FINANCE COMMITTEE MEETING

Transcription

1 FINANCE COMMITTEE MEETING Friday, May 3, 2013 at 8:30 a.m. at 9700 Stockdale Highway Board Room 1 st Floor Bakersfield, CA For more information, call (661) /88

2

3 AGENDA FINANCE COMMITTEE MEETING KERN HEALTH SYSTEMS 9700 Stockdale Highway 1st Floor Board Room Bakersfield, California Friday, May 3, :30 A.M. All agenda item supporting documentation is available for public review at Kern Health Systems in the Administration Department, 9700 Stockdale Highway, Bakersfield, during regular business hours, 8:00 a.m. 5:00 p.m., Monday through Friday, following the posting of the agenda. Any supporting documentation that relates to an agenda item for an open session of any regular meeting that is distributed after the agenda is posted and prior to the meeting will also be available for review at the same location. PLEASE REMEMBER TO TURN OFF ALL CELL PHONES, PAGERS OR ELECTRONIC DEVICES DURING MEETINGS. COMMITTEE TO RECONVENE Members: Deats, Casas, Rhoades, Sidhu, Smith CONSENT AGENDA/OPPORTUNITY FOR PUBLIC COMMENT: ALL ITEMS LISTED WITH A "CA" ARE CONSIDERED TO BE ROUTINE AND NON-CONTROVERSIAL BY KERN HEALTH SYSTEMS STAFF. THE "CA" REPRESENTS THE CONSENT AGENDA. CONSENT ITEMS WILL BE CONSIDERED FIRST AND MAY BE APPROVED BY ONE MOTION IF NO MEMBER OF THE COMMITTEE OR AUDIENCE WISHES TO COMMENT OR ASK QUESTIONS. IF COMMENT OR DISCUSSION IS DESIRED BY ANYONE, THE ITEM WILL BE REMOVED FROM THE CONSENT AGENDA AND WILL BE CONSIDERED IN LISTED SEQUENCE WITH AN OPPORTUNITY FOR ANY MEMBER OF THE PUBLIC TO ADDRESS THE COMMITTEE CONCERNING THE ITEM BEFORE ACTION IS TAKEN. STAFF RECOMMENDATION SHOWN IN CAPS 3/88

4 Agenda Page 2 Finance Committee Meeting 5/3/2013 Kern Health Systems PUBLIC PRESENTATIONS 1) This portion of the meeting is reserved for persons to address the Committee on any matter not on this agenda but under the jurisdiction of the Committee. Committee members may respond briefly to statements made or questions posed. They may ask a question for clarification, make a referral to staff for factual information or request staff to report back to the Committee at a later meeting. Also, the Committee may take action to direct the staff to place a matter of business on a future agenda. SPEAKERS ARE LIMITED TO TWO MINUTES. PLEASE STATE AND SPELL YOUR NAME BEFORE MAKING YOUR PRESENTATION. THANK YOU! COMMITTEE MEMBER ANNOUNCEMENTS OR REPORTS 2) On their own initiative, Committee members may make an announcement or a report on their own activities. They may ask a question for clarification, make a referral to staff or take action to have staff place a matter of business on a future agenda (Subdivision (a)(2) of Government Code Section ) CA-3) Minutes for KHS Finance Committee meeting on April 5, APPROVE 4) Proposed Amendment to Agreement with Argus Health Systems, Inc., for claims processing of outpatient/retail prescriptions from June 1, 2013 through May 31, 2016, in an amount not to exceed $468,000 per year (Fiscal Impact: $1,404,000; Budgeted) - APPROVE; REFER TO KHS BOARD OF DIRECTORS 5) Proposed TV Advertising Contracts - 5 A) Proposed Agreement with Fisher Communications, Inc. (KBAK/KBFX), for spot television commercials from May 9, 2013 through March 1, 2014, in an amount not to exceed $60,000 (Fiscal Impact: $60,000; Budgeted) - APPROVE; REFER TO KHS BOARD OF DIRECTORS 5 B) Proposed Agreement with Nextstar Broadcasting Group, Inc. (KGET/ Telemundo), for spot television commercials from May 13, 2013 through April 30, 2014, in an amount not to exceed $49,840 (Fiscal Impact: $49,840; Budgeted) - APPROVE; REFER TO KHS BOARD OF DIRECTORS 5 C) Proposed Agreement with Scripps Media, Inc. (KERO-TV), for spot television commercials from May 9, 2013 through December 31, 2013, in an amount not to exceed $61,500 (Fiscal Impact: $61,500; Budgeted) - APPROVE; REFER TO KHS BOARD OF DIRECTORS 4/88

