On record and. Miss green, I just want to remind you that you're still under oath and I'll turn it over to. Mr. Becker for questions. Thank you. Hearing officer Barbara. Nice to meet you. Miss green. I've been reading your memos for the past year, but it's good to see you face to face. Well, almost face to face. So if I could just have you turn to exit before, which is your memorandum to Martin Lemieux. Okay, so. And that second paragraph down under overall CTR philosophy, you say Blue Cross Vermont has long held that a long term CTR of 1.5% represents an adequate yet not excessive contribution to member reserves. Is that right? Yeah. Okay. And then that very last. Sentence on the page you say while Blue Cross VT believes that CTR should be managed to an adequate adequate long term level, rather than fluctuating significantly from year to year with changes in membership and health care cost trends. We do need to reflect inherent risk within each market segment and current economic and health care environments. Is that accurate? I'm just not. Where are you on the page for that was the very last. It's the last paragraph that starts on the page but does not complete on the page while Blue Cross Vermont believes. Yep. Yep. Okay. And so the part there I want to highlight is that CTR should be managed to an adequate long term level. Is that what you said? Yep. Okay. And so guess I guess what I'm wondering then is with this memo. Are you saying that the recommended CTR in the ACA markets will be at 3% for the long term. I'm saying in the memo that it's 3% until the conditions to change it. Tell us that we should change it. And right now the RBC being well below the bottom end of the range ordered by DFR and the higher medical trends dictate a higher long term assumption. And if those conditions change, as we've also said in the memo, as I've also said in the memo, you know, we would change that long term assumption occasionally. The reason we call it a long term assumption is that if we calculated the amount of CTR required in any given year to sustain member reserves to a level that's within the ordered range, it would fluctuate wildly. It would be very, very, very high some years and lower other years. So we try and manage to a long term assumption, but recognize that that assumption has to take into account the conditions in which we're navigating. Okay. I mean that makes sense. I mean you're not recanting. I mean do you think that CTR should be managed on a long term basis? It shouldn't be fluctuating wildly. Is that accurate? Right, on a year to year basis. Okay. So what I'm getting at here is right when I think about something like the Federal Reserve raising interest rates, they do things gradually. And this is the double, you know, 1.5 to 3. Wouldn't a more modest adjustment be appropriate if you're thinking about managing it over the long term? We could make a more modest adjustment, but given where our RBC is and where it is relative to the ordered range, 3% seems like an appropriate adjustment to increase the likelihood that our premiums would be fully maintaining reserves. And as I indicated, we shared last year that with the higher medical trend, the minimum necessary to keep pace with a medical trend that is admittedly rising very quickly, a more modest increase would not be recommended at this point in my view. Okay, thank you. So I don't know if you were listening to the testimony earlier, but I asked Ms. Lemieux what a 3% CTR comes out to on a PMPM basis and then overall dollars. So we got the PMPM figures, but we didn't get the overall dollars. Do you happen to know what it... Yeah, and I made a note that you were estimating that at $13 million and you're correct, it's $13 million. Okay, thank you very much. Yeah, perfect. So I guess what I would want to know then is if Blue Cross from lost $13 million in one year on a particular book of business, how would you describe those losses? Significant? Yes, I would. And the losses that we experienced in 2022 were significant and on the order of magnitude similar. Okay, so among the reasons, I'm back on your memo, among the reasons that you cite for the 3% CTR recommendation is the importance of adequately funded premiums. That's the first heading on page two, and you go on to describe what you mean by that. I mean, that's a pretty uncontroversial notion. Would you agree? Adequately funded premiums? I would hope so, and it's very consistent with what I testified about the importance of DFR's opinions that adequately funded premiums is fundamental to protecting solvency. Okay, so I'm going to ask you to jump over to exhibit 22 and page three of exhibit 22. And just if we could, so this is the exhibit 22 is Blue Cross Blue Shield of Vermont's 2022 annual statement. That's correct. Okay. And so on page 53, note 18, there's a note here about losses from ASO uninsured plans. Could you state what Blue Cross Vermont's total losses on ASO plans were in 2022? Do you have a rough sense of how many RBC points equal $14.4 million? Percentage points of RBC give or take. Is there any, I mean, you don't have premiums with ASO plans. Is there a CTR that you ask of these customers? Yes, there's a, the ASO plans when we get Blue Cross's overall books of business across the enterprise, we operate in a number of different competitive environments. And so when the administrative services only book of business is required to contribute a contribution to reserve that reflects the risk that that business brings to the RBC calculation. And, you know, that is very similar to the 3% CTR on the insured books of business, but it's calculated differently because the underlying risks are different. Could I ask you a little bit more about that? We calculated based on their risk. I mean, there is no risk with these plans or is there any risk with these ASO plans? Yes, there's risk. The way our administrative services only, sometimes it's called ASC, which is administrative services contracts, which is, you know, mainly credit risk, where we'll be funding the claims incurred by a self-funded client ahead of, we'll be paying the providers for those claims before collecting from the client. So there's a credit risk. There's also some risk related to whether or not there's stop-loss coverage. In some cases there's stop-loss coverage and that stop-loss coverage would require. In fact, stop-loss has a quite high contribution to reserve requirement because of the risk involved. So you say it's in line with the risk that you take on for these ASO customers so that it's sort of equivalent to the 3% that you're asking of the insured books of business? I mean, is it anywhere, do you know, anywhere close to the 13 million that this 3% CTR? If I use the word equivalent, I didn't mean to use the word equivalent. Each segment is funding the maintenance of reserves for the risk that it brings to the RBC ratio. So in that sense, it's equivalent, but the amount would be very different. In fact, I can just confirm that the ACA, individual and small group business, both because its membership is quite high and because the risk is quite high, is by far the largest contributor or detractor from member reserve because of the nature of that risk fully insured. And it's a very, as we said earlier, it's a very expensive coverage. Okay. Thank you. Could I have you turn to exhibit 13? So these are Blue Cross Blue Shield of Vermont's responses to HCA questions and specifically, could you turn to page 4? Okay. So question 6, this is a very complicated question that I did not write. My colleague, Mr. Schulteis wrote this question. And this answer is also very complicated. You'd probably need an advanced degree to parse out everything it says. I want to ask you about one detail. The answer describes something called a PDR liability and I don't want to get too in the weeds on what that is, but there's a sentence here at the top of page 5. A PDR is a liability that is established when the estimated costs related to insured or ASO contracts exceeds the revenue expected to be earned during the remainder of the contract period. Did I read that correctly? Yeah. Okay. And then the response goes on to say at the start of that next paragraph that the vast majority of the PDR liability reported at both year end 2021 and 2022 relates to ASO contracts. Did I also read that correctly? Yeah. And so we've already sort of established that the level of risk that you're taking on with these customers is significantly lower than the risk you're taking on with your insured books of business. The sense that for each contract period, they're charged for the risk that that contract brings. Yeah. I'm just trying to get a sense of, you know, 14 million, we've already, you know, you said the 13 million was a lot to lose. And so 14 million would also be a lot to lose. The answer here it refers to, you know, inadequate revenue sources on jumbo ASO contracts beyond base admin fees to cover projected costs as one reason for the loss. Another being multi-year rate guarantees necessary to retain these key customers. And then you conclude here with this book of business is currently in a lost position that management is taking steps to resolve over time. That's at the end of the second to last paragraph. Yeah. Okay. So my question is, you know, these ASO customers, it sounds like you feel you need to give them multi-year rate guarantees to retain them. They have some clout to negotiate with you such that management is willing to take time to resolve the losses in this market, right? Yeah, they're a question in there. Sorry. Yeah. I mean, I just, you know, I'm getting back to the end, but the individual and small group markets, some of the most vulnerable for monitors, they have to pay 3% of their claims for CTR. That's all I had to ask. Thank you very much, Ms. Green. Okay, we'll move to board questions starting with board member lunch. Thank you. I also have a couple of questions about RBC. So, could you quantify either the, the, I'm going to use profit and quote. I think you understand what I mean or loss from your Medicare Advantage business. Can you quantify, depending on metric you're interested in, we can certainly follow up with some further details, but the, excuse me, the Medicare Advantage business has recently, relatively recently been launched. It's in its third year of enrollment. And so it's currently losing and the business case to get into the Medicare Advantage market segment and serve those for monitors was that it would lose money in the first four years. And then it would break even and as it gains scale, it would generate and the plan is and the target is that it would generate a similar 3% CTR on that insured risk. We, we had startup losses in the year that we launched and then we've had operating losses in the last two years as that that business grows and gains scale. And again, Blue Cross is serving multiple markets. So the, the technology and processes and business operations that's required to serve the Medicare Advantage market adds cost to the business. And it isn't until that book of business achieved certain scale that it would, excuse me, begin to contribute to reserves in the way that we would expect it to on a regular basis. And I would link that back to my comments earlier about the need to have member reserves and RBC in a place where as we're entering new markets and growing membership that we're able to able to support that kind of business growth. Sure. And so do you know what your most recent losses were from 2022. I'm happy to have you follow up. Yeah, happy to have you follow up. Okay, as you may recall, one of the designs of our Medicare Advantage launch included a risk share with a partner. Yes, we only, we only experienced half of whatever their gains and losses are, but we'll, we'll provide that information to you from the 2022 period. Thank you. No, not just one second. I wanted to talk a little bit about if I'm the right place here. Okay, it's exhibit 12 and attached to the responses to the questions in exhibit 12. There is an exhibit one, which is on page 15. Okay, great. So this exhibit details the assumptions that were used to create the RBC model and have an understanding of what your range would be for 2023 and 2024 is that correct. And so in this exhibit you've outlined membership assumptions, right, and claims assumptions. And then there are some additional assumptions related to administrative expenses, investment returns and pension. Is that right? I'm sorry, I didn't catch that. Yes. Did you not? Oh, sorry. Cassidy, did you get what you needed? Just the answer again. Thank you. So Ruth, if you could just repeat your answer, I think that's what Cassidy missed. Yeah, that's correct. That includes the assumption other categories such as administrative expenses, investment returns and pension. Yes. Sorry, I'm slipping among exhibits, so I just need one minute to find the other information I was looking for. And so in exhibit 13, there are, in addition to some of the information that Ms. Rebecca spoke with you about, there is also some information related to the pension liabilities on page 2 to 3. Is that correct? Okay. And could we, in past years, we've spent quite a bit of time on pension, the pension liability, which, and so I just wanted to get your sort of general statement about how the pension liability is currently influencing the RBC level. In the exhibit 13, pension liability, the way the pension accounting works, it's valued at every year end and the accounting gain or loss funded or underfunded, whichever nomenclature you prefer, is recorded in our balance sheet. And so in 2022, as we outlined, I think in question, the answer to question 3, it shows up in the change in surplus in the annual statement based on the balance sheet valuation of the pension. And that happens every year. And we had an increase in surplus in 2022 as a result of the pension valuation improving, mainly due to the recoveries from the Allianz litigation settlement. Thanks. And in, hold on just one more minute. Okay, so now I'm going to turn to exhibit 19, which is your pre-filed testimony. And let's go to page 6 and let me know when you're there. Exhibit 19, page 6. Okay, so in the footnote on that page, and I'm using the page in red, not the page. So it's page 5 of 11 or page 6 in the red numbering, just to make sure we're in the same place. In your footnote, you've highlighted several items that influenced RBC levels. In prior years, you've been able to produce for us sort of a quantification of the different factors that were moving RBC up and down just so that we could have a, let's say, a simpler understanding of the impacts from those items. I did not see that in the materials this year. Is that something that you'd be able to provide? Something that shows what the changes in RBC were from the end of 2021 to the end of 2022, and off the top of my head I don't recall if that was in previous years materials. The changes in the RBC going forward is the piece that we've transitioned over to the statistical modeling exercise, and it's less relevant to show the changes. But if it would be helpful, I can certainly provide something that shows you the changes that led to the 434 at the end of 2022. That would be helpful to me to understand how we kind of got to where we are today. Okay, I also had a couple of questions related to the affiliation with the Blue Cross plan of Michigan, and I certainly understand that some of these questions may require confidential answers. But I'm going to go ahead and ask in case it is public information. And then if not, please just indicate and we can take that up in executive session. Okay, so in your testimony related to the affiliation, it sounds like one of the major benefits of the affiliation is access to improved technology. Is that an accurate characterization? That's