tv Government Access Programming SFGTV June 17, 2019 11:00am-12:01pm PDT
that was moved to 50% to be in line with all three programs. a reminder of the appeals process. that is always available to any member, not only on this topic, but any topic. on page 4, we included some sample pricing. i'll use truly sample, because there is a wide range of costs associated with infertility diagnoses and treatment. you can see here, san francisco being the first listed and generally at the upper end of costs for the metropolitan areas listed here. so at a 50% benefit in this sample pricing, that is about $12,000 coverage for an average of the $25,000 cost. again, this is a sample. and price range -- price does
range pretty significantly. on page 5, we did work with the cariers to understand more about where is the point of decision and how infertility is considered a diagnosis which is a requirement under the plan for treatment. so you can see here, outline of the three health plans to sum it up briefly. blue shield and kaiser pretty much, their response indicates they leave the determination between the provider and the patients. uhc relies on a medically necessary based on individual conditions. so again, pretty much -- pretty closely tied to that provider-patient relationship. in addition, on page 6, we did speak with page, who some of you
may remember, who has worked with the board members in the past as a clinician who has very detailed familiarity with infertility from the clinical perspective. she provided some information on her perspective of what the current benefit looks like. she felt it was very comprehensive. she did note that environmentally, there is a shift from looking at infertility being the medical diagnosis to treatment of fertility. so that shift in mindset is happening in the environment and in the market place. and that fertility benefits -- so without the in, it can include prenatal, adoption and surrogacy. so fertility would remove the requirement for a diagnose of infertility. i think this last sentence on this bullet is important, though, and key to this mindset,
is that certain fertility benefits have a tax consequence to them without that medical diagnosis. so that is something out there that we're aware of and cognizant of as we have these conversations. >> president breslin: a tax? explain that? >> so, if there is not a medical diagnosis, the service isn't considered for pretax purposes under the health plan. so it becomes a taxable benefit to the employee. or member. and that's a federal tax. page 7. there are some points solutions out there. some have been around a little bit longer than others and we're seeing others pop up pretty much every day. we've talked about all these new point solutions.
there are three we have listed here. just to give a little bit of information on three of the big key players that we see out there as we're exploring others. prodigy is an insurance car for reproductive services. and then a new player, carrots, is more of a reimbursement type program. the landscape is changing. we're keeping our eye on this. talking to health plans. and talking to some of these other players to see what they're doing and what is new and evolving in the market place. on page 8, so to get to the end. preliminary findings in all of this various research i've just outlined for you, with the change to the benefits in 2017 and kind of removing some of those barriers to care, like the 12 months of unprotected sex
that was previously required, we haven't seen a significant change in the cost or number of members utilizing the infertility benefits. total plan payment in terms of the pharmacy component of infertility benefits is trending downward. we believe that might be associated with some of the drugs becoming lower tier on formularies. the benefits landscape is evolving from infertility to fertility. and health plans report that physicians are relied on to determine the fertility and status. one question we had -- or we had wondered is are we reaching all the membership that we want to reach? and current data collection systems don't include sexual orientation or partnership status of those utilizing the service, which makes sense, but
that was a question we had posed to make sure we are being comprehensive. as far as next steps, we're going to continue to mine data through the database as well as with the carriers. we are with the goal of standardizing reporting as a result of this inquiry. we're researching carve-out options to the point solutions and speaking with the carriers as well. we will continue to monitor market changes and trends that occur since those benefit enhancements occurred in 2017. we will compare evidence-based medically necessary and fertility benefits to elective options, so continuing to push ourselves to think about the concepts of infertility as well as fertility. and then investigating third party administration for infertility benefits. so that concludes the
presentation as far as the data that we looked at, preliminary findings, next steps. the last page has reference points. >> president breslin: any questions. >> just a comment. i'm pleased that we have been this thorough in following up on this particular issue. we took a step in faith and it was not without some controversy at the time regarding, would there be a stampede of costs and all kinds of things were forecasted. but i think that we have done this in a very prudent way and in support of members. and this type of analysis will help to reinforce that going forward as we consider other medical plan changes that might be considered forward-leaning. that we don't just make a decision in the absence of any type of follow-up at all.
