ALAMEDA ALLIANCE FOR HEALTH BOARD OF GOVERNORS REGULAR MEETING. November 10, :00 pm 2:00 pm 1240 South Loop Road, Alameda, CA

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1 ALAMEDA ALLIANCE FOR HEALTH BOARD OF GOVERNORS REGULAR MEETING November 10, :00 pm 2:00 pm 1240 South Loop Road, Alameda, CA SUMMARY OF PROCEEDINGS Board Members Present: Marty Lynch (Chair),Dr. Evan Seevak (Vice Chair), Scott Coffin, Dr. Rollington Ferguson, Feda Almaliti, Will Scott, Wilma Chan, Aarondeep Basrai, Delvecchio Finley, Rebecca Gebhart, Dr. Bertram Lubin (phone), Jane Garcia (phone) Excused: Dr. Ray Davis Jr., Travis Stein, Nicholas Peraino, Dr. Michael Marchiano Alliance Staff Present: Scott Coffin, Matt Levin, Gil Riojas, Matt Woodruff, Dr. Michael Kaufman, Tiffany Cheang, Anastacia Swift, Bob Padilla AGENDA 1. CALL TO ORDER M. Lynch The regular board meeting was called to order by M. Lynch at 12:05 PM. A board quorum was established by a simple majority for the meeting. 2. INTRODUCTIONS M. Lynch Introductions were made for those board members and Alliance staff present. 3. CEO UPDATE S. Coffin S. Coffin provided the following updates: Q operating performance is $3M under budget; $608K net income; membership at highest ever over 270,000 members. Current trends are unfavorable; a taskforce has been set up to examine the trends over the last three (3) months. The Alameda County safety net is facing some real threats; involved in recent meetings with county members around payment reform, policy changes and the impacts and opportunities. DHCS announced a request for proposal to Alameda County for Medi-Cal Managed Care. The Alliance does not have to apply. Anthem Blue Cross will go through this process in 2019 or HEDIS results are expected to be published in November. As a result

2 of the improved HEDIS results, the default enrollment has been increased. A preliminary report from DHCS indicates a 69% default rate for the Alliance and 31% rate to Anthem effective on 1/1/18. LA Times recently featured articles in regards to the profits of managed care health plans. The Alliance has been highlighted in these articles providing visibility and attention about our work. W. Scott inquired the reasons for the increase in membership trend and the demographics of the new members. G. Riojas responded the biggest increase was due to the Medicaid Expansion, which currently represents one-third (1/3) of our membership. T. Cheang clarified that the expansion includes adults only and no children; 50/50 split for gender and 57% for ages 19-44; 41% for 45-64; 2% for 55 and older. M. Lynch inquired if the press reports drew any distinctions between how the health plans managed their profits based on their public or for-profit status. S. Coffin replied there was not much indication of reinvestment into the community. There was a reference to DHCS s recoupment and collection of funds and profits from the Exchange. R. Ferguson inquired about the reintroduction of the grants as a way of giving back to the community. S. Coffin suggested reviewing the grant program in January to determine options for provider evaluations. Dr. Steve O Brien has been selected as the Chief Medical Officer (CMO) starting on January 1, He was formally with Sutter Health, Alta Bates and Summit. M. Lynch requested his CV be shared with the board. Anastacia Swift has been selected as the Executive Director for Human Resources effective on January 1, 2018 after serving as a consultant since April. Tiffany Cheng was promoted to Chief of Performance and Analytics. Operations Dashboard o M. Levin reported that Provider Disputes & Resolutions did not meet the 95% requirement due to increased volume and nursing staff out on leave. 45% were overturned. S. Coffin to share Dr. O Brien s CV with the board members. AAH BOG 11/10/ of 8

