SFHSS board approves rate actions, stabilization reserve use and applies $16M Sutter settlement toward 2024 buy-downs

The San Francisco Health Service System board approved a package of rate and reserve actions at its April 23 meeting intended to stabilize 2024 premiums for covered plans.

Actuary Mike Clark presented several recommendations and the board voted unanimously on each. For the self-funded non-Medicare PPO plan the board approved applying one-third of the 12/31/2022 stabilization reserve deficit'$746,000 of a $2,238,000 deficit'as a rate buy-up allocation for 2024. Clark described the calculation and how the remainder will carry forward into 2025.

Clark also presented fully insured and retiree renewals. The board approved a hold on 2024 VSP vision premium rates as part of an existing multi-year agreement; Clark said the 2024 rates remain at 2023 levels under a five-year arrangement. For retiree dental plans, the board approved Delta Dental PPO retiree rates that include a 2% increase (the first year of a new three-year renewal) while Delta Care USA HMO rates return to 2022 levels and UnitedHealthcare retiree HMO rates were held steady.

Separately, the board approved applying settlement proceeds the system received from the Sutter Health antitrust litigation toward 2024 rating buy-downs. Clark reported SFHSS had received approximately $16,000,000 to date (an anticipated allocation from a larger settlement) and recommended allocating the funds to Blue Shield Access Plus/Trio HMOs (and related UHC EPO split-family lives) and the non-Medicare PPO. The board discussed the accounting principle of matching settlement benefits to affected plan populations; CFO Iftikhar Hussain confirmed the litigation covered self-funded commercial plans and did not include Medicare recipients.

Earlier in the meeting, Ren Coleridge presented SFHSS's 2022 health-plan risk-score analysis. Coleridge highlighted that musculoskeletal disorders were the largest single contributor to risk (about 14 percent) and that 2 percent of the membership classed as "crisis" accounted for approximately 79 percent of plan costs, underscoring concentration of expense among a small group of high-need members.

Aon's Mike Clark also presented Kaiser Permanente plan experience for 2022, showing increases in outpatient care and mental-health utilization and reductions in direct COVID-19 care costs versus 2021. Kaiser representative Denise Rodriguez described pharmacy-management and well-being programs designed to encourage preventive care and appropriate prescribing.

All of the rate and settlement recommendations described above were moved, seconded and approved by roll call with President Scott, Vice President Howe, Commissioner Canning and Commissioner Zavansky voting Aye.

The board directed staff to incorporate these approved buy-down allocations and rate actions into the formal 2024 rating and enrollment materials to be presented at upcoming meetings.