 Accrued Payroll Expense 90,331 74,235 - Current Portion Of Long Term Debt 208, , ,000 Total Current Liabilities $ 53,409,433 $ 50,664,649 $ 68,165,553 Long-Term Liabilities Deferred Revenue - Long Term Portion 1,073,333 1,111,667 1,380,000 Notes Payable 2,200,000 2,200,000 - Total Long-Term Liabilities 3,273,333 3,311,667 1,380,000 Total Liabilities $ 56,682,767 $ 53,976,316 $ 69,545,553 Beginning Fund Balance (6,031,881) (6,031,881) (4,422,819) Net Income Current Year (692,909) (1,304,310) (1,609,062) Total Fund Balance (6,724,790) (7,336,191) (6,031,881) Total Liabilities & Fund Balance $ 49,957,976 $ 46,640,125 $ 63,513,672 FINANCIAL INDICATORS Current Ratio 93.2% 91.7% 92.9% Days Cash on Hand Days Cash + State Capitation Receivable b-10

43 $65 $50 $35 $20 Cash and Medi-Cal Receivable Trend Actual Results Projected Results $56.07 $53.05 $54.43 $52.94 $51.98 $47.51 $45.70 $44.22 $42.41 $36.35 $38.73 $39.16 Jul'12 Aug'12 Sep'12 Oct'12 Nov'12 Dec'12 Jan'13 Feb'13 Mar'13 Apr'13 May'13 Jun'13 $ Millions 4b-11

44 Statement of Cash Flows FEB'13 JAN'13 Cash Flow From Operating Activities Collected Premium $ 583,217 $ 51,269,535 Miscellaneous Income 6,478 3,889 Paid Claims Medical & Hospital Expenses (13,521,936) (19,544,086) Pharmacy (4,179,429) (3,419,551) Capitation (921,432) (917,020) Reinsurance of Claims (228,352) (225,793) Reinsurance Recoveries Payment of Withhold / Risk Sharing Incentive Paid Administration (1,101,351) (1,307,167) Repay Initial Net Liabilities MCO Taxes Expense - - Net Cash Provided/ (Used) by Operating Activities (19,362,804) 25,859,807 Cash Flow From Investing/Financing Activities Proceeds from Line of Credit - - Repayments on Line of Credit - - Net Acquisition of Property/Equipment - (3,392) Net Cash Provided/(Used) by Investing/Financing - (3,392) Net Cash Flow $ (19,362,804) $ 25,856,414 Cash and Cash Equivalents (Beg. of Period) 39,161,003 13,304,588 Cash and Cash Equivalents (End of Period) 19,798,198 39,161,003 $ (19,362,804) $ 25,856,414 Adjustment to Reconcile Net Income to Net Cash Flow Net (Loss) Income 611, ,305 Depreciation & Amortization 3,554 3,554 Decrease/(Increase) in Receivables (22,702,415) 23,542,824 Decrease/(Increase) in Prepaids & Other Current Assets 18,206 (101,372) (Decrease)/Increase in Payables 854,092 1,856,253 (Decrease)/Increase in Other Liabilities (80,000) (80,000) Change in MCO Tax Liability 3 (63) Changes in Claims and Capitation Payable 2,043,847 2,447,488 Changes in IBNR (111,492) (2,345,181) (19,362,804) 25,859,807 Net Cash Flow from Operating Activities $ (19,362,804) $ 25,859,807 4b-12

