Partnership HealthPlan of California Finance Committee ...partnershiphp.org/About/Documents/FinanceCommittee...Governor’s Executive Order on Pharmacy ... budget preparation that

Partnership HealthPlan of California

Finance Committee Meeting Agenda

August 21, 2019 | 8:00 a.m. to 9:30 a.m.

Held at PHC’s Southeast Regional Office at 4665 Business Center Drive, Fairfield, CA 94534

(Board Room – 3rd Floor)

Video Conference Location

PHC’s Southwest Regional Office at 495 Tesconi Circle, Santa Rosa, CA 95401,

PHC’s Northwest Regional Office at 1036 5th Street, Eureka, CA 95501,

PHC’s Northeast Regional Office at 2525 Airpark, Redding, CA 96001,

Yolo County Health and Human Services Agency at 137 N. Cottonwood Street, Suite 2500, Woodland, CA 95695

Finance Committee Members: Dave Jones, Chair, Dick Fogg, Letty Garza, Randall Hempling, Karen Larsen, Viola Lujan, Kathryn

Powell, and Nancy Starck

I. Agenda Items Lead Page # Time

1. Agenda Dave Jones, Chair 1 8:00

2. Finance Committee Minutes – June 19, 2019 - Decision Dave Jones, Chair 2

3. Commissioner Comments

At this time, committee members may provide comments and announcements.

Commissioners --

4. Public Comments

At this time, members of the public may address the committee on any non-agenda

item of interest to the public that is within the subject matter jurisdiction of the

committee. There will also be an opportunity to address the committee on a

scheduled agenda item during the committee's consideration of that item.

Speakers will be limited to three (3) minutes.

Public --

II. New Business

1. CEO’s Health Plan Update – Information Liz Gibboney 8

2. Progress Report – New Building Expenditures - Information Patti McFarland --

3. Wellness & Recovery Update – Information Margaret Kisliuk --

4. Finance Department Update/Budgeting and Value Based Purchasing Priorities –

Discussion

Liz Gibboney/

Jeff Ingram /

Patti McFarland 9

5. Approve May to June 2019 Metrics and Financials – Decision Patti McFarland 13

III. Closed Session

1. Closed Session: Action Pursuant to Government Code § 54957(b) – Personnel

Exception (Information/Action)

Liz Gibboney /

Patti McFarland /

Jeff Ingram --

IV. Adjournment 9:30

Government Code §54957.5 requires that public records related to items on the open session agenda for a regular finance meeting be made available for public inspection. Records distributed less than 72 hours prior to the meeting are available for public inspection at the same time they are distributed to all members, or a majority of the

members of the committee. The Finance Committee has designated the Administrative Assistant to the CFO as the contact for Partnership HealthPlan of California located

at 4665 Business Center Drive, Fairfield, CA 94534, for the purpose of making those public records available for inspection. The Finance Committee Meeting Agenda and

supporting documentation is available for review from 8:00 AM to 5:00 PM, Monday through Friday at all PHC regional offices (see locations above). It can also be found

online at www.partnershiphp.org.

PHC meeting rooms are accessible to people with disabilities. Individuals who need special assistance or a disability-related modification or accommodation (including

auxiliary aids or services) to participate in this meeting, or who have a disability and wish to request an alternative format for the agenda, meeting notice, agenda packet or

other writings that may be distributed at the meeting, should contact the Administrative Assistant to the CFO at least two (2) working days before the meeting at (707) 863-

4207 or by email at [email protected]. Notification in advance of the meeting will enable the Administrative Assistant to make reasonable arrangements to

ensure accessibility to this meeting and to materials related to it.

This agenda contains a brief description of each item to be considered. Except as provided by law, no action shall be taken on any item not appearing on the agenda.

Finance Committee Packet, 082119: Page 1 of 31

IntentionallyLeftBlank

HEALTHPLAN OF CALIFORNIA MEETING MINUTES

Committee: Finance Committee Date/Time: June 19, 2019 / 8:00 – 9:30 AM Members Present: Dave Jones –Chairperson, Richard Fogg, Randall Hempling, Viola Lujan, Karen Larsen, Kathryn Powell, Nancy Starck* Members Absent: Letty Garza Staff Present: Liz Gibboney, Patti McFarland, Sonja Bjork, Mary Kerlin, Kirt Kemp, Wendell Coats, Jeff Ingram, Michelle Rollins, Marisa Dominguez, Melanie Lam,

Margaret Kisliuk, Wendi West*, Danielle Ogren, Kamille Gholson, Olevia O’Donovan Staff Absent: Amy Turnipseed, Diane Walton Guests: Joseph D’Angina (Woodland Hospital)

* Attendance via Video Conference

DECISION AGENDA ITEMS DISCUSSION / CONCLUSIONS RECOMMENDATIONS / ACTION TARGET DATE DATE RESOLVED

Approval of May 15, 2019 Meeting Minutes

At 8:02am, Dave Jones, Chairperson, confirmed a quorum, stated there are no changes to the agenda; May 15, 2019, meeting minutes was presented for approval.

Action: Mr. Randall Hempling motioned to approve and Ms. Kathryn Powell seconded the motion.

All voted yes to approve.

AGENDA CHANGES AND DELETIONS

None

NEW BUSINESS

CEO’s Health Plan Update

Presenter: Liz Gibboney, CEO

Ms. Gibboney introduced Ms. Karen Powell via video conferencing in Woodland.

Pediatric Services/EPSDT Audit Ms. Gibboney stated that there are many requirements coming from the State, regarding the pediatric audit and the subsequent recommendations, as part of the continued effort to make changes in response to retroactive “new bar” of 50% for MPL. DHCS also announced additional quality measures under Prop 56, however some are not in alignment with our existing QIP. Currently, PHC is considering changes to the PCP QIP, which was already discussed at the Physician Advisory Committee (PAC) meeting earlier this month. PHC will also convene with primary providers in lower performing geographies towards January 2020.

Governor’s Executive Order on Pharmacy There is trailer bill language being pushed through on the pharmacy piece that requires the administration to be

Action: Information only


transparent on the changes, which will have major impacts on the providers and members. Stakeholders are asking for clarity on what pharmaceuticals are included/excluded.

State Budget Status The State approved the budget to include the undocumented young adults, ages 19-26, effective January 2020.

Wellness and Recovery PHC is prepared for the onsite “Readiness Review during the 2nd week of July, and working with DHCS on the documents as required.

Federal Issues There are some changes to the 42 CFR Part 2, on substance abuse regulations and data sharing. The CFR regulations are outdated. Healthcare associations and lobbyists, along with the American Medical Associations (AMA) are advocating for the changes that will offer better coordination of patient care.

In response to Mr. Fogg, Ms. Gibboney stated that the rates will be covered in another part of the meeting.

Social Determinants Convening PHC hosted a Social Determinants conference in early June. Part of the discussion was regarding the concept of bringing in Whole Person Care to health plans. Jacey Cooper of DHCS was the speaker and provided updates to the health plans, including a presentation on “Future of MediCal”. She is leading the waiver planning at DHCS.

NCQA Accreditation & HEDIS Score Improvement Strategy PHC has completed submittal of Interim Survey requirements on June 4, 2019. We will know more in two weeks, with the preliminary report due back in mid-July.

Mr. Richard Fogg asked about updates on the rates.

Mr. Jones asked if there were any more questions.

No additional question was given.

Progress Report – New Building Expenditures

Presenter: Patti McFarland, CFO

Ms. Patti McFarland stated that there are small items that are still in progress, for example, speed bumps and the possible 3rd floor build-out. However, potential tenant requested the space be kept open, as they plan to place cubicles or work stations only; therefore, no additional build-out will be done. As of this report the budget has a surplus of $7.6 million, largely due in part from the hard work of the general contractor, by closely monitoring the subcontractors and recommending changes and clarifying



unnecessary items. For example, the suggested balcony on the top floor was more of a risk due to high winds. It is very rare for a building construction project to be under budget, especially starting from scratch. The final project expenditures will be given, including the capital on the 3rd floor, by the end of the year.

In response, Ms. McFarland stated that the potential tenant would use the site for disaster recovery.

Mr. Hempling asked about the building codes for the tenant.

Mr. Jones asked if there are other questions.

No other question. Wellness & Recovery Program Update

Presenter: Margaret Kisliuk

Ms. Margaret Kisliuk stated that PHC was in another conference call with DHCS, and is awaiting approval from CMS The proposed mandate will have the State contract with the counties, then the counties delegate to PHC. PHC will need to set-up and configure internally on how to be compliant with State regulations. Inland Empire HealthPlan is looking into a similar model, and expects it to be a complicated funding process.


Mr. Jones ask if there are other questions.

No other question. Board Designated Reserve Policy, ADM-30


This resolution approves the recommended changes to the policy to increase PHC’s allocation to an infrastructure fund.

Ms. McFarland presented the minor changes to the policy.

Decision: No questions were asked. Mr. Fogg motioned for approval; seconded by Mr. Hempling


Mr. Fogg recommended to either re-define or remove the word “owner” under Section III.A – Definitions, Tangible Net Equity.

Capital Assets Policy, FIN-700-201


This resolution approves the recommended changes to the policy language under Section VII.B, for recording acquisition of capital assets.