true. And what types of technology would that potentially include? Yeah, it actually includes all types of technology ranging from just more cost effective forcing of the basics, whether that's infrastructure, network and cybersecurity protections, things like that. That would be one end of the spectrum. We have to do a lot of the same things that larger health plans have to do. And we tend to have to pay the same cost, but we're such a small health insurance plan that those six costs become very, very on a relative basis, much more costly for us than a large plan. So the basics is a big piece of it. We also would expect to have an opportunity to not have to build some of the new things. I'll just pick an example. We for years have been wanting to invest more in our ability to manage and control and use our data and analytics. And that's a very expensive technological proposition and requires oftentimes even expertise that we would have to go out and acquire in the market. So there's some, I'll call it not so cutting edge technologies that we're just behind being able to sort of meet the minimum threshold on. And so the expectation would be to be able to partner with Michigan to utilize their capabilities instead of having to build them from scratch ourselves. So that's another piece of it. And then I guess the third bucket I would put in the technology category would be just as new things are being rolled out and tried on. That's also a very expensive proposition because of the risk of things not working out. And a lot of times it's easier for us to look and see what works and then adapt it or adopt it in our business rather than trying it out. So that sort of other end of the spectrum of trying on new things should be more affordable for us. We've avoided doing some of that in the past because we just can't afford to charge our marketplace for that. Another good example on the middle bucket is a real familiar example and that would be a mobile app from several years now. We've wanted to have a mobile app that would help our members as they're navigating the healthcare system. And that is a very expensive thing to do and do right. And that's a good example of something that we don't have to build from scratch. We can lean on the Michigan organization who's got a mobile app. It's a well rated mobile app and they've been doing it for many years. So it would be something that we could adopt relatively cost effectively. Thank you. So would you anticipate, for example, using their claims processing software? Well, the good news is the claims processing software that they use is the same software that we use. So that is a nice side benefit of partnering with Michigan. They use NASCO. We implemented NASCO a few years ago. So we're excited to be able to take what they've been able to do with the claims system. They've been able to invest in some enhancements and coding around the core systems that we, as just a quote, average customer of NASCO, we didn't have the add-ons that they would have built themselves. So that is another opportunity for us. Thank you. So would you overall, and I understand certainly that you're not anticipating that the timings for the affiliation plus implementation of new IT would hit in 2024. Is that a fair characterization from your pre-filed testimony? In the pre-filed testimony that switching over to some of these new things will take some time and there's a planning process that has to happen to get the order. Okay. And do you have an order of magnitude for the timeline? Like, for example, would you anticipate rolling out different components of the IT upgrades? I'll call them over two years, five years, 10 years. Yeah. I guess I could characterize that the time frames that both parties are thinking about when we think about realizing value is sort of a three-year horizon. It certainly will extend well beyond three years, but we recognize that there's value in making sure that we enter into the partnership and harvest the value as quickly as we can. And so we're thinking about that in sort of a three-year time frame. Broadly speaking, the first year is planning and setting up the change over and then in years two and three there would be some changes that would allow us access to some of these capabilities in a new way. Okay. I think that's all I have. Thank you. Board Member Holmes. Yeah. Thank you. Lots of questions answered as well already for me. I wonder, I just want to make a question around, or maybe it's a clarifying and perhaps adding to what Member Lange had asked about the RBC follow-up. Will you be able to decompose for us the declines in RBC, maybe over the last, more than just the last year, I mean the last three years, into the relative contributions to RBC of what I'm thinking about these component parts. By this, I mean investment gains and losses as one component, Medicare Advantage as a component, large group, small group, individual ASO, just to try and understand what are the drivers overall and their relative impacts. Is that what you're planning to provide in follow-up or is it slightly different? Yeah, so a question I was thinking of a one-year view, but what I'm hearing, Jessica, from your perspective, it would be helpful to understand a multiple year view. I just mentioned earlier that the Medicare Advantage investment has been over a number of years. Our growth, when you look at, we had a period of membership decline which would have buoyed RBC and now in a period where we have growth that takes a while to digest so that a multi-year view could be useful there. The investment gains and losses is a really good example. I can speak to that. That was a big source of loss in 2022 and I'll try and be brief, but with member reserves, of course, we invest those reserves in assets and we broadly allocate among asset classes to both protect the reserves but also have a return. And so historically we've had an allocation of 20% of the portfolio to equities as a way to grow surplus. And 2022 was the worst year in equities since 2008 and we lost, like a lot of folks did, a lot on the equity market. But if you look at what equities have contributed to our member reserves for the whole time that we've been invested in equities, it's still a net positive. I've done the numbers out. I think we lost 18 million last year but net positive for the whole time of being invested in equities even with that loss were still a plus, close to 9 million. So the long-term strategy for investing in equities is to help grow surplus but at the same time in any given year you're going to have a downturn. So I can certainly produce that information. That information is right in the annual statement each year and I've pulled an exhibit that just holds the last six or eight years worth of that picture that I can certainly pull together and share if that would be helpful. No, that would be great. It's just helpful to understand what are the component parts and what's driving it. It's clear that it's been declining but to understand, we only see part of the business here and just try and understand your idea of how it breaks down year over year and the contributing factors. I think it would just be helpful. Yeah. Let me just see. I think one of the questions I had was actually on exhibit one page nine in the second to last paragraph. Mention says Blue Cross Vermont has invested in Civic RX, a non-profit enterprise that will bring to market lower cost options for prescription drugs. Well its impact on pharmacy spend is not expected to be significant in 2024 and it goes on to say, so I guess my question was one was how much did you, was it a direct investment? Did you mean that literally or did you mean figuratively invest in? And if it's literally I'm wondering what the investment dollar amount was and then when you think it will actually return on that investment in terms of having significant savings on pharmacy spend? Yes, this is a really good example of one of the things that having a solid foundation of member reserves allows us to invest in things like this that does require and it was a literal investment and I've added just now to my list of things to dig out for you. In the comparison of the things we've been talking about it was relatively small compared to say Medicare Advantage or some of the other things we've been talking about. I'll dig that out and the returns on that were very far out because it actually involves setting up facilities to produce generic equivalents for drugs that don't have competition so it had a very long development tail. It was an investment that was made jointly with a number of blue plans so that the Vermont investment was quite modest. Do you recall or maybe when you follow up just when the long tail was supposed to turn positive or when you're expecting those returns and I recognize yeah it's going to take some time to build those facilities and get that production going. But I just would be curious as to when the expectation was that at the time of the investment anyway or what you know now when we should start to see the benefits of that. Yeah, I think at the time of the investment it was at least a couple of years out and then for one reason or another I think it slipped out another year or so but we'll follow up with that. Okay, that'd be great. Our team might also know that but in the interest of not backtracking we'll just gather up the information and include it in a written response. Yeah follow up is great. And then I'm just wondering with respect to this it sounds like there's some potentially wonderful opportunities through the affiliation with Michigan. I'm just wanting to know it's hard to quantify the administrative cost savings and the opportunities or the investments that you will not have to make in the future that you can build on theirs. I guess I'm just wondering, were there any estimates of the cost savings that other Blue Cross Blue Shield license companies realize from their partnerships with Michigan that might be a good indicator of what Vermont might see in the future. And what are the cost savings that other Blue Plans experienced in partnering with Michigan. Yeah, if there was any data on that just basically you know you're not the first to partner with them so I'm just wondering if there's any indicators from other partnerships previous partnerships of potential cost savings that they realize or actual cost savings that they realize through the affiliation. Not not submitted as part of this filing that there are longer term projections of what we would expect in terms of avoided costs or things that we're now able to do versus will then be able to do that we can't do today. Some of that work was grounded in some comparisons between I don't know if you're familiar with the Sherlock survey which compares Blue Plans to Blue Plans and looks at where their per member per month administrative costs are relative to the survey participants. And so we were able to compare where our costs are compared to where the Michigan costs are and so we have a pretty good idea where the efficiencies and where we won't have to invest in X as a developing a mobile app will just be able to pay for that mobile app on a go forward basis. So that's that's where our savings could come from. So I'll see if there's anything that I can find that would be responsive to your question but it's. We know anything with other Blue Plans but I they might be in different different areas that are sort of unique to that partnership that's different than than our proposed affiliation. Yeah. I mean anything that you think that would be helpful for the board to understand what the potential cost savings might be in the timeline for those cost savings recognizing I know you've testified and it's in the materials that there are no expected 2024 costs savings but you know what those cost savings might be and when they might hit would be really helpful to understand. And if I may I'll just emphasize that one of the benefits of the affiliation has to do with cost effectively accessing programs that today we won't buy because we can't afford them. So it comes up from time to time in the integrated health care management area under Dr. Weigel where there's this really cool program but it's pretty costly to add that to our administrative costs. So we we don't do it. So so a lot of the value will come from being able to do things that we previously found it prohibited but prohibitively expensive to venture into. Right. Just building on that. This is my last question actually but and I asked it of MVP the other day. But this is you know this AI technology is is coming out and there are studies that was you know one by Sonny and a bunch of other colleagues that estimate that adoption of what's already available in terms of AI technology could reduce total health care spending 5 to 10 percent in the next few years. Some of it coming from hospitals and physicians groups but some of it coming actually from insurance companies and estimates there are like saving 7 to 10 percent of total costs from better efficiencies and claims management and member services better waste and fraud detection efficiencies to determine a whole list of areas where this AI could potentially really improve efficiencies and I'm just wondering if Blue Cross Blue Shield is thinking about this if they're exploring AI technology to reduce these kinds of costs and if there's any projections or have you even factored in any of these potential efficiencies in the coming year in your premiums for this year or plans for future years. Yeah thanks Jessica. The AI is a very good example of one of the things that health insurance plan struggles with because like you said the potential for that technology everyone saying it's very very high and has a lot of potential. But the cost to implement it and I'll just add that in order to implement AI sort of presumes that you have a strong data foundation because the AI builds off of the data that you use in your business. And so you have to not only invest in the AI technology but you have to invest in the data technology and so that sort of opportunity up to this point really would be for all practical purposes beyond our grasp. I was involved just anecdotally I was involved in an internal review of an AI piece of technology for call center capabilities and it was very very expensive and we deferred it because it's just we don't have the data foundation that would connect into it. So you know I appreciate you bringing this up as sort of like the robotics process automation of two or three or five years ago RPA as it gets adopted and used in the industry we're able to get around to using some of that. But it does take an investment and oftentimes it can be at least in the early days especially it can be quite expensive. And also we have to be sure that it's going to work for our marketplace and our customers because we like to think that we're someone very wise told me that we wouldn't do AI for AI sake. We have to make sure we're solving a business problem with it and making sure we know which business problem that that particular technology can solve is an important part of the planning stuff. Great. Well those are my questions and I'm you know it'll be interesting to see where we are a year from now in terms of what's evolved with AI and what's affordable and what the opportunities are for administrative cost savings. Well thank you very much. Appreciate it. We're going to be a moment. Hi. Thanks for taking a few more questions. Just to sort of piggyback on Jess Holmes's question regarding technologies and and and the affiliation with Michigan when you prepare thoughts on for us on ROI on various technological instruments if you could think about them from the board's perspective in the sense that well you know Blue Cross Blue Shield is a company