Good morning everyone. I'll call this hearing order and the first order of business will be to decimate Judy Hinkin as the hearing officer for today's proceeding. And that will turn it over to you, Judy. Thank you, Chair. Good morning everybody. Today is July 24th, 2018. We're here in the matter of MVP re-piling. It is docket number GMCB0818. And we have the parties here. We have MVP, representing MVP, is Geary Carnity, and I don't know the other person in the table. Mike, Summer Associate Michelle Bennett. Michelle Bennett. Michelle Bennett, so she's going to learn today. And you have here with us at the table, Matt Lombardo from MVP. Yes. The HDA is here today. We have representing the healthcare advocate's office of J. Angloff, Gail Tender, Aaron Holtzke, and Chief Health Care Advocate Mike Fisher is also at the table. We have a court report for today's hearing. So this will be videotaped, audio taped, and we have at least videotaped, audio taped, not audio taped, transcribed by the court reporter. I don't know how to work simple recording instruments, so otherwise I would do that but I'm still in care of it. The board has jurisdiction over this matter. Under Title 18 of the remonstration, and that's it, sorry. So I want to welcome all the members of the public and the parties that are here today. We do have a signing sheet, I believe. We would like to make a public comment, which will be taken at the end of today's evidence. I will remind the board again and I will remind the parties that there may be confidential information that has been submitted by the carrier that is within the filing. And please exercise caution in discussing anything that may have been clearly marked as confidential, which cannot be discussed in this open forum. We have a lot more room today for everyone, so you can stretch out a little bit. I would like to have you swearing all the witnesses now so we can take care of that. All the witnesses or potential witnesses, please rise and be sworn in. Do you swear that the testimony you are about to give shall be the truth, the whole truth, and not the truth, so long as God. Which reminds me that we also have the Department of Financial Regulations sitting right in front of me, and that we, um, General Counsel Gavin Boyle, also in attendance. Now that we have sworn in these witnesses, we do have, um, a stipulated set of exhibits that the parties have worked on. There were two, this is also a list of items submitted by the health care advocate. Some were stipulated to, some were not, and those are items which they are requesting before potentially if you take some administrative notice of. We can address that issue right now, because I believe there was an objection to several of the issues of the submitted documents. So you want to start with that before the motion to go next? Let's start with that, I'll get this out of the way. So, um, do you want to hear the objection or do you want to hear the profit first? One of you from first. You filed an objection, why don't you please raise that? Um, apparently, so the health care advocate provided well over a dozen documents by email to us asking if we take judicial notice of those. We read all of them, say, to talk about those two documents. The first document, as I understand it, and I think I'll talk about all of them at the same time as it's related, is the Commonwealth Fund. This is a document, 20-page paper from May of 2015. There are four authors to this document. We're not here today for being cross-examined. The HCA put broad, any one of them, as an expert witness, disclose them to our procedure. This document cites other papers that haven't been provided, so there's a lack of foundation. This article is not, like, great anatomy, lack of audition area. Some other learning trees get around the hearsay issue. This is hearsay. It's not a public record, no accession on that. And the document, I think, acknowledges bias. It's admitted in the document by the Commonwealth Fund, or that is that the paper only interviews presented by the author, not necessarily those in the Commonwealth Fund. So I can't test that bias without having these witnesses here. And what we're talking here is about judicial notice, and that standard appears to be higher than the APA standard, where, you know, it's just a question of reliability here. We've got a question of whether this document is not subject to reasonable dispute. And I would say that it is difficult for me to dispute about who this is here. So I would say that should not be referenced, increased, or used in this case. The second document, two of the same arguments. This is referenced as a market decisions document, a comprehensive report prepared for DFR in 2015. It's a 101-page report. It's written by a Brian Robertson, a PhD director of research. He's up in Portland, Maine. Again, they could have disclosed him as an expert. And Brian here, the report was not that far away. Expert disclosures provide the other side an opportunity to prepare or even have that opportunity. I don't think it's a deliberate attempt to subvert that of the reality that this goes in. There's hearsay issues. There's a lack of foundation. This isn't relied upon anyone testifying as an expert in this case. And the public records exception specifically excludes investigative reports prepared for a government entity. So both of these documents shouldn't be referenced and agreed for here in the case. We don't think that they should be considered by the court for reasons I see. Yeah, I think the objection with respect to the commonwealth fund report is at least in part well taken and we would draw it. The commonwealth fund is not a government entity. It's got a certain point in view. And I thought I'm going to agree with what everything council said. I think there are some good ones that we would draw out. On the other hand, the other report is not done by a foundation. It's done by a governmental entity in the Vermont Department of Regulation and Shum Division. And therefore, if you think that it was, if it does fall into the category of a few children in this body, it should certainly be an official notice of it. And before, Judy, in a reporting role, I should just disclose that while I was working for the executive branch, I was actually responsible for the production of the household insurance survey. I, in March of 15, I was in the agency of administration, but because I was in charge of health care reform, I worked closely with the staff at DFR and with that consultant toward production of the report. The only thing I would add is it sounds like the board member was very well versed on these issues. And she doesn't need this report to come into evidence and obliterate on the matters before us here today. And Mr. Robinson isn't going to be causing any trouble here. The report is produced by a governmental agency that was a contractor. It is a report that I believe is again being prepared. This one was from 2015. It was seed less available report on this. It is not being offered into evidence. It is being, they are requesting that the board take notice if, in fact, it is to be administrative in the purpose of the hearing and for their briefing if it is to be used at all. It is the type that reasonably prudent jurors may consider, in fact, and we find it's reliable for, for the reason discussed that it is a regularly, regularly produced report. It was produced by the Department of Financial Regulation, which I believe then might have been, I can't remember. And it will be given appropriate weight in our consideration. So that is not being able to be taken into evidence as fact, but in fact, it is used by the parties. It will be weighted according to the board. So that will be, will take notice of that document. Moving on. We have another motion before the board, which was filed by the party by MVP. And there was a written response on this motion. Would you like to present your motion quickly, please? Stand by and read the laws clear that the report Mr. Fisher should be stricken. He should not be allowed to testify. First, we start with the proposition that was unopposed to the frame of this testimony was set forth in four corners of that report. The subject matter is restricted to what he discussed in his extrovert report and he's not disclosed to faculty. So they made the choice to have him talk solely about this. And then that relates to the second issue is report related testimony amount to admissible legal conclusions about legislative history. The case law is clear on this. You got a brief expert testimony on legislative history is stricken. We're not allowed. This is a subject for the board to consider if it chooses in his briefing. It's not a testimonial expert. The board and their amounts are going to do with the second case law, legislative history, whatever you want to do. This hearing should not involve the debates about what happened and what was said leading up to the passage of that 48. And Mr. Fisher's respective chair picking on what he recalls back then. Since this report and testimony are are inadmissible. He was not disclosed to talk about anything else. He should be prohibited from testifying. I also know that I understand the board removal on a similar motion yesterday to his testimony. We asked him to do the same here. We're at the board removal yesterday and therefore on this motion therefore we withdraw Mr. Fisher's Mr. Fisher's an expert and instead we would like to rely on section 4062 E1B, which says that the board shall provide an opportunity for testimony from the insurer, the office of the health care advocate and members of the public. So we draw Mr. Fisher as an expert and simply rely on the statute toward amendment to the health care advocate even to testify. Do you have a response? I do. We had several pre hearing meetings, pre hearing orders and a path to which there was a fair disclosure and transparent process here leading up to this hearing. One thing we were supposed to do, the parties were supposed to do was to disclose facts, disclose our witnesses whether they be expert or fact. He was not disclosed as a fact witness. And now I'm hearing he is going to be testifying as a fact witness that's in the system of your ruling yesterday. I believe my ruling yesterday was that he could not provide testimony as to the legislative history, his recollection of the legislative history and his interpretation of the intent. This sounds like this may be different, but I would like to just clarify a few things. Have you reviewed the board's scheduling order that was agreed to by the parties and signed by the board? And there is a there was a date in fact with disclosure of witnesses so the parties would have an opportunity to be fairly surprised at the testimony. And was Mr. Fisher disclosed on that? Mr. Fisher was disclosed as an expert. We believe that Mr. Fisher qualified as an expert. And therefore, there was no need to disclose him as a fact witness. In fact, that would be that would be conducive of our proposal that he testified as an expert in this. We believe that he's qualified. The ruling as an expert, the ruling was that he's not qualified, which we accept, obviously. But the statutory amendment or shall allow the public attitude to testify. I understand you wouldn't be testifying about you can't testify about anything that seems like he's just talking about legislative intent or what the legislative slates are meant. But he can still testify as to an understatement as the health care officer. Was this a strategy decision, however, to not offer him as a fact witness and just instead offered to discuss the intent of the legislation? No, we're not that smart. We believe that he would be allowed to testify as an expert. And you're wrong. It's not the first time. So we should reward you for your ignorance. It's been done before. It has been done before. Sometimes they came out ahead. I would like to consider this because there is no I think that some of you may have seen that the board is barred testament. It was a fair opportunity for Mr Fisher to come in. And in fact, I think what was disclosed to the board and to the other party was that there would be two witnesses, one of whom was someone from your Burlington office who presumably would be discussing facts about violence and about phone calls and so forth and what goes on to that office relative to these violence. This was not what transpired, whether by default or ignorance or whatever you'd like to say. And the testimony, yes, you can see that the legislative testimony is not going to be admissible. And thank you for conceiving that. That's very gracious. However, we don't have notice of what Mr Fisher would be testifying to for the other party. And we didn't have this discussion and the opportunity was there for the health care advocate to discuss this at that time. What can be allowed is Mr Fisher can appear as a little witness on the matters that are already out before the board. However, I'm not going to allow him to come in with unknown testimony as an undisclosed witness at this time. So as you strategize instead of letting things happen for today, you may think of how you wish to do that because I think that is quite allowable and wouldn't give fair notice to MVP of the content of what what you're going to testify about because it will be limited to what is discussed here. The other piece of this is I also want to make clear and and again, I thank you that the ACA is not barred from this hearing. In fact, it represented right here, you have the opportunity to cross witnesses and to ask different questions as you need to of Mr Lombardo or the Department of Financial Regulations. So this is not an effort to bar you from hearing. However, agreed upon and by prior link with adequate notice and in the interest of fairness to all parties. The HCA is a very good partner. We are not opposing parties on this. We're all here to try to ensure that Vermonters get the best rates possible and the slimmest possible rates and that they are in line with all the statutory requirements. So there's a very important role and the HCA has been participating has submitted suggested questions for the actuaries to present those have been answered the information has been provided to the HCA's office. You still have opportunities for comment is provided for in 4062. And you have an opportunity to fully participate in this hearing. And I want to make it very clear that this is not intended to wash your participation in any way, but it will have to be within the set downs of prior order and remit of the party and standard procedure in this case. So with that, I will let us proceed and and you have questions. For several purposes. So Mr Fisher can testify as a vital expert and then I'm going to talk about witness and then he's not an expert. He is not an expert testifies or by the witness just for scheduling purposes. That will be at the end. We will discuss that that will be after we take all the testimony today. So we will we will proceed with allowing MPP to present their case versus we always do. We will DFR to then proceed. LME can proceed and we will take any testimony offered from Mr Fisher at the end of the day. Thank you. Is that understood one and then we could obviously rebut whatever he says you cross you cross everybody. Hopefully time will allow today. Yesterday was a little bit crunching time. I I think today we only one with this year. We should be able to get through everything. I am going to also caution everyone to be mindful of the time in their testimony and in their questioning. I don't want to cut anyone off but I do want to make sure that everyone fits her before we proceed. There's one thing that I should have announced at the beginning. If there are any members of the public, there is a public commentary tonight from 