Ms. McFarland presented the minor changes to the policy by adding language, with actual cost, instead of purchase cost, and adding to the definition. There are no changes to the procedure, just clarifying the language.

Decision: No questions were asked. Mr. Fogg motioned for approval; seconded by Ms. Powell.



Final Budget for FY 2019-2020


This resolution approves PHC’s final budget for our core business.

Ms. McFarland presented the final budget from page 3, as all-encompassing with highlights, rather than a stand-alone, as historically been done and presented. This is the final stage which took all elements, trends, and changes into the budget, including version control.

In response to Mr. Fogg, Ms. McFarland stated that the State can do so, and PHC is prepared to provide data on a granular level, should the State require.

Per Ms. McFarland, it is possible, as some managed care plans cover the rural areas it is difficult to encourage members to seek medical help. The rural areas are the ones that bring down the HEDIS scores.

Ms. McFarland stated that the deficit is .3%, not even a full 1%, to keep in perspective. A lot of rigor went into the budget preparation that started in January 2019.

In response, Ms. McFarland stated that the SUR can be estimated and have the $47M earmarked for behavioral health

Capital Projects: Some items are carry-over from the prior year. There isn’t a material increase from prior years, except for the big concentration on the new claims system, including the implementation resources.

In response, Ms. McFarland stated that the Board approves the capital projects. Based on the approved budget, the Executive team decides which capital projects will go forward based on the organization’s need. In some cases, projects will be placed on hold given other priorities. For projects that meet a certain cost threshold, such as those related to IT, the purchase may go out to bid. In some instances, they may not necessarily be the lowest bid/cost, but PHC also looks at strategic benefit, resources/ staffing, and technology.

Per Ms. McFarland, Facilities are doing very well at the maintenance piece, where the staff do the maintenance

Decision: Mr. Hempling moved to approve and Mr. Fogg, seconded the motion.

All voted yes, to approve the budget.

Mr. Fogg asked if the State is reasonable to roll-out MCO into one regional rate.

Ms. Kathryn Powell asked if it is possible for PHC not to be rolled into a single regional rate.

Ms. Lujan asked what percentage is the $9M deficit of the budget.

Mr. Fogg asked if the SUR can be called the Unrestricted Reserves.

Mr. Fogg asked who approves the capital expenses.

Mr. Hempling asked if PHC is staying within budget of its capital needs.


internally, which gives us a lot of savings, and are budgeted ahead of time. There could be some challenges from the tariffs, if some of our items or equipment are affected, for example, IT/technology industry. Fortunately, the new building construction has been completed. Mr. Jones asked if there are any more

questions.

No additional questions. Year in Review: Financial Management Changes in FY 2018-2019

Presenter: Liz Gibboney, CEO; Patti McFarland, CFO; Jeff Ingram, Director of Financial Planning & Analytics

Ms. Gibboney stated that there were modifications to the Finance Department due to new processes being implemented, mandates from the State, and membership decline.

Ms. McFarland added that the department was reorganized considering the staffing levels. PHC is changing the focus to more analysis of data and make data retrieval more efficient with collaboration from IT.

The course for the next five years is to be aligned with the State mandates. Staff will implement budget processes and open communications with other departments.

In response, Ms. McFarland stated that PHC goes through an audit about once every month. Finance also created an internal audit position (Dell Coats), with a dotted line to Ms. Gibboney.

Action: Discussion

Mr. Fogg asked how many audits a year PHC goes through.

Approve April 2019 Metrics and Financials


Ms. McFarland started with page 35, and stated that for the month ending April 30, 2019, PHC is a little positive. Some are due to the settlements and IBNR adjustments, as well as the increase of $6.0 million in State Capitation Revenue, in comparison to prior month. Other Revenue decreased by $3.2 million, primarily from the previous month’s recording of the administrative component of the 2017/18 IGT program.

In response to Ms. Powell, Jeff Ingram stated that the main driver was the aid code proportions and the split between the State and Federal contributions, which was based off the 17-18 higher medical expansion population.

Decision: Mr. Fogg motioned to approve the April 2019 financials, seconded by Ms. Powell.


Ms. Karen Powell asked for clarification on why the IGT they received was higher than anticipated.

III. New Business –CLOSED SESSION

Closed Session: Action Pursuant to Government Code § 54956.9 – Existing Litigation

Action: Decision

No action taken. Finance Committee Packet, 082119: Page 6 of 31

Minutes Prepared and Submitted by: Olevia E. O’Donovan and Kamille Gholson Minutes Reviewed and Submitted by: Jeff Ingram

Chairman Signature of Approval_______________________ Date__________________

Closed Session: Action Pursuant to Government Code § 54956.87, Record Exempt; County Health Plan No action taken.

Adjournment Meeting adjourned at approximately 9:48 am.


Finance Committee

Report from the Chief Executive Officer

August, 2019

DHCS & Legislative Issues

Governor’s Executive Order on Pharmacy

Wellness & Recovery Program & Youth Opioid Response Grant

Prop 56 Funding Opportunities

General

Public Charge Regulations

ACA Constitutionality/Texas v. US and the 5th Circuit Court

NCQA Accreditation & HEDIS Score Initiatives

FY 19‐20 Team Goals


1

Summary of Changes: Ongoing Response to PHC Fiscal Challenges Update August 2019

Executive Summary PHC’s Finance Department has been faced with an increasing work load over the previous five years

stemming from rapid expansion, increased oversight from regulators, and an increased demand for

internal support. The increased workload left minimal resources dedicated to innovation, process

improvement, and quality control. Over the past couple of years the Finance Department has worked

diligently to identify risks and begin working through mitigation plans. This has been—and still is—an

ongoing process. The Department has made significant strides in transforming processes and increasing

transparency in operations to help ensure a better fiscal understanding PHC wide. Notably, this year,

Finance has made several structural, process, and workflow changes to help ensure sound fiscal

operations.

Structural, Process, and Workflow Changes Evaluation and Approach The Finance Department worked to formally establish what a “high functioning” department meant.

Through a series of meetings, functional reviews, and goal discussions the department leadership

articulated the following working priorities for the department:

Fosters fiscal stewardship throughout the organization through shared review and responsibility

for asset control and risk management.

Provides timely, reliable, accurate and useful analytics that allow for proactive and informed

decision making/executive action.

Support of shared values: transparency, integrity, collaboration (inter/intra departmental),

work/life balance, continuous quality improvement, efficiency.

Implementation of Improvements Corrective actions became part of updated mid‐year departmental goals for 2017‐18 and were also

captured in more detail as part of the 2018‐19 goals and budget planning efforts. Selected actions to

date have been taken in six broad areas: (1) Administrative Capacity, (2) Budget Development, (3)

Quality Control, (4) Fiscal Monitoring, (5) Communication, and (6) Provider Contracting.

Administrative Capacity The Finance Department has made changes to increase overall capacity to meet the evolving

organizational needs. The Finance Department Leaders reviewed the Department’s existing positions

and experience levels to determine the best allocation of responsibilities. From this analysis, certain

open positions were repurposed or eliminated and certain duties for existing positions were re‐

distributed. As a result, the number of full‐time equivalents remained the same from fiscal year 2018‐19

to 2019‐20. However, the overall capacity has improved significantly. As of June 2019, the Finance

Department had ten new hires, providing a varying level of experiences and skill sets to complement


2

existing staff. As processes are refined and responsibilities change, personnel considerations will be

recommended as needed.

Budget Development For the 2019‐20 fiscal year, the Finance Department designed a completely new budget process for

membership, revenue, and healthcare costs. The new approach utilized a financial model that allowed

for frequent data refreshes in addition to scenario planning. The model allowed for detailed

documentation to track data sources, contributors, and iterations.

As for the administrative budget, to improve the review process of personnel requests, the due date for

the personnel budget was set earlier in the process. The earlier due date allowed the Executive Team

more time to meet with all the directors regarding their requests and to reach a joint conclusion on

what would be the best fit for the organization. A similar process was adopted for the development of

the capital asset budget. Additionally, to further enhance the directors’ understanding of the

administrative budget process, Finance met individually with the directors, conducted group‐training

sessions, and created standing agenda items on the bi‐weekly Ops meeting along with the bi‐monthly

MOR meeting.

The overall annual budget was approached as a departmental initiative with all materials stored on the

internal SharePoint site to maximize transparency. The Finance Department Leadership met on

numerous occasions to review and challenge all elements of the budget to yield a mutually agreed upon

target. The budget presentation to the Finance Committee and Board of Commissioners was also

refreshed to provide a running narrative of risks and opportunities by category. Staff will track the

actual financial performance and continue to keep the Organization and Governing Committees

apprised of favorable and unfavorable budget developments.

Fiscal Monitoring Finance is making strategic use of analytic and documentation tools like Tableau, SharePoint, and others

to support a more rigorous ongoing fiscal monitoring. The primary focus has been around budget

variance, healthcare cost trends, SUR reporting, revenue reconciliation, and cost avoidance.

Budget variance and cost trending are two of the most important functions related to fiscal

monitoring. The Finance Department has designed comprehensive models to track the

healthcare cost trends as well as utilizers against budget assumptions. Early detections of cost

runs can save a health plan millions over a small amount of time. These increases could be

attributable to contract changes, configuration updates, utilization trends, facility mixes, or

overall economic factors.