so thank you for your work on this. >> commissioner scott: i'm curious if we have response or feedback from the members who utilized this service, in terms of their own impression of the services they received, compliments, complaints, or whatever. per health plan. >> i know we have a member who has attended these hearings who i think is here today, who has spoken to us about her experience that wasn't the best. but outside of that, we've talked with member services and we've not had any other members call us to talk to us about their experience. we have considered, as we continue to mine the data on whether we will need to talk to any of our members, but we haven't done that at this point.
>> i wanted to acknowledge that a member of our team has worked very hard on this and is not able to be here today because she's attending training. but i wanted to acknowledge her work on this. >> you took the words out of my mouth. >> president breslin: thank you. any public comment on this item? >> good afternoon, commissioners. i'm a city employee. first i wanted to start by saying i feel heard and this is evident by the fact there is an agenda item and presentation before you today. so thank you. i also want to be clear. i continue to have concerns regarding the fertility coverage policy and how access is not equal across the board and harder for lesbians and those without partners to access. simply as a point of reference, just yesterday, i received three
denials in the mail. that i will have to fight an appeal, even though i'm still covered in the 90-day window i fought for before and if i was in a heterosexual relationship none of this would be happening and i would be covered. the change in 2017 that added the qualify for service you needed to demonstrate a condition last month i shared a litany of things that didn't qualify for me. and the reference brings up -- it's not showing -- this is the definition. it was listed as enhancement. i ask you to clarify as this specifically seems to exclude more people, particularly lesbians and those without a partner, if -- the definition removed one, you found a workaround, but not a workaround for the other. there was almost no quantitative
data in the presentation. basic data points, such as how many denials and for what reasons were not shared. since i've spoken publicly on this, now three times and making pretty serious allegations, if data was shared with hhs that could prove my experience was unique or isolated, wouldn't it have been shared? is it fair to draw the conclusion that there are employees who don't have equal access. or that providers have not given the data requested. you asked for information and the providers came up here and said they would get back to you. have they? although this is not strictly an lgbtq issue, i want to remember you that june is pride. i raised this concern with hhs in december which means providers have had six months to get the department quantitative data. as a body whose sworn duty is
to -- if this basic principle can be not be verified, it is within your power to act. it is within your power to define benefits that are within compliance and ensure equal access. it is within your power to rescind the vote and not move forward with the contracts until you are confident that every member has equal access to benefits. thank you for your time. >> president breslin: thank you. any other comment on this item? >> commissioner scott: can i ask a question? there are compelling points being made. i wonder if we have -- >> commissioner follansbee: if we have a mechanism to collect information on denials and reason for denial and have those reviewed, maybe independently. i mean, i think that, you know, it's great to have, you know, the numerator in terms of how much money we've spent, but we are missing, i think, a lot of
data. and i would ask for more information, particularly around the issue around denials of service. and whether that is health plan specific or across the board or what? >> i can ask the health plans to respond and what they're able to produce on denial. on the other data, we do have a lot of data at this point and what we don't yet have is a good standardized way for how we're going to look at it. cdc does have report on fertility data, but some of the questions that are on the table are not yet answerable. we do need more time to do the analysis of the data that we have, because we have at this point more questions than we do answers. so it does take time to do the data analysis. and what we're discovering is