430 to 630 at Montpelier City Hall. But at the end of the proceeding today, we will also listen to those who cannot be at Montpelier City Hall and they did actively could stand up. If anybody from the public wishes to make a comment, please make sure to sign in with Agatha. Thank you. Okay, to start today, I'll let you each present an opening and then we'll move right on into the next session. There's no other matters. Not here in the center of stipulated documents. The stipulated documents are admitted into evidence. It's exhibit list is there's exhibits one through 14 and we'll enter those into evidence now. Thank you very much. I'm sorry, the one through 14 and what about it? We'll be entered into evidence now. Oh wait, yeah, one through 14 and there's three that are not stipulated. Let's go over those now. Sorry. You want to get all those down at the time? Well, I was going to wait until they were offered. So would that work for you also? Yes, until the time they're offered, then there was going to have some discussion as to why they shouldn't be So again, the exhibits one through 14 are in the different standards. Good morning. My name is Gary Parnady, I'm from Piper. I once again represent MVP in this 2019 rate hearing. I have with me Matt Lombardo, who was the director of Actual Services, the MVP who can testify again this year. I also want to say welcome to board members of the film to our fun problem. The evidence presented today will show that MVP's original increase, the average request was 6.4%. That is the amount that will be felt by the launchers to use a trace point by Melanie. I wanted to provide the board with a roadmap on our presentation with this opening statement. First of all, I'll be conferring with Melanie. The evidence will show we have reduced the request we're making today from 6.4%, 4.6%. MVP has made three changes to its original proposal of maintenance. The evidence will show the first change was an actuarial adjustment suggested by Melanie relating to the silver load. We went from 6.4 to 6.1. That's the first change. The evidence will also show that there's three initial issues of disagreement or laid out by Melanie and their report. We continue to have a respectful disagreement or respectful over the first issue of mid-year enrollment. That amounts to a 0.3 difference. We've agreed on the second issue that they raised, a reduction for the risk adjustment of 1.9%. So that's the second issue and that's the second change MVP is making to today's rate file. The third issue raised by Melanie relates to hospital budget increases. In its May 10 rate filing, MVP simply plugged in last year's budget increases for the hospitals, which was the best data they had back in May at the time. The evidence will show that in its July 10 recommendations, Melanie recommended that any more recent information we get regarding the hospital budget increases that may arise after their July 10 letter should be considered by the board. This recommendation is consistent with the board's ruling in our MVP case last year when it ruled that it would consider the hospital budget filings even though it did not yet have the hearings to finally approve those budget proposals. This year you will hear evidence on how the hospital recently filed a proposed budget report and that MVP is making an adjustment, an increase of 0.5% to recognize the recent proposed increases of the hospitals. So this is the third change that MVP is proposing. The bottom line is that MVP has reduced its original rate proposal from an average of 6.4% to 4.6% developed by homeowners. The HCA is not disclosed to any actual expert to testify this year, so the only two qualified expert actuaries you'll hear from will be Jackie Lee to Matt and Bart. As we've done every year, MVP will submit evidence that may apply to some or all of the actuarial or non-actuarial criteria. In a case both MVP and the Bremont Care Board are familiar with it, which we took from our Supreme Court argument. The Supreme Court ruled these statutory non-actuarial terms such as affordability are broad and largely undefined, leaving you the board with broad discussion to consider the evidence that may bear on each of the statutory criteria. We believe that the evidence that's been submitted and will be submitted, as it has in prior years, will have broad application to some or all of the statutory criteria. One piece of evidence may relate to many of these statutory criteria rather than falling into only one bite. This is for the board to determine. For example, in exercising this broad discretion, the board may find that the telemedicine benefit that's in the refinement relates not just to access to care, but also to affordability and the adequacy of the rate and the non-strumentary way that benefit is offered. Said another way, you don't have to be an expert to define non-actuarial terms, you just have to sit on the Bremont Care Board. By the end of the hearing, the evidence, including the testum omen, multiple exhibits, multiple objection letters, and the explanation and description of the benefits offered in MVP's nine-page rate filing will be sufficient for the board to make findings on each and every statutory criteria. Thank you. We believe that the rate increase is not fully or shortly justified and we will demonstrate that through our questioning. In addition to that, there are three issues which I think the board will, which we got questions about and which were actually somewhat agnostic about and which we will be questioning. One is on the affordability issue, which as you know is the first standard of the statute, MVP submitted in the 13th entitled, What is Affordability? And we would like to go through that carefully and determine how that's relevant to the affordability of this rate, but then to see if it has any relevance. Second issue is it's clear that the MVP Army C ratio is substantially lower than that Blue Cross. Whether that's a good thing or a bad thing when it can be discussed and how that affects the need for profit of what the companies here call contribution to reserves. I think that's also an issue that's unclear. So they've got a lower Army C ratio. Is that clear or bad? And does that mean that you've got a higher or a lower profit after a CTR? Third issue, MVP underwent a reorganization recently. There's nothing to see about that at all, but they underwent a reorganization that allows them to save state premium taxes. And I think it's important that the board understand exactly what they did. I don't think it's important that the board understand exactly what they did and how, if at all, they factored the savings on premium taxes into their rate of filing. They're specifically into that sort of memorandum. And similarly, under the Trump tax bill, the tax jobs, the what's it called, the jobs act, tax cuts and jobs act, MVP like Blue Cross does get some benefit. But it's very clear exactly what that benefit is, how much it is, and again how, if at all, that's factored into the rate of filing, particularly into the actual memorandum. So we'll look at questions about various elements of the actual memorandum, but those are the three issues that I think are particularly important for the board to take notice of. You mean how your first bank has to call Matt Murrow? From Sworn Inn? Yep. So I'm going to ask you questions. So try to look at the board, but also listen to the questions. Got it, yeah. So just take your name from the board. Matthew Lombardo. And where are you employed at? MVP Health Care. And who's the pilot of this rate filing? MVP Health Plan, Inc. It's a nonprofit HMO subsidiary of MVP Health Care. And what is your position at MVP? Director of Actuarial Services. And Matt, do you have any professional certifications or vouchers? Yes, I'm a fellow in the Society of Actuaries and I'm a member of the American Academy of Actuaries. How long have you worked in the healthcare insurance industry? I've worked in healthcare for 12 12 and a half, 13 years, 10 years with MVP. And have you had involvement working on the Vermont rate filing for MVP over the years? Yes, I've been involved in every one of the Vermont Health Connect rate filings since 2014, so I'm familiar with them. And how many times have you been in the HACI to testify? This is my third or fourth time that I've actually testified. So what are some of your job views as a Director of Actuarial Services? In addition to setting premium rates, it's also corporate forecasting, understanding some market intelligence about our competitive premium position. And we also analyze value-based contracts for our New York Medicaid business, in addition to a number of other items. Do you review cost drivers? Yes, I mean that's always part of our rate calculations. We're analyzing how our experience period data has anticipated to change from 2017 in this case to 2019.  Do you see that list of exhibits, the stipulated exhibit list? Yes. So we'll be referring to that today and if you would look just at that list and you see exhibit one is the rate filing and then exhibits two through nine are all of the ejection responses. Do you see that? Yes. And you're familiar with the rate filing of those ejection responses? Yes. And you adopt them as you're testimony in this case? Yes. And exhibit ten, do you see that? That's the DFR solvency analysis letter? Yes. And you've reviewed that and familiar with it? Yes. And then exhibit 11 on the list is the L&E actuarial opinion. Do you see that? Yes. And if you reviewed that, you're familiar with that before? Yes, I am. And then exhibit 12, is your CV, did you prepare that? Yes. And then Matt, if you look, for example, look at exhibit one behind the number one, do you see that little red numbers in the bottom right hand corner? Yes. So I'll try to refer to those. They're not on every exhibit, but they're on a lot of them. I'll try to refer to those so we can follow one another and the board can follow what you're talking about. Okay? Yeah, that sounds good. So with that in mind, let's start at a high level on the number scale. So when you go to page 32 of the exhibit one, how can you see the sentences of that first paragraph? Assuming all members purchasing, caution, reduction, subsidy plans stay on the exchange while all other members purchasing silver plans move to the reflective plans, the proposed rates reflect an average rate adjustment to prior rates of 10.9%, ranging from 4.2% to 30.7%. The average rate adjustment absentee loading to silver plans for CSRD funding would be 6.4%, with increases ranging from 4.2% to 10.6%. And then would you go, please, briefly move exhibit 11, which is the L&E report, page 12. Do you see that? Yes. Can you see where the L&E uses the language? Recommended rate change fell by the monitors. Do you see that? Yes. So let's go back then, please, to exhibit one. Those two sentences you just read, can you explain how those two sentences relate to this issue of fell by the monitors? Yes. So MVP worked with various stakeholders, including DVHA and the Green Mount Care Board and the Health Care Advocate and creating silver reflective plans, which are helping to mitigate the impact of cost sharing, reduction, subsidy elimination by the federal government. With the change, it's going to increase the overall premium rates, which is coming at 10.9%, but offsetting that is an increase to the premium subsidies that eligible members will feel. And the increase fell by the monitors is taking into account the increase in premium subsidy. So originally, if you look at that second sentence on page 32, and that first adding 2.6.4% absent to the silver vote, correct? Correct. So going back to the L&E report, just exhibit 11, please. Okay. This year, is it fair to say that L&E and MVP agree on most everything? Yes. So if you would go, please, to page 11. Okay. You'll see the document as create bolded recommendations and then a sentence after that. Do you see that? Yes. Okay. So read the sentence at the end. After the modification. After the modification, the anticipate overall rate increase will reduce from 10.9% to approximately 8.5% and the rate increase fell by the monitors will reduce from 6.1% to 3.8%. Okay. So a moment ago, we pointed out that we started out at 6.4. You remember that testimony? Yes. And L&E saying 6.1 is the starting point. You see that? Yes. So can you explain why the numbers are different and how MVP reacted to that? Sure. MVP is, for the members that are in the silver loaded plans, MVP is mapping them to the most similar silver reflective plan. And when that's taken into consideration, you arrive at a 6.4% increase. L&E's calculation is excluding the silver loaded members from the calculation, which is driving a 6.1% increase. They're both reasonable calculations, just a little bit different way of looking at it. So are we agreeing that then there's 6.1% as the starting point? Yes. So then if you look on the same page, you see the three bullets on the recommendations? Yes. The second bullet, again just highlight, which is identifying for the numbers. The second bullet relates to change to the risk adjustment. You see that? Yes. And they're proposing a 1.9% increase, correct? That's correct. And if we agree to that, do you sit here today? Yes, we agree with that adjustment. And then the first bullet that relates to mid-year enrollment, correct? Correct. And that's the one we, we, well let me ask you, do we respectfully agree or do we respectfully disagree on that? We respectfully disagree on this adjustment. And then the third bullet, is that what relates to the hospital budgets? Yes. And you'll be explaining this later, but we're looking for a 0.5% increase on that issue, correct? That's correct. So adding all of that up, if my math is correct, we're at 4.6 and tell me it's at 3.8. Is that correct? That's correct. So let's walk through the rate 5 now. Okay. Again, going back to the one, and I'll try to do this in the order of the pages. Let's start with page one. What was the date of the submission? May 11th, 2018. And then go to page three, please. On May 11th, what would be overall rate increase rule? 10.88%. What's the increase in premium? 15,734,195 dollars. And the number of policyholders? 8,929. And number of premium? 144,599,214 dollars. And the maximum minimum change? 