Improved Strategic Use of Reserves (SUR) accounting: During fiscal year 2017‐18, the Accounting

team worked with department directors to develop a reporting structure that would allow

Finance to report on the financial status of a SUR as needed. As a result, an updated summary

of outstanding SURs is presented to the Finance Committee each month. Additionally, the

Analyst team revised the data collection process for health care cost related SURs processed in

Amisys. The result was a restatement of the Hospital Outpatient Rate Increase, LTC Provider


3

Rate Increase and Medicare Copays and Deductibles SURs to more accurately reflect the balance

of those SURs.

Revenue reconciliation improvements: The Finance Department has implemented a process to

review the 820 report for data quality issues and reconcile the 820 report to cash receipts on a

monthly basis. We report data quality issues to DHCS as part of this process. The Finance

Department has also identified major issues with the data quality provided by DHCS for the prior

and current periods, incomplete and duplicate entries, and is working with the State to

determine the best solutions to address the data quality issues. With the June 2019 capitation

payment, DHCS changed its systems for the 820 report and is no longer providing invoices that

Finance used to validate and identify data quality issues with the 820 report. Finance now needs

to reevaluate the revenue reconciliation process. As part of this reevaluation process, members

of the department have joined a state wide workgroup, the Electronic Accounting Modular

Interface (EAMI), which consists of representation from all health plans and key representatives

from DHCS. The goal of the workgroup is to work through technical issues and questions with

DHCS so that plans can efficiently and effectively reconcile the 820 report to support their

accounting records. The workgroup has identified and raised numerous issues with DHCS and is

in the process of working through those issues with DHCS. Finance also continues to work with

the IT department to make changes to our EDI process to accommodate these changes and

assist with the reconciliation process.

Quality Control Through the changes made with the Department’s personnel, as indicated above, the Department has been able to have more segregation, additional reviews, and transparency to existing processes. The Department has also made strides in automating manual processes, increasing efficiencies and mitigating risk of errors. The Department plans to continue the process of automation where it makes sense, allowing more resources to be committed to improving the quality of the analytics and other information published by the unit.

In May 2019, a new internal audit and treasury position was added to the department. This new position will provide leadership, direction, and management of all aspects of the internal audit and treasury functions through a systematic and disciplined approach to identify risks, monitor compliance with organization's policies and internal controls, evaluate whether such internal controls/governance practices are working effectively, and educate and train staff. This position will participate with, and support the Chief Financial Officer (CFO) in the continuous assessment process, in the development and maintenance of the Internal Audit Plan and provide oversite of the company's financial activities.

This new position will also provide the Finance Department an independent review of financial and analytic reports that are produced for upper management, board and external users; for accuracy, documentation, and reasonableness.

Communication The Finance Department has worked hard to elevate budget and fiscal communication generally, across

key organizational departments, as well as across intra‐divisional units. For example, the Finance

Department hosts a bi‐monthly Finance meeting, Monthly Operating Reports (MOR), to present findings


4

and financial performance to a cross section of key leaders and staff from the Organization. This

meeting allows for an open feedback loop to address concerns Finance may have, but allow for outside

departments to raise issues of their own. Over the last year, staff has also provided fiscal trainings to

outside departments to support a broader fiscal understanding. In addition to the meetings and

trainings, an email inbox was created and shared to allow any and all PHC Staff to contribute ideas,

concerns, and solutions related to financial performance. The inclusion of the broader audience ensures

the Finance Department and Leadership continue to make informed decisions.

Provider Contracting A significant amount of work has been done over the last year to improve PHC’s contracting approach

and process as well as increase value‐based purchasing efforts. Increasingly, the state and federal

government, expect and require certain value‐based purchasing models and programs. For example,

the State recently enacted a required managed care value‐based purchasing program for physicians

related to certain tobacco tax related funding. This new program will provide risk‐based incentive

payments to physicians for certain high‐cost or high‐need populations that meet certain performance on

identified metrics.

During the 2018‐19 fiscal year, PHC worked on a very ambitious team goal to strengthen contracting and

value‐based purchasing to meet our fiscal stewardship and budgetary needs. This included modernizing

contract templates to reflect state requirements, NCQA goals, Quality Improvement Programs (QIP) and

other priorities. It also included re‐vamping the contracting process with greater finance linkage,

supporting documents and analytics, and finally, the development of a conceptual fiscal strategic plan

that outlines PHC’s philosophic approach to risk‐based contracting and fiscal priorities.

Ongoing Work PHC continues to make efforts to evaluate and implement needed improvements to make the

department’s output internally and externally sound. Finance views this as a continuous, iterative

process that will support the evolution of the Organization and industry.


FINANCIAL HIGHLIGHTS Of The Partnership HealthPlan Of California For the Period Ending June 30, 2019

Financial Analysis for the Current Period

Total (Deficit) Surplus For the month ending June 30, 2019, PHC reported a surplus of $9.1 million, reducing the year-to-date deficit to $54.6 million. Significant variances are explained below.

Revenue June’s State Capitation Revenue of $234.8 million decreased by $13.0 million in comparison to the prior month, primarily due to a year-to-date adjustment provided by DHCS booked in May 2019.

Healthcare Costs Total Healthcare Costs are lower than budget by $10.1 million for the month, and higher by $41.9 million year-to-date. Notable variances are as follows:

Physician Services is unfavorable to budget $6.2 million year-to-date, which is primarily attributable to higher incurred expenses than anticipated.

Total Inpatient Hospital has an unfavorable year-to-date variance of roughly $15.0 million. Partnership is actively engaged in contract negotiations with various network hospitals in addition to closely monitoring expense development.

Long term care is favorable to budget by $2.4 million for the month and $4.8 million year-to-date. The favorable variance is due to timing of budget expectations related to retro-rate adjustments.

Pharmacy remains unfavorable year-to-date with a variance of $13.9 million, attributable to higher utilization along with higher than anticipated costs related to the renewed MedImpact contract. As previously discussed, PHC has been working with the PBM in an effort to restructure the contract to receive more favorable financial outcomes.

Capitated Ancillary Services has a year-to-date favorable variance of $2.1 million which is attributable to favorable contract development related to vision services. Non-Capitated Ancillary Services is over budget $14.2 million year-to-date due to a number of accrued liability true-ups primarily for outpatient services. The Transportation expense within Other Medical remains over budget on a year-to-date basis and now includes a ground emergent medical transportation program (GEMT) component that was released with the 2018-19 final rates.

Administrative Costs Total administrative costs are under budget by $18.1 million for the year. The larger year-to-date variances are from Employee Costs, which are due to open positions that were budgeted for but were not filled during the year. Occupancy Costs also contributed to the variance as several budgeted capital items were not purchased during the year, which resulted in lower depreciation costs; many of these budgeted capital purchases will be carried over into the following fiscal year.


FINANCIAL HIGHLIGHTS Of The Partnership HealthPlan Of California For the Period Ending June 30, 2019

Balance Sheet Total Cash & Cash Equivalents increased by $29.3 million for the month. The increase is primarily related to the annual QIP payments disbursed in May for $27.7 million.

The Strategic Use of Reserve balance decreased by $600 thousand for the month bringing the balance to $60.6 million. The SUR Project initiatives that contribute to this decrease for the month include Access projects for $353 thousand, Community Partnership projects for $258 thousand, and other projects for $28 thousand. In order to not understate the balance for uncompleted SURs, the SUR amounts that have exceeded their original budget have been excluded in calculating the ending balance. See reconciliation of the unspent SUR to date on the Strategic Use of Reserves Update schedule.

General Statistics

Membership Membership had a net decrease of 2,412 members for the month. Medi-Cal Rate Regions 1 and 2 had net membership decreases of 1,392 and 1,020, respectively.

Current Ratio/Required Reserves (Excluding Capital Assets) Current Ratio Including Required Reserves 1.97 Current Ratio Excluding Required Reserves: 1.24 Required Reserves: $481,630,143 Total Fund Balance: $604,225,818

Days of Cash on Hand Including Required Reserves: 88.05 Excluding Required Reserves: 44.51


Partnership HealthPlan of CaliforniaStrategic Use of Reserves UpdateAs of June 30, 2019

Focus Area InitiativeAllocatedAmount

$ Spent To-Date

Balance at06/30/18

SURAdditions/

Adjustments

SURDeletions

(P&L)

SURDeletions

(B/S)

Re-AllocUnusedFunds

Balance at 06/30/19

Access 1% Reduction 7,800,000 7,800,000 - - - 0Billing Limit 8,400,000 8,400,000 - - - 0Hospital Outpatient Rate Increase (to 165%) 54,000,000 57,119,279 (7,050,570) 3,931,291 - (3,119,279)Long Term Care Provider Rate Increase (2%) 25,800,000 20,506,171 4,905,612 388,217 - 5,293,829Medicare Copays and Deductibles 12,000,000 26,936,535 (14,077,385) - (859,150) (14,936,535)Provider Recruitment Program 8,562,270 4,494,030 5,015,875 35,000 (982,635) 4,068,240Others 25,255,060 22,905,371 3,263,985 74,645 (988,942) - 2,349,689