5 Agenda Page 3 Finance Committee Meeting 5/3/2013 Kern Health Systems 5 D) Proposed Agreement with Univision Communications, Inc. (KBTF), for spot television commercials from May 9, 2013 through December 31, 2013, in an amount not to exceed $39,032 (Fiscal Impact: $39,032; Budgeted) - APPROVE; REFER TO KHS BOARD OF DIRECTORS 6) Proposed Amendment to Agreement with tw telecom, for internet and telephone services from May 10, 2013 through May 9, 2016, in an amount not to exceed $88,488 (Fiscal Impact: $88,488; Budgeted) - APPROVE; REFER TO KHS BOARD OF DIRECTORS 7) Proposed Agreement with Stria, LLC, for Optical Character Recognition (OCR) services to scan and process paper claims from June 1, 2013 through May 31, 2018, in an amount not to exceed $1,175,000 (Fiscal Impact: $1,175,000; Budgeted) - APPROVE; REFER TO KHS BOARD OF DIRECTORS 8) Report on Kern Health Systems and Kern Health Systems Group Health Plan financial statements for March 31, 2013 (Fiscal Impact: None) - RECEIVE AND FILE 9) Proposed Accounts Payable Vendor Report and non-claims paid through MHC system for March 2013 (Fiscal Impact: None) - RECEIVE AND FILE 10) Kern Health Systems Chief Financial Officer report (Fiscal Impact: None) - RECEIVE AND FILE ADJOURN TO FRIDAY, June 7, 2013 AT 8:30 A.M. AMERICANS WITH DISABILITIES ACT (Government Code Section ) The meeting facilities at Kern Health Systems are accessible to persons with disabilities. Disabled individuals who need special assistance to attend or participate in a meeting of the KHS Finance Committee may request assistance at the Kern Health Systems office, 9700 Stockdale Highway, Bakersfield, California, or by calling (661) Every effort will be made to reasonably accommodate individuals with disabilities by making meeting material available in alternative formats. Requests for assistance should be made five (5) working days in advance of a meeting whenever possible. 5/88

6

7 SUMMARY OF PROCEEDINGS FINANCE COMMITTEE MEETING KERN HEALTH SYSTEMS 9700 Stockdale Highway 1st Floor Board Room Bakersfield, California Friday, April 5, :30 A.M. COMMITTEE RECONVENED Directors present: Deats, Casas, Rhoades, Sidhu, Smith NOTE: The vote is displayed in bold below each item. For example, Smith-Deats denotes Director Smith made the motion and Director Deats seconded the motion. CONSENT AGENDA/OPPORTUNITY FOR PUBLIC COMMENT: ALL ITEMS LISTED WITH A "CA" WERE CONSIDERED TO BE ROUTINE AND APPROVED BY ONE MOTION. COMMITTEE RECOMMENDATION SHOWN IN CAPS PUBLIC PRESENTATIONS 1) This portion of the meeting is reserved for persons to address the Committee on any matter not on this agenda but under the jurisdiction of the Committee. Committee members may respond briefly to statements made or questions posed. They may ask a question for clarification, make a referral to staff for factual information or request staff to report back to the Committee at a later meeting. Also, the Committee may take action to direct the staff to place a matter of business on a future agenda. SPEAKERS ARE LIMITED TO TWO MINUTES. PLEASE STATE AND SPELL YOUR NAME BEFORE MAKING YOUR PRESENTATION. THANK YOU! NO ONE HEARD COMMITTEE MEMBER ANNOUNCEMENTS OR REPORTS 2) On their own initiative, Committee members may make an announcement or a report on their own activities. They may ask a question for clarification, make a referral to staff or take action to have staff place a matter of business on a future agenda (Subdivision (a)(2) of Government Code Section ) 7/88