30.69%, down to 4.24%. And would you go back to page 32 of the exhibit? First paragraph, I had to read some of them moment and moment, but it makes reference to a CSR subsidy plan. Do you see that? Yes. I think you started to explain that, but explain please what the CSR subsidy plan is. CSR was a function of the Affordable Care Act to help lower income individuals with out-of-pocket expenses like co-pays, deductibles. In the fourth quarter of 2017, the federal government ceased making those payments to carriers, but it's important to know that the second lowest cost silver plan in any market also drives premium subsidies. So with various stakeholders throughout Vermont, we worked together to come up with a solution where members that are in cost sharing reduction plans, we've loaded up the rates to reflect the shortfall funding from the federal government, which at the same time is increasing premium subsidies. That's just creating the disconnect between the 10.9% and 6.4% or 6.1%. We had referenced. And then members in silver plans that aren't impacted by the cost sharing reductions can purchase a very similar plan off-exchange, which doesn't include the loading for the CSRD funding. Great. Would you go to page 41, please? Do you see where is the Henningman said silver CSR will be? Do you see that? Yes. Can you just talk about this? So just a moment. Yes. Would you go to the third paragraph, please, which starts increasing the second lowest cost silver plan? Okay. Do you see that paragraph? Yes. So there's a reference to the silver plan, the bronze plan as well. Would you explain how this rate filing and CSR subsidies relates to those two metal levels? Yes. So just to go through the CSR levels, there's a 73% CSR, a 77% CSR, an 87% CSR, and a 94% CSR. A normal silver plan is about 70% actuarial value, which means that the carrier will pay on average 70% of the cost, the member will pay 30% of the cost. Because of the amount of the funding, the CSR loading that's built into the rates, the 73 and 77% benefits will actually be more expensive than a richer gold plan. So a gold plan is approximately 80% actuarial value. So you can purchase, if you're an eligible member, the 80% actuarial value for less money than the 73 and 77% plans, which have a linear benefit. Additionally, because the APTC is increasing, you can purchase a bronze plan for a little to no premium. So it is a linear benefit, but it will help make the premium rate more affordable for Vermonters that are eligible. And so Vermonters that are eligible, can you explain the APTC credit and how that lines up with particular Vermonters? Yep, the APTC is available to individuals that are below 400% of the federal poverty limit, and it's based on a maximum out-of-pocket or a maximum percentage of your income can actually go towards premium. How about the folks who don't receive the APTC subsidies? Is there a premium increasing because of the CSR issue? There are members in those plans right now, but that's what the silver reflective plans are going to be used for. And we're working with, you know, I know that we're working with DBHA externally, as well as other stakeholders, and internally, Actuarial is working with our marketing communications team at MVP to help guide members towards the right purchasing decision that's in their best interest. Have you heard this called the Silver Solution, you heard that? Yes. And the state of Vermont is the stakeholder in that? Yes. Green Mountain Care Board as well. Yes. We talked about the APTC issue, roughly how many of our members in 2017 were eligible for APTC? I know the numbers as of current in 2018, and it's about 8,500 members. So that's about a third of our overall population, and it's actually over 75% of our individual population. Let's go back to page 32, please, Matt. All right. Then you mark it with benefits. Do you see that? Yes. And then a fourth paragraph down, it says all essential health benefits are covered. Do you see that sentence? Yes. Do you agree with that statement? Yes. Okay. So the fifth paragraph talks about non-standard plans. Do you see that? Yes. Could you explain the board about standards, non-standard, and these as involved approval, etc.? Sure. Standard plans, so one of the features of the Affordable Care Act was that to make purchasing decisions easier to understand for consumers, a set of standard plans, same benefits have to be offered by all carriers, that are offering plans on the exchange. So the state, DVHA, determines what those standard plans are. Those go through approval, both MVP and Blue Cross Blue Shield offer those benefits so that a Vermonter can go on to the exchange and compare two of the same benefits to understand, okay, really just the only difference in this benefit is premium, maybe a network difference, and just maybe the carrier on the ID card. The non-standard plans allow carriers to come up with plan designs that are still within the meta-level requirements of the Affordable Care Act, but it gives us a little bit of flexibility to offer something unique or different than the other carriers offering that we may think is a selling point that can differentiate us from our competitors. Matt, the last paragraph on that page, that refers to the book of business. You see that? Yes. Please walk the board through what it says. Sure. So the book of business, I'll just read the cement to start, book of business affected by this refiling is 8,929 policy holders, 16,360 subscribers, and 25,223 members as of February 2018. A policy holder in this instance, if it's an individual, it's the subscriber. So if you were a family, if you purchase a family contract for your spouse and children, then the subscriber would be the policy holder in that case, and then the members are your dependents, whether it be your spouse or your children. And in a small group, the policy holders is actually the employer group. So the reason why that continues to get larger is because small groups are mixed into the policy holder calculation. So if it were an individual, if this were all individuals, policy holders would equal subscribers, and members are subscribers plus dependents. Now, would you please go to page 35? Okay. There's a heading that says market wide adjustments to experience period claims. Do you see that? Yes. And there's three stuff that would go on to page 36. Do you see that? Yes. So as to the first heading, does that relate to the mid-year enrollment issue that you can be talking about later? Yes, it does. So we have a disagreement on that. Correct. The second heading relating to on page 36, adjustment for pharmacy benefit mandate. Do you see that? Yes. Do we have any dispute, Melanie, on that? No, we do not. And then the third matter, adjustment for individual mandate penalty, except for $1 or $0, do you see that? Yes. Do we have a dispute on that, Melanie? No. The Green Mount Care Board consulted with Melanie to provide an estimate of the overall impact of the individual mandate penalty being set to zero.  In December of 2017, the Trump administration set the penalty to zero, which effectively doesn't have any teeth, so it almost effectively repeals the mandate. Melanie did a comprehensive analysis based on Vermont's market of what will happen to the market when the penalty is set to zero. Because generally speaking, healthier members that were paying more in premium than they may have been valuing the benefits that they were utilizing will likely drop, which overall will raise the level of costs in the market. And MVP did a similar analysis. It wasn't quite as robust as Melanie's, but we did a similar calculation where we were assuming that healthier members would exit the market, and we came up with a comparable figure. Because Melanie's figure was a little bit more detailed, we just adopted their best estimate. And that's a two percent, that impact is a two percent premiums there, right? That's correct. The second or last paragraph is the title general administrative expense flow including QI component. Do you see that? Yes. So would you explain what this is about? Carriers have to meet a minimum loss ratio requirement. We have to file a federal MLR filing with the NAIC annually. And that calculation is guaranteeing that a certain percentage of our premium dollars being spent towards medical expenses. So in the small individual market, that's 80 percent. They do allow a little bit of flexibility in the calculation. They'll ask you to remove premium taxes and assessments from the calculation, just because they don't want to penalize carriers for that, for those premium costs. And they also allow carriers to increase to just admin expenses for quality improvement into medical expense. Because these quality improvement expenses are spelled out by the NAIC and what it actually has, the costs are associated with reducing inpatient readmissions. And inpatient stays around four to $5,000 per night. So they don't, the federal government doesn't want to stop carriers from putting expenses towards helping reduce costs, making more affordable rates. Other items like reducing medical errors, health and wellness initiatives, those are all items that are included in the quality improvement expense. Is it also considered chronic care? Yeah, some services associated with case management and utilization management, which help, which are utilized to help a member with chronic condition like diabetes navigate through the health care system. So MVP nurses will contact the members that are in these care management programs regularly to make sure that they're on top of their meds, going to their PCP and helping reduce further costs. Because if you're not following those kind of best, those medical guidelines, you may end up with a higher cost procedure and inpatient mission, a more severe case. Thank you. Would you leave the second sentence under that heading, please? Under general ministry expense load. Second sentence. Based on an analysis of MVP's 2017 expenses, 10% of MVP's total administrative expense was spent on QI. So 10% correct? Yes. So let's turn, I want to go through these three bold and issues raised by Helen and go back to exhibit 11 please. The first issue is one where we have a Delta 0.3, difference of 0.3, correct? Correct. And that relates to mid-year enrollment, correct? Correct. Could you please explain to the board our position on that issue? Sure. The benefits being offered on the Vremont Exchange are calendar year benefits and what that means is that deductibles and out of pocket maximums reset on January 1st of every year. An MVP's experience period of 2017, we see members enroll throughout the year.  The following year MVP's assuming that that member will enroll on January 1st and we'll cover them for a full 12 months and therefore they're more likely to reach their deductible which will raise their costs. So MVP's calculation is assuming that all members will be enrolled for a full 12 months going forward. Okay. And then if you would please, so it relates to claim exposure and deductibles, right? That's correct. So group Exhibited 11, Page 3 to 4, the Sammy City. On page 3, there's a paragraph down the bottom that is on the 1 next to it. This is 2017 actual projected claims experience. Do you see that? Yes. So this is an explosive page 4. This is L&E's explanation of their position upon this issue, correct? That's correct. So would you please say what their position is and why you disagree? L&E's position is that they recognize that the open enrollment period was shortened from 2017-2018. So some members, our experience period data may be more skewed towards later enrollments. They adjusted for that impact but then they still said that there's going to be some members through special enrollment periods that will enroll. I believe that was somewhere in the range of 9% of members and they enrolled throughout the year. So if you had to pick between the two, which is more conservative, which one would you pick and why? MVPs is more conservative because we're mitigating our exposure for members enrolling for a full year. If we adopt L&E's opinion, then we will be exposed if members don't follow the enrollment pattern that they have projected. So if you follow L&E's proposal, you might have to catch up next year. Is that right? That's correct. And in your view, is it more conservative not to kick the can down the road with the deal this year? I would rather deal with it this year than kick the can down the road as you put it. Let's talk about the second bullet. If you go back to our bulletin page, which is page 11, changes to risk adjustment. Do you see that? Yes. So I understand we have agreement with L&E on that, correct? That's correct. So would you explain what that's all about, please? Risk adjustment is another feature of the Affordable Care Act. The concept is to level the playing field. So if a carrier has higher morbidity risk than another carrier, that their rates are arbitrarily increased. So if, for example, MVP's morbidity actually is much healthier based on the risk adjustment results than blue crosses, our claim cost is actually lower. Risk adjustment, when you account for that, levels out the risk to put it to the market wide average. And MVP believes in the risk adjustment program, and that's why we're adopting this adjustment. Go to page 8, please. I don't know why you're there. And you see that there's a box on the right that says future of risk adjustment. Do you see that? Yes. Well, first let me ask you why. But chronologically, why didn't you reduce by 1.9 in the time of refiling and only did it after L&E recommended? Can you explain why? We submit our rates on May 11th, which uses 2017 experience period claims. At that time, the only information that we have from the federal government for risk adjustment is an interim risk adjustment result, which differs from our final results. The final results were issued in early July this year, and the 1.9 percent adjustment reflects the difference between our interim results and our final results as a percentage of our claim cost. So L&E had more recent data, is that correct? That's correct. So, okay, I kind of interrupted a little bit. But this box, what's this talking about, these 20 to the board? In this past winter, federal court, district court, and New Mexico, their opinion was that the risk adjustment transfer calculation wasn't clear enough for years 2014 through 2018. In 2019, the notice of benefit and payment parameters actually included more clarifying language, which spelled out exactly what the formula was doing. And we're confident based on our understanding that this won't be an issue in 2019, and risk adjustment will be in place. So we still should be adjusting our rates for the risk adjustment mechanism. Let's go back to our bullet spendings on page 11 to identify as relating the hospital request. It's correct? It's correct. Have you turned one more time to exhibit nine things, exhibit nine, which is an evidence? Would you just identify this for more Yes, this was an interrogatory response that we submitted on July 17th, 2018. The question from Melanie to MVP was to address whether the recent information regarding hospital unit cost increases for 2018 were anticipated to have an impact on our rates. For 2019, were anticipated to have an impact on the proposed rates? So, Matt, in honor of Kim, I'm going to ask you to speak more slowly. Okay, no problem. All right. Okay, so Melanie asks us a question about the hospital budgets on July the 16th, correct? That's correct. And do you know when those hospital budgets were hosted? It's at the bottom of the page, July 13th at 11 a.m. So, and when did Melanie respond to this July, excuse me, when did MVP respond to Melanie's July 16th request? The question was asked on July 16th, and we responded the next day, July 17th. And did they actually give us additional timing on that to respond? Yes. I believe it was three or four days, and we responded the next time. We were going to be proud of you that you were prompted to respond on that. I suppose that would be, you know, something that you'd be very proud of me for. Be what it says in the third bullet, please, from Melanie. If updated information regarding unit cost trends are known at the time of the board order, Melanie recommends considering this updated information in the development of the unit cost in the 2019 premium rate calculations. So, Melanie's recommending that this information be considered, correct? Correct. And this information is more recent information that we received after every file correct? Correct. And after Melanie's report, correct? Correct. And what did the board do last year on this issue? We had the budget proposal of no hearings and held at the hospital. If I recall, that was taken into consideration in the final rate decisions. Thank you. So, what is your, I'm looking at objection six that you need to, but what is your calculation of the impact this year? The proposed hospital budgets will increase the proposed premium rates by 0.5%. And that's all laid out in the six, correct? Objection six, I believe, was it? Yes, I'm sorry. Objection six, which is exhibit nine. Exhibit nine, yes. And what's your understanding of where Melanie's at since they got our response on objection six on this issue? Based on correspondence that we had with Melanie last night, they're still reviewing the impact. I'm