Access Total 141,817,330 148,161,386 (7,942,482) 4,429,153 (2,830,726) - (6,344,056)Care Coordination Analytics Support 750,000 750,000 - - - 0

CarePlus (Home Visit Program) 2,700,000 2,700,000 - - - 0Case Management System 2,500,000 3,092,416 (187,381) - (405,035) (592,416)IOPCM Grants (Marin CC, Shasta CHC) 900,000 900,000 - - - 0IOPCM Grants (Mendo, PHC, QVMC, La Clinica) 1,500,000 1,500,000 - - - 0Others 1,663,140 3,045,225 (1,381,868) - (217) (1,382,085)

Care Coordination Total 10,013,140 11,987,640 (1,569,249) - (405,252) (1,974,500)Community Partnership Discharge Grant 500,000 405,094 367,500 - (272,594.00) 94,906

Local Innovation Fund: SDOH (Round 2) 2,650,000 2,624,756 359,873 - (334,629) 25,244LOCAL INNOVATION FUNDS- Provider Access 1,600,000 1,424,213 175,787 - - 175,787SUR Funding Project for Housing & Sober Living 25,000,000 5,058,479 23,725,746 - (3,784,225) 19,941,521Others 775,310 713,815 349,001 - (287,506) 61,495

Community Partnership Total 30,525,310 10,226,356 24,977,907 - (4,678,954) 20,298,954New Benefits Cardiac Rehab Benefit (RM) 300,000 300,000 - - - 0

Coverage Of Chiropractors & Acupuncturists For Patients On A Narrow Basis (Rm) 300,000 300,000 - - - 0Palliative Care Benefit 1,800,000 1,800,000 - - - 0Optional Medi-Cal Benefits-Vision&Podiatry 18,000,000 6,864,078 (3,685,250) 14,821,172 - 11,135,922Others 413,000 447,430 (34,430) - - (34,430)

New Benefits Total 20,813,000 9,711,508 (3,719,680) 14,821,172 - 11,101,492Plan Infrastructure Analytics Department 1,500,000 1,500,000 - - - 0

Enterprise Data Warehouse 2,700,000 2,700,000 (691) 691 - 0New Building in Fairfield - 4605 Bus. Ctr. Dr. 53,006,400 39,179,185 26,015,600 (12,188,385) 13,827,215NR Buildings (Redding and Eureka) 3,112,511 3,112,511 - - - 0Technical Infrastructure For Hie And Clinical Data 2,000,000 2,142,695 238,837 - (381,532) (142,695)Others 3,545,930 4,372,037 (320,953) - (505,154) (826,107)

Plan Infrastructure Total 65,864,841 53,006,428 25,932,794 691 (886,686) (12,188,385) 12,858,414Quality Clinic Consortia Quality Improvement 1,275,000 1,275,000 - - - 0

Expand Hospital P4P Programs 7,500,000 4,750,000 2,750,000 - - 2,750,000Improve Prenatal Care With Pay For Performance Program 1,000,000 201,675.00 1,000,000 - (201,675) 798,325PCP QI Planning 330,000 330,000 - - - 0Pharmacy QIP 3,200,000 3,200,000 - - - 0Others 410,000 286,072 155,752 - (31,824) 123,928

Quality Total 13,715,000 10,042,747 3,905,752 - (233,499) 3,672,253

Grand Total 282,748,621 243,136,065 41,585,042 19,251,016 (9,035,117) (12,188,385) - 39,612,556

Over Expenditures To-Date 26,738,528 21,033,547

Total Unspent SUR To-Date 68,323,570 60,646,102


Partnership HealthPlan of CaliforniaExecutive Dashboard: Medi-Cal - Rate Region 1Key Measures of Financial Performance as of June 30, 2019

2018/19 2018/19 2017/18 2017/18LOB: Medi-Cal Budget Estimated FYTD Budget Actual

Average Enrollment 225,260 224,952 235,427 231,862Cost Per Member Per Month:

Global Subcapitation $45.01 $45.95 $44.89 $45.32Professional Cap $20.51 $21.72 $20.90 $21.43Medical Services (FFS &Prop 56) $91.40 $100.98 $79.82 $88.80IP Hospital - Cap $44.21 $47.96 $42.92 $45.88IP Hospital - FFS $65.05 $67.27 $60.25 $61.13Pharmacy $35.73 $38.90 $38.93 $37.27Long Term Care $52.11 $51.32 $47.23 $47.00Total $354.02 $374.10 $334.92 $346.83

Total Capitation Revenue PMPM $380.38 $402.36 $351.14 -$12.02

Annual Bed Days/1000 324 306 Annual Admissions/1000 66 64 Avg Length of Stay (ALOS) 4.88 4.75 Avg Cost Per Bed Day $4,244 $4,132ED Visits/1000 583 594 Physician Visits PMPY 2.75 3.14 Pharmacy Avg Cost Per Fill $78.06 $69.56Pharmacy Pct. Generic Fills 89% 89%Pharmacy Fills PMPY 7.71 8.16 FY 2017-2018 Utilization measures as of 6/30/18. FY 2018-2019 as of Q3.

Global Subcapitation

12%

Professional Cap6%

Medical Services27%

IP Hospital -Cap13%

IP Hospital - FFS18%

Pharmacy10%

Long Term Care14%

Medi-Cal Expenditures by Cost Category

FY 2018/2019

Global Subcapitation Professional CapMedical Services IP Hospital - CapIP Hospital - FFS PharmacyLong Term Care

Professional Cap7%

Medical Services31%

IP Hospital -Cap14% IP Hospital - FFS

20%

Pharmacy12%Long Term

Care16%

Medi-Cal Expenditures(excluding Kaiser)

by Cost CategoryFY 2018/2019

Professional Cap Medical ServicesIP Hospital - Cap IP Hospital - FFSPharmacy Long Term Care


Partnership HealthPlan of CaliforniaExecutive Dashboard: Medi-Cal - Rate Region 2Key Measures of Financial Performance as of June 30, 2019

2018/19 2018/19 2017/18 2017/18LOB: Medi-Cal Budget Estimated FYTD Budget Actual

Average Enrollment 324,740 329,271 337,993 333,914Cost Per Member Per Month:

Global Subcapitation $13.91 $13.16 $12.59 $14.36PCP & Spec/Ancillary Capitation $12.41 $12.00 $12.69 $13.11Medical Services (FFS, AB915 & Prop 56) $119.65 $126.53 $97.65 $112.35IP Hospital - Cap $18.22 $18.26 $17.76 $18.32IP Hospital - FFS $98.68 $104.82 $82.55 $91.67Pharmacy $41.06 $45.80 $45.49 $41.39Long Term Care $48.50 $48.61 $48.96 $47.65Total $352.45 $369.19 $317.70 $338.84

Total Capitation Revenue PMPM $375.85 $389.92 $343.33 $350.66

Annual Bed Days/1000 321 298 Annual Admissions/1000 66 63 Avg Length of Stay 4.84 4.72 Avg Cost Per Bed Day $4,340 $4,281ED Visits/1000 655 671 Physician Visits PMPY 2.61 3.10 Pharmacy Avg Cost Per Fill $71.75 $65.32Pharmacy Pct. Generic Fills 89% 90%Pharmacy Fills PMPY 7.88 8.20 FY 2017-2018 Utilization measures as of 6/30/18. FY 2018-2019 as of Q3.

Global Subcapitation

4%

Professional Cap3%

Medical Services34%

IP Hospital - Cap5%


Pharmacy13%

Long Term Care13%

Medi-Cal Expenditures by Cost Category

FY 2018/2019

Global Subcapitation Professional CapMedical Services IP Hospital - CapIP Hospital - FFS PharmacyLong Term Care

Professional Cap3%

Medical Services36%

IP Hospital - Cap5%


Pharmacy13%Long Term

Care14%

Medi-Cal Expenditures(excluding Kaiser)

by Cost CategoryFY 2018/2019

Professional Cap Medical Services

IP Hospital - Cap IP Hospital - FFS

Pharmacy Long Term Care


Please note that the actual enrollment reported here is based on data refreshed as of Aug 1, 2019 and may not tie to the financial statement.