45 APPENDIX 4b-13

46 Income Statement Comparison Feb-13 Actual Monthly Trend Month-To-Date Variance Nov'12 Dec'12 Jan'13 Actual Budget Fav/(Unfav) Membership 96,907 97,745 97,745 97,691 97, Increase in Family and Dual members Revenue: Premium $ 25,519,637 $ 25,759,968 $ 25,377,074 $ 25,469,855 $ 26,044,075 $ (574,220) Membership mix causing lower revenue and lower CBAS utilization Reserve for Rate Reduction (128,543) (129,959) (127,606) (90,347) (127,039) 36,692 AB 97 Reserve (excluding LTC) MCO Premium Tax (37) (3) (781) 778 Total Net Premium 25,391,057 25,630,030 25,249,532 25,379,504 25,916,255 (536,751) Other Revenue: Interest Income 9,004 7,899 3,889 6,478 15,626 (9,148) Miscellaneous Income 38,333 38,333 38,333 38,333 38,333 0 Total Other Revenue 47,337 46,233 42,223 44,811 53,959 (9,148) Total Revenue 25,438,394 25,676,263 25,291,754 25,424,315 25,970,214 (545,899) Explanation Medical Expenses: Capitation (PCP & Specialty) 907, , , , ,159 34,815 Incurred Claims: Inpatient 4,542,801 4,093,335 4,054,978 4,376,271 4,338,630 (37,641) LTC/SNF 6,858,363 6,228,689 6,107,181 6,546,009 6,717, ,783 Outpatient 2,735,387 2,458,657 2,438,523 2,629,778 2,926, ,181 Laboratory and Radiology 229, , , , ,877 5,618 Emergency Room Facility Services 529, , , , ,847 14,594 Physician Specialty Services 2,111,295 1,838,999 1,849,915 2,000,658 1,851,737 (148,921) Pharmacy 3,251,427 3,180,407 3,859,639 3,370,333 3,141,557 (228,776) Other Medical Professional 288, , , , ,665 (34,234) Other Medical Care Expenses Other Fee For Service Expense 1,570,885 1,426,578 1,401,900 1,512,773 1,515,143 2,370 Transportation 306, , , , ,376 65,362 Total Claims 22,424,513 20,515,839 20,888,495 21,634,246 21,741, ,338 Medical & Care Management Exp 587, , , , ,129 26,530 Reinsurance 224, , ,793 (374,504) 233, ,097 Refects net reinsurance Claims Recoveries (1,711,511) (150,917) 11, ,876 - (109,876) Write-off of estimated uncollectable Provider Refunds Sub-total (899,496) 635, , , , ,751 Total Cost of Health Care 22,432,967 22,068,065 22,713,884 22,894,562 23,561, ,904 Contribution Margin 3,005,427 3,608,198 2,577,870 2,529,753 2,408, ,005 General & Administrative Expenses: Salaries and Wages 323, , , , ,576 53,400 Timing differences in hiring of staff Payroll Taxes and Benefits 72,886 88, ,130 81,676 90,368 8,691 Timing differences in hiring of staff Total Travel and Training 5,784 2,996 1,546 5,050 5, Outside Service - ACS 1,052, , , , ,145 43,046 Driven by lower membership Outside Services - Other 17,311 44,810 28,663 30,339 19,494 (10,845) Driven by IT/security expenses Accounting & Actuarial Services 44,311 37,529 25,350 21,061 5,000 (16,061) Actual expense includes consulting fees which will be reclassified Legal Expense 67,921 41,114 47,724 31,577 32, Insurance 11,846 9,245 9,245 9,245 10,792 1,547 Lease Expense - Office 15,879 15,977 15,983 25,980 27,630 1,650 Consulting Services Expense 330, , , , ,960 (180,480) Translation Services 590 4, , (414) Advertising and Promotion Expense - 2, General Office Expenses 78,657 48,327 76, ,468 58,752 (44,716) New association dues, software licenses & computer costs, repairs & maintenance Depreciation & Amortization Expense 3,561 3,554 3,554 3,554 4,761 1,207 Printing Expense 1,670 1,276 14,767 1,645 6,431 4,785 Shipping & Postage Expense , ,713 1,364 Interest Exp 37,812 29,643 40,195 1,511 6,172 4,661 Total G & A Expenses 2,065,315 2,001,876 2,041,565 1,918,352 1,787,515 (130,837) Net Income / (Loss) $ 940,112 $ 1,606,322 $ 536,305 $ 611,401 $ 621,233 $ (9,832) 4b-14

47 PMPM Income Statement Comparison Actual Monthly Trend Feb'13 Month-To-Date Variance Nov'12 Dec'12 Jan'13 Actual Budget Fav/(Unfav) Members (Member/Months) 96,907 97,745 97,745 97,691 97, Revenue: Premium (7.66) Reserve for Rate Reduction (1.33) (1.33) (1.31) (0.92) (1.31) 0.38 MCO Premium Tax (0.00) (0.00) (0.01) 0.01 Total Net Premium (7.27) Other Revenue: Interest Income (0.09) Miscellaneous Income (0.00) Total Other Revenue (0.07) Total Revenue (7.36) Medical Expenses: Capitation (0.42) Incurred Claims: Inpatient (0.09) LTC/SNF Outpatient Laboratory and Radiology Emergency Room Facility Services Physician Specialty Services (1.40) Pharmacy (2.13) Other Medical Professional (0.33) Other Medical Care Expenses Other Fee For Service Expense Transportation FFS Total Claims Medical & Care Management Reinsurance (3.83) Claims Recoveries (17.66) (1.54) (1.12) Sub-total (9.28) Total Cost of Health Care Contribution Margin Administrative Expenses Salaries and Wages Payroll Taxes and Benefits Total Travel and Training Outside Service - ACS Outside Services - Other (0.11) Accounting & Actuarial Services (0.16) Legal Expense Insurance Lease Expense -Office Consulting Services Expense (1.84) Translation Services (0.00) Advertising and Promotion Expense General Office Expenses (0.45) Depreciation & Amortization Expense Printing Expense Shipping & Postage Expense Interest Exp Total Administrative Expenses (1.22) Net Income / (Loss) (0.14) 4b-15