may find significant return in an app if that leads to users more likely staying with Blue Cross Blue Shield but if it leads to expenses where we're not having reduction in health care expenditures you know from our standpoint that's not necessarily a return. So just a slight slight difference in perspective that I would ask you to be mindful of for us to sort of understand where that's coming from. I have some more questions on the RBC. You said you can't publicly predict the future of RBC but the last RBC that we have is from the end of December and as you mentioned last year's equity markets were down quite a bit. But this year's equity markets have been up quite a bit. Do you have a more recent RBC say from the beginning of this month or the end of last month that you could share with us. Yeah we can talk about that in the executive session where we typically don't report interim non year end RBC. Part of the reason for that is that there's calculations that go into a complete RBC calculation at the end of the year including the premium deficiency reserve the PBR that Mr. Becker mentioned earlier as well as the pension valuation. But we do in executive session we do take the 434 at the end of 1231 2022 and we look at our financial forecast and then we do some statistical modeling around that financial forecast to give a sense of what we think the trajectory of RBC looks like. And I can certainly speak to an executive session where equity markets are and where your data results are relative to the RBC. But we tend to focus on the projection of a year end number both at the end of 2023 and the end of 2024 with a range around that because as you know equity markets change daily. So we are we are careful to not anchor on any one number through the year. Yeah the I don't want to pretend to predict equity markets but it was pretty pretty far down in the around December of 2022 and just a quick check of the S&P 500 so far since then that's up 18%. So that could significantly change the amount that would be needed for reserves to to reach your goal RBC so that would be very helpful information to get an executive session please. The other question that I have is on exhibit 17 on the first page. Sorry I just have to get there real quick. You had testified earlier that the DFR said that if if the rate was adjusted downward without actual supported without some of those actually supported it it will I think is the word use further road your RBC. Could you read that sentence there. It's the second to last sentence on this page. Sure. It starts with the company's RBC ratio. Yeah. Yeah. The company's RBC ratio is below its targeted range as of December 31 2022 and any downward adjustments to the filing rate components that are not actually supported would likely further a road. Should a Vermont surplus and RBC ratio. Okay. I just want to clarify that I think the DFR use the term would likely as opposed to will and since we're being very specific with our statistically related terminology I thought that would be as important to point out. And the other question I have for you and this is this question is a risk of being long winded answer. And I if I think my colleagues would prefer it if we try not to. But as I guess that the question I have for you is what is the role of a health insurance company in reducing costs for containing costs. What are the levers that you have to do that. You mean overall cost of care. Or overall cost of care and insurance companies in general maybe not specifically Blue Cross Blue Shield. Yeah well the the I guess I'd answer the role question in two ways. One is the role of the insurance company is to be the the fine answer if you will for the community rated participants who buy coverage from us. So that that's what Martin was describing earlier today about our role is to provide for an estimate as to what the premiums will be required to cover all the costs in 2024. And then we'll we'll pay the providers. So we're the finance or that if you will the role of insurance company in terms of reducing costs. And you know this is this is such a multifaceted area of our work in the sense that you know we're we support and Dr. Weigel can speak to what I used to know as the triple aim. But I think they've added a few things to the triple aim is now maybe the quadruple aim or even five aspects. Making sure that people have the right care in the right place at the right time and for the right cost.  We are constantly coming at making sure that people are getting the care they need but also working with providers to make sure that there isn't cost that shouldn't be in the system. But it is a there's so many different aspects to that work. Some of it is the the value based reimbursement programs that I know. The board member lunch will ask Dr. Weigel about that you know the more we can try and encourage providers to look at the population health instead of the fee for service payments. That will be an aspect of cost spending the cost care. But the practicalities that all of those present in operating in the health care system is that oftentimes the insurer is held up as you know the barrier in creating paperwork for providers because of prior authorization requirements. But at the same time we know that that is an area that we need to have in place in order to make sure that members are getting the right care in the right venue. What similarly if we push a provider in our payment integrity programs and we have an edit that says to a provider you know we no longer pay for this claim in this circumstance because you have a different service that was paid or whatever that edit is. We quite often get a lot of pushback from providers and they will say well OK I'll I'll code it this way because I know that that'll get through the edit. So it's like a constant you know when you think about our role some of it is just looking at the whole landscape and understanding where things are working where they're not working and working with the health care system participants and stakeholders to see if we can improve the whole. I don't know if that gets your question. Some to some degree there was an editorial written by one of one of the folks at Blue Cross Blue Shield about lower cost providers and trying to utilize lower cost providers. I guess my question to is getting at the concept of negotiation and what it how the influence of negotiating prices and having the role of the insurer in the negotiation role as opposed to an individual. And there are certain providers that seem to be lower cost. And is that a reflection of Blue Cross Blue Shield's ability to have stronger leverage in negotiating with them. Well there are certainly circumstances where we do have leverage but we've talked to the board off and on over the years about the way Vermont provider geography and consolidation works. There's some important places where we don't have a lot of negotiation leverage. The fact of the matter is if we if we I'll use the expression if we go to the mat. So to speak with a hospital over a raid sort of end up in the situation where United and UVM Health Network were in where suddenly there's members impacted by having to go out of network. And the irony is that in Vermont with the network adequacy rules we would still have to send many of our members to that hospital that we went to the mat with and we'd end up paying more because we would be out of network at that point. So it is a very complicated environment in Vermont when it comes to exerting influence in the negotiation realm. So I think implicit in that would you agree that implicit in that is that there are certain providers that don't have the market don't have the negotiation leverage with Blue Cross Blue Shield. And thus Blue Cross Blue Shield can negotiate lower rates with. There are some providers. Yeah. We also have a very well worn dialogue around in these rate hearings in fact around the providers viewing the approved budget as sort of that's their budget. So there is no negotiation and we've heard loudly and clearly from board members three mountain care board members that that was intended to be a ceiling. It's not intended to be you know the rate and what we've I think in one of the binder documents we shared the results of us sending out our negotiations letters last year after the budgets were approved. And I think there was all but one hospital did not move an inch. So you know this is this is something that is familiar territory to all of us. Does Blue Cross Blue Shield track in any way. Let me back up. We hear a fair amount of public comment about concern of smaller providers going out of business because of reimbursements are so low. Does Blue Cross Blue Shield are you aware of that public comment or those comments. Yes. Yes we are. Yes. And does Blue Cross Blue Shield sort of monitor that the health of the smaller independent and it appears on at least your cost tool lower cost providers their their business health. Yeah. This is probably an area that Dr. Whywood can speak more specifically to. But there are our provider contracting people and provider relations team are very close to all of the Vermont providers. And so there's a lot of discussions about what works or what doesn't work when it comes to helping providers stay in existence. We have an exciting program that I'm sure Dr. Whywood will talk more about the big value based care program that has been great for some providers but it's a very small small population of providers involved in that program. But we're always looking for for programs. We we in spite of not having a contract with one care of Vermont for 2023 we are continuing to pay the community providers that were attributed to one care. The payments as a transitionary measure. So we're very aware of the circumstances of the various different providers. Great. And I'm looking forward to speaking more with Dr. I guess the last question I have for you is so if a lower cost provider was to go out of business in area and patients were to seek care at the higher cost provider how would that impact total cost. Exactly as you imply there there is motivation to keep providers who can do quality work for the lowest cost and if in fact a provider does go out of business and members have to go elsewhere for higher costs. Our premiums will feel the impact of that. Well thanks and thanks for all your time today. Thank you. Your foster. Yeah, thank you. I have a few questions miss green. Jumping off of Dr. Merman's questions. When you're allocating this rate increase across your provider network. Do you consider the cost of the facilities and making those determinations that we don't allocate the increase across the providers or across any of the pieces in the way that I'm understanding your question. What we do is look at the various contracting circumstances of the provider network. And as Martin indicated we work with our provider contracting folks to understand what the future rate changes will look like. And then we build that up into what we think the premiums will be required for 2024 and then calculate the increase. So if in the end when we get to 2024 if provider increases our difference and what we assumed in the rate filing that is that just falls out of all of the assumptions that we said earlier are just bad assumptions. But I feel like I'm not getting at the core of your question about choices we might be making in the context of what I've just shared is there. Can I ask if you could clarify a little bit more what you're asking. Yeah, I think you started touching on it but when you're coming up with the rate you're anticipating provider increases across your network. And so that has hospitals it has independence it has behavioral health has all kinds of providers in it and in in trying to estimate those provider increases across the provider type. Do you consider. What do you consider. And I think if I can fast forward my understanding is for hospitals that GMCB regulates, you take whatever the number is that you think the Green Mountain care whatever they requested, and then perhaps a discount off of that based on historical Green Mountain care board cuts. And what I'm trying to understand is, what do you do for everyone else. The hospitals go through the budget process and they get their budgets approved. It's actually after that process that then they come back and say okay well that we got approved. That's why the commercial rate increases. So this is what we propose. And then as I said we pushed back but very seldom do they move off of that. But the hospitals are made up of, you know, the inpatient the outpatient and their provider practices. And they will, they will work with our provider reimbursement folks to get all of the rates for their, their services, sort of in a mix that supports an overall commercial rate and increase of say 12%. Just to pick a number. So that process, when we're looking at what the community providers increases should be, it's our own provider contracting folks who are looking at, you know, which services are maybe outliers or maybe a Medicare reimbursement level has moved and we need to keep pace with that. So we will, we will look at where the, the most, you know, the highest priority of where all those pain points are. And then we will, we will allocate, you know, within an overall budget of sometimes it's 3%, sometimes it's 5%. But it's, it's separate from the hospitals. There's, we find that if we were to try and reduce the practice rates at a hospital, that doesn't really fund anything in the community provider world for us because they will, they will expect to have that made up elsewhere in the hospital budget. So the hospital budgets are very hard to move in total. I don't know if that, again, trying to be responsive to your question. I think I think that was, that was helpful. So it sounds like there's two different sort of frameworks within which you negotiate. One is the Green Mountain Care Board rates with the hospitals. And then the other is doing a review of, like you said, if there's outliers or if there's Medicare reimbursement changes or particular financial need at non hospitals. But those sound like two sort of distinct sort of processes. Is that fair? Yeah, provider services that are outside the hospital. So in terms of trying to go to affordability or making it more affordable, I guess it should say, do you think it would be better if there were, if rates were allocated more towards lower cost facilities? When Blue Cross is deciding, and I understand the market dynamics and the negotiation leverage, I get all that. But from a theoretical perspective or a policy perspective, if we're trying to drive down costs and keep it affordable. Do you think it would be more advantageous to be able to allocate the rate increases that the care board provides to Blue Cross? If it were in consideration of lower cost options, I provide more financial support or higher rate increases to more cost effective facilities. That's an interesting concept. We do have programs and analysis that we do on a regular basis that looks at where the sort of high value providers are because it'll be high quality for a lower cost and so on. But the idea of putting words into your mouth at some sort of variable rate change that's driven by, you know, where care is directed. That's an interesting concept, but as I said here, I'm struggling to see how it would fit in today's filing process, but certainly willing to talk about it. I'll ask you a few follow-up questions on affordability. I thought Ms. Lemieux's testimony was very helpful in understanding Blue Cross's process. And I'll preface these questions by saying I acknowledge that a lot of the, if people consider it unaffordable and a lot of people do, it's because of the inputs and I get that. In terms of when Blue Cross prepares its rate