going to ask you about Vermont market share competition, okay? Okay. So would you explain to the board how our market share has changed over the last year or so? Last year we, when we were sitting here, we had somewhere in the 11 to 12,000 member. We were somewhere in that range for 13% of the market. We've grown considerably since then up to 25,200 members. And that's because of the improvement in our premium position, we've been doing everything under our power to try to promote the most affordable rate. And that's actually a wide spread between MVP and Blue Cross in terms of premium position. And we attribute that to our growth. To the product being affordable? Yes. While by trying to promote the most affordable rate possible, that's how we've been able to expand the premium position that we have against Blue Cross Blue Shield. Next I want to ask you about reserves and salts. You please go to exhibit one, page 40. You see the first paragraph which references contributions to reserves, risk charge. You see that? Yes. And what's the contribution we're requesting this year? We're building in 2% of premium into our 2019 rates. That's consistent with what was filed and approved for 2018. I didn't hear that last part considering that. That's consistent with what was filed and approved in the 2018 rates. So I get confused with the issue. And last year we did 2%, is that what you're saying? That's correct. And that was approved? Yes. Why 2%? It's a good question. As we've grown, we actually should be to maintain our resolvency. We should actually be charging somewhere in the range of 8.5% to meet our minimum solvency requirements. But that wouldn't make much sense to us because as I was just talking about, we're promoting an affordable rate relative to Blue Cross. And that's what's helped us gain our membership over the last year. So now we're around 30%, 33% of the membership. And if we were to build in 8.5% into our rates, then our competitive position would go away. Then all the efforts that we put towards growing our membership would probably walk out the back door. So it didn't make much sense for us. We'd rather step into this and this is a long-term play for us. So we felt like 2% was a reasonable number. It's the number that was approved. It's the figure that was approved last year. We've recognized that it's not sustainable in a one-year time period, but over time that we will get to our minimum reserve requirements with that figure. And MVP's picked up members correct from last year? Yeah, we've grown by over 100%. So how does that growth relate to what you need to set aside? New York state is the solvency. They govern MVP solvency because that's where we're domiciled. Solvency in New York state is determined based on percent or premium. So as our premium has grown substantially, if we grew by over 100%, we've more than doubled our premium effectively. That means that 2% of premium that we're contributing isn't enough to actually catch up to the minimum solvency requirement, which is about 12.5%. MVP targets somewhere in the range of 16 to 20%, and that's based on New York state's recommendations. They also have an enterprise risk management program that actually analyzes not just premium risk, but also regulatory risks and a number of other risks. And their recommendation is 16 to 20% of premium. When a carrier increases market share, increases membership, I should say, does that line up with a need to increase contributions to reserves? Yeah, as I referenced, to meet our minimum reserve requirements for 2019, we would need to build in somewhere closer to 8.5% to 9% of premium because of the increase in premium and that we're measured from a solvency perspective on a percentage of premium basis. If you have more claims, you need more reserves. Yes, and so not just membership needs to be taken into consideration, but the fact that claims are increasing, claims are approximately 90% of every dollar that's in the premium rates. So as our claims are increasing, we need to also increase the premium rate. Would you agree that there's a fair amount of uncertainty at the federal level on these issues, on health care in general? Yes, it's hard to get your finger on the pulse of exactly what's going to happen at the federal level. Last year it was all about individual mandate repeal and cost sharing reduction removal. Both of those actually came through. This year, in addition to a number of other items, Association Health and Land are concerned that we have, which could adversely impact the market. Let's go to L&E exhibit 11 again, please. Page 9, paragraph 9. And the heading is changes in contribution to reserves. Let me know when you're there. I'm there. So what did L&E say about our proposed 2%? The contribution to reserves assumption appears to be reasonable and appropriate. While L&E does not recommend any changes to the CTR, the results of the Department of Financial Regulations Solvency Analysis should also be considered. And do you agree with that? The FR's input should be considered? Yes. Read the first two sentences in the first paragraph, please. I think you read the second paragraph. Read the first one, say the proposed 2%. The proposed 2% contribution to reserves is consistent with the assumptions found in MVP's other recent filings. And read the next sentence. The projected federal loss ratio using this CTR is 90.2%, which greatly exceeds the statutory minimum of 80%, and is reasonably consistent with the other character in this market. And do you agree with those statements? Yes. Okay, go to exhibit 10, please. This is the DFR Solvency Letter. Please. I think you testify you reviewed this, but you're familiar with it, right? That's correct. Okay. When you read under the heading Summary of MVP Solvency Opinion, let's write that down. I don't want to read you. Read the Summary of Opinion sentence on the first page. Okay. MVPHP currently meets Vermont's financial licensing requirements for a foreign insurer and DFR believes the proposed rate will sustain MVPHP Solvency. You agree with that, correct? That's correct. Okay, then go to the second page, please. The heading that says MVPHP Solvency Opinion, do you see that? Yes. And would you read from the sentence that starts finally to the end of that character? Finally, in 2017, all of MVP's holding companies, operations in Vermont accounted for approximately 2.9% of its total premiums written. Thus, DFR has determined that MVPHPs for Vermont operations pose little risk to its solvency. Nonetheless, adequacy of rates and contributions to surplus are necessary for all health insurers in order to maintain strength of capital that keeps pace with claims trends. So, do you agree with what the department's saying here about that 2.9% of the business? That's an accurate statement, yes. So, it's a small part of the overall business. What are they saying, or what do you believe that small percentage means in terms of being proved and considering solvency? Although it is a small percentage of our overall revenue for MVP Health Plan, we are of the opinion that we should be setting our rates for every block of business to be self-sustaining and self-supportable. If we fail to do so and we grow in one block and we shrink in another block, that could actually be maybe 2.9% in 2017, but that could really shift with growth and reductions of membership in our other blocks of business. So, we feel it's important that when we analyze our premium rates for the Vermont Exchange or focus on the Vermont Exchange block of business and to make sure that's a self-supporting block. And there's a file heading just below that says impact of the filing on solvency. See that? Yes. Would you please read that sentence underneath this? Based on the entity-wide assessment above and contingent upon GMCB actuaries findings that the proposed rate is not inadequate, DFR's opinion is that the proposed rate will likely have the impact of sustaining MVP HP's current level of solvency. Do you agree with that? Yes. In your opinion, will the reduction from our original filing number of 6.4% down to 4.6% that we're talking about today for ratings? Will that adversely impact the solvency of MVP health care? No, because all of the adjustments that are built into that 4.6% are actually sound and reasonable. Now, Matt, I want to ask you a little bit about lowering costs and promoting quality care and access. If you would go, please, to the L&E report, which is exhibit 11. Okay. And go to page 90, page 90. And there you're going to find a paragraph number dated at the top that says changes in administrative costs. Do you see that? Yes. So what conclusion is drawn by L&E about our administrative costs? Let me fill in the poll. Okay, Chase, what are the last sentences? Okay. In light of the steps taken by MVP in reducing administrative costs over the recent years, they assumed administrative 2019 costs appear to be reasonable and appropriate. And they talk a little bit about New York and see that. Yes. So would you explain to the board how administrative costs work in MVP as it relates to New York work and Vermont work and overall administrative costs? Yeah. So we analyze our costs on enterprise-wide level. There are a number of functions that are actually housed in our New York offices that still are utilized by MVP in Vermont. So for example, our Cleans Operating System is sitting in our Schenectady headquarters. Those Cleans that are processed, although it's physically located in New York, we have to allocate the costs associated with running that operating system into our overall book of business, Premium Rates. And even though we've grown significantly in the MVP Vermont market, our overall corporate-wide membership has actually been reduced, which is resulting in us spreading fixed costs over a smaller membership base and therefore is increasing our per-member per month admin rate proposed in these rates. So that last point you made, Matt. I think a board member user asked last year about if we grow market share, can't we spread the costs out to more people and lower our costs? So I want you to answer that question again related to what you just said. Yeah, again, it's based on the fact that we were, at that time, I think the assumption that was implicit was that we would be growing everywhere, not just in Vermont. We were hoping to grow in our New York business as well. The net change in our membership has actually decreased by tens of thousands of members recently, and that's actually, that's the reason why we have to increase our costs. So I think the statement I made last year was pertaining to just Vermont growth and assuming that we'd be growing everywhere, but we're not. So the growth in Vermont is being offset by a larger reduction in New York membership. Is it a goal of MVP to lower costs? Yeah, we have a number of competitive bidding processes with outside vendors. So if we're using an outside consultant or a vendor for a service, we have competitive bidding processes where you have to take in a number of RFPs to make sure that we're trying to keep our administrative costs down. At the end of the day, we're really, we're operating as lean as possible so that we can promote an affordable rate and have, while we're promoting a quality product at the same time. So our goal is to analyze our admin costs annually, continuously, but it's definitely a very focused annual effort. How are we managing our admin costs? Where are we putting our expenses? Because we understand that wherever those expenses are changing, that's going to have an impact on the premium rate and the affordability of the premium rates we're offering. What is the company doing around pharmacy? Our pharmacy team does a great job. They contract with our PVM. They're continuously renegotiating unit cost discounts on drugs. So as new drugs are coming out, a lot of times they're very expensive. Our pharmacy team is working with our PVM to try to manage those costs down as much as possible. Whether it's through unit cost reduction or an increase in a rebate that we're going to receive. And we are expecting an increase in our rebates and we're reflecting that in the premium rates that we're proposing for 2019. Also, they're always analyzing formularies. So to the extent that a new drug comes out, or a drug is coming off of patent and there's a lower cost generic available, we analyze the formularie and we'll say, okay, well the higher cost brand drug that is going to move to a higher tier, which will make it a higher cost share, and we'll then send members to go to the lower cost generic. So those are all ways that we're trying to analyze our costs and again keep our rates affordable. This is, we're proud of our growth in Vermont and our goal is keep working on these items so that we can manage our costs down and keep a premium rate advantage against Blue Cross. What is MVB doing around online price comparison? We have a tool available where you can enter your location in the procedure. Suppose you need to have a knee surgery performed. You can enter your location, whether it's where you live or where you work. And it will actually tell you the costs or contractual arrangement with providers within a certain service area within a certain radius of where you're located. So that if you are a member with a deductible, suppose you have a plan that's a silver plan with a two or $3,000 deductible, you can go online and see that there's Dr. A versus Dr. B and one Dr. B is 10% lower cost. That will help mitigate your out-of-pocket costs if you go to that lower cost doctor. And all the providers in our service area are all that we can have a contract with are all quality providers. We're currently going through an NCQA accreditation to make sure that we are compliant and are promoting the most quality care possible. So what you just described helps to keep costs down, correct? Yes. Helps with access for care to the medical care provider member who wants, correct? Correct. What's quality of care as well for the reasons you described? Correct. Would you please tell the board about our telemedicine benefit? Yeah, recently MVP rolled out a telemedicine benefit. It's actually pretty cool. I've used it a few times where you can use your... Sorry Matt, did you say pretty cool? Yes. Go ahead. That's on the record. Yeah, you use your smartphone or your tablet or computer and you can meet with a doctor 24 seven any day of the year and have a conversation and they can fill the prescription for you. It's really, there's a number of uses but we've seen that the highest use is a replacement for urgent care. So the cost of telemedicine visit is somewhere in the range of $40 while an urgent care visit is somewhere usually between $150 to $300. So that's definitely something that we're really trying to promote and push members towards utilizing that benefit. And it's part of a member welcome packet when you start off with MVP. We try to, we understand the healthcare system is complex and we try to engage a member and help them understand the benefits that they're receiving with MVP. So we're really optimistic about that program. We're hoping that we can see an uptick in utilization as we go forward because we think it will reduce costs as we move ahead.  No. That's up in the Northeast Kingdom. You've heard of the Northeast Kingdom before? I'm familiar with that.  