48 Income Statement Comparison For The Eight Months Ended February 28, 2013 Feb'13 Year-To-Date Variance Actual Budget Fav/(Unfav) Membership 775, ,982 3,559 Revenue: Premium $ 200,999,234 $ 202,132,874 $ (1,133,640) Reserve for Rate Reduction (883,290) (914,754) 31,464 MCO Premium Tax (1,498) (4,640) 3,142 Total Net Premium 200,114, ,213,480 (1,099,034) Other Revenue: Interest Income 83, ,447 (34,686) Miscellaneous Income 306, ,667 (0) Total Other Revenue 390, ,114 (34,686) Total Revenue 200,504, ,638,594 (1,133,721) Medical Expenses: Capitation 6,280,605 6,406, ,518 Incurred Claims: Inpatient 35,635,698 36,285, ,117 LTC/SNF 53,924,324 55,619,697 1,695,373 Outpatient 21,409,915 22,721,268 1,311,352 Laboratory and Radiology 1,797,986 1,861,715 63,729 Emergency Room Facility Services 4,146,789 4,293, ,374 Physician Specialty Services 16,454,342 16,201,913 (252,429) Pharmacy 26,930,203 25,812,424 (1,117,779) Other Medical Professional 2,273,587 2,181,557 (92,030) Other Medical Care Expenses 4,311 - (4,311) Other Fee For Service Expense 12,350,478 12,632, ,657 Transportation 2,316,713 2,366,281 49,568 Total Claims 177,244, ,975,968 2,731,622 Medical & Care Management Expense 4,576,691 4,590,994 14,302 Reinsurance (700,486) (1,303,914) (603,428) Claims Recoveries (1,176,238) - 1,176,238 Sub-total 2,699,968 3,287, ,112 Total Cost of Health Care 186,224, ,669,170 3,444,252 Contribution Margin 14,279,954 11,969,424 2,310,531 General & Administrative Expenses: Salaries and Wages 2,803,715 2,746,182 (57,533) Payroll Taxes and Benefits 740, ,349 (42,438) Total Travel and Training 41,670 44,529 2,859 Outside Service - ACS 7,297,924 7,285,871 (12,053) Outside Service - RGS 23,674 23,674 0 Outside Services - Other 355, ,832 (38,007) Accounting & Actuarial Services 241, ,227 (98,251) Legal Expense 261, ,186 (58,935) Insurance 67,987 71,574 3,587 Lease Expense - Office 127, ,416 3,701 Consulting Services Expense 1,910,678 1,768,176 (142,502) Translation Services 10,938 7,798 (3,140) Advertising and Promotion Expense 9,491 9,150 (341) General Office Expenses 583, ,103 (117,247) Depreciation & Amortization Expense 28,345 30,133 1,788 Printing Expense 48,547 55,696 7,149 Shipping & Postage Expense 39,533 32,561 (6,972) Interest Exp 380, ,674 (86,398) Total G & A Expenses 14,972,864 14,328,131 (644,733) Net Income / (Loss) $ (692,909) $ (2,358,707) $ 1,665,798 4b-16

49 Statement of Cash Flows FEB '13 YTD Cash Flow From Operating Activities Collected Premium $ 205,109,669 Miscellaneous Income 83,762 Paid Claims Medical & Hospital Expenses (163,114,451) Pharmacy (27,269,000) Capitation (6,002,537) Reinsurance of Claims (2,071,270) Reinsurance Recoveries - Payment of Withhold / Risk Sharing Incentive - Paid Administration (14,683,193) Repay Initial Net Liabilities - MCO Taxes Expense - Net Cash Provided/(Used) by Operating Activities (7,947,021) Cash Flow From Investing/Financing Activities Proceeds from Line of Credit 2,200,000 Repayments on Line of Credit - Net Acquisition of Property/Equipment (8,879) Net Cash Provided/(Used) by Investing/Financing 2,191,121 Net Cash Flow $ (5,755,900) Cash and Cash Equivalents (Beg. of Period) 25,554,098 Cash and Cash Equivalents (End of Period) 19,798,198 $ (5,755,900) Adjustment to Reconcile Net Income to Net Cash Flow Net Income/(Loss) (692,909) Depreciation & Amortization 28,345 Decrease/(Increase) in Receivables 8,586,290 Decrease/(Increase) in Prepaids & Other Current Assets (805,960) (Decrease)/Increase in Payables 4,549,038 (Decrease)/Increase in Other Liabilities (598,334) Change in MCO Tax Liability 1,498 Changes in Claims and Capitation Payable 1,252,449 Changes in IBNR (20,267,438) (7,947,021) Net Cash Flow from Operating Activities $ (7,947,021) 4b-17