that there is no standard way to report this, so when we put in all the -- when we've asked the plans with the expertise of page through aon, we got the list of codes that we're all looking at, but some of those codes made the people who were accessing them may be using -- some of the procedures are not necessarily infertility related. so there is all kinds of data questions we have. >> commissioner follansbee: i think the issue is, if we're not necessarily tying the benefit to infertility and there is no medical code, it makes it even more challenging and it's incumbent upon us to find a way. the question is, based on your sense of how things are moving, can you give us a timeline for when we can expect for information? >> we're thinking we're be back in august. we are marching forward on this. we've had two or three conference calls in just the
last month -- since last month on working on identifying this. so that's our thought. and then if there was -- and one of the things, there is a whole lot of parallel tracks here going on. and figuring out if there is a need to consider the art as an added benefit. that is why we're starting to talk to these third parties, because that may be something we need assistance, assisting the member in tracking the payments, especially if it's determined it's a taxable benefit. so there is big policy issues that we need to take a look at. you know, and again, i think it's given the fact that the benefit was just put into place in 2017, we're doing the first lookback at that benefit. i mean, maybe should have done it before, but that's kind of what we're doing, we're kind of inventing the wheel, there doesn't seem to be a standard
report out there. even our i.b.m. folks have helped take a look, but we have a lot of questions. >> president breslin: any other public comment? public comment is closed on this item. we go to the rates and benefits section. item number 11. >> item 11, review revised rates and benefits calendar as of may 28, 2019, presented by abbie yant, executive director. >> thank you. your rates and benefit calendar is coming to a close. after today's meeting, we will go fill in the few blanks left on the rates package that will be introduced to the board of supervisors on june 18. next tuesday. so we've got a short turnaround this time, but that's just the way the calendar crumbles.
>> president breslin: any public comment on this item? seeing none. item number 12. >> item 12, review and approve the hartford life and disability insured rate renewal, presented by mike clark from aon. >> good afternoon, mike clark, aon. i'm here to present the hartford life insurance and long-term disability insured rate renewal which will cover plan years 2020 through 2022. page 1, the insurances that we'll talk about today, basic life insurance, which is paid by the participating employers. long-term disability or ltb insurance which is paid by the
participating employers and member-paid insurances for supplemental life insurance for employees and dependents, accidental death and dismemberment insurance as well. and then we'll present our overall renewal summary. i will note, i won't go through it for you today, but there is information on a program called the hartford life essentials that are value-added services available to members, so i do encourage everyone to leverage the information in the appendix to learn about the programs available to members through the hartford. so recommendation summary on page 2 is recommending acceptance of the hartford's renewal for these insurances. you'll see the proposed rating actions illustrated below. we'll talk through the rationale on the basic life insurance increase, but also noting that overall, insurance rates in
total will decline by 12% relative to what is in place today for the three-year period, 2017 to 2019. and this includes aggregate reduction in insurance rates for both the employers and members. background on page 3. the life insurance and disability programs are available to certain active employees within the city county of san francisco superior court, municipal executive populations. the basic life insurance, the l.t.d. and the supplemental life. the school district and city colleges are not part of the program. they secure the insurances through other means. and also the note that these insurances are for active employees only. we'll talk about in this packet is not available to retirees.
page 4, the premium guarantee has been in place for the last three years with renewal that was approved under aetna. the hartford purchased aetna's group life and disability business in late 2017. so this renewal information is now underwritten by the hartford that we're looking at today. but obviously, there has been careful transition as the hartford has looked to integrate the aetna group life insurance business. and that premium guarantee under aetna has continued through 2019 under the hartford. so on page 5, just one thing to note here. again, through your renewal and the plan features will migrate as of january 1, 2020.