8 Summary of Proceedings Page 2 Finance Committee Meeting 4/5/2013 Kern Health Systems DIRECTOR RHOADES STATED THAT AGENDA ITEMS 4 AND 7 WERE REMOVED 3) Report by Brown Armstrong CPAs on the audited financial statements of Kern Health Systems and Kern Health Systems Group Health Plan for the year ending December 31, 2012 (Fiscal Impact: None) ERIC XIN AND ROBERT DICKSON, BROWN ARMSTRONG, HEARD; APPROVED; REFERRED TO KHS BOARD OF DIRECTORS Rhoades-Smith: All Ayes 4) Proposed Amendment to Agreement with tw telecom, for internet connectivity and long distance telephone services, extending the term for three years from April 11, 2013 through April 11, 2016, in an amount not to exceed $7,985 per month (Fiscal Impact: $297,460; Budgeted) ITEM REMOVED 5) Proposed Amendment to Agreement with American Business Machines, for purchase of four multi-function copiers and maintenance, in an amount not to exceed $42,392 (Fiscal Impact: $42,392; Budgeted) APPROVED; REFERRED TO KHS BOARD OF DIRECTORS Smith-Rhoades: All Ayes 6) Proposed Amendment to Agreement with CPAC Inc., to provide technical support for Cisco Catalyst switches Series 4507R and 4510R from April 20, 2013 through October 31, 2014, in an amount not to exceed $16,814 (Fiscal Impact: $16,814; Budgeted) APPROVED; REFERRED TO KHS BOARD OF DIRECTORS Rhoades-Sidhu: All Ayes 7) Proposed Agreement with CPAC Inc., for computer hardware replacement including 35 laptop computers, 28 desktop computers, monitors and monitors, in an amount not to exceed $79,849 (Fiscal Impact: $79,849; Budgeted) ITEM REMOVED 8) Proposed Agreement with The Lamar Companies, for advertising of Kern Health Systems on 10 Golden Empire Transit buses from April 15, 2013 through December 22, 2013, in an amount not to exceed $45,000 (Fiscal Impact: $45,000; Budgeted) APPROVED; REFERRED TO KHS BOARD OF DIRECTORS Rhoades-Smith: All Ayes 9) Proposed Agreement with The Lamar Companies, for outdoor advertising of Kern Health Systems on 10 billboards from April 15, 2013 through December 29, 2013, in an amount not to exceed $38,750 (Fiscal Impact: $38,750; Budgeted) APPROVED; REFERRED TO KHS BOARD OF DIRECTORS Rhoades-Smith: All Ayes 8/88