50 Top 12 Drugs by Dollar March 2013 Medication # of Scripts Amount Paid Amount Paid/ Rx BENEFIX 1 $147, $147, NEULASTA 29 $124, $4, ADVAIR DISKU 373 $85, $ LANTUS 463 $76, $ VENTOLIN HFA 1532 $60, $39.36 OMEPRAZOLE 1442 $46, $32.19 DIVALPROEX 473 $46, $97.39 FLUTICASONE 1035 $44, $42.86 HYDROCO/APAP 2732 $42, $15.48 PANTOPRAZOLE 566 $40, $71.94 VENLAFAXINE 321 $40, $ ENBREL SRCLK 17 $38, $2, b-18

51 Top 12 Drugs by Rx March 2013 Medication # of Scripts Amount Paid Amount Paid/ Rx HYDROCO/APAP 2732 $42, $15.48 AMOXICILLIN 2063 $13, $6.38 METFORMIN 1587 $9, $5.71 VENTOLIN HFA 1532 $60, $39.36 IBUPROFEN 1521 $5, $3.52 OMEPRAZOLE 1442 $46, $32.19 LEVOTHYROXIN 1281 $8, $6.52 IBUPROFEN 1279 $9, $7.08 LISINOPRIL 1199 $4, $3.66 LORATADINE 1170 $8, $7.67 FLUTICASONE 1035 $44, $42.86 AZITHROMYCIN 1005 $24, $ b-19

52 Top 12 Drugs by Therapeutic Class March 2013 Code Therapeutic Class # of Scripts Amount Paid 44 Antiasthmatic 3765 $333, Antidiabetic 3863 $281, Anticonvulsant 4171 $249, Antidepressants 4760 $180, Stimulants/Anti-Obesity Anorexiants 1135 $174, Misc. Hematological 158 $166, Analgesics-Anti-Inflammatory 3668 $161, Antineoplastics 295 $155, Analgesics-Narcotic 4460 $146, Hematopoitic Agents 1743 $141, Ulcer Drugs 2778 $120, Misc. Cardiovascular 25 $103, b-20

53 AGENDA ITEM 5a To: From: Re: Gold Coast Health Plan Commissioners Guillermo Gonzalez, Director of Government Relations Federal and State Government Update Date: April 22, 2013 SUMMARY: Federal On Wednesday, April 10 th President Obama released his proposed 2014 budget to fund the federal government. The President s budget proposes to delay $500 million in cuts to the Medicaid Disproportionate Share Hospital Program (DSH) meant to start in Cuts to the DSH Program will instead begin in The intent is to ensure that states have adequate funds to assist those that remain uninsured when the Affordable Care Act begins full implementation on January 1, The President s 2014 budget calls for an increase in Medicare premiums for higher income beneficiaries, and a reduction in rates that the Medicare Program pays providers of post-acute care such as skilled nursing facilities and hospitals. State The State Legislature continues to work on legislation that will implement provisions of the Affordable Care Act (ACA) in California. GCHP s contracted lobbying firm, Edelstein Gilbert Robson & Smith has provided the attached State Legislative Report. Lastly, the Governor s May revise budget will be released in early May. The revised budget typically sets in motion budget deliberations between the Legislature and Governor. Voter-passed Proposition 25 requires the State Legislature to adopt a budget on or before June 15 th or Members of the Legislature forfeit their pay for every day a budget is not approved. The state s fiscal year runs from July 1 through June 30. GCHP s Government Relations Director will provide a summary of the revised budget impacts, if any, to GCHP and Medi- Cal managed care. SB 335- Quality Assurance Fee Update State Senate Bill (SB 335) enacted a thirty-month Medi-Cal hospital provider fee or quality assurance fee (QAF) for the period beginning July 1, 2011 through December 31, The intent of the QAF is to draw down federal matching funds and increase payments to designated public hospitals (DPHs) as well as non-designated public hospitals (NDPHs) in the Medi-Cal Program. 5a-1