to submit to the board, is there any evaluation of affordability in determining what the rate should be that you request? I appreciate the opportunity to participate in the conversation about affordability and in my direct testimony I indicated that the non-actuarial criteria of affordability, access, and quality are all important, are in some ways in tension with one another in the sense that the more you increase access and quality and add benefits, which is what we call access, or is a form of access, then the price will go up. In the process of submitting rates, and this is, I think, consistent with what Martin was indicating earlier this morning, is that the process of submitting rates is all about making sure that the premiums are funded for 2024 given the regulatory framework and the products that are being offered. So when we think about affordability as Blue Cross who shielded from, we're thinking of it more in the broader sense of what are the policies and regulatory framework that brings these policies to Vermonters. But when we're developing the rate, we have to make sure, from a solvency point of view, that the rate is adequate. So I'm drawing a distinction between thinking about affordability as we develop a rate versus thinking about affordability as we support our members in many ways to access the programs and policies that are there because that's in tension with access and quality. So really, you can't have high affordability, high quality, and high access all the time. There's no equation that gets you all of that. Given the access and the quality that we're being asked to supply through the ACA market for individual and small groups, the rate development process is determining what are the premium rates that are required. So again, I hope I haven't confused, but we don't think about affordability in the rate development process per se, but we're always thinking about affordability in the grand scheme of products that can be offered to Vermonters. A good example is the Medicare Advantage segment that we worked hard to enter that our Medicare Supplement products are very good quality, great products. A lot of people buy them, but they are quite expensive. So the Medicare Advantage option is a lower cost option, has a different way of going to market, but nonetheless will meet the needs of many Vermonters. So it was important for us to have those choices and those options out there for our Vermont seniors. So part of our thinking around affordability has to do with making sure that our system in total is delivering options that people can find a solution that fits them. And the ACA is designed for assuming, especially in particular in the individual market, is designed assuming that there will be subsidies. So that's such an important part of understanding how to think about affordability. So if we just reduce premium rates to save in the name of affordability, all of the subsidized members, all that will do is reduce the amount of federal subsidies that come through. It does not actually change the cost of care or anything like that. So it's important to think about affordability in the context of the regulatory framework. So I appreciate all of that, and I think that's all fair. And I'm glad you shared that. My question is very specific, though, and I just want to understand this answer. Did Blue Cross and Blue Shield make any adjustment in their rate due to people's ability to pay for this premium? Do the subsidies take to the extent that a regulatory framework is designed for the lower and modest income people to pay very, very little monthly premium for what is, by many standards, a very high quality coverage? So the income aspect is wrapped up in how the subsidies work. And this might be a broader conversation that's not particularly keyed in on this, but I want to share a reflection that I had, if you don't mind, which is affordability is a component of this process and we have to evaluate and consider it. And I do think it's important that these plans be affordable. I think that matters. But Blue Cross doesn't really have many levers to go to other than some of the things you were speaking about. You know, we can make sure people know about the subsidies. We can drive and direct people to the right product for their needs. We can lower our admin costs. And it seems to me like Blue Cross is doing a pretty effective job at those and putting in a pretty good effort on those, which is great and should be commended. But then you have the inputs, which are hospital costs, pharma costs, non-hospital costs. And if those aren't reviewed in light of affordability, it sounds like your testimony is there's not much opportunity for Blue Cross, which strikes me as potentially have some level of truth to it. Is that fair? I think that is fair. And I think you're describing it as input, you know, 90% of the premium goes directly to all of those inputs and those costs. So anytime we can participate in whatever efforts might be out there to just make healthcare less expensive. I mean, healthcare is very expensive until we can figure out a way to help. I'll just throw out a random example, but if we could collectively in Vermont find a way to help the hospitals not have to rely so heavily on all these travel resources, I speculate that that's a source of, you know, the hospitals are much more well positioned to tackle some of those questions because, like Martine said, I'm not an expert in hospital accounting or budgets. I look at their submissions to the board from time to time to try and understand more about what's there, but you know, anything that we can do that would add value in that process we're willing to. So if we were to reduce Blue Cross's rate, but the inputs didn't change and there were no meaningful avenues on the admin side or efficiency side at Blue Cross, that's when we get into the solvency issue. I'm just being mindful of time. I want to summarize what I thought some of the other board members I think is member Holmes and Merman were going to on the CTR things I think the concern and it's some we don't know this to be the case but the concern sounds like that there's all these other things that can impact CTR and your RBC your RBC. And we don't want small and individual QHP plan members to be paying to make up for problems that are causing RBC to go down that aren't attributed to that those plans right so if there's investment losses or there's other products that you're offering that are dragging down RBC. We don't want to see that made up for over here right so I know this was asked for I think by the other members but information showing us the impact downward that these plans have had on RBC vis-a-vis the others would be relevant right we don't we just want to be careful that these aren't disproportionately making up for losses in the pension that were due to something else or disproportionately and I'm sure you can understand that. So information on that would be great. Yeah and if I may reframing of if our insured books of business were consistently realizing fully funded premium. Then all of the other things that are affecting RBC will have to be risk managed as well so the way I think about it is that the appropriately funded premiums and a contribution to maintain reserve. If we're consistently doing that as CFR's opinion says so well then that's that's the core solvency driver and then the other market changes I mentioned that equities are invested in because over the long haul they will help us grow surplus in one year. It's a detriment but that that will not in a in a world where premiums are fully funded the equity market volatility in RBC is something that we would certainly manage through in any given year. So as I said in my direct testimony this this market segment has not produced a minimum level of CTR in recent years and it really is exhibit one. I forget which page it's on but it's the CTR on page six on exhibit one shows that for the nine years one two three the nine years listed there it's lost point seven or nine million dollars. So for nine years we've foregone any contribution to reserve on average. And so that is that is a fundamental gap in maintaining RBC no matter what else is happening to RBC. Right. Any other ways as jotting some down where RBC could be improved without coming from rate increases would be directing care ensuring care is being provided at the most cost effective locations avoiding market losses to the extent possible. Reducing expenses which I know here sounds like it's not as much of a available bucket. And ensuring non duplication of tests and procedures things like that which I'm sure all on your radar but my point is just that rate is not the only way to improve RBC and I know you're aware of that but we want to make sure that we don't harm rates as to the extent we can. Keep them affordable. It's great. Let me just check my notes real quick. Oh two other questions on the call pay parity. Can you give us a general sense of whether or not hospitals in Vermont receive a larger rate increase than the other hospitals you contract with in New Hampshire and New York. Dr. Weigel to confirm this that I think historically at least in the exhibits that we produce here for this refiling and the previous great filings that are our success rate at negotiating a lower trend over time with the New Hampshire hospital is lower than what we've seen in the Vermont. I don't know which New York hospitals if any we directly contract with but that is something that either Dr. Weigel can answer or if he can answer we can follow up separately. And then relatedly are the rate increases that the Vermont hospitals receive generally larger than the non hospital medical providers Blue Cross contracts with within Vermont. And could you read the last sentence on page three please. Beginning with any downward. Any downward adjustments to the filings rate components that are not actually supported however will reduce Blue Cross the show the Vermont surplus and negatively impacted policy. And do you agree with that. I do. And could we go back now to page the table on page six of exhibit one. I think you testified earlier that what this table shows is that over the past over these nine years instead of any contributions to reserves from the individual small group markets that there has been a nine point four million loss for Blue Cross. Right. Do you have any sense even roughly of what total contribution to reserve for those nine years would have been had the rates been funded to a one point five percent. I do. If you look at the filed or target contribution to reserve and if you would multiply that by the premium in each year each year nine years is on this table we would have expected somewhere around five million dollars so that the cumulative contribution to maintain reserves from those nine years would be in the ballpark of forty five million dollars. And that's contrasted with. In fact a lot. So it's like fifty five million dollars short. I have nothing further during the public session. Thank you Mr. Mr. Becker anything else. No I don't have anything else. Hearing officer rubber. And I neglected. Well I don't know if I neglected. I forgot. I don't remember. Did I miss Belville. Did you have any questions or Miss Green. I do not. Thank you. Okay. Thank you Miss Green. We will hear from you in an executive session later this afternoon. But at this point I think we can move on to. Our next witness which is Jesse Lucier from the Department of Financial Regulation. Jesse are you with us. I am. Can you hear me. Yes. Great. So could you please raise your right hand so I can swear you in. Do you solemnly swear that the evidence you shall give relative to the cause now under consideration shall be the whole truth and nothing but the truth to help you God. I do. Okay please go ahead. All right. My name is Jesse Lucier. My title is Administrative Insurance Examiner. I work for the Department of Financial Regulation. As an examiner I'm involved in all aspects of analysis and examination of insurance company. In the interest of time I'll just I know several people have already read off of the solvency letter. So I'll just read the final paragraph to try to keep it short. So this is Exhibit 17. Page three under the final paragraph the final paragraph impact on solvency of proposed rate. And this is the mall group filing. And it's filing BC BSVT has requested that the board approve an overall average rate increase of 14.5%. BFR does not expect the proposed rate as filed will have a significant impact on our overall solvency assessment of BC BSVT. There will be downward adjustments to the filings rate components that are not actually supported however will reduce BC BSVT surplus and negatively impact its solvency. The small group I'm sorry the individual group reads the same except the average rate increases 15.5%. On earlier when L&E was was discussing the rates and the various components. My understanding is that there are a few adjustments that L&E has recommended that Blue Cross has agreed and that will increase the rate to around 17 or 18%. Similar to previous testimonies. Assuming those rates are actuarially supported. The increase in rates will not change the department opinion. I think that's it for now I'm sure there'll be a couple questions. So I will pass it back to Michael. Thank you Jesse. Any questions from Blue Cross. Yes I think that's probably this one question.  Yes. At page three of exhibit 17. Yep. The second paragraph. Can you read the first sentence of the second paragraph please? I'm sorry which paragraph? The second paragraph. The analysis. DFR consider. Yes that's right. Read that first sentence. If you could please. DFR considers insurer solvency to be the most fundamental aspect of consumer protection. Playing a little bit more about what you mean by that. Sure. I mean to really oversimplify it. Insurance companies need money to pay policy holders. And if a insurance company goes insolvent then they won't have the necessary funds or capacity to pay policy holders. I have nothing further at this time. Thank you. Thanks for your time today. Mr. Becker. Yes I have just a couple of quick questions. Hi Mr. Lucia nice to meet you. Hello nice to meet you. So you have exhibit 17 available before you. Yeah. Yep. And so on page two of exhibit 17 you show two graphs. The top graph there are green lines and red lines. And what do those represent? Green and red lines represent the top and bottom of the targeted RBC range for Blue Cross. Okay. And so that was the range that was approved in 2019 correct. Correct. And it says here in a footnote that it went into effect early in 2019. The department in early yeah I think that's when the process began. Okay. I mean it's just it may be a minor thing but I mean so in 2018 the the range wasn't applicable or it was lower. So it's not fully accurate to show that they were so far out of range in 2018. Is that correct. I would say that's correct. Yeah there was there was a targeted range prior to the the department issuing the order but there was no formalized documentation in place. Would you trust my colleague Eric Schulteis who just messaged me that it was 500 to 700 in 2018. That sounds right. Okay. All right. So it was just slightly out of range in 2018. Yep. Okay. So you've already read your the last concluding paragraph on page three I think this point has already been made so I'm just going to try to very quickly make it again. In the third paragraph under analysis of solvency. You say the rates are developed by predicting future behavior. Therefore it's impossible to predict with certainty the correct rate to charge in a given year that will be both adequate and not excessive. Is that correct. Correct. It's impossible to predict. Then you end with a prediction. So I mean we can't really say if