ALAMEDA ALLIANCE FOR HEALTH BOARD OF GOVERNORS REGULAR MEETING October 12, 2018 12:00 pm 2:00 pm 1240 South Loop Road, Alameda, CA SUMMARY OF PROCEEDINGS Board Members Present: Marty Lynch (Chair phone),dr. Evan Seevak (Vice Chair), Feda Almaliti, Rebecca Gebhart, Nicholas Peraino, Dr. Noha Aboelata, Dr. Rollington, Wilma Chan, Dr. Michael Marchiano, Travis Stein, Aarondeep Basrai, Bertram Lubin, Delvecchio Finley, Excused: Dr. David Vliet, Will Scott, Alliance Staff Present: Scott Coffin, Gil Riojas, Dr. Steve O Brien, Anastacia Swift, Sasikumar Karaiyan, Tiffany Cheang, Guest Speakers: Moss Adams - Rianne Giselle Suico, Chris Pritchard 1. CALL TO ORDER Marty Lynch The regular board meeting was called to order by Marty Lynch at 12:02 PM. A board quorum was established by a simple majority for the meeting. 2. ROLL CALL Marty Lynch Roll Call was taken. 3. APPROVAL OR MODIFICATIONS Marty Lynch There were no modifications to the agenda. 4. INTRODUCTIONS Marty Lynch No introductions of the audience in lieu of the long agenda and closed session. 5. CONSENT CALENDAR Marty Lynch Requested the Board to take a moment to read the August 2018 minutes. Review and Approve August 2018 Board of Governors Meeting Minutes. Motion: Second: unanimously.
6. a. BOARD MEMBER REPORT COMPLIANCE ADVISORY GROUP Rebecca Gebhart The following Compliance Advisory Group updates for the Compliance dashboard: The Compliance Advisory Group met both September and October. The Compliance Dashboard was sent to all Board members. The Compliance group is large and all the Compliance members work on the Dashboard. In the October Compliance meeting we reviewed the summary of total findings open, summary of completed findings, and summary of validated findings. We are tracking 113 items, 68 are complete, 45 are in progress. The Compliance Advisory Group is specifically working on the Department of Managed Health Care (DMHC) findings still in progress from the last audit; which totals 12 findings. The Plan will correct these 12 findings. A Corrective Action Plan is in the process of development and finalization and will be submitted by November 1, 2018. Rebecca deferred to Scott for additional updates, citing report discrepancy related to formatting. 6. b. BOARD MEMBER REPORT FINANCE COMMITTEE Rollington The Finance Committee meeting met on October 9 and the following items were noted. TNE is 610.9% but projected to lower to 4.68% at the end of FY 2019. The projected loss pf $37.8 million at the end of FY 2019 was discussed. 7. a. BOARD BUSINESS REVIEW AND APPROVE MOSS ADAMS TO PRESENT THE ALLIANCE S FY 2017/2018 AUDIT Rhiane Giselle Suico / Chris Pritchard Moss Adams issued an Unmodified Opinion which is Combined financial statements are presented fairly and in accordance with generally accepted accounting principles. The composition of assets were confirmed (cash and cash equivalents, premiums receivable, investments, reinsurance, capital assets) and were AAH BOG 10/12/2018 2 of 6
consistent. Liabilities and net position balance were confirmed (accounts payable, accrued expenses, claims payable, payable to other governmental agencies and hospital fee, net position, etc.) and were consistent. Medical Services was the largest expense in Operational Expense from June 30, 2017 to June 30, 2018 followed by Administrative Expenses. Revenues, Claims, and Claims Payable have remained consistent from the prior years. Tangible net equity has been surpassing the TNE requirements for the last 3 years. The Accounting estimates are reasonable, no audit adjustments, no issues discussed prior to our retention as auditors, no disagreements with management and there were no adjustments or issued completing work. There were no questions. Second: Dr. E. Seevak unanimously. 7. b. BOARD BUSINESS REVIEW AND APPROVE JUNE 2018 MONTHLY FINANCIAL STATEMENTS Gilbert Riojas The following financial updates for June 2018: Enrollment increased by 426 members. Net loss for the month ending June 2018, $4.3M due to; unfavorable variance in revenue of $4.0M, unfavorable $826,000 of Medical Expenses, Favorable $932,000 Administrative Expense, and $510,000 other income. Second: Dr. E. Seevak unanimously. 7. c. BOARD BUSINESS REVIEW AND APPROVE JULY 2018 MONTHLY FINANCIAL STATEMENTS Gilbert Riojas The following financial updates for July 2018: Enrollment decreased by 640 members For the month we showed $1.1M income and 617% of required Tangible Net Equity (TNE). Second: Dr. E. Seevak unanimously AAH BOG 10/12/2018 3 of 6