Member Months by County:

County Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19

Solano 109,126 108,671 108,473 108,380 108,188 108,253 107,799 107,532 107,167 107,334 107,356 107,067 106,144

Napa 28,300 28,330 28,257 27,963 27,760 27,652 27,426 27,478 27,400 27,319 27,440 27,572 27,560

Yolo 53,009 52,881 52,794 52,803 53,074 53,112 52,781 52,550 52,237 51,866 51,669 51,537 50,940

Sonoma 108,613 107,812 107,561 107,495 107,032 106,785 106,294 106,005 106,212 105,870 105,066 104,767 104,490

Marin 38,246 38,024 37,761 37,566 37,433 37,440 37,092 37,195 37,126 37,073 37,149 37,287 37,263

Mendocino 38,856 38,794 38,572 38,616 38,605 38,600 38,439 38,393 38,146 38,150 38,171 37,894 37,356

Lake 30,867 30,790 30,648 30,550 30,548 30,464 30,286 30,318 30,210 30,071 30,010 29,904 29,817

Del Norte 11,486 11,469 11,360 11,323 11,251 11,229 11,270 11,264 11,200 11,158 11,158 11,131 11,144

Humboldt 52,302 52,248 52,000 51,926 51,898 52,043 51,906 52,022 51,990 51,938 52,126 52,198 51,974

Lassen 7,360 7,335 7,327 7,325 7,293 7,359 7,208 7,129 6,943 6,965 7,014 6,988 7,020

Modoc 3,142 3,129 3,113 3,149 3,151 3,147 3,174 3,195 3,196 3,194 3,184 3,186 3,165

Shasta 59,824 59,731 59,583 59,289 59,368 59,617 59,764 59,502 59,197 59,079 59,015 58,848 58,683

Siskiyou 17,633 17,500 17,480 17,456 17,475 17,491 17,480 17,469 17,438 17,337 17,267 17,183 17,062 Trinity 4,340 4,356 4,306 4,313 4,273 4,300 4,250 4,274 4,281 4,258 4,233 4,204 4,211 All Counties Total 563,104 561,070 559,235 558,154 557,349 557,492 555,169 554,326 552,743 551,612 550,858 549,766 546,829

Medi-Cal Region 1: Solano, Napa, Yolo & Marin; Medi-Cal Region 2: Sonoma, Mendocino & Rural 8 Counties

570,924

563,289 560,805

558,342

555,899 553,476

551,073 548,691 546,328

543,984 541,661

539,357 537,071

563,104 561,070 559,235 558,154

557,349 557,492 555,169 554,326

552,743 551,612 550,858

549,766 546,829

530,000

535,000

540,000

545,000

550,000

555,000

560,000

565,000

570,000

575,000

580,000

585,000

590,000

JUN ‐18 JU L ‐18 AUG ‐18 S EP ‐18 OCT ‐18 NOV ‐18 DEC ‐18 J AN ‐19 F EB ‐19 MAR ‐19 APR ‐19 MAY ‐19 JUN ‐19

PARTNERSHIP HEALTHPLAN OF CALIFORNIAACTUAL V. PROJECTED MEDI‐CAL ENROLLMENT

JUNE 2018 ‐ JUNE 2019

Projected (Budgeted) Actual


43,343 As of

FINANCIAL INDICATORS Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 YTD Jun-19

Total Enrollment 558,229 555,694 554,259 553,722 554,344 551,393 550,184 549,293 548,517 547,283 547,276 544,864 6,615,058 551,255

Total Revenue 223,622,396 224,627,038 223,011,248 221,839,053 238,320,688 225,145,110 229,293,826 234,635,800 237,354,464 240,583,405 248,302,311 235,490,761 2,782,226,099 231,852,175 Total Health Care Costs 215,098,111 213,849,684 210,084,055 209,799,985 223,764,851 211,650,497 216,013,007 226,612,352 225,474,410 219,531,756 218,022,242 205,309,098 2,595,210,049 216,267,504 Total Administrative Costs 7,937,564 8,576,255 7,892,305 8,992,573 8,487,438 9,080,268 9,079,667 8,720,456 9,568,053 8,989,395 10,037,320 9,906,862 107,268,157 8,939,013 Medi-Cal Hospital & Managed Care Taxes 11,196,958 11,196,958 11,196,958 11,196,958 11,196,958 11,196,958 11,196,958 11,196,958 11,196,958 11,196,958 11,196,958 11,196,958 134,363,496 11,196,958 Total Current Year Surplus (Deficit) (10,610,237) (8,995,859) (6,162,070) (8,150,463) (5,128,559) (6,782,613) (6,995,806) (11,893,966) (8,884,957) 865,296 9,045,791 9,077,843 (54,615,603) (4,551,300)

State DHS Cap Payable 322,923,752 322,923,752 322,923,752 6,562,106 6,562,106 6,562,106 6,562,106 6,562,106 6,562,106 6,562,106 6,562,106 6,562,106 6,562,106 85,652,518 Total Claims Payable 238,728,946 242,503,297 266,069,388 251,011,405 298,803,635 294,871,571 309,072,419 331,116,229 334,992,569 318,215,062 330,437,589 342,352,414 342,352,414 296,514,544

Total Fund Balance 648,231,184 639,235,325 633,073,254 624,922,791 619,794,231 613,011,618 606,015,812 594,121,845 585,236,888 586,102,184 595,147,976 604,225,819 604,225,819 612,426,578 Capital Assets 84,135,058 85,929,106 88,073,284 Reserve Fund - Required Reserves 468,852,166 470,106,280 470,618,797 375,187,068 374,339,552 371,639,122 373,138,099 376,969,141 381,309,416 383,837,629 376,627,068 376,097,730 376,097,730 399,893,506 Reserve Fund - Capital Assets 89,834,151 93,533,892 97,192,597 97,351,505 96,896,491 95,866,835 95,577,773 104,951,344 105,532,414 105,532,414 94,572,871 Reserve Fund - Strategic Use of Reserves 66,188,548 63,204,100 73,804,101 72,586,265 71,540,381 68,267,962 66,495,382 66,082,314 65,094,988 63,538,939 61,259,598 60,646,102 60,646,102 66,559,057 Unrestricted Fund Balance 29,055,412 19,995,839 577,072 87,315,307 80,380,406 75,911,937 69,030,826 54,173,899 42,965,649 43,147,843 52,309,966 61,949,573 61,949,573 51,401,144Fund Balance as % of Reserved Funds 104.69% 103.23% 100.09% 116.24% 114.90% 114.13% 112.86% 110.03% 107.92% 107.95% 109.64% 111.42% 111.42% 109.16%

Current Ratio 1.13:1 1.11:1 1.09:1 1.38:1 1.31:1 1.30:1 1.29:1 1.24:1 1.13:1 1.12:1 1.23:1 1.24:1 1.24:1 1.19:1Medical Loss Ratio w/o Tax 101.26% 100.20% 99.18% 99.60% 98.52% 98.93% 99.04% 101.42% 99.70% 95.70% 91.95% 91.54% 98.01% 98.01%Admin Ratio w/o Tax 3.74% 4.02% 3.73% 4.27% 3.74% 4.24% 4.16% 3.90% 4.23% 3.92% 4.23% 4.42% 4.05% 4.05%Profit Margin Ratio w/o Tax -4.99% -4.21% -2.91% -3.87% -2.26% -3.17% -3.21% -5.32% -3.93% 0.38% 3.82% 4.05% -2.06% -2.06%

Avg / MonthAs of

FINANCIAL INDICATORS Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 YTD Jun-18

Total Enrollment 568,992 569,707 570,705 568,892 566,242 567,337 564,572 564,569 563,691 562,064 560,050 558,880 6,785,701 565,475

Total Revenue 205,914,930 202,463,215 208,643,443 204,685,309 203,524,443 213,293,828 215,921,622 210,269,951 208,960,442 218,229,085 209,685,637 181,661,507 2,483,253,411 206,937,784 Total Health Care Costs 196,109,514 197,452,364 194,021,729 204,535,642 196,831,981 207,039,251 205,275,246 201,457,842 211,879,099 220,366,668 200,913,052 203,354,948 2,439,237,336 203,269,778 Total Administrative Costs 7,493,740 8,045,192 7,555,930 7,729,491 7,898,850 7,913,758 9,650,978 7,766,423 8,209,919 7,858,023 8,643,207 8,987,188 97,752,699 8,146,058 Medi-Cal Hospital & Managed Care Taxes 10,654,816 10,654,816 10,654,816 10,654,816 10,654,816 10,654,816 10,654,816 10,654,816 10,654,816 10,654,816 10,654,816 10,654,816 127,857,792 10,654,816 Total Current Year Surplus (Deficit) (8,343,140) (13,689,157) (3,589,032) (18,234,640) (11,861,204) (12,313,996) (9,659,418) (9,609,130) (21,783,393) (20,650,422) (10,525,438) (41,335,445) (181,594,415) (15,132,868)

State DHS Cap Payable 538,743,271 443,571,500 524,648,407 488,902,411 439,666,040 389,323,402 341,860,755 341,871,594 341,886,198 341,814,082 340,900,506 322,923,752 322,923,752 404,675,993 Total Claims Payable 222,550,796 206,631,634 221,639,982 207,148,084 222,592,917 235,244,176 229,118,232 251,870,385 235,067,841 214,457,971 224,847,266 247,403,757 247,403,757 226,547,753

Total Fund Balance 832,092,696 818,403,539 814,814,507 796,579,867 784,718,663 772,404,666 762,745,249 753,136,118 731,352,725 710,702,304 700,176,866 658,841,421 658,841,421 761,330,718 Capital Assets 57,893,788 60,201,112 62,527,138 64,308,066 66,311,268 68,557,648 70,577,856 72,423,316 73,790,467 78,146,812 78,942,486 79,989,985 79,989,985 69,472,495 Reserved Funds - Strategic Use of Reserves 104,524,973 98,369,480 94,884,494 90,902,268 85,254,785 70,540,971 68,189,018 65,752,188 63,856,025 55,608,127 55,043,647 68,323,570 68,323,570 76,770,796 Reserved Funds - Required Reserves 450,075,961 449,170,817 448,257,893 449,389,049 448,949,490 450,340,836 451,528,188 452,157,040 454,400,725 457,737,337 459,214,840 459,441,304 459,441,304 452,555,290 Unrestricted Fund Balance 219,597,974 210,662,130 209,144,982 191,980,484 184,203,120 182,965,211 172,450,186 162,803,575 139,305,508 119,210,028 106,975,893 51,086,562 51,086,562 162,532,138 Fund Balance as % of Reserved Funds 135.85% 134.66% 134.53% 131.75% 130.67% 131.04% 129.21% 127.58% 123.53% 120.15% 118.03% 108.41% 108.41% 127.14%