cutting these rates will negatively impact Blue Cross's surplus in solvency. Can we I think we can. You essentially if you're asking. Let me phrase it this way. If a company receives a 10% increase they'll receive X amount of dollars. If they receive a 9% increase they'll receive Y amount of dollars and Y will be less than X. But we don't actually know what allowed charges will be for 2024. Do we? No. No. But they I guess in essence a rate cut would mean less money going to Blue Cross. If the board determines that there are reasonable places to cut this rate. We don't know whether or not that's going to end up being affecting Blue Cross's bottom line. We have no way to predict that. Do we? Maybe you could rephrase the question. If Blue Cross would receive less money then yes it would affect the bottom line negatively. And a great cut would mean receiving less premium revenue. Well I think the whole point of the exercise we've been going through today is to perhaps try to find areas where there might be areas where the rates are perhaps set too high and that there could be legitimate places to cut these rates. I mean I think that's been a part of what we've been doing here today. Yeah, correct. And that's the exercise both of the actuaries go through. And so if the board determines that there are places where this rate could be cut. We can't predict how that's going to affect Blue Cross's solvency in the future. Can we? I'll just stop it because I don't think we're connecting on this question. Yeah, yeah. I mean I guess at the bottom line is it less premium revenue would mean less surplus for the company. If you're asking do we know if the rates that the company is asking for are going to be 100% accurate. No we don't know that. That could be up or down. Okay, thank you. And there could be room to. Yeah, okay. Thank you. Thank you. I'm all set hearing officer Barbara. Thank you. Thank you. Miss Bellovo. Any questions? Sorry it's hard to find my unmute button sometimes. No further questions. Board member lunch. I'll just ask a quick clarification. So when considering solvency you look at the amount of premium revenue coming into the company. Is that correct? Jesse. And considering that that's a component of it. Sure. And the reason why your opinion refers to actuarial factors is because the actual real factors are in essence. Trying to predict the claims costs that will be paid in the future. Isn't that right? Correct. So the, the solvency and the RBC levels are not just a factor of the premiums, but also a factor of the claims. Correct. Correct. Thank you. I'm all set. Yes. I'm all set. Thank you. Dr. Merman. Just one quick question regarding the 2019 DFR. RBC target range. I'm sure people have discussed this. I think the RBC and the RBC in the past. Looking at the linked file. It didn't seem that there was a significant body of evidence to support going from 500 to 590. But do you do briefly know what the. The reason to go to the higher. Range was. The Blue Cross hired an independent third party actuary to review their surplus adequacy and how it relates to the RBC ratio. The department. Also hired an actuary to review that work. To assess for reasonableness. And the department actually found that the Blue Cross is actually was reasonable. Correct. I don't know if that's the specific language they use that have to go back and look at the information, but in essence, yes. It's all thanks to your foster. Yeah, just clarifying. Mr. Becker and member lunch were speaking out. If the rate is lower, there's less revenue that can impact RBC. But I think the point was a lower rate doesn't necessarily mean that the RBC will be lower next year. And that's because there could be fewer claims. There could be greater efficiencies or could be lower. There could be a number of things that are lower. That would mean that RBC doesn't actually go down even if the rate were lower. Is that accurate in your opinion? Yeah, that is accurate. Yeah, there are a lot of factors that go into the RBC component. And so theoretically, the care board could cut the rate. But other things could mean that the RBC stays static or even goes up even with a cut rate. Theoretically, yes. However, all other things being equal. The likelihood of rates being inadequate, I think increases if cuts are made that are not actually justified. Right. Okay, I had nothing else. Thank you very much. Thank you. Thank you, Mr. Lucia. Thanks. So why don't we take a quick comfort break until 225 and then is the next Dr. Weigel will be testifying next. Is that correct? So let's recess until 225. Off the record. Thank you. Want to make sure the phone in here is on. Is Dr. Weigel on a cave? Are you a hostage, Dr. Weigel? Speaking of which, Mr. Chair, we can't see you at the moment, or at least I can't see you at the moment. Oh, there you are. Okay, I think we are all back. Thank you for that. So let's go back on record. On the record. And Dr. Weigel, could you please raise your right hand? Do you solemnly swear that the evidence you shall give relative to the cause now under consideration shall be the whole truth? And nothing but the truth to help you guys? Yes.  Over the positioning of the phone to make sure that we're both being heard. Good afternoon, Dr. Weigel. Could you please state your name and current employment for the record? Sure. Tom Weigel, I'm the Vice President and Chief Medical Officer at Blue Cross Blue Shield of Vermont. And how long have you held that position? I've been the CMO since September of 2022. And prior to that, I was the Senior Medical Director since 2021. And could you briefly describe your work experience prior to joining Blue Cross? Sure. As a board certified child psychiatrist, I've served in hospital administration, clinical programs at multiple levels of care. Government agencies, including the Department of Mental Health at the State of Vermont. And generally I've had a focus on quality improvement and outcomes measurement. And could you please briefly describe your current responsibilities at Blue Cross? Sure. At Blue Cross, I oversee departments related to quality, value-based care, medical cost management, including prior authorizations, provider contracting, and pharmacy. And you're prepared to answer questions from the HCA and from the board on those areas today, right? Correct. Before we make you available for those questions, I wanted to ask you a couple of questions in a couple of those areas. So first of all, you're aware that the proposed rates include $2.25 per member per month for payment reform and value-based payment initiatives, right? Correct. Could you explain a little bit about how Blue Cross intends to use those funds? Sure. Blue Cross is making strong progress in transitioning to value-based payments as a means to improve health care quality and efficiency. We're piloting an advanced primary care model, Vermont Blue Integrated Care, or VEBIC, in collaboration with four large Vermont primary care practices, encompassing over 10,000 attributed lives. VEBIC focuses on implementing quality metrics for disease management, particularly for diabetes, hypertension, and cancer screening, and also incorporates existing resources such as case management and risk adjustment. So investments in VEBIC will come out of that $2.25 PMPM. In addition to VEBIC, Blue Cross is looking to use the remainder of the value-based care dollars to incentivize community care providers to improve quality, cost, and appropriateness of care. This will be facilitated by a Blue Cross Association report on each provider that includes data from all Blue Cross Vermont claims, all Medicare claims, and claims from other Blue Plans. These reports will rank all PCPs on quality, cost, and appropriateness of care compared to all other providers in the country. These rankings are risk-adjusted for illness severity. We'll use the blueprint attribution method to issue payments to community providers based on their rankings in quality, cost, and appropriateness of care. Providers will receive ranking reports on their specific practice and metrics, including the measures used to calculate the incentive. The providers may work to improve these quality and cost outcomes for their patients. This program is different from both One Care and Blueprint in that we're directly measuring and incentivizing changes in quality and cost outcomes. Over time, we'll transition dollars a lot from direct fee-for-service claims payments to this program, which will essentially shift the buckets and move toward more capitated payments for these attributed members. Let me now move over to, I forget the umbrella term that you gave, but prior authorizations and that collection of issues. Would you please touch on that briefly, prior authorizations and Blue Cross's provider policies? Sure, and I know this has been a hot topic in the legislature that we've had discussions with DFR about prior authorizations. Prior authorizations are a common practice used to ensure appropriate and cost-effective care. Prior authorizations improve patient safety by making sure that the high-risk procedures or medications are administered appropriately. By requiring additional scrutiny for certain interventions, such as surgeries or medications, we can reduce the likelihood of errors or adverse events. Prior authorizations control costs for members, which I know we're talking a lot about today. They help prevent over-utilization of health care services by requiring justification for certain procedures, tests, or medications. This can help ensure that resources are allocated appropriately and reduce the risk of unnecessarily or potentially harmful intervention. Blue Cross Vermont is dedicated to easing the burden of prior authorizations for health care providers. We've implemented various initiatives to achieve this goal. Each year we analyze our list of PAs for items with low denial rates or low returns on investment, and we remove those PAs that are no longer necessary. In 2020, we gold-carded or eliminated the PA requirement for providers with low denial rates for certain advanced imaging studies like MRIs and CT scans. In the current year, we introduced several gold-carding programs for mental health, including eliminating all prior authorizations for all in-state, in-network, mental health, and substance abuse programs. So as it stands now, there's no PAs for in-network, in-state, or limits on outpatient therapy, psychiatry service, IOP, partial treatment, residential, or in-patient programs. Blue Cross also provides electronic PA options to providers. We've seen a significant uptake in the utilization of web-based PA submissions with 60% of medical and 78% of pharmacy PAs being submitted through these platforms in 2022. Furthermore, we're transitioning to Salesforce internally as our platform for utilization management, and that should offer additional web-based automatic PA opportunities for their streamlining the process for providers. We do most of our utilization management in-house. Caroline is our utilization management PA vendor for advanced imaging, and Avalon is our vendor for laboratory PAs. In 2020, our combined savings for PAs was $21 million, with a 6-to-1 ROI, which means we spent $3.5 million on PAs to save $21 million. I'd like to now turn to, I think, one of the other areas you mentioned was quality. If you could give kind of an overview of Blue Cross's approach in that area. I'm sure you'll get more questions as we move along. Sure. Yeah, I've seen lots of questions today and on Monday about quality. Blue Cross, Vermont, our quality program evaluation follows the requirements set by the National Committee for Quality Assurance, or NCQA. So we are NCQA accredited. This acts as our roadmap for our improvement efforts. We also solicit feedback from our members and providers to assess our company's performance. When evaluating member satisfaction, we utilize the CAHPS Consumer Assessment Survey. Currently, Blue Cross is performing above the 50th percentile compared to other plans, with 47 percent of members rating our plan as 9 or 10 on a scale of 0 to 10. According to provider satisfaction survey results, 8 out of 10 health care providers express satisfaction or high satisfaction with Blue Cross, Vermont. Our primary cost drivers are often associated with transitions in care, readmission rates, and gaps in care. So to address these quality issues, our readmission reduction and transitions in care programs identify members statistically at high risk for readmission, as well as those who have recently undergone transitions in care, such as hospital admissions or emergency department visits. Our case management team proactively engages these members to provide necessary services. Additionally, we have quality improvement programs focused on various areas, including pregnancy outcomes, addressing care underutilization, conducting quality of care investigations, optimizing pharmacy services, and enhancing member experiences. Thank you. Dr. Weigel, I'd like to turn to one other topic and get some of your overarching thoughts. Another one we've heard a lot about today, and we'll probably hear more in further questions to you. And that's provider contracting, provider payment, particularly around the community provider fee schedule. So if you could maybe provide an overview of Blue Cross's approach there, I'm sure there will be more specific questions on it as we move along. Sure. I think the question was focused around the possible discrepancies around what we might pay a hospital for a certain outpatient service versus what we might pay a community provider. And there often is a discrepancy in that. So one way I think about it is theoretically if we get a rate increase of 6% and a hospital gets a rate increase of 9%, that may result in a disproportionate change for community provider fees where the hospital actually ends up getting a higher fee rate or raised from the community provider. This is worse if the hospital rates go up more in a particular year than we have budgeted in our rates, than we don't have as much flex for those community providers. For a real life example, the UVM Medical Center professional service fees increased by a higher percentage each year than those of community providers, which results in a compounded difference year over year with the community providers. Keep in mind that we cannot just reduce hospital fee schedules for outpatient services and redistribute that to community providers. Hospital budgets are like a balloon since they're fixed. If we reduce the rates for outpatient services, we'll get the money from us in some other bucket. So far proposed rates are reduced by the board and our hospital budgets are fixed. Community providers may feel an adverse impact. I think as Ruth noted, hospitals often refuse to negotiate with us and they treat the board's budget allotment as a minimum rather than as a cap where they may receive less than the board allotted. For example, if we save money with claims edits this year with a major hospital, they expect to be paid those dollars in another realm. Thank you. I have no further questions. Mr. Becker, do you have questions? Just a few quick questions. Hi, Dr. Weigel. How are you? I'm well. Thank you. Great. I heard you say at the beginning that one of your roles at Blue Cross or in your role at Blue Cross, you're involved in pharmacy, the pharmacy benefit. Is that right? Correct. Okay. All right. So I don't know if you heard Ms. Lemieux's testimony earlier. I asked her some questions about the pharmacy benefit. And in particular, there was one that she wasn't able to address. I asked if Blue Cross had recently done an audit of their PBM to ensure that you're getting the prices, discounts, rebates, et cetera, that you're entitled to under your contract. And she thought maybe something along the lines was