54 The State Department of Health Care Services included QAF fees in the contract amended rates. The California Hospital Association is collaborating with the state Department of Health Care Services to establish a methodology for determining the amount of payments that plans will be required to make to hospitals based on actuarial certification, enrollment and hospital utilization within 30 days of receipt of those funds. BACKGROUND: Background on Federal Budget Federal law requires the President to submit a budget before the first Monday in February; however the past several administrations including the current one have missed this deadline. Under the U.S. Constitution the legislative branch has the power to control funding levels, thus the President s budget proposal is basically a wish list for Congress to consider while the Senate and House of Representatives draft their respective budget measures. This next phase of the budget process involves the House and the Senate developing a series of appropriations bills to fund 13 appropriation bills to fund specific government programs. The House and Senate must reconcile funding differences in their separate appropriations bills to come up with unified legislation. The House and Senate are expected to finalize a budget by Oct. 1, which is when the government s fiscal year begins. Unfortunately the budget process has broken down due to partisan political party polarization. Thus Congress has had to adopt short-term spending plans, i.e. continuing resolutions, to keep the government operating. Once the House and Senate budget bills are reconciled the President can sign the budget reconciliation bill into law. DISCUSSION: The President s proposed budget includes 17 proposals designed to strengthen the integrity of the Medicare and Medicaid Programs through increased pre-payment scrutiny and increased penalties for improper actions in these Programs. Some of the proposals include: Requiring Prepayment Review or Prior Authorization for Power Mobility Devices Expansion of the Medicaid Fraud Control Unit (MFCU) Rebase Future Disproportionate Share Hospital (DSH) Allotments Disproportionate Share Hospital reductions, one year later, in FY 2015 Limit Medicaid Reimbursement of Durable Medical Equipment (DME) based on Medicare rates Clarify Medicaid Drug Rebate and Payment Definitions and Calculations 5a-2

55 Expand State Flexibility to Provide Benchmark Benefit Packages Integrate the Appeals Process for Medicare-Medicaid Enrollees Modified Adjusted Gross Income Beginning January 1, 2014 The modified adjusted gross income (MAGI) is expected to standardize eligibility determination and do away with conflicting eligibility standards across states. States have the option of converting income using standards put forth by CMS or use their own substitute methodologies with federal approval. The above mentioned proposals are expected to save the Medicare, Medicaid, and CHIP Programs $4.1 billion over 10 years. RECOMMENDATION: This memo was provided for information purposes only. No action is requested at this time. CONCURRENCE: N/A. Attachments: None. 5a-3

56 Gold Coast Health Plan State Legislative Report By Don Gilbert and Trent Smith April 11, 2013 The State Legislature remains focused on implementation of the Affordable Care Act (ACA). Special Session bills, ABX1 1 and SBX1 1, have passed their respective houses. Both bills are identical and include the state option, as opposed to the county option, to care for the newly eligible Medi-Cal population. While legislative leadership had planned to finish their work in the Special Session by April 1, their timeline has been pushed back by at least a month -- and likely longer -- while they await further guidance from the federal government and continue negotiations with the Governor s Office. The state vs. county option remains an issue of debate. While the Legislature seems very committed to the state option, the Governor would still like to extract some level of funding from counties to help pay for a portion of the cost associated with caring for the newly eligible Medi-Cal population. The California State Association of Counties (CSAC) is negotiating with the Governor s Office on behalf of all of the counties. CSAC will likely support the state option, despite the fact that at least two counties are pushing for a pilot program for the county option. However, CSAC opposes the Governor s effort to take back county funding arguing that even with the ACA, counties will still be responsible for substantial health care costs. In addition, they are arguing that the federal government is picking up the cost of the ACA for the first three years. Finally, CSAC points to the fact that the state never provided enough funding to cover all of the state mandated local services. The Legislature seems content to allow CSAC and the Governor to resolve the funding issue rather than directly engage in the debate. Once a resolution between CSAC and the Governor is reached, and necessary federal guidance is received, the legislative leadership will decide which bill moves forward. It is also possible that various elements of the final proposal could be split up so that both bills move to the Governor s desk. Meanwhile, the Bridge Proposal contained in SBX1 3 is moving on a separate but parallel track to the larger ACA implementation bills. SBX1 3 is intended to establish a bridge plan product by contracting with Med-Cal managed care plans for various populations. The narrow bridge proposal is the plan that seems to have the most support. In this plan individuals losing Medi-Cal coverage (perhaps because of an increase in income), or the parents of Medi-Cal or Healthy Families eligible children, 5a-4