Current Ratio 1.36:1 1.39:1 1.34:1 1.34:1 1.34:1 1.33:1 1.33:1 1.30:1 1.27:1 1.25:1 1.20:1 1.17:1 1.17:1 1.30:1

Medical Loss Ratio w/o Tax 100.44% 102.94% 98.00% 105.41% 102.05% 102.17% 100.00% 100.92% 106.84% 106.16% 100.95% 118.92% 103.56% 103.56%

Admin Ratio w/o Tax 3.84% 4.19% 3.82% 3.98% 4.10% 3.91% 4.70% 3.89% 4.14% 3.79% 4.34% 5.26% 4.15% 4.15%

Profit Margin Ratio w/o Tax -4.27% -7.14% -1.81% -9.40% -6.15% -6.08% -4.71% -4.81% -10.98% -9.95% -5.29% -24.17% -7.71% -7.71%

Partnership HealthPlan of CaliforniaComparative Financial Indicators Monthly ReportFiscal Year 2018 - 2019 & Fiscal Year 2017 - 2018

Avg / Month


$84.1 $85.9 $88.1 $89.8 $93.5 $97.2 $97.4 $96.9 $95.9 $95.6 $105.0 $105.5

$468.9 $470.1 $470.6

$375.2 $374.3 $371.6 $373.1 $377.0 $381.3 $383.8 $376.6 $376.1

$66.2 $63.2 $73.8

$72.6 $71.5 $68.3 $66.5 $66.1 $65.1 $63.5 $61.3 $60.6

$29.1 $20.0 $0.6

$87.3 $80.4 $75.9 $69.0$54.2 $43.0 $43.1 $52.3 $61.9

$0.0

$100.0

$200.0

$300.0

$400.0

$500.0

$600.0

$700.0

$800.0

Jul 2018 Aug 2018 Sep 2018 Oct 2018 Nov 2018 Dec 2018 Jan 2019 Feb 2019 Mar 2019 Apr 2019 May 2019 Jun 2019

Partnership HealthPlan of CaliforniaFund Balance Comparison

(in Millions of Dollars)

Capital Assets Reserves - Capital Assets Required Reserves Strategic Use of Reserves Unrestricted Funds

For the Past 12 Months Ending June 30, 2019


CURRENT MONTH

PRIORMONTH INC / DEC MEMBERSHIP SUMMARY

CURRENT YTD AVG

PRIOR YTD AVG VARIANCE

220,974 222,366 (1,392) Medi-Cal Region 1 223,669 230,353 (6,684) 323,890 324,910 (1,020) Medi-Cal Region 2 327,586 335,122 (7,536) 544,864 547,276 (2,412) TOTAL 551,255 565,475 (14,220)

ACTUALMONTH

BUDGETMONTH

$ VARIANCE MONTH FINANCIAL SUMMARY

ACTUAL YTD

BUDGET YTD

$ VARIANCE YTD

235,490,761 235,230,431 260,330 Total Revenue 2,782,226,099 2,775,979,414 6,246,685 205,309,098 215,380,632 10,071,534 Total Healthcare Costs 2,595,210,049 2,553,321,088 (41,888,961)

9,906,862 9,357,956 (548,906) Total Administrative Costs 107,268,157 125,328,395 18,060,238 11,196,958 10,998,834 (198,124) Medi-Cal Managed Care Tax 134,363,496 133,690,692 (672,804)

9,077,843 (506,991) 9,584,834 Total Current Year Surplus (Deficit) (54,615,603) (36,360,761) (18,254,842)

91.54% 96.05%Medical Loss Ratio (HC Costs as a % of

Rev, excluding Managed Care Tax) 98.01% 96.63%

4.42% 4.17%Admin Ratio (Admin Costs as a % of Rev, excluding Managed Care Tax) 4.05% 4.74%

PARTNERSHIP HEALTHPLAN OF CALIFORNIAMembership and Financial SummaryFor The Period Ending June 30, 2019


June 2019 May 2019

A S S E T SCurrent Assets

Cash &Cash Equivalents 384,528,617 355,195,367

ReceivablesAccrued Interest 462,900 392,000State DHS - Cap Rec 237,998,689 236,440,885Funds Receivable - Prov Risk 4,531,891 4,657,891Miscellaneous Receivable 254,476 3,981,027

Total Receivables 243,247,956 245,471,803

Other Current AssetsPayroll Clearing 10,185 8,638Prepaid Expenses 4,959,649 5,028,833

Total Other Current Assets 4,969,834 5,037,471

Total Current Assets 632,746,407 605,704,641

Non-Current AssetsFixed Assets

Motor Vehicles 139,824 139,824Furniture & Fixtures 7,518,859 7,518,859Computer Equipment - HP 541,886 541,886Computer Equipment 13,324,632 13,324,632Computer Software 16,400,186 15,174,006Leasehold Improvements 962,374 962,374Land 6,767,292 6,767,292Building 55,932,088 55,932,088Building Improvements 27,324,340 27,294,140Accum Depr - Motor Vehicles (124,163) (122,747)Accum Depr - Furniture (5,735,523) (5,690,651)Accum Depr - Comp Equip - HP (541,886) (541,886)Accum Depr - Comp Equipment (7,243,813) (7,016,075)Accum Depr - Computer Sftware (12,599,095) (12,389,151)Accum Depr - Lsehld Improve (929,455) (927,383)Accum Depr - Building (4,871,644) (4,752,131)Accum Depr - Bldg Improvements (3,824,945) (3,675,189)Construction Work-In-Progress 12,491,456 12,411,456

Total Fixed Assets 105,532,413 104,951,344

Other Non-Current AssetsDeposits 68,269 65,636Board-Designated Reserves 375,797,730 376,327,068Knox-Keene Reserves 300,000 300,000Net Pension Asset 1,018,026 1,018,026Deferred Outflows Of Resources 1,077,039 1,077,039

Total Other Non-Current Assets 378,261,064 378,787,769

Total Non-Current Assets 483,793,477 483,739,113

Total Assets 1,116,539,884 1,089,443,754

PARTNERSHIP HEALTHPLAN OF CALIFORNIABalance Sheet

As Of June 30, 2019


June 2019 May 2019

PARTNERSHIP HEALTHPLAN OF CALIFORNIABalance Sheet

As Of June 30, 2019

L I A B I L I T I E S & F U N D B A L A N C E Liabilities

Current LiabilitiesAccounts Payable 101,316,847 88,334,777Unearned Income 165,355 213,080Suspense Account 669,517 1,378,673Capitation Payable 5,955,152 8,314,962State DHS - Cap Payable 6,562,106 6,562,106Claims Payable 60,575,481 82,592,331Incurred But Not Reported-IBNR 281,776,933 247,845,258Quality Improvement Programs 54,833,915 58,595,832

Total Current Liabilities 511,855,306 493,837,019

Non-Current LiabilitiesDeferred Inflows Of Resources 458,760 458,760

Total Non-Current Liabilities 458,760 458,760

Total Liabilities 512,314,066 494,295,779

Fund BalanceUnrestricted Fund Balance 61,949,573 52,309,966

Reserved FundsReserve Fund-Board Designated 360,797,729 361,327,067Reserve Fund-Board Designated-Infrastructure 15,000,000 15,000,000Reserve Fund-Board Designated-Capital Assets 105,532,414 104,951,344Reserve Fund-Strategic Use Of Reserve 60,646,102 61,259,598Reserve For Restricted Fund-Knox-Keene 300,000 300,000

Total Reserved Funds 542,276,245 542,838,009

Total Fund Balance 604,225,818 595,147,975

Total Liabilites And Fund Balance 1,116,539,884 1,089,443,754


Current Month Activity Year-To-Date Activity

CASH FLOWS FROM OPERATING ACTIVITIES:Cash Received From:Capitation from California Department of Health Care Service 233,243,717 2,852,792,872 Other Revenues 188 543,738Cash Payments to Providers for Medi-Cal Members

Capitation Payments (31,761,194) (468,451,262) Medical Claims Payments (160,731,697) (2,007,627,603)

Cash Payments to Vendors (3,052,108) (565,881,195) Cash Payments to Employees (6,544,149) (85,476,447) Net Cash (Used) Provided by Operating Activities 31,154,757 (274,099,897)

CASH FLOWS FROM CAPITAL FINANCING & RELATED ACTIVITIES:Purchases of Capital Assets (2,878,380) (25,515,865) Net Cash Used by Capital Financial & Related Activities (2,878,380) (25,515,865)

CASH FLOWS FROM INVESTING ACTIVITIES:Board-Designated Reserve Transfers 529,338 83,343,574Interest and Dividends on Investments 527,535 6,034,241Net Cash (Used) Provided by Investing Activities 1,056,873 89,377,815