so even though aetna has acquired the business, the contractual standards have maintained and will maintain through the end of 2019. much of what the hartford has for contractual standards does match or exceed compared to aetna standards or with something like life insurance eligibility, when someone leaves an employer covered by these insurances, they have the ability to, what is called port or basically convert the insurance into individual insurance at a set of specified rates. the aetna eligibility provisions are more robust than the hartford provisions, but the hartford is going through state insurance filings to match the aetna standards and they're
looking to accomplish that. i talked about the program that will expand and that is documented in the appendix. i'll start to talk about basic life insurance on page 6. this is fully employer funded. most employees who participate are at the $50,000 benefit level, but there are four different levels of benefit, depending on the employee. and the proposed life insurance premium is projected to increase from 8 cents monthly premium per $1,000 of coverage, to 11.4 cents effective 2020 through 2022. the rationale behind this is simply with the life insurance coverage over the past five years, looking at a fairly long period from 2014 to 2018, there
have been substantially more claim payments made through basic life insurance than the premiums collected by the hartford. and so, there are other aspects of the rates that include reserves for things like waiver of premium. so if you're on long-term disability, you have your premiums waived for life insurance, and then incurred and not reported, reserves as well. all of those elements factor into the recommendation to increase the basic life insurance rates. i will say that in working with the hartford, and certainly we're looking to achieve longer term stability financially on this plan, but part of your discussions with the hartford, they gave us a deeper reduction on long-term disability rates in return for somewhat of an increase on life insurance and overall that combination will actually benefit the employers.
employers will pay less in premium in 2020 for the combination of basic life insurance and employer paid l.t.d. insurance than what would have been paid under the hartford initial renewal proposal. then i have a chart on page 7 that shows the number of deaths that have -- claims that have been incurred in the basic life insurance program for each year, 2014 through 2018. relative to a benchmark that was provided by the hartford for population similar in nature. demographically and industry, that covered population. >> can you pause there for a moment, just to clarify what they mean, similar? are these public employers? are they groups of our size? >> it's a demographic alignment
to looking at the age and gender characteristics of the hfsha population of what would be expectation under the hartford benchmark. >> i'm having difficult with the number as large as this. i recognize it's only a few cents, but it's the magnitude of this, and if this is kind of a consumer la effect over a five -- cumulative effect over a five-year period, are there check ins, or if that wasn't part of the transition, is that where we're headed going forward? >> sure, we do have annual very views of the experience with the hartford. and so this has been an item that is brought up and passed annual review meetings in terms of how high the loss ratios have
been, so claims divided by premium for the basic life insurance program. but we've also seen, i'll talk about this a bit, that the experience on the long-term disability program has been very favorable for us at sfhss. there are far fewer dollars rolling through the program, relative to the actual premiums that have been paid. so -- i do have a chart that i'll lead to shortly that looks at the cumulative comparison of the existing premiums to what is being forecast under this updated quotation by the hartford. and what i'll stress is that the employers do pay significantly higher total premium dollars for long-term disability than they do for life insurance. and on the heels of the initial renewal proposal by the
hartford, where they have suggested somewhat of a decrease on long-term disability and maintaining the existing rate for basic life insurance, we did push back on that because we looked at the total of the experience, and even though basic life insurance running poorly, we felt that a further reduction was warranted for long-term disability. and so the combination of what was arrived at upon that discussion and then the revised proposal by hartford resulted in a lower overall premium that will be paid by the employers. you know, from actual world stand point, i look at the experience that has occurred under the basic life insurance program, especially for 2014 through 2017. in full recognition that the actual claim experience exceed the premiums by a substantial amount. so i feel there is justification in a rate increase in order to
keep basic life insurance viable for the long-term. but i will heavily stress that the conversation with the hartford to facilitate that came with the need to see a further reduction in the long-term disability premium they're quoting from their initial renewal. so there was a tradeoff aspect to the discussion with the hartford that is allowing them to increase this rate in return for a deeper reduction on the l.t.d. rate. but certainly note your concerns. >> commissioner scott: i just want to go on the record that these things seem to be cumulative over time. and if we are going to experience something like this in 2022, i may or may not be here at that time, but you know, to nearly go up 50% on anything means that something fundamentally is not working in the process in my judgment.