9 Summary of Proceedings Page 3 Finance Committee Meeting 4/5/2013 Kern Health Systems 10) Proposed Amendment No. 2 to Agreement with McKesson Health Solutions LLC, for care management services, settling the dispute over the cost of third party translation fees that includes a discount on third party translation services, a credit in the amount of $14, to be applied to future invoices, and assignment of bilingual nurses (Fiscal Impact: $14, Credit; Not Budgeted) APPROVED; REFERRED TO KHS BOARD OF DIRECTORS Smith-Sidhu: All Ayes 11) Proposed revision to 2013 Kern Health Systems operating budget, increasing medical costs by $5,648,885, from $208,964,116 to $214,613,001, to cover the cost of increased rates paid to Kern Medical Center (Fiscal Impact: $5,648,885) APPROVED; REFERRED TO KHS BOARD OF DIRECTORS Rhoades-Casas: All Ayes NOTE: ITEM 12 WAS HEARD FOLLOWING ITEM 15 12) Report on status of Kern Health Systems facility plan (Fiscal Impact: None) FOR INFORMATION ONLY 13) Report on Kern Health Systems and Kern Health Systems Group Health Plan financial statements for January 31, 2013 and February 28, 2013 (Fiscal Impact: None) RECEIVED AND FILED Smith-Sidhu: All Ayes 14) Proposed Accounts Payable Vendor Report and non-claims paid through MHC system for January 2013 and February 2013 (Fiscal Impact: None) RECEIVED AND FILED Smith-Sidhu: All Ayes 15) Kern Health Systems Chief Financial Officer report (Fiscal Impact: None) RECEIVED AND FILED Rhoades-Smith: All Ayes ADJOURN TO FRIDAY, MAY 3, 2013 AT 8:30 A.M. AMERICANS WITH DISABILITIES ACT (Government Code Section ) The meeting facilities at Kern Health Systems are accessible to persons with disabilities. Disabled individuals who need special assistance to attend or participate in a meeting of the KHS Finance Committee may request assistance at the Kern Health Systems office, 9700 Stockdale Highway, Bakersfield, California or by calling (661) Every effort will be made to reasonably accommodate individuals with disabilities by making meeting material available in alternative formats. Requests for assistance should be made five (5) working days in advance of a meeting whenever possible. 9/88

10

11 11/88

12 12/88

13 13/88

14 14/88

15 15/88

16

17 To: KHS Finance Committee From: Doug Hayward, CEO Date: May 3, 2013 Re: TV Advertising Contracts 5A, 5B, 5C, 5D Background 2013 and 2014 will bring significant change to KHS as we embark on expansion to incorporate increased membership coming from implementation of State and Federal initiatives associated with the Affordable Care Act. This expansion will provide many Kern County residents with the opportunity to receive health care coverage for themselves and their families. It is estimated over 100,000 individuals in Kern County may be impacted by this change. KHS could benefit significantly from this expansion as more people become eligible for Medi-Cal, Dual Eligible Coverage (Medicare and Medicaid) and the Bridge Plan. Many of the newly eligible population will see as one of its options, Kern Family Health Care for the first time. With name recognition playing a significant role in selection, a positive identifiable, relatable image will become paramount to ensure KHS is a benefactor of this expansion. The 2013 Strategic Plan adopted by the Board at its December meeting, included creating a 2013 Marketing and Public Relation Plan promoting KHS s commitment to our mission and community. The content of this plan identifies several avenues though which positive name recognition would be accomplished. The message will project KHS as a health plan, (through its partnership with the provider community), who is caring, innovative, supportive and focused on keeping its members well. Images used in this campaign will be of our members and providers using services and programs available to the local community. The 2013 Marketing Plan was presented and approved by the KHS Board in February Since then, the Finance Committee has approved for recommendation to the Board, the productions costs for our television campaign, along with both billboard and transit contracts for our advertising campaign. Today we ask the Finance Committee to approve the media buy for television advertising approved by the Board at the February, 2013 meeting. 17/88

18 Jacque Jans will present the preliminary TV ads to be aired over the next 9 to 12 months on local television stations owned by the media companies listed as parties to the attached contracts. Requested Action Finance Committee approval of the television contracts with: 5 A) Fisher Communications, Inc. KBAK/KBFX $60,000 8 months 5 B) Nextstar Broadcasting Group, Inc. KGET/Telemundo $49,840 8 months 5 C) Scripps Media, Inc. KERO-TV $61, months 5 D) Univision Communications, Inc. KBTF $39,032 7 months 18/88