going on, but she wasn't quite sure. Are you aware of an audit? We do perform audits. Optima is one of our key vendor relationships. We have 49 performance guarantees outlined in the contract to make sure that we are getting consistent and expected vendor performance. Results of these guarantees are reviewed on a quarterly and annual basis by the pharmacy department. And if there's any guarantees that are not met, we recoup money from them based on that. Okay. Thank you. So then it's a quarterly. You do it a quarterly audit. Is that what I heard you say? Correct. Yes. Okay. All right. Although I have to say we have more than monthly meetings with Optima to review the numbers with them. Have you recouped any money under these 49 performance guarantees to date? I would have to get back to you on specifics for that. Okay. One of the largest components of the pharmacy cost trend is the specialty pharmaceuticals. I guess I wonder if you could speak a little bit to how Blue Cross assesses the value of some of the higher cost specialty medications, whether that's something that Optima performs for you, whether Blue Cross performs its own evaluation of value of some of these high-cost specialty medications? So Optima is doing much of that evaluation and we have a say in that evaluation after they let us know what their thoughts are. Okay. And then just quickly, the Vermont legislature, Act 131 was enacted at the beginning of 2022. And I'm just wondering if Blue Cross performed any sort of an audit to determine whether or not your PBM is fully compliant with the provisions of Act 131, including the pharmacy choice provisions, the anti-steering provisions, no more mandatory mail order pharmacy, things like that. I'm fairly certain we're compliant but I could get you the results of that as a follow-up. I would appreciate that. Thank you. I have no other questions. Hearing officer Barbara. Thank you. Board Member Lunge. All right. It took me a moment. Do you want to go to Laura first or I'm happy to go? No, I keep forgetting. Ms. Bella, do you have questions for Dr. Weigel? I do not. Thank you. Okay. I'll jump right in then. So, hi, Dr. Weigel. I hope you're having a good day. So I have some questions about the Vivec program as you may anticipate. So in exhibit one on page 22, let me just take a moment to get there and let me know when you are. Hold on. Is that where I want to go? I think there are many tabs on my binder. No, I apologize. It's exhibit 12, page five. This is in response to question six which asks for how the MPM was calculated and how it applies to the payment reform activity. So let me know when you're there. Dr. Weigel, it's exhibit 12. Thank you. Okay. So in table five included in that response, there is an indication that the Vivec program has a current attribution of 5.7%. How many people is that? Okay. So you're anticipating that this program will roughly double? I also note that you have a current attribution of 45.5% in the ACO program. Which ACO program is that? Well, so those are referring to the one care dollars that we're spending this year for the primary care providers. And those would be reallocated to the other program that I had mentioned, which was paying for quality, cost, and appropriateness of care to community primary care providers. Okay. But those folks are not actually, I'm sorry, go ahead. So instead of going to only providers enrolled in the ACO, it would actually go to all community primary care providers. Okay. And so then what is the accurate number of people that should be listed in that percentage? Something like 95% or for a current attribution? And I guess it would be under the projected. So the, let me just come up. There's a certain number of members that are not attributable based on the blueprint method. So those members who are not attributable based on the blueprint method would not be included in that. And depending on how the program gets rolled out, members attributed to hospital-based practices would not be attributed to that. It would be a community provider program. Okay. So if it would be possible to get an updated table five that accurately reflects your plan for 2024, I'd really appreciate that. You bet. Thank you. Okay. And I think it would be helpful to get the actual numbers as well as a percentage, because I'm not really sure what it's a percentage of that. That's not explained in this chart. So that would be helpful just for clarity. So in your narrative, there is an indication that at least at the time of filing, you weren't clear on how you would use these dollars, but it sounds like that has changed. Is that accurate? That is the budget. That is how we would use that. So at this time, you have no plans to contract with OneCare Vermont in 2024. And again, if you need to answer, I should have said this up front. If any of these, the answers are confidential, please feel free to indicate and I can save it for executive session. That one may get into negotiations. Sure. Because the contract work for the next performance year typically begins in February of the current year, it would be very challenging to address the data analytics quality and total cost of care issues in time for a 1231-23 execution. So personally, I don't anticipate that we will contract with them. Okay. Thank you. So in terms of the new program for community providers, have you already chosen a quality framework for that program? So we have program is based on what the Blue Cross Association is calling network optimization reports that they're in the process of rolling out. So we've received some of those reports for specialty providers, for example, cardiologists, but we're not actually getting the reports or the metrics for primary care until mid-August. So we will have those. I don't have them in front of me. Okay. That's fine. So it sounds like this is a national Blue Cross program that's getting rolled out. Correct. Yeah, it's an association report that they're providing to the Blues. Okay. So I was going to ask you how you were collaborating with the blueprint in terms of choosing the quality metrics, but I assume given that it's a national Blue Cross program that that's not happening. And then I guess to restate the blueprint is a little more focused on their care community health teams and outreach through those teams, which can be variable by region and by practice. And they also tend to serve proportionately to not serve our members as much as they might serve a Medicaid or Medicare member. So, you know, blueprint really isn't able to tell us which specific members they've served. So their metrics aren't as much value to us. Although certainly having consistent quality metrics for our community for primary care practices would be helpful in terms of influencing provider behavior. Wouldn't you agree? I think having factors like, you know, hospital readmission rates or how quickly providers see people after they're discharged from the hospital. Percentive generic prescribing, you know, for example, whether somebody's also taking a, for example, taking a beta blocker for heart failure. Having a measurement of overutilization or underutilization of testing. I think those are all, you know, great metrics by which to measure primary care doctors. And I don't think those metrics are specifically used by the blueprint or things similar. I think their numbers are a little more vague, but I don't want to, I don't want to report to know all the details about the blueprint measurements. Sure, but in your filing on page five, in the last full sentence on that page, Blue Cross has indicated, and I quote, we have learned that successful programs do not segment members by type of insurance. And quote, did I read that accurately? Ideally, a program when implemented would be impactful across the board, across all providers, and across all payers in equal ways, if all are funding us. Thank you. So, can I also call your attention to in this, in exhibit 13. It's page six and answer to question nine. I was a little confused by a statement in this section. So when they answered a question nine in the third paragraph. This is a question around ASO plans and the losses in the ASO plans. Okay, the statement is, quote, the loss of Blue Cross's Blue Cross Vermont's 104,000 ASO members would drastically reduce our healthcare and payment reform initiatives, making it even harder for the state of Vermont to achieve its healthcare policy goals. Which healthcare and payment reform initiatives are the 104,000 ASO members currently participating in? Yes, which healthcare and payment reform initiatives are the 104,000 ASO members currently participating in? Participating in BBIC, and I would have to give you a separate break. Well, certainly they're not participating in one care in 2023 because you're not participating in one care. Yeah, I can reframe it as the former one care dollars being distributed to primary care physicians in 2023. Okay, thank you. And I think that that is it for my questions. Thank you very much. Thank you board member Holmes. I'm up. Okay, great. Nice to see you. I just want to actually just a quick clarification. I think this is what you're sending us building on member lunges questions about the new BBIC program but I think it'd be really helpful for us to understand. And that's what you're sending us. I just want to make sure the PM PMs and the attributed lives that are already baked into the base for 2022 and 2023. And then what the expected PM PM and attributed lives are for 2024 so that we can understand what's already been in the base and what the incremental $2 and 28 cents is paying for. It's not clear from that answer that you all were focused on that page how all these moving parts. So I think if you could just, you know, in your follow up that would be great if that makes sense to you what we're asking for. Yes, and I think I actually have some of those numbers, but I think to have a concretely would be great for everybody. Yeah, I just I just want to understand where that $2 and 28 cents is coming from and what's already in the base because you were already paying out, you know, dollars for attributed lives in the program so in the one care program anyway. And just to clarify, I think I heard you say but I wasn't sure what this meant and I would love to understand this better in your testimony. You said if Blue Cross Blue Shield saves money through claims edits, the hospital expects to be paid in another realm. Sure, I think a good example of this and I don't have the years in front of me but I think it was maybe 2016 2017. I believe the legislature man that there was a lot of hubbub about evaluation and management claims fees. And I believe that a legislature mandated that that we actually make all the fees the same community provider as UVM everybody. So, so the E&M fees went back down to the community provider level for a facility like UVM, but we didn't actually save money based on that. They expected that money to be paid in another bucket. See, you can't drain a bucket. You actually have to take something from one bucket and put it in another bucket because the hospitals view the Green Mountain Care Board approved budget as kind of a bottom rather than as a cap. Okay, well, we may have to dig into that a little bit in executive session, I think. But thank you. I wanted to actually this is maybe I should have asked this before I had my questions in a bad order but we know that this is related to some of the primary care initiatives that you're undertaking. We, you know, we know obviously that access to primary care has potential to drive down long run costs. I feel like there was reference to that and some of the materials here. And I'm wondering if you if you track that your members who have not been assigned a primary care provider or have not visited a primary care care provider in a given year. Is that something that Blue Cross Blue Shield tracks? It is, you know, for the, as of April of 2023, and this is just looking at the QHP market, 14,203 members selected a PCP 14,906 members were able to be attributed using blueprint attribution and 11,290 members were not attributed. So that's out of 40,399 total members. Great. You had your data. You anticipated my question. I appreciate that. So do you have a target percentage that you would like to see? So, you know, I think in Vermont, we have provider shortages across the board. This includes primary care providers, specialists, long waits for specialists and mental health providers. To address this, we've added the option to use other state providers through AMWEL for urgent care and mental health services. Starting in August, we will also offer additional mental health, talent health services through a company of under contract with Valera Health. Valera provides services for adults and kids as young as six. And they also specialize in the treatment of serious mental illness such as bipolar disorder and schizophrenia. We're exploring several companies that provide virtual primary care services. And sometimes one of the sticking points is around, you know, getting labs drawn and physical exams and things like that. But it's something that we're looking into and that some other states are doing. You mentioned a shortage. Have you mapped the members that don't have, they're not attributed to a primary care provider. Have you visited a primary care provider with availability of primary care in their area? I mean, is that the driving force? Can you map that out and claim that it's because of a shortage that they're not attributed or are there other reasons potentially? Map that out specifically, you know, our provider relations director knows more data around that and where we're lacking some services or where we might have more services available. Right. And it'd be really helpful to also understand you just described some things that you're doing, making availability, some talent health and all of that to meet that gap. I'm also just wondering what outreach you're doing to the individual members to say, hey, here's a primary care provider in your area, for example, that has availability. You know, you haven't seen one lately. Is Blue Cross Blue Shield doing anything like that to help get people in the door to a primary care provider in their area? Sure. You know, to engage members in care, we identified 1,400 members who were enrolled from 2020 to mid 2022 and had zero claims during that time. We targeted a member of Mailer to provide education about the importance of seeing a doctor. After that, mailing 21% of the members had a claim submitted. Our customer service team is available to assist members in finding a new provider. And then I guess just my final question, which actually goes back to the VBIC program. What have you put into place? You know, this is a pretty new big initiative, it seems like. How are you planning to evaluate whether it achieves its intended impact of improving value? So what's the program evaluation that you've got in place to evaluate its success? Sure, you know, Blue Cross seeks provider feedback through VBIC quarterly and plans to issue a formal survey to practices in the fourth quarter of this year. We're also looking at our own data and plan to have the results of those outcomes in the first quarter of 2024. Okay, great. Thank you. Those are my questions. Thank you. Hi. Thanks for taking a few more questions. One of the few things that you mentioned in your introductory remarks was on transitions of care and case management contacting patients who were recently admitted or had an emergency department visit. Is that all patients that are recently admitted had an emergency department visit? Is some patients, how do you determine who gets contacted? Sure. We use information both from vital and patient paying that lets us know when people have been discharged, admitted or seen in the emergency department. I believe we do try to reach out to each of those members to at least touch base with them. The other aspect of our care management team, though, is focused on members who have more higher numbers of chronic conditions or higher costs of care. And so we do focus for those members on chronic care management in addition to reaching out if there's a particular event. Okay, so you think you likely contact all members after even like an ED visit or is there a severity or anything like that that you use?  