so we need to get in front of it and figure out what the factors are. i'm looking at expected versus actual debts. and many years, it's substantially lower than they projected. you know, that should have some effect on this at some point. so i hear what you're saying and i understand it, but i'm saying that we need to do something proactive going forward so we're not faced with this in the end of three years. >> i appreciate that comment and what i will say looking back on the last renewal cycle. i think everything set itself as a rate freeze with the justification that again, long-term disability is running well, life insurance running poorly, in aggregate, let's just keep rates the same. i do credit the hartford for coming with an initial renewal where overall rates did decrease, but to us, it wasn't
enough. i do personally feel this revised life insurance rate does position for long-term rate stability. i wouldn't expect the need for a further rate increase three years from now. of course, experience can vary. but from my view, this rate sets a number to where it should sustain for the long-term. and again, i think you'll see when we talk about the long-term disability information that the further rate reduction off the initial proposal was more than warranted. >> commissioner scott: thank you. >> commissioner follansbee: can i follow-up? i'm also confused. because if you factor out 2018, where the actual deaths within the hhs system was less than projected by hartford, one would suggest if the new rate were based on sort of experience, then there -- we were roughly on
parity with what would have been expected by hartford. so to me, it suggests one of two things. either aetna's benchmarks were completely off and they didn't expect the number of deaths that hartford has more robust, quote unquote data on this for the future, or that hartford just charges an awful lot more for basic life insurance. or possibly that they expect a lot move or our employees will move out of the $50,000 to the 125, 150. and therefore, be more -- people in the higher categories. because just on the face of it, the deaths don't explain any of the rate increase. >> no, that is a very astute oh. the statistics on page 7 are
approximately 1.1 to 1.2 expected deaths per thousand. that translates into a rate that is roughly the 11.4 cents. my feeling is for the risk that is presented for this population of basic life insurance, 8 cents wasn't enough. at some point it was quoted and certainly to the employers' advantage that the rates were perhaps lower than the expected experience would say they should be, so that's been a benefit to the employers for this period of time. and that plays out in the figure that i quoted on page 6, where over the last five years -- and again, this includes a favorable 2018, there has been $4.5 million in premiums paid to the plan, but 5.7 in claim payment. so the hartford has paid out $1.2 million more over five
years than was collected in premium for the plan. i so i think it's a function of the 8 cents not being adequate for the risk that is presented by the population in this basic life insurance plan. i will transition to good news. page 8. that is long-term disability. there are two plan designs. most employees as you see in the table at the bottom of page 8 are in the 60% benefit, but they're also 6800 covered employees in the 66-two-thirds benefit, so that's just a matter of what different employee groups have offered to them. there is very favorable experience in this plan. again, originally, the hartford proposed a reduction of 10% in
these premiums as their original quote. we felt that a larger reduction was due into this plan because of the favorable claim experience. and so again, that was part of the negotiation of allowing them to take up the basic life insurance rate. in return, i asked for doubling that reduction on the long-term disability rate. so after i walk you through the individual slurnss, i have a -- insurances, i have a chart at the end where i will show you what the benefit will be, both to employers, but also to employees as a result of the negotiation. you can see here on page 9, that there has been a much lower actual approved l.t.d. events into this plan relative to the benchmark. i will say 2018 is still somewhat immature, because at this point not all of incurred
2018 long-term disabilities will be known because of the long tail on those claims. supplemental life insurance is fully member paid. hartford proposed keeping the rates the same, but experience has been favorable. executive director mentioned the recent kind of special election activity that included supplemental life insurance. so we were able to ask for and receive a 15% premium reduction on employees, dependent supplemental life as part of our negotiation. that is the element that benefits the employee population in the member paid supplemental life insurance. child life rate remains as they are today. you can see that lower left
bullet. a key goal in this supplemental life insurance rate reduction along with the special enrollment was to increase enrollment in this program as prior to the special enrollment period only 9% of eligible employees participated. then supplemental a.d. and d. insurance, accidental death and dismemberment, the rates are low and staying the same in this renux so page -- renewal. is page 12 is where is bring it together from an overall expected standpoint. these are expected 2020 premiums. so one year. and as you can see, as i mentioned before, long-term disability employer costs are much higher than the overall premiums that are paid for basic life insurance.