You gotta drive by now or you'll get to the hospital. We're not in St. Jay or it was a new one. So for somebody like that, the telemedicine benefit is something that sounds like it would be cheaper for them, correct? Yes, it's cheaper and not only that, it's also just more efficient and it's easier to access. And you know, it's somebody that lives in the Northeast. Another good example is if you have a foot of snow and you get snowed into your house, you can still access a provider without having to leave your house. So it's a nice benefit. It's also a cause to gas, right? That's correct. Matt, would you explain to the board, I know there's not a right one, the difference between costs that we have direct control over and more indirect control over. Yeah, so as I was mentioning earlier, about 90 cents of every premium dollar are going towards health care expenses. We have less control over those costs. We do go through, you know, I was talking about pharmacy cost management. We do try to manage those costs as much as possible through contractual arrangements, whether it's with doctors' hospitals or our pharmacy benefit manager. But we can more directly manage our admin and overhead costs and those are the items that I think Gary you're referring to as direct costs that we can manage. And again, we go through a continuous process of analyzing where our expenses are going, what improvements can we make. It's a very IT intensive business, health insurance. So we're constantly reviewing how up to date our IT systems are and making updates as needed. And I apologize if you've said this in your answer or wasn't listening properly. Out of every dollar, how much do we have direct control over versus indirect control? Direct means the overhead admin is about 10 cents of every premium dollar. The indirect costs are 90 cents of every premium dollar. Talk to you a little bit about promoting quality care and activities that MEP is doing. One thing you already talked about is the online health and ability to go in juice and prepare care products, correct? That's correct. Are there also online health and wellness tools? Yeah, we also offer health and wellness tools that will help members navigate through quitting, smoking or working on if they want to take a personal health assessment. They can do that through MVP's online health and wellness tools and that will give them an output at the end that gives them different ways and mechanisms that they can try to help improve their health, whether that's through eating more healthy or again, tobacco cessation programs. Those are all benefits that are available to members. And is there a member welcome package that's provided to members? Yes, as I was mentioning earlier, there's a lot of different information included in our member welcome package. Again, we recognize that health care is not the easiest to understand concept. And our goal is to engage a member and help them navigate through the health care system because these are complex decisions they have to make. And if we can help simplify the decision making process, we think that is a really valuable piece of information to provide to members. What is the effort MVP made in relation to physicians in hospitals versus community care doctors? Recently, our contracts with, in particular, UBMC, we were made aware that the physician fee schedules were misaligned between our community health care doctors and our hospital own physicians. So recent changes to our contracts, our fee schedule increases, or changes, I should say, have actually been decreases to the physician fee schedule at the hospital-owned practices and increases on the facility side to end up at a net figure that either matches or beats the Green Mountain Care Board Group budget. And we're working towards getting those two fee schedules, the community-based fee schedule and the hospital and physician fee schedule, more appropriately aligned over time. And do those efforts promote quality care? Yes. Why? We're of the opinion that if we can increase access to physicians, to PCPs that are in the community, if your PCP is generally, you know, I think medical home through the Vermont blueprint and other items such as that, it'll help, they understand your healthcare better than a doctor, that a specialist or somebody like that. So if we can direct more care through the PCP, we are of the opinion that it'll help not only improve the member's healthcare or health, but we can also help reduce costs because PCPs are generally lower costs than specialists. I think you talked a little bit about NDP's health and care management program. A moment ago for you. I don't recall. Do you remember in particular, Gary? I'm older than you, so I don't remember. Let me ask you then a question. Okay. NDP has health and care management programs, correct? That's correct. So why don't you describe those briefings? Yeah, so we did discuss this earlier. We have chronic, we hire nurses and medical doctors that will help members with chronic conditions navigate through the healthcare system to make sure that they're seeing their doctor regularly and they're taking their prescriptions and getting refilled in a timely fashion. That helps avoid higher cost hospital admits and that's another way that we're helping to promote not only access to care and higher quality care, but also affordability at the same time. Do part of our administrative costs improve credentialing? Yes, as I mentioned earlier, all the providers on our network have to meet standards based on HEDIS measures as well as we're going through an NCQA accreditation right now for NDP Health Plan Vermont. We have that accreditation right now in New York and I think we're getting close to getting the accreditation in Vermont. And is NDP linked into a national network of providers? Yeah, it's a benefit feature we added to our 2018 premium rates and that it's access to any provider that's contracted with SIGNA, who's a national carrier. The nice feature about the SIGNA network is if you are on vacation in Florida in the winter and you have MVP coverage through the Vermont Health Connect, then you'll actually be able to access a number of providers in Florida. So rather than having to pay higher out of network fees, you'll have your lower in network cost share applied at a lower discounted rate. And I want to go through the steps straight. So based on rate filing, the other evidence submitted in your testimony today, the MVP rate being the standard affordability. Yes. Based on rate filing, other evidence submitted today, your testimony to the rates from low quality of care and access to health care. Yes. Based on rate filing, other evidence submitted today, your testimony. Are the rates not unjust, the rates are not unjust, unfair, inequitable, misleading, or contrary to all the correct? That's correct. Are the rates reasonable based on the data we have? Yes. And are they actually sound, fair, charging premium for the services covered? Yes. Next, I want to ask you about whether the rates are excessive, inadequate, or unfairly discriminatory. Are you familiar with ASOP 8? Yes. What is that? There's, it's actual standard of practice number eight. Actuaries have to follow certain set of criteria that to make sure we're in compliance with the best standards of practice. And ASOP 8 is, requires actuaries to attest that the rates that they're promoting are not unfairly discriminatory against any parties. And that they're adequate and not excessive. So, do the, do the rates provide the payments, the claim, administrative expenses, taxes, and regulatory fees, and reasonable contingency for profit margins? Yes. So, is your opinion they're adequate? That's correct. Do the rates exceed the rate needed to provide the payment of claims, administrative expenses, taxes, regulatory fees, and reasonable contingency and profit margins? Yes. Do the rates exceed? No. Okay. So, they're not excessive? They're not excessive. Do the rates resolve in premium differences among insurers within similar risk categories? No. Where rates are assuming that any Vermonner that's eligible to purchase care can purchase same type of benefits and where nothing is discriminatory in our rate setting. So, they do not, so they do reasonably correspond to expected costs, right? Yes. And except there's any differences, those are reasonable differences, correct? Yeah, the premium differences reflect our rates purely reflect the benefit differences being offered between our products. Last issue I wanted to touch on would be math, which is the associated health plans. Are you familiar with that issue? Yes. So, would you explain your understanding of the issue? When the Affordable Care Act rolled out in 2014, association health plans and back up in association is people with similar jobs that can band together for purposes of having more purchasing power for an item such as health insurance. Under the Affordable Care Act, small employers were not permitted to purchase coverage outside of the exchange, is my understanding, they had to purchase it through an ACA qualified plan in the small employer market. And if you were a sole proprietor, then you would have to purchase an individual plan being offered. Recently, there's been some federal legislation that came out between the time when the rates were submitted, May 11th and today, that association health plans can purchase coverage outside of the exchange. MVP is aware of this and we're working with various stakeholders in the state of Vermont to gain a better understanding of what the risks are that some of our membership base in the Vermont exchange exits the market. The general concept is that the associations are going to seek out a premium rate from MVP, Blue Cross or any of our competitors and if their premium rate for a comparable benefit is better than the rate offered on the Vermont Health Connect or the reflective plans, then they're going to purchase that product. Implicitly because they have a lower premium rate, that would mean that they're actually a lower morbidity population. As those members leave it similar to the individual mandate, the overall morbidity of the pool will actually increase. At this time, we're more engaged in these conversations. I know Susan Gorkowski is helping MVP navigate through these conversations and we don't have enough data at this point to actually put a number to what we think this is going to, how much this is going to impact our rates. It's just something that we're well aware of and we think there is definitely a risk and the premium rates that we've put forth if this is actually, if the association health plans can take off before the 2020 year. So in 2019, if associations enter, there is definitely premium risk in our rates. So the 4.6 MVP is proposing this hearing doesn't include a reduction as it relates to the association health plans or an increase in the association health plans. Correct? That's correct. We haven't made an adjustment. We don't have enough data at our fingertips. We're still evaluating what the risks are. We're just aware that this is definitely a risk in our premium rates. It's a concern that the MVP is correct. That's correct. Thank you very much. At this time, we'll take a 10-minute break. So we will come right back and start off with the HCA. But I just wanted to keep the time to see you. Good morning, Mr. Lombardo. Good morning. You're not the guy who premiered the late final. I work closely and he works for me. You're his boss? Correct. And so is it okay if I ask you questions about the great time that you prepared? You're not sure if they're in there? Yes, that's fine. So what's your position? Director of Actuarial Services. And is that just for the launch? Is that for New York? That's New York as well. So are you a fellow of the Society of Actuaries? Yes, I'm a fellow of the Society of Actuaries and a member of the American Academy of Actuaries. How many Actuaries do you supervise? A handful of, one, two, three. Two credentialed actuaries and indirectly four students. They're taking exams. Okay, and the person who wrote the list is Eric Bachman. That's correct. And is he a credentialed actuary? Yes. But he's not a fellow right here? He's close, but no, he's not yet. Okay, and what's the difference between a fellow and a non-fellow? There's two levels of credentialing that you go to. The first is ASA, which is Associate in the Society of Actuaries. The second level is fellow in the Society of Actuaries. Eric is very close to becoming a fellow. So, you know, I'm confident Eric is doing a great job. He's one of our brightest employees at MVP. And does he have to take one more test? Is that it? Yeah, one more test. So hopefully I'll pass the next setting and hope to be a fellow next year. And so you've taken it on. So you've supervised both of mine in New York. Have you testified here before about that, right? Yes. For how long? This is my third year being the primary person to testify on behalf of MVP. I believe I testified a word into one other year, so three or four years. So you're familiar with the great, you're familiar with the great proceedings for the last several years and so on. Yes. And is that the case in New York too? There aren't rate hearings in New York prior to when I was an actuary. They did have rate hearings, but there aren't any more in the State of New York. Sorry, that's incorrect. Are you familiar with the great no hearing in New York? Are you familiar with the great findings that was made in New York? Yes. And then the insurance department's decision on those findings? That's correct. We've talked a lot about all the percentage increases based on various elements, the various components of the rate finding, but can you tell us what the actual rate is that you're charging and that you're proposing? Just let us start with current rates. Can you tell us what the actual rate that you currently have for seven months? Off the top of my head, no, but I could, we may have that somewhere in the filing. Could you look it up if I wanted to share that with you first? How many standard funds are there? One at Platinum, two at Silver, well, two at Silver. Six to seven. That's a long, long amount of that, sir. Yes, that's excluding the American Indian, Alaskan, Native plans. Catastrophic, I wasn't taking the consideration. I guess that's questionable. And do you know how you're going to compare the blue cross? Yes, on a high level, we have a more competitive premium rate than blue cross. You mean the rates are lower? Yes. Can, without taking too much time, can you give us an example of what your rates are for standard plans? Jack, you said what time, Jacob? It's about your current rate of current. When you say a standard plan, there's standard plans at remedal level, so. That you're most popular, you're the most popular standard Silver plan. I can look that up for you. I don't know it off the top of my head. To the dollar amount, I don't know exactly what it is, but it's somewhere in the range of $480 to $520 for a single rate. Between 480 and 520? Yeah, somewhere around $500, I would estimate, for a single plan. Very, very standard Silver. Yes. What page of that do you like? I'm looking at page 77 of exhibit one, and I'm just kind of backing into it. Based on the proposed rate increases. And that would be the most popular plan? Memorized where all of our enrollment lies, but I mean, we have exhibits that I could easily pull off, but that's something that you'd like us to share with you. Can you tell for all of us in that point your standard golden land rate is? Just so the record's good, exhibit 77, it's a very small type you need. It's challenging.  