3 o S. Coffin reported the encounter data had issues starting in June. The Alliance had identified encounters that were not reported the DHCS since Approximately 750,000 encounters were identified and 45% have been submitted to the state. The plan is to have this issue resolved by early Q There is no impact to claims payments. G. Riojas added that it is unclear if this will impact our rates but will be working with the state for any future impact. Y. Doshi, the EDI manager explained there were some technical system glitches which have been corrected to prevent this from occurring in the future. There are a variety of data issues which need to be corrected with our trading partners, which will take time to resolve by Q R. Ferguson was concerned that it would take six (6) months to resolve this issue. This should be a priority. 4. AGENDA APPROVAL M. Lynch S. Coffin requested a motion to modify the agenda to include a vote for the board seat vacated by Jane Garcia. Motion and vote was taken in the Board Member Reports section. 5. CONSENT CALENDAR M. Lynch M. Lynch requested a motion to approve the following items on the Consent Calendar: Approval of Minutes September 8, 2017 Board of Governors Meeting F. Almaliti moved to approve the minutes of the September 8, 2017 Board of Governors Meeting. The motion was seconded by E. Seevak. The motion passed unanimously. Motion: F. Almaliti Seconded: E. Seevak unanimously 6. BOARD MEMBER REPORTS M. Lynch Jane Garcia will be resigning from the board effective December 31, She represents the Alameda Health Consortium. J. Garcia expressed her pleasure to serve on the board and offered her thanks for ongoing support over the years. AAH BOG 11/10/ of 8

4 Dr. Ray Davis resigned from the board effective October 31, He represented the ACCMA and Sinkler Miller. Since the appointment of the new ACHCSA Director, Rebecca Gebhart will now occupy a subject expert seat on the board. S. Coffin presented the resolution to nominate David Vliet to replace Jane Garcia on the board. David is currently the CEO of the Tiburcio Vasquez Health Center and is also the chair of the Community Health Center Network Board of Directors. E. Seevak moved to add this item to the agenda. Motion was seconded by R. Ferguson. W. Chan inquired if we can take this action since it wasn t posted. M. Levin clarified that if the decision is unanimous it is acceptable, if there is one dissenting vote, action cannot be taken. unanimously. A. Basrai moved to submit to the Board of Supervisors, David Vliet as the board s recommendation as a board member nominee. Motion was seconded by E. Seevak. R. Ferguson inquired as to the timeline of the Board of Supervisors approval. He suggested the delay of this vote until December to ensure compliance with the Brown Act. After discussion, M. Lynch suggested to table the vote until the December meeting. Motion: E. Seevak Second: R. Ferguson unanimously. Board vote was tabled until December meeting. 7.a. BOARD BUSINESS STAFF PRESENTATIONS MOSS ADAMS FY2017 AUDIT G. Riojas G. Riojas introduced Chris Pritchard with Moss Adams. Chris provided the following 2017 Financial Audit results: Unmodified Opinion: Combined financial statements are presented fairly and in accordance with generally accepted accounting principles. Assets: No errors in reconciliations; confirmed cash collections; no significant changes in reinsurance recoveries and capital assets. Liabilities: normal accounts payable and accrued liabilities; no issues with year-end testing, Claims and actuary data was consistent; payables to government agencies was reasonable; positive net position. Operations: Analytical comparison over the past four (4) years; percentages by classification are fairly consistent. AAH BOG 11/10/ of 8

5 Trends: Revenue, Claims expense and Claims payable are all trending in a significant direction. Tangible Net Equity: TNE is well over requirement and is consistent with other health plans in California. Board Communications: Policies are in compliance with generally accepted accounting principles; accounting estimates and models are reasonable and consistent; no audit adjustments; no difficulty in performing the audit; no disagreements with management. Best practices recommendations: followed up on IT security issues from last year and are pleased with changes to monitoring and reporting the number of attempts into the organization. E. Seevak inquired as to the responsibilities of the auditor. M. Levin responded the auditors are responsible for giving an independent validation of our finances and reporting to the board. M. Lynch inquired about any additional best practices recommendations. C. Pritchard responded there were no comments regarding the basic controls relating to the financial statements; reiterate maintaining high standards regarding IT security. R. Ferguson moved to accept the results of the 2017 Financial Audit by Moss Adams. The motion was seconded by E. Seevak. Motion passed unanimously. Motion: R. Ferguson Second: E. Seevak unanimously. 7.b. BOARD BUSINESS STAFF PRESENTATIONS FINANCIAL STATEMENTS FOR AUGUST AND SEPTEMBER 2017 G. Riojas G. Riojas acknowledged the Alliance finance staff for all their work for the annual audit. He provided the following financial updates for August 2017: August enrollment increased to 270,870 members, which is the highest ever; increases in the MCE and Child population Net income $2.2M; which is $1M more than budgeted. YTD Net Income $3.9M Revenue was higher than budgeted primarily due to the increase in members. Medical expense was higher than budgeted due to membership and trends with claims expense which adjust the IBNP model upward. AAH BOG 11/10/ of 8