Okay, that would be great. Obviously, we don't, you know, if there's a dog bite, I don't think we're reaching out to people. Well, I was going to say, my child definitely goes to the ER with a lot of things, but one of them does, one of them doesn't, and I hadn't gotten a call. So you mentioned prior authorization. You may have picked this up for my questions the other day about return on investment that the cost is about three and a half million dollars and the savings was $21 million. Was that in one year, was that aggregate over a period of time? So that's 2020. So I can look for more recent numbers, but the numbers are actually pretty similar for 2022. So that's just for a single year. And how do you define savings in that? So the savings would simply be defined as denied procedures times cost. And do you track whether or not the patient then subsequently got a procedure in the following year, or whether or not their imaging study was done at a later date? So the, in the information that we see through Caroline, who's our advanced imaging PA provider, the rates are very low. I don't have this rate in front of me, but the rates that are very, so the example that I gave to them was if somebody orders an MRI and you attribute $1,000 of cost savings to that, but instead they end up getting a CT that was $700. Is there a way to factor that in? And they actually do factor that into the math and how that's calculated. Okay, so if a patient, like in my experience, I'm an emergency provider, I see patients who get sent to their, the ER by their primary care provider because they couldn't get a prior authorization, you know, seeking a CT scan for something. That would get picked up in that as having the imaging study done, but probably not the cost of like the ED visit. The ED visit would not be incorporated into that savings, correct? I recently got a public comment about, and I haven't read through the details of it about how the AMA has a position that the prior authorizations aren't actually saving much money, but your experience suggests that they are saving a significant amount of money. Would you, have you reviewed the AMA position on that at all? Yeah, I've reviewed the AMA position. And so, you know, what the number doesn't obviously factor in is the provider's time or staff to do that. So that doesn't factor into that $20 million, $21 million savings. But I guess I'd also have to say that, actuarially, for our rates, we would have to factor in $21 million, you know, minus, I guess, the $3 million we spent. We had $18 million. So we'd have to add $18 million to our rates. And then you also can't discount what's called the sentinel effect, which means that when people are being monitored, they behave better. So, you know, we, in addition to the $21 million or $18 million, we'd have to factor into our rates that would be discussed here, you know, there would be additional dollars we'd have to account for. I'm sorry, could you, could you restate that again? I think I lost the chain there in the middle. Sure. So if there's a net of $18 million in savings for a year, if we removed all PAs, then we would need to add that onto our rates because those are savings that our members would not be getting and would have to pay for. Okay, I'm sorry. I was just trying to figure out how you were referring to that with regards to the AMA position. You said you have read the AMA position, which suggests that. I think where the math gets fuzzy is that the savings for our members does not account for expenses that might be incurred by providers. And probably some of those expenses are passed on to members, but most of them are not. Someone's got to pay for it somehow. Right. One of the things that's come up today and on Monday to some degree was the COVID expectations for 2024, basing it off of 2020, actually, have you reviewed that at all? I heard the testimony this morning. So as far as COVID, as you know, the end of the public health emergency is kind of more of a random politically motivated date. COVID is still with us. I actually have a close friend who's currently hospitalized here in Vermont with COVID. They're younger than me, quite healthy and very sick. We do have a COVID vaccine and a medication packs loaded, which can lessen the impact of COVID relative to where we were in 2020. People have stopped testing for COVID. I haven't tested myself in over six months. So it can be hard to tell where our numbers stand with COVID at any one time. New hospital admissions for COVID right now are similar to where they were in March of 2022. New strains and variations of COVID are arising frequently. In June, the XB1 variant increased in frequency by 27%. And we're also dealing with costs from long COVID, which was not a factor earlier in the pandemic. So those are my COVID thoughts. And the new hospitalizations that you're referring to now compared to March of 2022, which was the tail end of the Omicron surge. Is that Vermont data or national data? And have you looked at Vermont data? So Vermont data was very different from national data early on in the pandemic because we all obeyed and stayed at home. But the Vermont data has mirrored the national data over the last year. But not looked at it specifically for Vermont within this current hospitalization level that is equivalent to March of 2022. I believe I have. I don't want to state falsely that I haven't. So we get updates from the Blue Cross Association every month. And we have meetings about that and that includes trends by state and things like that. I looked at that deck today. I looked at the national trends. I didn't happen to look at more local slides. But generally the trends have been similar for Vermont over the last six to 12 months. It seems to me that in my clinical work and looking at the data that I've seen that we are in a very different position with COVID cases and expenses at this point. And then we were in 2022, which is the comparison year, which includes the Omicron surge. Do you think that that's much closer to 2022 now than what I'm suggesting? Looking to the actuaries, but my impression is that we had a lot of COVID expenses in 2022. And I believe that we may have a lot of COVID expenses in 2023, many of which may not even be called COVID expenses. So the trips to the ER, the inhalers, the other costs associated with illness that, again, because people aren't really testing, it's not being called COVID anymore. It's being called a URA. Yeah, okay. I mean, it's definitely my clinical experience is far lower than 2022, but that's my anecdote of my job. I think the evidence that I've seen is it's far lower than 2022. And it's like after the H1N1 viral epidemic, did we predict another H1N1 epidemic the following year and plan for that from a budgetary standpoint? I guess that's the question of what's what are reserves and pandemic planning preparedness and what's what's a budgetary item, but I think seems to me that we are far lower now, but I don't think you agree. So there we are. The one other thing that you mentioned was that the hospitals look at the GMC board approved rate increases as a minimum, instead of a maximum. Do you negotiate, do you end up with rates above the GMC board negotiated rates that are being paid to hospitals? Any specifics about the negotiating process we should probably take in executive session? Is there a way to answer that without being specific? I was actually thinking of deferring to Ruth and Martine about that. I'm actually not involved in the hospital rate negotiation process or where the buckets of money fall with each category. Okay. I have no further questions. Thanks. Just a couple. Dr. Weigel, you referred to total cost of care as being an issue in connection with the one care withdrawal. Can you explain that a little more? Interject that if that would get into specifics of kind of underneath the hood of negotiations and discussions with one care, perhaps we should take that up. I'm not sure. Do you want me to try a different way? I'm not sure if it would. I'm not sure I understood the question. I was going to say that we had issues with the total cost of care and quality outcomes with one care. We weren't seeing a reduction in total cost of care or an improvement in outcomes relative to our members who were not in one care prior to our withdrawal. That's what I was trying to get at. You have VBIC now. You had one care. Are you anticipating at Blue Cross that this will be a net financial savings for your members? The VBIC project I anticipate will be a net financial savings for our members that we're focusing on some high cost items and such. I anticipate that will be a savings and for the new payments to community primary care providers for quality costs and appropriateness of care, that will not have an immediate impact, but I think over time it will actually have a very large impact as providers change their ways to improve those metrics. And it seems as though there's certainly a fair possibility Blue Cross won't contract with one care. We don't know, but it sounds like there's a chance it won't. Do you view that as financially beneficial to your members to not participate with one care? I think the money is spent in better ways should it be approved. Just two quick topics. Access. Can you describe for me what the evidence is that this rate promotes access? It maintains would be my take on that or a different way of saying that if you reduce the rate and we still have to pay the hospitals a lot of money, that may take away from community provider rates, which would potentially reduce access that may reduce the community providers who actually contract with us. You might have answered this and maybe I missed it. Does Blue Cross track the number of primary care providers, mental health providers, and mental health providers that are active in the state? And this may be for Miss Green or Miss Lemieux, but is the allocation of resources that Blue Cross gets through this rate consider those numbers? And what I'm getting at is if you see primary care providers dwindling or mental health dwindling and we need more because of access issues, do you provide increased rates to those areas where we have more need for providers? And I take it the reason for why there's limited flex with the community providers is because of the large proportion that's being allocated in the hospital process. Yes, I would times that will fight a discrepancy between the rates that they're paid and the rates that specifically UVM is paid. You know, I think we just had a physical therapy or lunch physical therapy practice. I just, I'm sorry to interrupt Dr. Weigel. I'm just trying to be mindful of the confidentiality line and I feel like this is getting, we're getting a little close into specifics of your contractual interactions with providers. Sure. And I really do apologize for interrupting the flow of the question in between the two of you here. No, no, appropriate, appropriate interjection. Thank you for doing so. I think you're right. We can take it up there. So last question, Dr. Weigel, can you describe for me what the evidence is that this rate promotes quality quality? How does this rate promote quality? Sure. You just have to continue to do the good quality work that we're doing here at Blue Cross, you know, with all of our programs and employees. I can go back to some of the quality information I gave before and describe those programs, but those rates support that work that we do. I have nothing further, but thank you very much and appreciate your time. Mike, I have one follow up. Go ahead. And this may be a question you'd prefer to defer to Martina, Ruth, Dr. Weigel, and please feel free. But I believe you just testified in response to the chair's questions that you expect a debt financial savings for members both from VBEC and from leaving the one care program. Where are those savings reflected in the filing? We have absolutely no calculations because it's a brand new program. So we don't really know what those numbers will be. Okay. Thank you. I'm all set, Mike. Mr. Nafre, when you redirect. Thank you, Dr. Weigel. So at this point. I think we're ready for an executive session. Sounds like for Miss Lemieux, Miss Green, and Dr. Weigel. So just want to, well, first, any concerns about that being our kind of planned next step? Anybody need a break before we. Break if it's no trouble. Yeah, why don't we, if it sounds appropriate timing wise to go to an executive session, why don't we kind of. Work through the motions of that. And then take a break and call into that executive session. So. Kind of went through this on Monday, but. The open meeting law says that the board can go into executive session to consider records that are exempt from disclosure under the public records act. Provided the discussion of the exempt record shall not itself permit an extension of the executive session to the general subject to which the record pertains. The rate review statute. Is somewhat broader than that it allows. That says that notwithstanding the open meeting law, the board may examine and discuss confidential information. Outside of public hearing or meeting. So we have. A lot of material in the binders that has been reviewed. And determined to be exempt from. Public inspection and disclosure under the public records act. And so you can go into an executive session to question witnesses about that material. And under the rate review statute. Again. You can examine confidential material generally, even if it is not, you know. Marked in the binders. So questions around provider contract negotiations and pricing, which are competitively sensitive, which Blue Cross, you know. Makes reasonable efforts to keep secret and which give it a competitive advantage over, over others. Question witnesses about those, those type of things, which I've heard, you know, there are some questions around that have been raised and. Would be appropriate for an executive session. So the mechanics of an executive session, there needs to be a motion to go into executive session. It must indicate the nature of the business of the executive session. There needs to be a. A 2 thirds vote. In favor to do that and assuming that happens. We really need to stick to confidential subjects. As I've described and anything, you know. Anything that's appropriate for the public session should be done in the public session. So. Any questions about that? There may also just based on the earlier testimony, there may also be. Executive session testimony around blue crosses. RBC and reserves. So I just wanted to note for the record. That's that's another issue that may be addressed, but I believe is appropriate based on information that's already been being confidential. Yeah, thank you for that. The forward looking RBC projections. They have been determined to be confidential. So anything around the. The specific numbers around that would certainly be. For the executive session. Thank you. So. Would any board member at this point like to. To go into executive session to. Ask questions regarding confidential materials in the binder or confidential information. Generally. I will move that we go into executive session to discuss confidential materials and records as well as confidential information. Board discussion. Oh, sorry, you're. Second, you're right. Procedurally second. Thank you. Any discussion from the board. Okay. All those in favor, please say aye. Aye. Aye. Aye. Okay. So. You should have received a invitation separate invitation for the executive session, the parties. Obviously. Sorry, I'm trying to get. Clarify the people who should be going over to the executive session. So obviously the board members, board staff. The parties. Their employees and representatives. Including the healthcare advocate. Mr. Fisher. Luis and Ellis department of financial regulation. The people who are subject really to confidentiality restrictions and protections. Already in place. So. Any, any questions about who should be calling in. To the line. And obviously. Miss Holland. Who. That would appreciate if you could separately transcribe. This as, as we did on Monday. I do expect this to take some time. So. For the public, I think it'll be at least an hour. Based on yesterday and just did the number of. Questions, I think. So it's just roughly. I guess we might return it around 430. I'm hoping, but we'll, we'll keep. Keep it updated. As we can. And I said, we would take a quick break before we did that. So. Maybe if we could. Leave this open session, call into the executive session at. Around 336. Five minute break. Okay. Thank you. Thank you. Thank you. Thank you. Thank you. All the record. Just to make sure I can hear you. We can hear you. Thank you. Miss Holland, are you with us? I'm ready hearing officer when you are. Okay, great. Let's go back on record. On the record. One thing I wanted to address before we move to Mr. Fisher's. Testimony is. The board and submitted yesterday at the board's request and was discussed some in the executive session. Would the parties stipulate to the admission of this as exhibit. 