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HSS finance report shows projected $14.3 million trust-fund decrease; actuary cites drug and volume drivers
Summary
Deputy Director/CFO Pamela Levin told the board the Employee Benefit Trust Fund is projecting about a $14.3 million decrease and a year-end balance near $78.5 million; the actuary attributed much of a $12.7 million Blue Shield variance to drug costs and higher utilization.
Pamela Levin, deputy director and chief financial officer for the Health Service System, presented the HSS financial report through May 31 and fiscal-year projections through June 30, telling commissioners the trust fund is projecting an overall decrease of approximately $14.3 million and a year-end balance in the high $70 millions.
Levin described plan-by-plan drivers: City Plan had decreases offset by pharmacy rebates and subsidy uses; Blue Share Flex Plan showed an unfavorable variance. "We are monitoring that on a very regular basis," Levin said, describing discussions with accountable care organizations (ACOs) to reduce claims costs.
Anil Kosher, the Aon actuary, answered commissioner questions about whether the Blue Shield variance was due to price or volume: "There is an increased volume and prices have gone up," he said, adding that specialty drugs, notably recently introduced hepatitis C therapies, accounted for an estimated $4 million of the roughly $12 million variance.
Board members noted some serious individual claims also contributed to the increase. Levin said the formal audit of the trust fund begins and is expected to conclude in October with presentation to the board in December. The board agreed to increase oversight of ACO performance, moving from quarterly to monthly reviews following this report.
The presentation included multiple numerical figures; some line items in meeting materials and the transcript include formatting inconsistencies. Staff will continue to reconcile audit entries and report back to the board as the FY audit is completed.