19 19/88

20 20/88

21 21/88

22 22/88

23 23/88

24 24/88

25 25/88

26 26/88

27 27/88

28 28/88

29 29/88

30 30/88

31 31/88

32 32/88

33 33/88

34 34/88

35 35/88

36 36/88

37 37/88

38 38/88

39 39/88

40

41 To: KHS Finance Committee From: Doug Hayward, CEO Date: May 3, 2013 Re: Medical Claims and Administrative Support Services Background KHS uses Optical Character Recognition to scan and process paper claims. Our current system, no longer supported by the manufacturer, provided an opportunity to explore more cost effective alternatives. Several options were examined against specific performance and cost criteria. Richard Pruitt will present the outcome of this examination as delineated in the enclosed presentation showing the various alternatives and recommended solution and associated savings to KHS. Requested Action Following discussion, approval to recommend to the Board to contract with a local outside source, Stria LLC to perform OCR function for KHS. 41/88

42 Medical Claims & Administrative Support Services 42/88

43 Overview Background 2007, Optical Character Recognition (OCR) solution purchased OCR converts claims and eliminates the need for manual data entry and provides bulk upload capability KHS receives approximately 30% of its claim volume via OCR (350,000 claims per year resulting in 1.7M images) OCR solution is no longer supported by manufacturer, has been retired, as the manufacturer purchased a competitor Project Reviewed internal OCR process Identified potential solutions Performed cost analysis Published an RFP and selected vendor for OCR process Contracting and approval process 2 43/88

44 OCR Project Internal Review Process 350,000 claims per year resulting in 1.7M images Staff 10 KHS employees (7 full-time equivalents) Cost $400K per year. ($285K staffing, $115K systems) Risk Increased Membership, volume, staffing, hardware and software Risk Limited system changes Alternatives Migrate current system Rent onsite system with KHS staff External onsite staffing of KHS system Onshore outsourcing of entire system Offshore outsourcing of entire system *Review of cost and feasibility revealed that the best alternatives for KHS are migrate or onshore outsourcing. 3 44/88

45 Cost Analysis Migrate Current System (Internal) Total estimated costs: $400,000 / year Per claim cost: $1.70 Risk: Claim Volume Growth Onshore Outsourcing (External) Estimated vendor costs: $235,000 / year Estimated internal costs: $58,000 / year Total estimated costs: $293,000 / year Per claim cost: $0.78 Risk: Less Control Internal vs. External Savings: $535,000/ 5 Years Primary savings in staffing that will be reallocated into Q4 growth Local outsourcing identified as optimal solution 4 45/88

46 RFP Selection RFP Selection Five vendors responded and were scored based on the following: process capability; price, scope response; experience and knowledge; and technology and compliance ability Vendor selected is a local vendor that provided competitive pricing; has experience in healthcare and OCR; and is HIPAA compliant Vendor Selected Vendor 1 Vendor 2 Vendor 3 Vendor 4 Vendor 5 63% 54% 82% 76% 85% Stria Total contract: $1,175,000 5-Year Plan Month-to-Month in 2013 Volume based to accommodate variable growth 3 year contract with 2 year renewal option in 1/ day out, without cause 5 46/88

47 Implementation Plan TESTING Go Live May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct Nov Dec-13 Jan-14 Contract Approval Process Analytics with Vendor 20% Testing Decision 100% Live Upgrade 6 47/88

48 Summary Current OCR solution is no longer supported by the Mfg Receive 350,000 OCR claims/1.7m Images annually 2014/2015 membership growth will increase paper Reviewed five alternatives Conducted RFP with five responses Selected local vendor leveraging a volume based contract Cost savings at current volume: $535K over 5 years 7 48/88

49 49/88

50 50/88

51 51/88

52 52/88

53 53/88

54

55 55/88

56 56/88

57 57/88

58 58/88

59 59/88

60 60/88

61 61/88

62 62/88

63 63/88

64 64/88

65 65/88

66 66/88

67 67/88

68 68/88

69 69/88

70 70/88

71 71/88

72 72/88

73 73/88

74 74/88

75 75/88

76

77 77/88

78 78/88

79 79/88

80 80/88

81 81/88

82 82/88

83 83/88

84 84/88

85 85/88

86

87 To: Finance Committee Date: May 3, 2013 Re: Chief Financial Officer Report Keith Quinlivan, Chief Financial Officer will make a verbal report at today s meeting. 87/88

88

89