26, I believe. Yes. And we would simply stipulate to that as well. And I'll admit that as exhibit 26. And Mr. Fisher, are you ready? Could you please raise your right hand so I can swear you went. Do you solemnly swear that the evidence you shall give relative to the cause now under consideration shall be the whole truth and nothing but the truth to help you out. Yes. Okay, please go ahead. Good afternoon. I think I'm speaking to you at about the same time. As I spoke to you two days ago. I am Mike Fisher. One of the many mics. Here today. And like I just said, and I'm the healthcare advocate. Fulfilling my statutory role as a consumer advocate in this. These proceedings. Like I say, I spoke to you a couple of days ago. And in the interest of time, I'm not going to repeat. Myself. I don't think it would be reasonable. For me to say the same thing to you. And by reasonable here, I mean sound judgment. I don't mean it's common practice. To do to repeat yourself in each hearing. I'm meaning that common definition of the word reasonable. I will hit some of the same themes. First off. Ever since starting this job in 2017, if I'm remembering right. I have been frustrated by a line in. In I think every single. DFR analysis of rates and that line has gotten a fair amount of play today. So I'm going to talk about it for a minute. That line is. I think insurer solvency is the most fundamental aspect of consumer protection. I said something similar to this, but I'll be much more last time, but I'll be much more explicit. A solvent company. That charges rates that the likes of only Warren Buffett Bill Gates and Elon Musk could afford. To pay. Sure could be solvent. But provide no consumer protection. Now obviously that's an extreme notion. Obviously that's not going to happen. But rate increases like the ones proposed this year on top of last year's will price more of her monitors out of health care out of our health care financing system. The rates contemplated may be a great consumer protection for those who can afford to participate. That is pay the rates and pay the out of pocket costs. But little or no protection for those who are priced out. This concept that insurer solvency is the most fundamental aspect is I'm sure a industry standard. But not one that record recognizes the competing interests and the competing pressures on Vermonters. About the individual market. I said something about this last time, but because it got some discussion, I want to say clearly. If anyone here can think of a way to assure that this year's increases will not become a part of the base two years from now when the enhanced subsidies are scheduled to end. I'm all years. And I wouldn't freak out about it. I mean, I wouldn't push back if there was a way to separate to not build this year's rates into a base that will become a part of a rate after we don't know that the enhanced subsidies are there. I can't think of a way. So that that is why, you know, unfortunately, this is where we are. This is what Congress gave us. I just want to push back on the notion that somehow 8.5% of income for premiums in the individual market. And by the way, it's 9.12% of premiums in the small group as a person, you know, is a measure of affordability is somehow came from a careful policy consideration. The very fact that there are two different standards tells us, no, these numbers came out of a political process. And not a careful consideration of just what the right number should be. So when it is indeed in the small group where we see descriptions, you know, where people are forced to pay very high percents of their income for health coverage. And I'll just hit one public comment that I think did it best. I'm the or a part of one anyway. I'm the executive director of a human service organization that has struggled to keep up with the increases in premiums over the past decade. As a nonprofit, we have focused on covering employees that have not been able to expand to covering employees, children or spouses, because it's simply not possible. With the significant increases in recent years, we have employees with children who are devoting close to 25% of their annual incomes to health coverage alone. That is unreasonable and untenable. And here, though it's not my comment, I have to assume that the person was using the word unreasonable in the context of fair about CSR load. And I want to be a little bit more explicit today than I was two days ago. Again, I'll make the same point. It's important to have the same approach across the market. You have at least three approaches before you at this moment, one from the other carrier, one from L&E, and the one originally proposed by Blue Cross Blue Shield. In my opinion, well, in my opinion, they are not all reasonable here. And I don't think I'll try and describe what I mean by reasonable this time. Or maybe I will, sensible. They are not all sensible here. While we are pushing, we are pushing for an approach that would provide for more affordability amongst the three. Amongst the three I mentioned, the approach that Blue Cross originally proposed is the one that will have, will do the most to increase buying power, improve affordability, or improve affordability for higher value plans. About reserves, for years, whenever I have or somebody has asked the question, pre-pandemic, pre-COVID, whenever someone has asked the question, why is it that insurance companies need quite so much rate payer money? Why did they need to hold so much of our money? The answer has always been, what if we have a pandemic? Well, now we have a little bit of a better understanding and once understanding of what a pandemic might look like. And while clearly a future health catastrophe could play out in a way very different from COVID, my question is, can anyone envision a reserve depleting health crisis for which there is no corresponding influx of federal monies? I can't. Or maybe more accurately, if there were no federal monies in response to such a health crisis, we're in deeper trouble than health reserves. And then lastly, I want to anticipate a question or maybe respond to a question from two days ago. When asked about measuring affordability by the chair, I responded about our data and I neglected to remind us that one of the documents we have is the Household Health Insurance Survey. It's not perfect, but it's a pretty good ongoing measure that we've been doing for a number of years to measure affordability. This year, this past one, it recognized that 44% of those commercially insured were underinsured. Interestingly, the uninsured number has not changed much recently, but 44%. And I know that if you look at previous Household Health Insurance Surveys, you'll see a trend that shows the numbers are getting worse. I also want to push back on a concept, well, there's never perfect numbers in healthcare. And we're never going to have a perfect measure of affordability. There isn't a whole science devoted to it like there is predicting future claims. But there's a lot of research that's been done out there and there's a lot of data about the pressures that Vermonters and Americans are facing around being forced to make what happens to people when they're forced to make economic decisions that interfere with their ability to follow medical advice. And so I guess I want to say that me and my team will be engaged in attempting and continuing to measure and provide as much good data as possible. We'll never have perfect data, but that doesn't discount the experience and the reality of what is so clearly expressed in this year's public comments, as well as every year previous. Thank you, Mr. Hearing Officer. Thank you. Does Blue Cross have any questions for Mr. Fisher? We do not, thank you. Ms. Bellovill, do you have any questions? No, I do not. Do any board members have questions? I have one, but I can go last. I'm all set. I think I saw Robin and Jess both share their heads. Mr. Fisher, is it the healthcare advocates position that this rate, these two rates submitted to the board are not affordable and do not satisfy that element of the criteria? Yes. And the best evidence that we should look for to support your position is the health hold survey and the volumes of public comment. Is there anything else that you think we should be considering? I am sure that we will also include some documentation of this in our post hearing. Memos relating to just how these rate increases compared to people's real buying power. And does the healthcare advocate have a position as to whether or not these rates promote access and quality? Yes. Yes, and I'll link it directly to, you know, people talk about access and affordability as if they are separate. And while there are access issues that are not directly linked to affordability, affordability is an access problem. That's all I had. Mr. Hearing Officer, thank you. And thank you, Mr. Fisher. Thank you. Blue Cross like to call any rebuttal witnesses? No, thank you. No, thank you. Okay. Then are the parties ready to make closing statements? Yes. Yes, we are. Blue Cross can go ahead. Thank you, Hearing Officer Barber. And I would like to thank all of the board members here today and Hearing Officer Barber and the staff of the board and the other witnesses and the healthcare advocate for a thoughtful and careful discussion of the proposed rates that are under review. I want to start by reiterating what my colleague, Mr. Donofrio, said this morning. Blue Cross is not happy to be here asking for these rate increases. We take very seriously the obligation to develop rates that are actuarially sound and do not overcharge any of our members. There is absolutely zero track record of Blue Cross charging excessive rates in these markets. I would refer the board back to a table we've looked at previously today, the table on page six of exhibit one, which shows Blue Cross's historical experience over nine years in these markets. It is an overall loss of almost $10 million. Five of the nine years show a loss. There's only one year where Blue Cross met or exceeded a very modest 1.5% CTR target. And that year, of course, was 2020, which had an unanticipated claims lol due to COVID. And as Ms. Green testified today, that benefit from that claims lol in 2020 was outweighed by a COVID cost that Blue Cross absorbed out of its reserves during the entire course of the pandemic. Every component of the proposed rate is justified and reasonable. That is what the evidence has shown today. 90% roughly of the rate is the direct cost of paying for the healthcare costs of Blue Cross's members. The board's actuary, L&E, reviews these rates carefully, reviews that component of the rate. And their analysis was not just the rate was reasonable, but in fact that a higher medical trend could have been justified than the one that was asked for. There are significant upward pressures. The board has heard about today from hospitals, from pharmacy costs, the healthcare that these rates fund is expensive. And it is getting more expensive and the rates have to reflect those costs or the insurer cannot remain solvent. Blue Cross's administrative costs again are part of the analysis conducted by the board's actuary. And again, the actuary has recognized that Blue Cross's administrative costs are low compared to other carriers. The 26th percentile of cost, the fourth percentile measured as a percentage of premium. It is their conclusion that we manage and limit costs better than typical healthcare plans. Again, as you've heard from our actuary, Ms. Lemieux and from Ms. Green, there's no padding in the rates. Blue Cross, like other businesses, is experiencing the same inflationary pressures on its costs that we're seeing across the economy, but has nonetheless kept the costs here as low as possible for the costs of insurance. We're asking this year for a 3% contribution to reserves, something which was discussed last year as a possibility. It is, as Ms. Green has explained, Blue Cross, the failure to achieve a CTR in these markets in the past years. This request is well justified and has not been questioned, again, by either the board's own actuary or by Blue Cross's solvency regulator. CFR, in fact, is again cautioning the board regarding the need to protect Blue Cross's solvency in this rate review proceeding. I know that over the course of the hearing, and there'll be follow-up on this, that the board has asked questions about other impacts on RBC, and there's been some suggestion that members in these markets shouldn't be required to pay the requested CTR if other factors are also impacting RBC. Again, first, I just want to reiterate that this market for the past nine years has overall been a loss and has not been contributing to member reserves, has not met the prior CTR target. But I also just want to push back a bit on the general notion that other factors that affect RBC have to be attributed elsewhere. The core, and again, I will go back to DFR, who said this well in their letter, the primary factor in an insurer's ability to maintain adequate solvency is whether the insurer charges adequate premium rates. Adequately funded rates that include a contribution to reserves sufficient to sustain reserves is the core of solvency. It's not possible for an insurer investing its reserves to, for example, never have an investment loss when markets crash. Insurers like Blue Cross who are trying to expand markets and meet additional needs, that will pressure reserves. That's part of the reason that rates include and should include a modest contribution to sustain those reserves over time. And this, it's not an optional part of the rate as the history of these markets shows. It's an essential part of the race. I'd like to close by addressing affordability and the related non-actuarial factors that we have also discussed today. Both Blue Cross and the Board's actuary agree that the actuarial development and review of rates is necessarily based on the cost of providing care and the cost of providing insurance. That's the only way to develop sound rates that protect an