and so we will see an increase in the basic life insurance rates, but what we were able to negotiate with the 20% reduction off of current will save employers $1,550,000 projected on long-term disability premiums. so when you bring the combination of the basic life increase and the long-term disability decrease, the overall reduction in premiums is more than $1 million to the employers. but, again, i would be remiss if i didn't point out the member-paid plans with the 15% reduction on supplemental employment. the members will save $119,000 in aggregate on their paid premiums for supplemental life insurance in 2020, which was not part of the original renewal presented by the hartford. so we were able to generate that savings in addition to the incremental long-term disability
savings in return for the increase in the basic employee life premium. so overall, total premiums are projected to decrease $1,170,000, or 12%, between current rates and 2020 under proposed rates. so i bring you to page 13. where i ask you to approve the basic life insurance, long-term disability insurance and supplemental life insurance and ad & d insurance rates that are contained in the presentation with recognition that the rates are for a three-year period, to the rates that i presented will apply from january 1, 2020, through december 31, 2022. and noting in the final statement on page 13 that all premiums displayed as presentation have no commissions built into them. and they are net of commissions.
they are just reflecting the cost of insurance. >> president breslin: any questions? >> commissioner scott: one question. i'm pressed by the value added package. was that available through aetna? number one. and number two, how do they market this? i mean there is a fair amount there. my concern is though it looks like you're getting something for free, frankly, we're not. everything gets built in the rates aszerbaijas value added. >> page 15 is good explanation of what the value added is. the first three listed services,
funeral concierge, i.d. theft protection, those are available today. under aetna. and then the other items listed below that, the beneficiary assist, and the ability assist counseling services with health champion, those are incremental services. so how do we make the awareness in members. i included at the very end of the presentation, a two-page p.d.f. we were supplied by the hartford as a communication sample to utilize in member meetings, posted on the website, certainly allow us, h.s.s., to make the information available. but the hartford does have information that can be posted, can be presented at meetings to help guide members on the awareness of these value-added
services. >> commissioner follansbee: are there links to this through the website? >> president breslin: i assume so. >> yes. yes. >> commissioner follansbee: great. >> president breslin: comments? thank you. any -- i move that we adopt the recommendation as presented with one caveat. that we do something different in our monitoring on the basic life insurance during this rate guarantee than we've experienced in the past. >> noted. thank you. >> second. >> president breslin: all right. any public comment on this item? seeing none. all those in favor? it's unanimous in favor of the motion. item 13.
>> item 13, health plan 2020 medicare plan renewal summary presented by marc clark from aon. >> mike clark, ion, if you recall last month before we started diving into the health plan rate renewals, we presented an overview summary we thought would be helpful to present today. with the two primary focuses being the kaiser permanente and united health care medicare advantage renewals and we'll be presenting on the kaiser multi-region retiree plans. so as introduction on page 1, the information that we'll present today is summarized and just to note that for most of the medicare members there were two plans available. so in northern california, but
also in washington northwest, which is primarily oregon and southwest washington and hawaii, there is regional kaiser permanente medicare advantage plans. and then across the country, there is a united health care medicare preferred provider organization which we call uhc and ppo. so three acronyms in one. we've labelled the washington northwest washington kaiser plans as multi-regions as there are also plans available to non-medicare retirees. page 2 is insight on how many covered lives there are in each of these programs. the uhc ma ppo has the highest number of covered lives because it is a national plan. 77-8% live outside of the kaiser
service area, so that would be the sole plan available, but for the remain der, there is healthy choice. there is approximately 13,000 covered retirees in the kaiser permanente senior advantage or kpsa plan in california. you can see from the multi-region plans, there are not many enrolled, but certainly this is a valuable benefit for those who live in those service areas and decide to choose kaiser. and it's noted in the first bullet, there is also 34 early retirees who are enrolled in kaiser non-medicare coverage in washington, northwest and hawaii. the remainder of the document focuses on the two primary plans. the ppo and the xps.