57 April 11, 2013 Page Two would be covered by the bridge plan. The goal of the program is to provide continuity of care for individuals that could otherwise churn back and forth between Medi-Cal and Covered California. It is also envisioned that the bridge plan would provide discounted premiums for enrollees compared to health plans in Covered California. SBX1 3 would also allow a broad bridge program, which would cover individuals who are eligible for Covered California and who have income below 200 percent of the Federal Poverty Level (FPL). However, while the bill would authorize such a program, it is more likely that the narrow bridge proposal would initially be pursued. As currently drafted, SBX1 3 makes health plan participation optional. There have been discussions about making it mandatory for all Medi-Cal managed care plans to participate. In addition, there is still debate as to when a health plan would have to start a bridge plan. The health committee staff admits that it may take time for health plans to establish a bridge program, especially in light of the fact that many plans are already very busy implementing coverage changes imposed by the Legislature over the last few years. As of now, staff seems to be targeting April of 2014 as a potential start date. They want to ensure continuity of care -- the main goal of the program -- but also point out that any further delay in starting a bridge program would lead to a loss of enrollment to plans participating in Covered California. SBX1 3 will undergo further changes as it moves through the legislative process. However, in its current form it already enjoys the support of the California Hospital Association. SBX1 3 will surely gain additional support as it progresses through the committee process. The budget subcommittees are beginning to meet and review the Governor s proposed budget. On April 8 the Assembly Budget Subcommittee on Health heard the Managed Care Organization (MCO) tax proposal and the proposed efficiency reductions. We testified on both proposals. On the MCO tax we stated that the COHS had supported previous versions of the MCO tax. However, COHS were opposed to the current proposal because none of the new revenue would be directed back to the Medi-Cal program. Several organizations, including patient advocates and health plans, voiced similar concerns. Some groups advocated for the money to go to children s programs and others urged that the new revenue go toward seniors and persons with disabilities. We testified that the new revenue should not be earmarked for one specific population, but rather go toward supporting the entire Medi-Cal program in the form of higher rates. 5a-5

58 April 11, 2013 Page Three There was support among the members of the committee to direct new funding towards the Medi-Cal program instead of augmenting the State s General Fund reserve as proposed by the Governor. The Department of Finance (DOF) tried to convince legislators that the revenue would go to support the Medi-Cal program. However, committee members pressed the DOF to explain how the new money could go to Medi-Cal and still be used for the General Fund. There was a debate over the terms supplant and supplement that ended when the committee asked the DOF to provide a breakdown of their math. The matter was held open until after the May Revise, at which time the committee will expect a better analysis from the DOF on where new revenue will go under their proposal. Ultimately, we believe there is support among legislators to use some MCO tax revenue to increase funding for Medi-Cal. Furthermore, the Administration indicated that there will be changes to this proposal released as part of the May Revise, but no explanation was provided at the committee hearing. The managed care efficiency proposal was also presented at the same committee hearing. The Department of Health Care Service (DHCS) did not have any further details on what efficiencies they were considering. Committee members were very skeptical of the proposal. In addition, the Legislative Analyst s Office recommended rejecting the proposal unless the Administration provides more details. Like the MCO tax, there was a lot of public testimony from patient advocates and health plans. In our testimony we highlighted that COHS are already very efficient. The best example is the fact that, on average, COHS spend only five percent on overhead, leaving 95 percent of their funding for patient care. Furthermore, we testified that efficiency goals must be presented to plans in a manner that allows them the opportunity to manage care to meet the proposed savings goals. The current proposal puts forth a target for savings, which means rate reductions for health plans, without providing the health plans the opportunity to meet the efficiency goals. It is putting the cart before the horse. Ultimately, we described the proposal as means for the state to recoup the AB percent cuts in a thinly veiled plan for efficiency. At the end of public testimony, one of the committee members commented that while it was tempting to book $135 million in savings, he could not see the Legislature adopting this proposal without more details from the Administration. The item was held open and will be heard again after the May Revise is released.. 5a-6

59 April 22, 2013 Tatum Team Cassie Undlin Debbie Rieger Tatum, All Rights Reserved 5b-1

60 Tatum Status Update Tatum is concentrating on five primary areas for their engagement: Project Management providing oversight on key initiatives. Staff Evaluation and Development improving departmental cohesiveness through development of policies and procedures, making staffing recommendations and restructuring where needed. Operational Optimization assessing the as is state of current operations, and recommending and/or developing tools to further enhance operations. System Optimization and Configuration working with internal and external resources to enhance and further automate key processes. Transitioning transferring work to GCHP staff with appropriate amount of training and documentation Tatum, All Rights Reserved 5b-2