It would be approximately $600 on a per, on a single contract basis. And you believe that those rates are lower than Blue Cross rates? Yes. Do you know that? I'm aware that we have more, more affordable lower rates of Blue Cross in 2018. Could you explain your methodology in estimating the effect of the individual mandate repeal on your proposed rates for this year? Yeah, MVP adopted Helen E's recommendation, which was a 2% impact on the morbidity of the risk pool. MVP did its own independent analysis where we analyzed, we were assuming a certain percentage of our healthier members would drop coverage and how that would impact our rates. Helen E estimated 2%, MVP at 2.2%. So that we adopted Helen E's recommendation, because the recommendation was taking into account more items such as federal poverty level and metal level on contract here. And you also used a 3.7% figure, right? Can you mention that estimate? Yeah, that was the impact on the individual members only. So this is a merged market. If we were proposing a premium rate, that was just for individuals. So if there's a separate individual versus a small group market, the individual rates would have gone up by an additional 3.7% for the individual mandate penalty being set to zero. But because it's a merged market, we blend the impact together and you arrive at 2%. Okay, so the increase that you asked for based on the repeal of the individual mandate is 2%, not 3.7%, correct? On the premium rates, it's a 2% adjustment. And that's the same, because it's a merged market, it's 2% for both individuals and small groups, correct? That's correct. And the underlying philosophy of that increase is that the people you ensure next year are going to be, as a group, less healthy than the people you ensure this year, right? Not necessarily MVP's enrollment, but the entire market will be higher morbidity because risk adjustment normalizes your claim cost to the market-wide average. So risk adjustment is normalize our claims to the 2017 market in 2019 with the individual mandate being set to zero. We expect the overall risk of the market to actually raise up by 2%, and that's what that additional 2% represents. Okay, but you're not projecting your own book is going to have worse health status? I'm sorry, how about you? You're not projecting that your own book is going to have worse health status in 2019 and in 2018? The concept in the Affordable Care Act is that you set your premium rates to the market-wide average risk. When you adjust your rates for or your experience period data for risk adjustment, your risk adjustment receipt in the experience period or payment, then that gets you to the market-wide average risk. I don't know if I'm not an answer to that, but I think it's a simple question and you're projecting your people who ensure in 2019 are going to have worse health status than the people who ensure in 2018. We're projecting that the market morbidity will deteriorate by 2%, which is the way that you should set your rates when risk adjustment is implied. So what effect does that have on the people who are going to ensure? It's unknown at this point what the members that we're going to enroll in 2019 will their morbidity or their utilization of health care services will look like relative to a 2018 book of business. So it's possible that the people that you ensure in 2019 will not be and not have worse health status than them can ensure in 2018. It's a possibility. Do you also increase your rates for overall morbidity in addition to the amount you've increased your rates based on the repeal you've been able to mandate? Not for the... No. I think just to be clear, you've done it a few times on what I call, but it's not a repeal of the individual mandate. It's the repeal of that thing. Absolutely. I'm sorry, it's the repeal of the... I didn't... And I'll take that too. I'll take that too. Thank you. Part of me, I stand corrected. Individual mandate was enacted. Did MVP reduce its rates based on the fact that a project on the individual mandate would have? At that time, there wasn't much of an individual market. MVP didn't participate in the individual market in 2013 prior to the Affordable Care Act being rolled out. So the basis of our 2014 rates, which is prior to the Affordable Care Act, used small group claim experience. We did anticipate that the individuals enrolling would be higher cost, but now we're using actual data. We're using our actual exchange enrollment to set our premium rates. So this is in effect the market-wide average when we adjust for a risk adjustment. When there was a penalty for the individual mandate, do you remember what it was? It was a function of your federal poverty level or your income. And it was similar to how your APTC would be determined. So it was up to a certain amount. And wasn't it $95 in the first year that was 114, 325, and 156, 95, and 160? I will assume that you're correct in those figures, but my understanding was that it would raise up based on your FPL. Did you think that the penalty for not having individual coverage was strong enough to really have an effect when it was in effect? There is definitely concern at this point after we've done more analysis on our claims that healthier members are going to drop coverage. That was my question now. When the individual mandate was in effect, did you have a concern that it wasn't strong enough to really incentivize people to buy coverage? There may have been times in the past where we were concerned at $95 penalty, as you referenced earlier. We may not have much teeth, but our understanding was that over time the penalty was increasing. And that became a significant portion of your income at one point. And that would actually incentivize members to stay enrolled. And the MVP ever doing research to determine what the effect of the individual mandate was? I'm sorry. The MVP ever doing research to determine what the effect of the penalty for not having an individual coverage was? Can you repeat the question also? It's like I have that for me too. Did every committee ever doing research to determine whether they had a coverage for not having an individual coverage was? When the mandate was in place it didn't seem necessary to do an analysis of the impact of it because our assumption was that with the mandate in place then it would be business as usual and be continuing forward. Once the penalty was set to zero that's when our concern and we started doing our analysis which the Greenmount Care Board also hired Ellen E. to do a similar analysis. So that's a no. We did not do an analysis while the mandate was in place while there was a penalty attached to the mandate because it didn't seem necessary at the time. And has MVP ever done any research as to the extent to which residents of Vermont are currently aware of the repeal of the penalty for not having an individual coverage? MVP's participating in any kind of stakeholder groups that are in place and we are very focused on trying to retain our membership to make sure that members don't lapse coverage. Our understanding is that Vermont is working towards trying to institute a penalty again in 2020 but it won't be in place in 2019. So what we're hoping is that in 2000 in the 2019 open enrollment year our work with all the various stakeholders in Vermont and internally with our marketing communication seems we can enroll with many members as possible and continue coverage. But has MVP ever done any research on the extent to which people who are in Vermont are aware that there is no longer a penalty for not having an individual coverage? No. Let me ask you a little bit about minister of expenses and you can refer to the issue you can look at page 90 rate filing page 39 of the TDF into the department. Your minister of expenses in this rate filing are 398 from member per month, correct? Correct. Okay. And last year your minister of expenses were less, right? They were $38 and 10 cents Yes. Okay. And you're aware that last year the board said that we expect MVP to reduce his minister of expenses because it's a long and long amount of members, correct? Correct. And this year your expenses aren't less than they were last year they're more than they were last year because of your overall loss of business in New York, correct? Which always you're in Vermont getting invasions? Yes. Okay. And you're short, isn't argued by charging Vermont policy holders for the New York reduction in business, aren't you forcing Vermont policy holders to subsidize the New York policy holders to a certain extent? I don't agree with that it's because our fixed expenses are, you know, like I was using an example of our claims operating system it's physically housed in our New York offices but it's being utilized by Vermont members so the cost of drawing that claims operating system is something that we need to account for in all of our premium rates not just Vermont or New York specifically. But you agree with me in principle the business should stand on its own, right? Vermont people should pay for Vermont covers New York people should pay for New York covers, correct? And our rates reflect that. And so for example your contributions to reserves should be the same in Vermont to New York, right? There's reasons why you could differentiate those two figures. Okay, what are those reasons? So in the individual market in New York for 2019 we're proposing a 1.5 percent contribution to reserves that's because with the individual mandate repeal we're anticipating membership decline in that market and similar to earlier we were speaking about if we grow membership we would actually need to charge more to maintain our minimum solvency level. If you lose membership you can charge less to maintain your minimum solvency levels. So with the individual mandate repeal we're projecting to ensure fewer individuals in New York which is why we're promoting a lower rate a lower contribution to reserve for 2019. We don't think it's a long term sustainable way of preserving solvency and in the future we plan to monitor what the impact of the individual mandate repeal has had in our membership and then we're going to reassess going forward. So for 2019 you've filed a 2% contribution to reserves of your line 1.5 in New York, right? In our individual market in New York 1.5% in our small group market which we don't expect to be impacted by the individual mandate being set individual mandate penalty being set to be zero we're still charging 2% contribution to reserves. Sorry. And in 2018 when the board awarded you with when this board awarded you with 2% CTR from Vermont New York only allowed you a 1.5% CTR from the individual market, correct? Yes. And in 2017 do you remember what your CTR was in New York? As they would say the profit? I don't recall. Turning to the AHP issue does it ever repeat clients who participate in the AHP market? To the extent that a group or an association requests a quote we wouldn't decline to quote them I believe that's actually regulatory we have to quote the group if they are allowed to purchase coverage in Vermont. Does that mean people will be soliciting that AHP business in Vermont? Now that I'm aware of it at this point. Could you tell the board a little bit about the reorganization that you at MVP undertook recently that had the effect of saving above limiting or at least reducing premium taxes? Yeah. MVP prior to third quarter of 2018 offered our large group and small group grandfather business on our health insurance company which is an article 42 license and we're charged a premium tax. We recognize that as a non-profit we shouldn't be offering coverage on the for-profit entity which it helped promote a more affordable rate. Our goal was to remove the premium tax that was built into our rates of approximately two percent so we can have a more affordable rate and promote a more promote a more competitive premium against our competitors for a large group market. So how much did MVP save in the month premium taxes result this result of the reorganization? Well whatever savings I don't know the number off the top might have but whatever savings MVP would have achieved is being passed through into the premium rates because we're not charging a premium tax any any more. Could you show the board in the rate file where that premium tax savings is reflected? This finally is offered on MVP health plan. We've always offered our Vermont exchange business on MVP health plan which is the legal entity where premium taxes are have always been zero so again we rate our blocks to be self-supporting so the blocks that are going to receive the benefit of the premium tax being set to zero are the large group block as well as a small group grandfather block where they transitioned from hangout premium rate that reflected the premium tax to premium rate that reflects zero premium tax. So are you saying then that the elimination of the premium tax has has no effect on individual policy orders on the rates of individual policy orders today? We've never charged premium tax on the Vermont health connect business so as a result we're still charging zero percent so there's no impact on the rate increase that we're proposing this year. The premium tax has an effect on small group business How many of that Jack, this has been asked in the answer. It's not clear has the elimination of the state premium tax had an effect on the rates that small group policy holders in Vermont affect? If you were a small group policy holder in our grandfather block of business then yes. And has the elimination of the state premium tax had an effect on the rates that are larger than policy holders in Vermont today? Yes. And am I correct in understanding that the elimination of the premium tax state premium tax has not had an effect on the rate of the individual policy holders in Vermont today? That's that's an accurate statement. Could you explain what the effect of eventing of the tax cuts and jobs act had in on the taxes that were paid in 2019? That's outside my area of expertise. I have had conversations with our finance team and they've indicated that they don't anticipate an impact due to the tax and jobs act. They've indicated that the tax cuts and jobs act will have no effect on that's that's my understanding. I'm not the subject matter expert on on the tax cut and jobs act. I would have to defer to our accounting team who's not here. So you don't know then whether and the effect of the tax cuts and jobs act is that that would be really fun. And what about the tax and jobs act? This has been asked several times and we can continue on and we have a limited amount of time and they don't want to cut the question short. So please move ahead. Does MDP have a target RBC ratio? As I testified earlier New York State Department Financial Services governs MDP solvency. It's not on an RBC basis. It's on a percent of premium basis. We translate that to an approximate RBC percentage. The target what I'm what I'm more comfortable with is a percent of premium. The minimum solvency requirement is 12 and a half percent of premium. We target at MDP 16 to 20 percent. That's also been suggested through the Enterprise Risk Management program that New York State Department of Financial Services has put forth as well. So does MDP have a target RBC ratio? We again we target a percent of premium to hold. And that's something that I can I could work with someone to translate that to an RBC percentage for you. But it's 16 to 20 percent of premium. Do you have any concerns that that RBC ratio fell below 300? Would have to know that translates to on a percentage of premium basis. If that's below 12 and a half percent we would be concerned. Could you turn please to page to tab 14 which is the MDP annual statement. 