-- kpsa. on page 3, unlike last year, where we saw decreases in both plans, we're seeing pretty significant increases for 2020. so on the surface, you know, you would say, what is happening with this wild swing in renewals from one year to the next? that is another reason we wanted to put this document together before we dive into each individual plan and i'll talk about that here on the next page. so page 4 for the kaiser permanente plan, the kpsa medicare plan, so every year at this time when we present the rates in june, kpsa is still months away from receiving their final funding information from the federal government. specifically the centers for medicare and medicaid services.
cms. we'll talk about cms in the presentations. there is funding that comes in from cms to support medicare retirees in the advantage plans and then the remaining rate is what cascaded to sfhss and guides contribution splits between employers and members. so last year, the reconciliation worked quite favorably for us at hss. and that's what produced a double-digit decrease in the rate. so what is happening, we're reversing out that very favorable funding that occurred last year relative to the actual funding. and then there is an increase amount to reflect the funding difference that is expected this year going into 2020. now the other element that does not impact kaiser medicare, but did impact as we talked about,
the kaiser non-medicare and we'll talk about it does impact uhc, is the affordable care act health insurance tax. so we've been on this every other year cycle for a few years. it first started with the passage of the affordable care act. the federal government waived this tax in 2017. it came back for 2018. the federal government took specific action last year to have it waived for 2019. as i stand here today on june 13, we don't have legislation that will alleviate the supplying in 2020. so the law reverts to the tax coming back for 2020. kaiser does not pass the act into the kpsa rate, so that is not a factor in the year to year rating, but what is again is the change in cms funding that was
anticipated last year versus what actually came through for 2019. and then how that impacts for 2020. so i will talk specifically in detail about the rate impact on that when we present on the kpsa rate shortly. i will be presenting a recommendation to adopt a transportation benefit writer into the kpsa plan today to support members in need of nonemergent transportation to and from medical services. this is similar to a benefit that was adopted into the uhcppo for this year. and that would add $2.75 per member per month to the rate. we'll talk about how that looks with and without the rider. for uhc, the hip tax is a factor. it's reflected in the rates. if you recall last year, again,
we had a decrease in the uhc rates that was made possible by the suspension of the hip tax for 2019. and that allowed to pay for some of those value added services that became part of the uhc plan this year. so of the 17% increase for the uhc, 10% is due to the hip tax. the remaining 7% is due to combination of plan experience, you foe, relative to -- know relative to cms funding levels and underwriting targets. but the 7% that remains is consistent for what we're seeing with national trends. we do have two changes that we're recommending for consideration by you today. so one plan change will aid in lowering the premium rate increase. that is to move the specialist office visit co-pay from $15 to $20 proposed, to sync with where
the kaiser office co-pay is. but then also introduce a new program to support members. if you recall last year, one of the value added programs for 2019, uhc, was a post discharge meal delivery benefit up to four weeks. so this new program would add that, providing 14 meals annually per member, delivered via the same organization, mom's meal nourish care, that is available to members paid for by the plan. so these combined changes would result in a net reduction of the status quo renewal position of about 0.4%. i'll talk about that during the rate uh-ppo.
>> again, rounding to the nearest dollar amount, it moves to the nearest cent, but gives comparison to retirees and dependents what the rate differentials are between the kpsa and uhc. keep in mind that kpsa is a regional plan. it's a group model, versus the uhc-ppo, which is a national ppo network within the medicare environment. not quite as tightly managed, relying on house calls to promote ability to help members identify their health needs and drive higher star ratings for the uhc-ppo.