61 Transition Plan: Transition Item: GCHP Resource: Completion Date: Project Management Specialty contract COO June 30 Plan to Plan toolkit Sherri Bennett, Network June 30 Management Enrollment issues Luis Aguilar, Member Services June 30 Long term care Will be complete June 1 Recoveries Management Percy Mayfield, Claims Manager June 30 Staff Evaluation/Development IT Director Melissa Scrymgeour, IT Director Complete Network Management COO June 30 Member Services COO June 30 Claims COO June 30 Interdepartmental communications COO June 30 Vendor Management COO June Tatum, All Rights Reserved 5b-3

62 Transition Plan: Transition Item: GCHP Resource: Completion Date: Operational Optimization Claims Processing COO hire June 30 Network Management Reorganization Sherri Bennett Complete Member Services Reorganization Luis Aguilar May 30 Vendor Management COO hire June 30 Financial Recovery Project Various, will be complete June 30 System Optimization/Configuration ICES Percy Mayfield June 30 Milliman Configuration Melissa Scrymgeour Complete System Config IKA setup COO hire June 30 IKA Updates 5.1, 5.3 Melissa Scrymgeour Complete Work Flow Management Andre Galvan June Tatum, All Rights Reserved 5b-4

63 Objectives/Accomplishments: Transition Item: Target Completion: Completion Date: Project Management Specialty contract April 15 Plan to Plan toolkit June 30 Enrollment issues; Part A April 30 LTC April 30 Admin June 30 Long term care June 1 Staff Evaluation/Development Provider Relations COO hire Member Services COO hire Claims COO hire Interdepartmental communications COO hire Vendor Management COO hire Tatum, All Rights Reserved 5b-5

64 Objectives/Accomplishments: Transition Item: Target Completion: Completion Date: Operational Optimization Claims Processing COO hire Enrollment May 30 Provider Contracting April 1 Complete Vendor Management COO hire Financial Recovery Project June 30 System Optimization/Configuration ICES June 30 System Config IKA setup COO hire Work Flow Management June Tatum, All Rights Reserved 5b-6

65 Operational Optimization Claims Stats: 60.00% 50.00% 40.00% 30.00% 20.00% 17.06% Auto-Adjudication Rate 27.00% 32.49% 34.48% 43.00% Auto Adjudicate Target: 51% by April 11, % by June 30, % 0.00% Sept '12 Oct '12 Nov '12 Dec ' 12 Jan '13 Inventory Analysis Tatum, All Rights Reserved 5b-7

66 AGENDA ITEM 5c To: From: Gold Coast Health Plan Commissioners Michelle Raleigh, Chief Financial Officer Date: April 22, 2013 Re: GCHP Financial Forecast Status Update Results through: February 28, 2013 This document provides a status update on Gold Coast Health Plan s (GCHP or Plan) updated financial forecast provided the Department of Health Care Services (DHCS) on March 22, The refreshed financial forecast was provided in response to the Corrective Action Plan (CAP) Amendment and projects revenue and expenses through June 30, This status update compares actual financial results to the refreshed financial forecast and highlights major differences. This update compares actual activities to those estimated in the financial forecast for February of 2013 (the new financial forecast included actual results through January 2013). The month s results are summarized in the table below. February 2013 Financial Statement Category Highlights of Major Differences between Financial Forecast and Actual B. C. Comments Refreshed Difference Financial (A-B) Forecast A. Actual Results Revenue $25.4M $25.5M ($0.1M) Differences due to membership mix Health Care Costs Administrative Costs $22.9M $22.5M $0.4M Differences due to multiple reasons (e.g., slightly higher actual pharmacy costs, higher claims reserves in actual results) $1.9M $1.9M ($0.0M) Net Income $0.6M $1.1M ($0.5M) 5c-1

67 Also important to note that as of the end of February, 2013: Line of Credit the initial line of credit of $2.2 million that was received in December 2012, was unchanged at February 28, TNE phase-in requirement has increased to 52% of the 100% level as of 12/31/12 per the State s TNE phase-in schedule (i.e., at $8,247,821 per February Orange Blank submitted to State). The Plan s TNE at February 28, 2013 was a negative $4,524,791, resulting in a deficit of $12,772,612. This deficit is marginally higher than expected in the financial forecast (i.e., $12,473,233). 5c-2