NET (DECREASE) INCREASE IN CASH & CASH EQUIVALENTS 29,333,250 (210,237,947)

CASH & CASH EQUIVALENTS, BEGINNING 355,195,367 594,766,564

CASH & CASH EQUIVALENTS, ENDING 384,528,617 384,528,617

RECONCILIATION OF OPERATING (LOSS) INCOME TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES:

TOTAL OPERATING (LOSS) INCOME 8,479,408 (60,921,465) DEPRECIATION 755,310 7,707,473CHANGES IN ASSETS AND LIABILITIES:Other Receivables 3,852,551 (35,960) California Department of Health Services Receivable (1,557,804) (24,786,231) Other Assets 1,607,005 (8,872,046) Accounts Payable and Accrued Expenses 9,865,379 (287,956,623) Accrued Claims Payable 11,914,825 94,948,657Quality Improvement Programs (3,761,917) 5,816,298Net Cash Provided (Used) by Operating Activities 31,154,757 (274,099,897)

PARTNERSHIP HEALTHPLAN OF CALIFORNIAStatement of Cash Flow

For The Period Ending June 30, 2019


-

ACTUALMONTH

BUDGETMONTH

$ VARIANCE MONTH

ACTUAL MONTH PMPM

BUDGET MONTH PMPM

ACTUAL YTD

BUDGET YTD

$ VARIANCE

YTD

ACTUAL YTD

PMPM

BUDGET YTD

PMPM

544,864 544,864 - TOTAL MEMBERSHIP 6,615,058 6,615,058 -

REVENUE234,801,521 234,801,519 2 430.94 430.94 State Capitation Revenue 2,770,832,280 2,770,832,272 8 418.87 418.87

598,435 236,321 362,114 1.10 0.43 Interest Income 6,305,861 2,835,401 3,470,460 0.95 0.43 90,805 192,591 (101,786) 0.17 0.35 Other Revenue 5,087,958 2,311,741 2,776,217 0.77 0.35

235,490,761 235,230,431 260,330 432.21 431.72 TOTAL REVENUE 2,782,226,099 2,775,979,414 6,246,685 420.59 419.65

HEALTHCARE COSTS13,548,480 14,608,744 1,060,264 24.87 26.81 Global Subcapitation 174,468,532 175,696,923 1,228,391 26.37 26.56

2,100,340 2,109,174 8,834 3.85 3.87 Capitated Medical Groups 24,965,428 25,828,422 862,994 3.77 3.90

Physician Services4,669,624 5,252,125 582,501 8.57 9.64 PCP Capitation 62,311,728 64,003,092 1,691,364 9.42 9.68

378,435 374,852 (3,583) 0.69 0.69 Specialty Capitation 4,625,787 4,598,478 (27,309) 0.70 0.70 25,508,699 25,250,326 (258,373) 46.82 46.34 Non-Capitated Physician Services 311,368,539 303,490,736 (7,877,803) 47.07 45.88

30,556,758 30,877,303 320,545 56.08 56.67 Total Physician Services 378,306,054 372,092,306 (6,213,748) 57.19 56.26

Inpatient Hospital15,757,032 15,883,394 126,362 28.92 29.15 Hospital Capitation 195,522,393 194,400,121 (1,122,272) 29.56 29.39 51,948,103 50,358,347 (1,589,756) 95.34 92.42 Inpatient Hospital - FFS 596,149,539 589,707,713 (6,441,826) 90.12 89.15 1,703,777 1,253,664 (450,113) 3.13 2.30 Hospital Stoploss 22,497,218 15,043,968 (7,453,250) 3.40 2.27

69,408,912 67,495,405 (1,913,507) 127.39 123.87 Total Inpatient Hospital 814,169,149 799,151,802 (15,017,347) 123.08 120.81

25,887,931 28,315,130 2,427,199 47.51 51.97 Long Term Care 326,752,468 331,583,593 4,831,125 49.40 50.13

23,233,582 23,361,340 127,758 42.64 42.88 Pharmacy 285,295,967 271,352,340 (13,943,627) 43.13 41.02

Ancillary Services967,869 1,202,563 234,694 1.78 2.21 Ancillary Services - Capitated 12,465,092 14,554,805 2,089,713 1.88 2.20

37,731,372 35,463,258 (2,268,114) 69.25 65.09 Ancillary Services - Non-Capitated 438,055,973 423,862,131 (14,193,842) 66.22 64.08 38,699,241 36,665,821 (2,033,420) 71.03 67.30 Total Ancillary Services 450,521,065 438,416,936 (12,104,129) 68.10 66.28

Other Medical1,675,689 2,363,897 688,208 3.08 4.34 Quality Assurance 21,532,852 27,258,724 5,725,872 3.26 4.12

601,919 1,026,630 424,711 1.10 1.88 Healthcare Investment Funds 6,512,274 8,360,000 1,847,726 0.98 1.26 77,621 129,564 51,943 0.14 0.24 Advice Nurse 1,030,789 1,555,274 524,485 0.16 0.24 7,014 21,374 14,360 0.01 0.04 HIPP Payments 123,331 256,884 133,553 0.02 0.04

3,273,528 2,159,551 (1,113,977) 6.01 3.96 Transportation 45,805,767 26,032,895 (19,772,872) 6.92 3.94 5,635,771 5,701,016 65,245 10.34 10.46 Total Other Medical 75,005,011 63,463,777 (11,541,234) 11.34 9.60

(3,761,917) 6,246,699 10,008,616 (6.90) 11.46 Quality Improvement Programs 65,726,373 75,734,989 10,008,616 9.94 11.45

205,309,098 215,380,632 10,071,534 376.81 395.29 TOTAL HEALTHCARE COSTS 2,595,210,049 2,553,321,088 (41,888,961) 392.32 386.01

ADMINISTRATIVE COSTS5,798,466 6,132,842 334,376 10.64 11.26 Employee 71,122,043 79,913,115 8,791,072 10.75 12.08

55,204 77,690 22,486 0.10 0.14 Travel And Meals 598,208 936,064 337,856 0.09 0.14 1,131,130 1,501,503 370,373 2.08 2.76 Occupancy 11,380,783 18,015,770 6,634,987 1.72 2.72

447,463 466,892 19,429 0.82 0.86 Operational 3,630,015 5,605,297 1,975,282 0.55 0.85 1,865,286 1,004,429 (860,857) 3.42 1.84 Professional Services 13,340,768 16,011,850 2,671,082 2.02 2.42

609,313 174,600 (434,713) 1.12 0.32 Computer And Data 7,196,340 4,846,300 (2,350,040) 1.09 0.73 9,906,862 9,357,956 (548,906) 18.18 17.18 TOTAL ADMINISTRATIVE COSTS 107,268,157 125,328,395 18,060,238 16.22 18.94

11,196,958 10,998,834 (198,124) 20.55 20.19 Medi-Cal Managed Care Tax 134,363,496 133,690,692 (672,804) 20.31 20.21

9,077,843 (506,991) 9,584,834 16.67 (0.94) TOTAL CURRENT YEAR SURPLUS

(DEFICIT) (54,615,603) (36,360,761) (18,254,842) (8.26) (5.51)

PARTNERSHIP HEALTHPLAN OF CALIFORNIA

For The Period Ending June 30, 2019Statement of Revenues and Expenses

**The Notes to the Financial Statement are an Integral Part of this Statement



NOTES TO FINANCIAL STATEMENTS

June 30, 2019

Page 1 of 3

1. ORGANIZATION

The Partnership HealthPlan of California (PHC) was formed as a health insurance organization,

and is legally a subdivision of the State of California, but is not part of any city, county or state

government system. PHC has quasi-independent political jurisdiction to contract with the State

for managing Medi-Cal beneficiaries who reside in various Northern California Counties. PHC is

a combined public and private effort engaged principally in providing a more cost-effective

method of health care. PHC began serving Medi-Cal eligible persons in Solano in May 1994. That

was followed by Napa in March of 1998, Yolo in March of 2001, Sonoma in October 2009, Marin

and Mendocino in July 2011, and eight Northern Counties in September 2013. Beginning July

2018 and in accordance with direction from the Department of Health Care Services (DHCS), PHC

has consolidated its reporting from these fourteen counties into two regions; these are in alignment

with the two DHCS rating regions.

As a public agency, the HealthPlan is exempt from state and federal income tax.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ACCOUNTING POLICIES:

The accounting and reporting policies of PHC conform to generally-accepted accounting

principles and general practices within the healthcare industry.

PROPERTY AND EQUIPMENT:

Effective July 2015, property and equipment totaling $10,000 or more are recorded at cost; this

includes assets acquired through capital leases and improvements that significantly add to the

productive capacity or extend the useful life of the asset. Costs of maintenance and repairs are

expensed as incurred. Depreciation for financial reporting purposes is provided on a straight-line

method over the estimated useful life of the asset. The costs of major remodeling and

improvements are capitalized as building or leasehold improvements. Leasehold improvements

are amortized using the straight-line method over the shorter of the remaining term of the

applicable lease or their estimated useful life. Building improvements are depreciated over their

estimated useful life. Buildings purchased are recorded at cost and are depreciated on the straight-

line basis over their estimated useful lives.