the city charter contribution formulas are such that members do not pay any amount for contribution for the retiree only coverage from the medicare plans. but there are contributions required for dependent coverage under both kpsa and uhcppo. our last slide, we wanted to make you aware of a rule change. at the moment, this is not happened, so it may or may not go through, but we wanted to make you aware that cms is considered a rule change that would require group medicare advantage plans to start to reflect prescription drug rebates at the point of sale. on the surface, you would say this would be beneficial to have
those rebates come into the cost of the medications at point of service, but it will actually have the impact of increasing the overall costs for prescription drugs that roll through the medicare advantage plans. and as a result, could have some rate impact on kpsa, uhc, or both. as i document here at the bottom of the page, when and how much would depend on when the rule will be implemented, as well as each plan would determine at the time of rule passage on whether it would apply to 2020 rates. it's possible if it's passed late enough in a year, there may
need to be a mechanism by which this would be paid in 2021. it's hard to know at this point point, so this is simply an awareness item to bring to your attention. we don't talk about our rate presentations because it's not a rule in place today, but we want to make you aware this is brewing out there and there could be impact to the medicare advantage rates for one or both plans if this rule is ultimately passed. >> president breslin: questions? >> can you identify the drivers of the cms policy? >> so in general, there is a lot of i would say passion right now around increased transparency in health care costs.
so the possible rule change that could require plans to reflect prescription drug rebates at the point of sale is a function of that desire for increased transparency. you know, what is happening, those rebates are being used by the plans today to really infuse into the total financial picture of the plan and in a sense, act as a rate offset, versus where the rates would otherwise be. so if the costs of the medications are offset by rebates at point of sale, there is concern about what could happen to the gross pricing of the medications and how that might change. and just the overall mechanics of the financials on how the cost of the drug would reflect in claim environment under these plans, and also how that could impact cms funding under the
plans. so while on the surface, point of sale rebates applying into -- rebates applying point of sale into the cost of drugs may seem to benefit the consumer, the reality is it will put more pressure on the claims cost of the plan and that would be the driver behind the possible need. and again i say possible, of rate increases that may need to happen with kaiser permanente, united health care or both. >> and the other question that i had was the fact that there is such a substantial shortfall or gap between the expected reimbursement in kaiser and what was actually received. is there any explanation as to why they set their sights so high, or so low? >> i personally am not aware. i'm not sure if a representative from kaiser is available to
speak to the funding mechanism. >> you always know there is this gap and risk, it's been there forever, but -- >> president breslin: not this large. >> not this large. >> kaiser permanente, one of the main components of the buildup of the senior advantage rate is the risk adjustment based often the health plan. -- based on the health plan. it's the not reimbursement that changed dramatically, it's the risk acutety of the group within the component. there are multiple pieces that go into it. one is the reimbursement we don't know about until september. we don't know final results until september, but we also don't have the risk data to compare to the other groups until around late june into july. so when we give our rates out more closer to july, august, september, they are closer to the final number from cms, but
because we're doing these earlier and we have both components, the risk adjustment and the cms reimbursement, you can see pretty significant changes. >> if i recall, our population is supposed to be somewhat stable year-over-year. we sat here, i believe, listening to marina -- are you here today? >> she is. >> -- a great presentation and i raised the question at the time would this be reflected in our rates in some way? and apparently it isn't. >> so the main difference between the commercial side is that utilization directly builds up your rates. on the medicare side it's the risk acutety. so it's not that your group got sicker, it's in relationship to others. so it's a different method approach to medicare rates than
it is for commercial. >> okay, i'm going accept that explanation, even though i have a problem with it. >> i have diabetes and hypertension and don't get seen or get that diagnose addressed and refreshed in that year, then it looks like i go back to sort of the baseline medicare healthy, 65-year-old. i'm not 65. but any case. so i guess the question i have is, you know, was there some adjustment in terms of the diagnoses for kaiser that they
didn't code as many serious illnesses in one year and that affected the reimbursement? and i would just say, i guess on the national level, the federal government has been pretty clear what it thinks about, not only the senior advantage programs and they've been paying too much across the board, not just to kaiser, but to all of them, but also that the providers are getting hit. so this is just a microcosm of a bigger issue that is happening across the board and that all medicare recipients should be cognizant of. >> makes excellent points. not an area of expertise on the coding versus what drove the risk change, but short-term, we can -- certainly,