46 for five years I'm going to start the data pages of that statement. Lines 14 and 15 now under risk-based capital analysis. Okay. And the RBC ratio is simply line 16 I'm sorry line 14 total adjusted capital divided by line 15 authorized control of the capillary. That sounds familiar. Yeah that sounds appropriate. Okay. So if you're you would do the vision to come up with the RBC ratio. Does that level RBC cause you any concern? Just I'm going to Jeff it is cautioned to the line questioning around RBC issues. We have a confidentiality statute here in Vermont. And I just want to be careful that we're not asking the witness to testify to something that would be being confidential. The annual statement is public I'm asking the witness assembly to testify as to whether the quotient of two numbers were causing any concern. He's asking the witness to testify and do math believe the RBC and he testifies as to the the math level that we might be getting into confidential information. He did not ask for a specific number he's asking if he had done the math would it give him my concern and I'll allow it for now. Back to what I was saying earlier I'm more comfortable weighing in on the percentage of premium that we're holding in reserves. So I haven't done the calculation I need to prepare this income statement. That's something that if I had a calculator I could do. I understand that I'm going to force the witness with a calculator. As opposed to my objection. At this point I will allow it and do the math and answer questions but this line of questioning I think we've had the answer already that they do not use the standard but you can get the math and have that one question and we'll move forward. Let's go ahead. I think there's many people right now looking at their frontage and how they like it. This is the one I like. And the question was when you get the answer to this equation whether that RBC would be a concern. Is that correct? In the end Gough is that the correct question? I'm sorry. We'll go and let him do his math and I believe I believe your question was whether the resulting number would be a concern to the company. Exactly. On a percent of premium basis we're above the minimum threshold we're not quite to the target that we want. Our target is 16 percent to 20 percent based on our our recommended solvency concerns that our ERM process has put forth enterprise risk management and right now we're at 15.4 percent of premium. The number that you just got with my very high tech calculator does that cause you any concern? As premiums increase and so we're below the threshold as our target threshold as it is so we would like to get up to 16 percent at a minimum and right now I'm calculating 15.4 percent. I think I'm entitled to the answer to my question but I'm asking you you've got one number and he's looking to answer that that doesn't have a part of that now. Josh and once across his amnesia is arguing he's answering the question he didn't answer the question you were asking him to do one equation and whether the the salting number would be a concern exactly right and is that the equation you did? I did that equation and does that cause you any concern? I guess could you define what give you my concern? Do you think that that the number that you've got they hit the quotient of those two numbers does that make you concerned at all about and the financial condition? Based on recommendations as I understand from New York State Department of Financial Services we should be increasing that figure so there is concern since we're not meeting that threshold we're above the minimum so we're we're in between the minimum that New York State has dictated and the target Could you please turn to until you're 13 this is not a an example that I've prepared but that's fine if you're not I don't ask you questions that I think that you're not familiar with I'm not overly no I'm not this is the first time I've looked at this a bit actually MVP has not implemented alternative payment methodologies in Vermont has it as of as of today no we have not okay and by implementing alternative payment methodologies you could apply hospital costs and other provider costs down for you we're participating in alternative payment methodologies in New York and it's too early to actually assess whether or not it is impacting hospital costs down that's not all I could say at this point why haven't you implemented alternative payment methodologies in Vermont? previously we didn't have what we felt was a large amount of footprint in our in membership there's also I know a desire from our contracting team to have more information about regional price analysis of hospital and lowering costs on unit cost basis in Vermont but that's about all I'm familiar with outside of the fact that I know that there are some conversations taking place between and one character you're a fellow of the society of actuaries correct yes okay and as a fellow of the society of actuaries you're certainly qualified to render opinion as to whether or not a rate is excessive correct correct or inadequate correct correct or unfairly discriminatory correct correct okay but there's no actual level standards they qualify as you remember the opinion as to whether a rate is affordable correct that is that's correct that's not an actual opinion I know it's in Vermont statute my understanding is that that's for order to determine but I believe that you mentioned to council that this this rate this proposed rate was affordable objection that's not exactly what you said go ahead do I object to questions that's right could you please re-ask the question sure I'll ask it this way you are not qualified as an actuary to render the opinion or are you as to whether this proposed rate is affordable that is a non-actuarial topic but as an actuary our job is to analyze our costs and project what we think those costs will be in the future approximately 90 cents on the recruitment dollar are going towards health care costs and I'm not going to try to dispute that health care is expensive in the state of Vermont but 90 percent of every of every premium dollar is going towards health care costs the main the remaining now we are managing as directly and as efficiently as possible to make the rate as affordable as possible and let's assume that every word that you said was correct nevertheless in analyzing those costs you're going to determine whether or not people can actually have the money to actually pay for those costs right that is not taking into consideration in the development of our rates our rates sorry that our rates are determined to promote an actuarially sound rate which is reviewed sensibly by the nominee and they have three actuaries sign off of the rate is not excessive inadequate it's reasonable relative to the benefits being offered sure and as an actuarial you're not qualified to render opinion as to whether the rate that you find to be not excessive and adequate on the period of discriminatory promotes quality of care that's not part of our actual real opinion but the testimony we adopted earlier was discussing quality of care and access to care to all affordability and other but as an actuarial you don't have any particular qualifications to determine whether whether this proposed rate promotes quality of care current that is not part of the actuarial statement okay I have no further questions board members I think that our chair is ready to go so I think I'll start with the individual Monday you've been made reference to report and you said that it was a three-bottom care board or you're referring to the joint effort of the Group on Care Board and DFR commissioning and outside consult and I'll need to come back to the board in February yes and since that report came back legislation was passed and said my understanding is that that's not for the 2019 plan year okay legislation could pass so correct that's my understanding correct and there's been quite a bit of listening that Vermont has taken that action followed to other places like New Jersey Washington Massachusetts and the regional mandate prior to the Affordable Care Act it appears in your filing that you believe that the legislation that was passed by the Vermont legislature will have no impact on mitigating the effects of the removal of the penalty for your premium year 2019 is that correct that's correct and what leads you to that assumption the benefits are offered calendar year benefits if there were benefits that were running into the next year that would be something that we have to take into consideration but because the benefits will reset on January 1st 2020 our assumption is that the calendar year 19 rates are not impacted by the individual mandate or the individual may need a healthy success here so you don't believe that the knowledge that there would be some type of penalty in 2020 and the fact is this would want to be a one-year decision mitigating some of that at all we did not reflect on the rates for we're working with our army even if the patient seemed to try to try to enroll in Indiana versus hospitals so the continuous coverage but if you're a purchaser it is a counter year one-year snapshot so you do if you feel healthy and you feel like you've been paying too much in premium rate our assumption is that they will likely walk away from the coverage how in depth was your analysis of the actuarial study that was done in February? I read through the slide deck and then we also did our own analysis afterwards on the association health accounts you have chosen not to include any request for a brief increase in this year can you tell us why? we simply don't have enough data at this point to understand what we think the impact is going to be to adequately assess the impact if we want to know who the members were that were probably that were most likely that were affiliated with an association or we most likely to exit the market and then understand how their healthcare building compares to the market wide average have you had any internal discussions about how many lives might be lost by entropy? those aren't conversations I was participating in I know there were in a multi-stakeholder conversation about the impact of association health plans but that's not part of my job responsibilities at this point okay so no one has come to you and asked you about changes in morbidity or anything when it comes to that particular topic now I think that question will come once we have an understanding of who the potential groups or associations that will exit that request is going to come our way we just haven't had any of that information asked of us at this point do you have any knowledge of any of those groups coming to MVP to try to do business with another one of your plans to meet? we um I'm not aware of which groups you sit I think the question was are there groups that used to be associations right now with MVP that um I'm not aware of which groups those are or the question is if MVP has been approached by any association to have an association plan piggybacking our existing MVP plan that is not something that I've that hasn't come across my desk at this point okay you talked a lot about trying to create transparency about the consumer as far as what they would spend for medical expense and you talked about about your members can go online and see what the the net effect of rates are and that is what their on the body would be not a hospital charge that's correct for a given procedure yes that would be that that's what they would be able to compare is the cost of a given procedure at um for Dr. A versus Dr. B your facility one versus facility two have you had any discussions as a company trying to create a similar database for the members so they could see that if they've been prescribed drug A that it all means it's $107 at the CVS it's $50 or anything like that I'm not familiar enough with our contracts to know if those if those costs do vary at Walgreens versus CVS in your example I think there have been several articles of the press that should be common dollars that if you're a member whatever their their group is called certain drugs are cheaper um we all know what Walmart has available so that hasn't risen to the level where you think there's a sufficient amount of return by providing your members with that information no that's not if you know assuming that's true I think that would be valuable information I just don't know if that's something that MVP is undertaken that's not necessarily something that we would be asked to quantify if it is in place that would be something we want to quantify and to understand the cost of the savings associated with directed carryable or cost pharmacy okay are you at all involved with negotiations with providers and hospitals when setting the brakes I'm not physically or I'm not personally a person that's doing the negotiations to the extent what we work with our informatics our contracting team to understand how much our rates are changing our group of costs is very costs are changing by facility or by physician group but outside of that I'm not actually the person that's going to negotiate the contract okay during your testimony I just want to apply to you you talked about your movement of trying to equalize payment schedules for physicians but I almost am afraid that I heard something that you followed that you shifted those dollars to hospital these schedules is that facility fees so that or did I just miss here here um I think the concept is if the approved if the contractual increase at a facility such as UBMC which employs physicians what's two percent we were there's facility component and there's a physician of the schedule component we're arriving in two percent in aggregate and that's a hypothetical number but we're we're basically doing the calculations to arrive at two percent aggregate which is reduction to the physician fee schedule and an offsetting increase to the facility costs to arrive at two percent aggregate if I went to the deli a lot of sandwich it was four dollars and I decided that they were charging too much for the bread did I benefit any of it was changed so that I banked two dollars for the bread two dollars for the uh for me getting back to that if you seem to understand as a company to have a what I'm here to do is that you you want to try to provide parity and do you know if there is variation and payments paid for like procedures to similar providers in the past there was a wider spread and we're working towards closing that gap to get them more aligned I have I don't analyze the fee schedules in detail but I know that we are still anticipating some reductions to position fee schedules which would imply that we're still working towards getting them more aligned and what about procedures sorry what about procedures is there a variation in the procedures so let's pay one colonoscopy nobody wants to go get it done we're all told we have to do you have an acceptable level of variation that any hospitals I'm not involved in them for the negotiations to answer that that would be something that our contracting team would have to weigh in and reflect the response okay your numbers guy you received several questions from attorney I've got about your reserves when you go to work in the morning do you worry about the help the financial wealth of your company because it's not being monitored with an RBC it doesn't bother me that we're not being monitored by RBC thank you member Holm okay thank you so I think I'm going to throw a little bit a little bit a little bit a little bit a little bit a little bit a little bit a little bit a little bit a little bit a little bit a little bit about having a little direct control over about 90 percent of the premium in respect to as long as the health care expenditures so I want to have a little bit about the incentives the NDP has to gain costs and try and bring that number down and your filing proposed a 3.2 percent unit cost increase and it was that unit cost increase was about 1.7 percent for providers that are subject to doing that in favor of oversight that is five percent for all the providers that we manage their work has no oversight for so I want to hear a little bit about what room you have for more effective bargaining over that five percent that we have no regular bargaining over and what leverage you have in bargaining what obstacles you face in that bargaining and how that number can be more aligned 1.7 percent that we have more regular bargaining yeah our providers outside of Vermont are are governed by pre-mapped care