INVESTMENTS:

PHC investments can consist of U.S. Treasury Securities, Agency Notes, Repurchase Agreements,

Shares of Beneficial Interest and Commercial Paper and are carried at fair value.

BOARD-DESIGNATED & KNOX KEENE RESERVES:

In April 2004, PHC’s Board established a policy to set aside in a reserve account a designated




June 30, 2019

Page 2 of 3

amount that represents the Knox-Keene Tangible Net Equity (TNE) requirement. This policy was

subsequently revised in May 2012 and beginning July 2012, the new methodology has been

reflected on the balance sheet. Based on this policy and as of As of June 2019, PHC has Board-

Designated and Knox-Keene Reserves of $481.3 million and $0.3 million respectively. To account

for the Board approved Strategic Use Of Reserves (SUR) initiatives, $60.6 million has been set

aside as a “Reserve Fund-Strategic Use of Reserve.” The amount represents the net amount

remaining of all of the SUR projects that have been approved to date; this balance is periodically

adjusted as projects are completed.

3. STATE CAPITATION REVENUE

Medi-Cal capitation revenue is based on the monthly capitation rates, as provided for in the State

contract, and the actual number of Medi-Cal eligible members. Capitation revenues are paid by

the State on a monthly basis in arrears based on estimated membership. Prior to January 2010,

enrollment was subject to retrospective adjustments by the State upon completion of the 6th and

12th months following the month of service. Effective January 2010, the retrospective adjustments

have been replaced with monthly reconciliations with the State. As such, capitation revenue

includes an estimate for amounts receivable from or refundable to State for these retrospective

adjustments. These estimates are continually monitored and adjusted, as necessary, as experience

develops or new information becomes known.

Effective with the enrollment of the Adult Expansion Population per ACA in January 2014 the

HealthPlan was subject to State requirements to meet a minimum 85% medical loss ratio (MLR)

for this population. Specifically, the HealthPlan was required to expend at least 85% of the Medi-

Cal capitation revenue received for this population on allowable medical expenses as defined by

the State. In the event the HealthPlan expended less than the 85% requirement, the Health Plan

would be required to return to the State the difference between the minimum threshold and the

actual allowed medical expenses. This difference was recorded as a reduction to Medi-Cal

capitation revenue and the related liability was recorded in State DHS – Cap Payable. As of June

2019, the remaining amount due to the State is $6.6 million.

Effective with California SB 78 and beginning July 2012, the health plans were required to pay a

gross premium tax on Medi-Cal Revenue. The rate in effect from July 2012 to June 2013 would

remain at 2.35% and beginning July 2013, the tax rate increased to 3.94% and expired in June

2016. Effective July 2016, SB X2-2 revised the MCO Tax, which is implemented by DHCS. The

tax is calculated by DHCS and is based on projected membership. Projected tax for fiscal year

2018/19 is $134.4 million.

4. HEALTH CARE COST

PHC continues to develop completion factors to calculate estimated liability for claims incurred




June 30, 2019

Page 3 of 3

but not reported. These factors are reviewed and adjusted as more historical data become available.

Budgeted capitation revenues and health care costs are adjusted each month to reflect changes in

enrollee counts.

5. QUALITY IMPROVEMENT PROGRAM

PHC maintains quality incentive contracts with acute care hospitals and primary care physicians.

As of June 2019, PHC has accrued a Quality Incentive Program payout for Fiscal Year 2018/2019

is $54.8 million.

6. ESTIMATES

Due to the nature of the operations of the Partnership HealthPlan, it is necessary to estimate

amounts for financial statement presentation. Substantial overstatement or understatement of these

estimates would have a significant impact on the statements. The items estimated through various

methodologies are:

- Value of Claims Incurred But Not Received

- Quality Incentive Payouts

- Earned Capitation Revenues

- Total Number of Members

- Retro Capitation Expense for Certain Providers

7. COMMITMENTS AND CONTINGENCIES

In the ordinary course of business, the HealthPlan is party to claims and legal actions by enrollees,

providers, and others. After consulting with legal counsel, HealthPlan management is of the

opinion any liability that may ultimately be incurred as a result of claims or legal actions will not

have a material effect on the financial position or results of the operations of the HealthPlan.

8. UNUSUAL OR INFREQUENT ITEMS REPORTED IN CURRENT MONTH’S

FINANCIAL STATEMENTS

None noted.


Partnership HealthPlan of CaliforniaInvestment ScheduleJune 30, 2019

Name of Investment Investment Type Yield to Maturity

Trade Date Maturity Date

Call Date Face Value Market Value Credit Rating Agency

Credit Rating

FUNDS HELD FOR INVESTMENT:

Highmark Money Market Cash & Cash Equiv NA Various NA NA NA 1,514,033$ NA NRCertificate of Deposit for Knox Keene Cash & Cash Equiv 0.00015 9/12/2015 12/30/2018 NA NA 300,000$ NA NR

FUNDS HELD FOR OPERATIONS:

Merrill Lynch Insitutional Cash for Operations NA NA NA NA NA 67,941,096$ Merrill Lynch MMA - Checking Cash for Operations NA NA NA NA NA 309,774$UBOC - General/MMA and Checking Cash for Operations NA NA NA NA NA 582,787,033$ Government Investment Pools (LAIF) Cash for Operations NA NA NA NA NA 65,000,000$ Government Investment Pools (County) Cash for Operations NA NA NA NA NA 39,364,051$ West America Payroll Cash for Operations NA NA NA NA NA 3,407,059$ Petty Cash Cash for Operations NA NA NA NA NA 3,300$

GRAND TOTAL: 760,626,346$

Required Reserves (Liquid)Board Designated Assets 375,797,730$ Knox Keene Reserves 300,000$Total Required Reserves (Liquid) 376,097,730$

Cash on Hand / Cash Days Available:Including Requried Reserves 760,626,346$ Excluding Required Reserves 384,528,617$

Cash Days Available incl. Required Reserves 88.05Cash Days Available excl. Required Reserves 44.51


Partnership HealthPlan of CaliforniaInvestment Yield Trends

11 10 9 8 7 6 5 4 3 2 1 1

FISCAL YEAR 18/19 JUL AUG SEPT OCT NOV DEC JAN FEB MAR APR MAY JUN YTD

Interest Income 372,994 530,984 384,540 500,869 404,948 415,805 646,883 454,679 538,970 921,112 535,643 598,435 6,305,862Cash & Investments at Historical Cost (1) 360,595,665 563,240,721 578,907,713 291,918,698 318,206,676 280,512,593 234,334,438 229,386,771 682,241,507 750,226,571 355,195,367 384,528,617 419,107,945

Computed Yield (2) 0.93% 1.38% 0.81% 1.38% 1.59% 1.67% 3.02% 2.35% 1.42% 1.54% 1.16% 1.94%Total Rate of Return (3) 1.24% 1.17% 1.03% 1.20% 1.25% 1.31% 1.49% 1.56% 1.44% 1.45% 1.47% 1.50%CA Pooled Money Investment Account (PMIA) (4) 1.94% 2.00% 2.06% 2.14% 2.21% 2.29% 2.36% 2.39% 2.44% 2.45% 2.45% 2.43%

FISCAL YEAR 17/18 JUL AUG SEPT OCT NOV DEC JAN FEB MAR APR MAY JUN YTD

Interest Income 332,589 222,615 211,359 368,385 224,017 223,248 479,060 297,446 305,917 484,364 339,943 375,978 3,864,921Cash & Investments at Historical Cost (1) 941,701,479 910,772,703 877,294,392 858,013,986 835,453,426 771,800,557 712,929,042 730,790,113 675,072,624 641,816,629 731,017,561 597,203,014

Computed Yield (2) 0.52% 0.29% 0.28% 0.51% 0.32% 0.33% 0.77% 0.49% 0.52% 0.88% 0.59% 0.68%Total Rate of Return (3) 0.42% 0.36% 0.34% 0.38% 0.37% 0.37% 0.42% 0.43% 0.44% 0.47% 0.48% 0.50%CA Pooled Money Investment Account (PMIA) (4) 1.05% 1.08% 1.11% 1.14% 1.17% 1.24% 1.35% 1.41% 1.52% 1.66% 1.76% 1.85%

NOTES:

(1) Investment balances include Restricted Cash and Board Designated ReservesYTD for Cash & Investments is average year-to-date

(2) Computed yield is calculated by annualizing the current month's interest divided by the current month's average balance.

(3) Total Rate of Return is computed based on year-to-date interest income annualized divided by an average of the fiscal year's portfolio's market value at month-end.

(4) LAIF limits the amount a single government entity can deposit into LAIF; currently that amount is set at $65 million.


0.010%0.110%0.210%0.310%0.410%0.510%0.610%0.710%0.810%0.910%1.010%1.110%1.210%1.310%1.410%1.510%1.610%1.710%1.810%1.910%2.010%2.110%2.210%2.310%2.410%2.510%2.610%2.710%2.810%2.910%3.010%3.110%3.210%

JUL AUG SEPT OCT NOV DEC JAN FEB MAR APR MAY JUN

Perc

enta

ge Y

ield

Periods

Partnership HealthPlan of California Investment Yield Trends

FISCAL YEAR 18/19

PMIA 18/19

FISCAL YEAR 17/18

PMIA 17/18