68 Gold Coast Health Plan Financial Forecast Refresh Overview Commission Meeting April 22, c-3

69 Agenda Financial Forecast Refresh Other Opportunities Next Steps 5c-4

70 Financial Forecast Refresh As part of the 10/4/12 Corrective Action Plan (CAP) response, Gold Coast Health Plan (GCHP) prepared a financial forecast: Original was submitted to DHCS on 12/11/12 Refresh was submitted to DHCS on 3/22/13 as requested in 2/26/13 letter Projected revenues and expenses through 6/30/14 (at which time GCHP is expected to reach 100% of the TNE requirement, which is phased in over 36 months) Reflected the impact of 19 key initiatives currently underway and those planned Followed same guiding principals Demonstrated GCHP achieving tangible net equity (TNE) requirements with outside support (e.g., lines of credit) as of 6/30/2014 5c-5

71 Financial Forecast Refresh Major Changes Reviewed and updated all 19 initiatives Reflected actual data through January 2013 (prior version used actual data through October 2012) Incorporated Healthy Families Transition members Adjusted for reduction expected in fee for service claims for the Specialty Contract implemented in October c-6

72 Refresh of Key Initiatives GCHP reviewed status of the original 19 key initiatives covering the following areas: Areas Number of Initiatives Correct coding of members 2 Collecting and processing overpayments, coordinating benefit payments, enhancing claims payment edits, and collecting from reinsurance vendor 8 Provider re contracting 4 Enhanced utilization and case management 3 Managing administrative budget & TNE requirements 2 5c-7

73 Impact of Key Initiatives Annualized impact of initiatives on TNE*: Refresh Annualized Impact (in millions) Refresh Range of Annualized Impact (in millions) Original Annualized Impact (in millions) Original Range of Annualized Impact (in millions) Increased Revenue $2.4 $2.4 $3.5 $2.4 $2.4 $3.5 Net reduction to Medical Expenses Increased Administrative Expenses Incorporation of lines of credit $24.5 $21.8 $31.7 $23.8 $20.6 $32.7 ($3.8)** ($3.6 $4.0)** ($1.2) ($1.1 $1.3) $7.2 $2.2 $7.2 $8.2 $2.2 $8.2 * Note sign (i.e., positive, negative) of amounts in table indicate the impact on TNE. ** Increase primarily due to phase in of 20,000 TLIC members as well as staffing increase approved during 1/28/13 Commission meeting. 5c-8

74 Financial Forecast Income Statement Finding Refreshed Forecast Original Forecast Description Audited Results Forecast 3 Year 3 Year FY TOTAL TOTAL Average Average Member Months 1,258,189 1,199,500 1,395,762 1,284,484 1,208,001 Revenue $ 304,635,931 $ 303,451,959 $ 319,346,295 $ 309,144,729 $ 304,483,676 pmpm Health Care Costs $ 287,353,673 $ 275,931,463 $ 279,529,291 $ 280,938,142 $ 277,784,021 pmpm % of Revenue 94.3% 90.9% 87.5% 90.9% 91.2% Admin Exp $ 18,891,321 $ 22,814,416 $ 22,732,511 $ 21,479,416 $ 19,730,880 pmpm % of Revenue 6.2% 7.5% 7.1% 6.9% 6.5% Net Income $ (1,609,062) $ 4,706,079 $ 17,084,493 $ 6,727,170 $ 6,968,774 pmpm (1.28) % of Revenue 0.5% 1.6% 5.3% 2.2% 2.3% Note FY includes an additional increase of $7M in estimated incurred but not reported (IBNR) health care costs which was included to be conservative. 5c-9

75 $25 $20 $15 $10 $5 $0 $5 $10 $15 TNE Requirements GCHP TNE POSITION FY JUL2012 OCT12 JUL12 JAN13 FY FY % TNE Phased In TNE GCHP TNE GCHP is projected to meet the full TNE requirement by 6/30/2014 Reflects $7.2 million in lines of credit throughout projection period AUDITED RESULTS PREVIOUS ACTUAL ACTUAL TOTAL TOTAL $MILLIONS 5c-10

76 Other Opportunities Intergovernmental Transfer (IGT) not reflected Financial forecast is conservative because: Estimates incorporate the lower end of savings ranges No State capitation rate increase is assumed between FY and FY Medi Cal expansion has not been incorporated, where GCHP could leverage existing infrastructure to increase net operating margin from higher enrollment Delivery model contracting changes not currently incorporated into the model (e.g., Plan to Plan contracting which will increase capitation and lower TNE requirements) 5c-11

77 Next Steps Obtain feedback from State and Monitor Provide ongoing updates to Executive Finance Committee and Commission on financial forecast results 5c-12