board for affordable reaching is are acceptable so our contracting team does a rigorous negotiating process where we go back and forth we have contracts that we have negotiations for a year and a half to two years to try to get keep costs affordable possible unfortunately that regulatory of course like if we were to if for monitors utilize 100 percent of costs that were governed by the pre-mapped care board the the trend increase would be 1.7 percent of the reference it's because for monitors are seeking care outside of of of Vermont which is driving that cost but we do have a rigorous contracting and negotiating perspective to create any incentives for your members to to remain in Vermont to seek the care words in the issue is a low cost I'm not aware exactly of any I do know that we set our benefits designs to have a lower PCP cost than any any special visit that's a strategic decision to try to direct care to PCPs and generally people's PCPs are in the state where they live and mostly will work for you on the board right so that's the majority that care is delivered by Vermont positions so our benefit design that's that's the way that I would say that I'm familiar with if there's other efforts to try to direct care I'm not familiar with those okay in the past week there have been recent announcements by several pharmaceutical companies to hold down price increases that that have been planned Pfizer, Merck, and Hottis Bayer approached they've all said that they're going to clamp down some pharmaceutical planned increases does that I'm assuming that does not have a same factor in the defiling would that cause you to make an adjustment down with the diplomacy trend with this idea that you're a pharmacy manufacturers that are planning do you think we've periodically received from projection trend information from our pharmacy benefit manager and those trend projections reflect that kind of information the information that we have reflected in our premium rates was current as of I believe it was March from this year so to the extent that our pharmacy team was able to negotiate better discounts in December of 2017 that is reflected in our rates any information that's been passed salary updates that wouldn't be reflected in our rates because we don't have that information at this point we do have conversations with our pharmacy team I'm not aware of a material change in some price and pricing contracts that any piece experiencing but to the extent that manufacturers are reducing their unit costs I'm sure we're going to work that into our into our pricing at some point hopefully it'll be felt through lower trends in future violence so what is MVP's commitment to reducing excess and unnecessary costs which there are some investments out there that you know it's about just 25 percent of expenditures do nothing for held outcomes of individuals what is MVP's you know cost-containment strategies particularly related to reducing that sort of wasteful and efficient unnecessary things are are we have a number of different items in place like the care management programs that we had discussed earlier or we have other programs in place our goal is really to try to improve wellness improve a member's health and we do that for example if you have any more child then you receive a letter in the mail that tells you here are the appointments that you should be having for your child so we're not really I think your question was to the extent of what are we doing to reduce cost I think our goal is to put forth best practice guidelines into our materials that would help you understand in the example of like in Newborn here are the steps that you should take to make sure that they're healthy so you can monitor their health so that's an example that you provided of providing people with best practice information you mentioned earlier in your testimony a website that talks about wellness to you as a company got any assessment of whether this works whether for example mothers are reading those those uh new information those welcome packages that are actually acting on and when the people are going on the website and downloading new information on health and wellness how is it I think you know that these strategies are actually working in changing behaviors to improve the health outcomes and lower costs that's that's something that I haven't been intimately involved in if there is that kind of analysis taking place I think right now I know we have a number of initiatives in place such as we have a total medical expense team and TME team and their job is to analyze costs are there programs that we have in place something like this newborn campaign isn't actually effectively helping reduce costs or is it helping guide members to utilize benefits because it may reduce costs but if it's not actually being really healthier that's not necessarily a good thing so are they adhering to these policies that we're putting in place um I'm I'm not familiar with any of those analyses but I do know that that is a huge effort that MEPs that come in if a team is undertaken to try to understand whether or not there's a positive order why in some of these programs so enough so with your from your actuarial knowledge there's nothing that there's no new cost containment strategy that you are aware of that MEP undertook for the upcoming year that would have translated into a rate reduction that when you were asked to say what would be the impact on the lowering rates because of this cost new cost containment strategy that's being taken there's nothing in there I know we're in conversations so put forth a musculoskeletal program to help to help mitigate costs for things such as like a shoulder surgery rather than I guess a shoulder surgery having physical therapy can try to work through that those direct costs are hopefully going to lay out in our data as time goes on but we were waiting till like the contract was signed and that we actually had some data to annualize the the effect because everything that we would have other than that would just be information that was provided by the lender so we would want to look at it what's the impact on our overall cost my hope is that when you off next year that there are specific cost containment strategies that are going to translate into lower rates that will reduce some of the ways we'll spend the rate that is true and all expenditures um I want to think related to that MVP and the exhibit sets the stage that uh the company does not directly incentive providers to provide generics or non-specific alternatives to specialty drugs why not incentive providers to redirect towards more lower cost drugs specifically I'm not I'm not I'm not part of that campaign and know that we provide that response um but and um okay I'm not part of those marketing efforts or those contracting efforts I should say I'm not even familiar through the law that would prohibit that so I actually really weigh in with confidence and why we're not human matter why we wouldn't do that and I know that generic drug utilization is 90 percent of our utilization so if you look at our a refile nine out of ten of the prescriptions that are filled are generics and then it's about nine percent brain draws and less than one percent are um specialty drugs which are the last constructs so we are seeing about an increase in generic dispensing rate and that is something but I'm not aware of any kind of contract talks to for promoting our incentive providers that offer generics okay um so let's talk about incentive consumers and employment consumers um he's built a little bit of a website a human price transparency and website um what percentage of your members visit that website actually lose the website I know those figures are maintained by our marketing communications team but I I don't know those I'll stop my head would you pay to follow and you can get that back my sense is that many of those websites have not real strong efforts to drive back to those websites don't get that much research so I would also wonder if you can follow like one of the policies and incentives to encourage people to actually use the website or actively seek more cost alternatives I would like to hear about those I mean I so I I think I'd reference earlier but when you when you when we have a member when somebody rolls with MDP do you get a member activation kit and um would you try to guide members towards tools such as this so they understand all the benefits available to them uh so they make so you know how many people actually actually activate you know actually go on and that's a um activation kit yeah so everybody receives it and then um I think that just means you're activated so it doesn't necessarily could mean you've done an example to the member or to the other side okay well any information you can provide on that I think would be helpful okay um the next area I'll let that go for a little while you can see where my theme was but it's a concern of mine um I have to say that I'm very very surprised other than through the HCA's questioning not to hear any mention of the all-finger model in one care in any of your testimony earlier so let me ask you that's what role do you think the all-finger model plays in improving health and lowering costs for people? um bet so I'm not that familiar with the all-finger model that's something that once we further our negotiations if we do and turn them to arrangement with one care then my team would be tasked with analyzing some of the costs that we think are associated with that with that program I know that we can participate in value-based arrangements in our New York Medicaid population and even some of our commercial population and at this point we haven't seen we don't have enough data to basically thoroughly evaluate exactly what the impact is in theory yet I understand what should happen but I we don't have enough data at this point to actually confidently assess whether or not strike the costs down so how likely do you think and repeat into you know uh inter-intensive data to facilitate the success of the all-finger model through that I would have to follow up with somebody that's involved in those negotiations okay that would be very helpful and I know has there been a shared you know any kind of sharing of data with one care to help them have designs understand and work for contact that's another question that you might understand a little bit more about what is MBT's plans with respect to one care what's their plan with respect to helping the state which scale scale targets for the all-finger model and other lines of business and a little bit more about reimbursement fever service versus effective payment what is what is MBT's plan here because I think it all relates to our hospital strategy I also think it relates to Vermont's decision to enter into this health reform effort and having our carriers involved is very important in the success set on the success of that program so that makes it not that be helpful thank you related to that I think a little stuff in the you talked about directing more care to the primary care practices yeah as a cost of payment strategy I noticed in the filing that the set of medical claims dedicated to primary care literally have not changed the percentage of your expenditures at least in the data that you provided since 2014 so again related to our statewide efforts at reform and increasing primary prevention what is MBT's plan here with trying to use that for the primary care yeah we are we are definitely we understand the value of primary care in the healthcare system and how they can actually lower costs overall it's just been challenging to get the first to move in that direction so I do know we have initiatives underway to help guide members towards the PCP but I yeah I do recognize that that hasn't hasn't been shown with the data in the experience so okay okay what percentage of your claims would you say are deemed fraudulent and therefore incredible that is not a number I could quote I know we have a special investigate an investigation unit team and they monitor irregular prescribing patterns or regular practice patterns regularly and they do it when when something when a provider is doing something that doesn't kind of pass the SNF test then we start to work towards either spending payment to them until it's resolved or even taking this taking information to off the regulatory authority team whether that's the insurance department in New York or actual authorities such as police that is part of the whole I don't know the exact number but that is definitely we have an entire unit that that's our goal and I know that there are recoverables every year as a result I just don't know that finger and any efforts made to increase those recoverables would actually translate into lower premium growth right to the confidence yeah it would be it would be money taken out of claim expense that's gross any information about you know and I guess the the last one this is related to the the added questions and in your testimony around the fixed costs associated the added costs and the New York business and the law business and the idea that despite the fact that I give you experience to hardening 45 percent increase in membership in 2017 on this fall on our health plan the members don't seem to be uh fortunately in the reduction of the administering the cost associated with that growth because MVP as a whole experienced uh membership decline in New York so I would love to see the numbers actually that can remember the amount added costs could be allocated differently uh you know the such that it's a collective effect that the amount membership has increased the increase and the Europe has decreased won't be the number of the month that that thought for the world that it would be calculated it is accounting for the fact that Vermont membership went up whatever membership went down I'm not sure I'm understanding I just I think it will be challenging because you're asking for the variable analysis or the fix it's just so separating out the costs of you know I'll go back to the claims processing in there or even like and in costs going towards the online wellness tool that's managed by that those costs have to be spread across the world business right that ought to be spread evenly you could you could partition that are my business and the your business attribute the fixed costs in some way and then adjust for the membership changes no I think so most of the fixed costs are shared both by both states there may be and I would hear there and I'm not familiar also on my head with exactly how the allocation is split but I think when you're getting that will be like what is a Vermont specific cost versus a shared fixed cost correct well I guess what I would like to see is is another methodology for accounting for the fact that Vermont membership has increased and there should be some benefit in the administrative costs you know in the premium for this year so there must be a different way of allocating fixed costs or distributing those fixed costs in a way that that accounts for that I'm not sure so you're asking for those to be moving it yeah so I'm going to wait until something reacts thank you okay um yeah they they okay if there's a follow-up for that that would be great okay thank you I'll start right with where Jess was ending there on the administrative costs and try to give an example of and use some of round numbers so I think when we divided last year the assumption was there was about 10,000 lives of the company yeah and roughly the PMDM was 40 dollars per ever and we split that between a fixed and act a fixed and variable portion and that too was roughly 60-40 we can say whether it was 50-50 but you guys had said it works about 60-40 we actually had a tremendous growth in Vermont and