7. d. BOARD BUSINESS REVIEW AND APPROVE AUGUST 2018 MONTHLY FINANCIAL STATEMENTS Gilbert Riojas The following financial updates for August 2018: Enrollment: August 2018 showed a decrease of 786 members with a total enrollment of 264,871. The graphs on page 5 show the Medi-Cal Child and Adult category and the downward trend. Group Care has remained flat. Net Income: For the month, ending August 31, 2018 the net loss was $5.7 million. Year-to-date the net loss was $4.6 million. Factors affecting the Net Income: Actual vs Budget were; $1.7 million higher than anticipated Premium Revenue, $5.5 million higher than anticipated Medical Expense, $539,000 lower than anticipated Administrative Expense, and $104,000 higher than anticipated Other Income. Revenue: For the month ending August 31, 2018, Actual Revenue was $75.5 million vs Budgeted 73.8. The favorable variance was due to $897,000 higher capitation membership rates, $425,000 Hep C Kick payments, $300,000 higher Behavioral Health Kick payments. Medical Expenses: The month reported $5.5 million more than anticipated Medical Expenses. This was partly due to Inpatient Hospital & SNF FFS, and Outpatient/Ancillary FFS. In addition, Pharmacy Expense was higher than planned; the largest component was Specialty Drugs for the SPD category of aid. Administrative Expense: The administrative expense represented 5.6% of the net revenue for the month ending August 31, 2018. The Alliance administrative expenses were below budget due to delayed hiring, less than planned Computer Support Services, Behavior Health administrations fees, and license / permit fees. Other Income / Expense: Year-to-date the Alliance has made income from investments of $1.2 million. Medical Loss Ratio: The Medical Loss Ratio was 102.7% of the net AAH BOG 10/12/2018 4 of 6
revenue for the month ending August 31, 2018. Tangible Net Equity (TNE): Tangible net equity results continue to remain healthy. For the month, ending August 31 2018 the TNE was reported at 581% of the required amount. This is a Surplus TNE of $153.6 million. Balance Sheet: The Alliance s Cash Balance for the month ending August 31, 2018 was $427.3 million, Uncommitted Cash was $186.9 million, and the Current Ratio is 1.47%. By the end of October 2018, we will need to pay the DHCS approximately $179.0 million in MLR (1/2014 to 6/2016) and this will negatively affect our cash balance. Second: Dr. M. Marchiano unanimously 7. e. BOARD BUSINESS REVIEW AND APPROVE FY 2018/2019 ALAMEDA ALLIANCE FOR HEALTH FINAL BUDGET Gil Riojas FY18 Post Audit final budget results reported a net loss of $1.3 million. Following is a cap of these differences: Enrollment was 266,297, Member Months 3.219,900 million, Revenues $885,772 million, Medical Expense $839,382 million, Administrative Expense $51,692 million, Other Income/Expense $3,914 million. The TNE for the end of year was 610.9%. FY2019 Final Budget reports a net loss of $37.8 million. Following is the predicted final cap of these differences: Enrollment w 268,090, Member Months 3,192,981 million, Revenues $901,769 million, Medical Expense $891,744 million, Administrative Expense $53,844 million, Other Income/Expense $5,970 million. The TNE for the end of year will be 468.0%. FY2019 Budget by Category of Aid Net Income and Medical Loss Ratios are reflected with Medi-Cal Child, Medi-Cal Duals, and Group Care experiencing positive incomes, whereas, Medi-Cal Adults, Medi-Cal SPD, and ACA OE experienced a loss. Second: Feda Almaliti unanimously 8. STANDING COMMITTEE UPDATES Marty Lynch There were no Standing Committee Updates in lieu of time but will report out next month. AAH BOG 10/12/2018 5 of 6
9. CEO REPORT Scott Coffin There will be an email going out to the Board before the next Board meeting explaining the Alliance s Turnaround Plan FY 2019-2021. We are questioning and testing every administrative expense, but the larger expense is the Medical Expense. Our approach is to cut waste. We have formally asked the Department of Health Care Services (DHCS) to make a consideration to the Alliance and accelerate the rate process by one-year. Marty and Scott have met with the DHCS regarding this issue. By June 2019, the Alliance should have a decision from the DHCS to accelerate the rate process by one-year or not accelerate it. Last May when we identified this loss, we immediately started communication with DHCS and the Department of Managed Health Care (DMHC). A number of counties are facing significant losses; Medi-Cal is underfunded based on the costs. 10. STAFF ADVISORIES ON BOARD BUSINESS FOR FUTURE MEETINGS Marty Lynch There were no Staff Advisories. 11. PUBLIC COMMENTS (NON- S) Marty Lynch There were no public comments. 12. CLOSED SESSION Marty Lynch Conference with Legal Counsel Existing Litigation 13. ADJOURNMENT Marty Lynch The meeting was adjourned at 2:15 PM. Respectfully Submitted By: Jeanette Murray, Clerk of the Board, Executive Assistant to the CEO AAH BOG 10/12/2018 6 of 6