6 Administrative expense: Budgeted $4.8M actual expense was $3.9M; favorable variance due to delayed hiring and delayed consulting services. Claims interest expense $612K YTD. Medical Loss Ratio: 92.2% ; budgeted 92.9% Tangible Net Equity: 663% of required amount. Cash: $596M, $354.3M is uncommitted cash. G. Riojas provided the following financial updates for September 2017: Enrollment increased by 511 for a total of 271,381 members; still highest ever; largest increase from MCE population. Net loss: $3.3M; budgeted $900K net income; previously showed net income for the past 23 months; increases in medical expense. Medical expense: increased medical expense in July, August and September; setting up a task force to identify reasons and address the drivers for this increased expense. Administrative expense: continue to be below budget due to delayed hiring and delayed consulting services. Claim interest expense: YTD $998K; interest paid due to AAH errors; review contract terms; review claims processing and contract configurations; processing quality control. After discussion, S. Coffin summarized the need to figure out what s not working, clean up the process and standardize contracts. A benefits committee will be convened which will focus on the interpretation of Medi-Cal benefits and ensure it is systematically configured correctly. M. Lynch requested a report at the next meeting of the activities planned. S. Coffin to provide Claims interest expense update at next board meeting. W. Scott inquired about expected fluctuation in membership. G. Riojas responded enrollment was budgeted to go up 1% year over year. There are no indications that that will increase more. R. Gebhart suggested allocation of time at the next board meeting to discuss the increase in medical expenses. M. Lynch noted that the big items seem to involve primary and specialty care in the FFS system or the non-capitated members. He requested a report back on how the FFS side is being managed. R. Gebhart also suggested a review of mental health which shows low utilization. M. Lynch request report back and update on increasing medical expenses and mental health utilization. AAH BOG 11/10/ of 8

7 Medical Loss Ratio: 98.8%; due to increased medical expense; revenue relatively flat. Tangible Net Equity: 649% of required TNE R. Ferguson moved to accept the August and September financial report. The motion was seconded by W. Scott. The motion passed unanimously. Motion: R. Ferguson Second: W. Scott unanimously. 7.c. BOARD BUSINESS STAFF PRESENTATIONS HUMAN RESOURCES A. Swift A. Swift provided the following Human Resources updates: Currently have 31 open positions after the announcements today. Five (5) pending offers in Medical Management; two (2) in Operations; one (1) in IT. Some Medical Management positions may be removed or delayed until a later date. Successfully leveraging the internal candidate pool through transfers and promotions. Brought on a temporary employee to assist with online resources. Developing new policies to align our current work environment to meet the needs of the Alliance. Minor changes to our offer letter to provide more contingencies with clearances and tentative start dates; goal to bring recruitment rate below 10%. Identified five (5) top recruitments in medical management at a management level to provide structure in the department and assist with hiring the remaining positions. Those staff positions are the Medical Director of Quality, Manager of Outpatient UM, Manager of Case Management, Nurse Liaison, Health Homes and Whole Person Care. Recently added Medical Social Worker. S. Coffin added that Gregory Wyche was hired as the Director of Case Management and Utilization Management. 7.d. BOARD BUSINESS STAFF PRESENTATIONS COMPLIANCE DEPARTMENT UPDATE M. Lynch M. Lynch announced the establishment of the ad-hoc Compliance Advisory Group of the board. R. Gebhart has agreed to chair the advisory group which also includes W. Scott, T. Stein and F. Almaliti. AAH BOG 11/10/ of 8

8 S. Coffin presented a narrative which described the purpose of the adhoc Compliance Advisory Group. M. Lynch requested a motion to approve this ad-hoc Compliance Advisory Group. W. Scott moved to approve the ad-hoc Compliance Advisory Group. The motion was seconded by D. Finley. The motion passed unanimously. Motion: W. Scott Second: D. Finley unanimously. 8. STAFF ADVISDORIES ON BOARD BUSINESS FOR FUTURE MEETINGS M. Lynch S. Coffin stated the next meeting will focus on the analysis of the medical expense; interest expense including configuration management and governance; analysis of mental health with regard to penetration of mild and moderate members; provide status of IT encounter data clean up; update on progress of grants project. 9. PUBLIC COMMENTS (NON-AGENDA S) M. Lynch There were no public comments. 10. ADJOURNMENT TO CLOSED SESSION M. Lynch The meeting was adjourned to closed session at 1:49 PM. Respectfully Submitted By: Lynda Fong, Compliance Coordinator AAH BOG 11/10/ of 8