Vermont Legislature SmartTranscripts:

[Sen. Virginia "Ginny" Lyons (Chair, Senate Health and Welfare)]: A little bit.

[Kaj Samsom (Commissioner, Vermont Department of Financial Regulation)]: Okay.

[Sen. Virginia "Ginny" Lyons (Chair, Senate Health and Welfare)]: We're back. Senate Health and Welfare. Good morning. And we have with us members of the Department of Financial Regulation. So why don't you introduce yourselves for the record and then we would love to hear your testimony and there will definitely be questions.

[Mary Blatt (Deputy Commissioner of Insurance, Vermont DFR)]: Great. I'm Mary Blatt, the deputational insurance for the Department of Financial Commission.

[Kaj Samsom (Commissioner, Vermont Department of Financial Regulation)]: And I'm Kai Samson, the commissioner of insurance for DNR.

[Sen. Virginia "Ginny" Lyons (Chair, Senate Health and Welfare)]: We should go around and introduce ourselves. I know you've been here before, but we have new members and I don't know

[Sen. John Morley III (Member, Orleans District)]: that you're I just got appointed, the Orleans District. John Benson from the Orange District. Okay.

[Sen. Virginia "Ginny" Lyons (Chair, Senate Health and Welfare)]: Ginny Lyons, Chittenden Southeast. Martine Larocque with Chittenden Central and Ann Cummings. I love love think it's your circle if you're Yes. Each other all over again. Yeah. You are.

[Kaj Samsom (Commissioner, Vermont Department of Financial Regulation)]: So, yeah, we're asked to testify, I think, on Act 68. We had a piece of that, a report to talk about insurer, domestic health insurer, solvency and how to sustain that. Obviously, when we say domestic health insurer, we mean Blue Cross Blue Shield of Vermont, which is the open and blind. So we've done this visit to HRD, House Health, and also appropriations, which was my first time at appropriations not discussing a bug in. So That was cool. Honored honored by the by the interest. It's obviously a very important topic, and I think, you know, the the compulsion in the statute for us to do a report on it really comes about because of some very scary financial challenges that Blue Cross Blue Shield of Vermont faces. They are a unique entity. They're a single state nonprofit entity enabled by statute chapters one twenty three and one twenty five. So in some in some regards, they are, you know, a creature of the state, you know, enabled by that statute. Again, they because they own a business in Vermont and because they're a nonprofit, diversity of business and policies that many other insurers enjoy that help kind of weather the storm. Of course, insurance is all about spreading risk. Blue Cross has less of that opportunity as a single state entity, and also as a nonprofit. They can't do a stock sale to raise money. You know, there's somewhat constraints in that regard.

[Sen. Virginia "Ginny" Lyons (Chair, Senate Health and Welfare)]: And I'll just say that as part of Act 68, obviously we worked very hard last year understanding how we could help and influence improving solvency from Blue Cross and Blue Shield and work collaboratively with DFR. We're glad we did it. And then understanding that some of the contracts that are negotiated with providers in DFR were not transparent. And then looking to see what are the things that are most helpful, both to you and to us, terms of opening up both transparency, but making suggestions about how we can avoid what have we learned? I got something.

[Kaj Samsom (Commissioner, Vermont Department of Financial Regulation)]: Yeah. Lesson learned for sure is, you know, and I think it's taken different people, you know, since the ACA and the dissolution of of Bishka that, you know, I had a prior life in Bishka on insurance side, banking insurance, securities, health care administration, came, you know, the same payer push. Rate authority was moved, and agreement on care board was created and took rate authority. I believe we're the only state in The US that rate authority is separate from solvency regulation. So, you know, that is an awkward model to be responsible from a regulatory point of view for the solvency of an entity and an insurer, but have no control over the primary way that they make money or break even, which is where it's a matter of agreement. So the real takeaway, I think, is you you cannot regulate health insurance or health care affordability by suppressing rates. You have to address the cost of care. What I think you know, is challenged in many other states, and frankly, it hasn't been as much of a challenge in Vermont because there's been

[Kaj Samsom (Commissioner, Vermont Department of Financial Regulation)]: a lot of pressure on well, that that challenge being that you do have in in other markets and in other states, you

[Kaj Samsom (Commissioner, Vermont Department of Financial Regulation)]: have the insurer's profit being a big piece of the affordability challenge. That has not been the case in Vermont. We have a fairly given their small size, a fairly efficiently run from an administrative cost perspective entity across the shield of Vermont. Their administrative rates are competitive with their competitors, of which we could sell or more, but certainly on the exchange, it's just MVP, but even in the self insurance space where you're very directly competing on administrative costs that you well. So in Vermont, we actually have the opposite situation where and I I hope this was forwarded by Joe to the committee's assistant. And so this is comes from an actuarial opinion. It's it's it's public information, but it's got two gray charts in it, and it shows with the qualified health plan since inception in 2014 that Blue Cross Blue Shield has cumulatively you know, this is giving the the years they made money and then subtracting the years they didn't. They have a cumulative contribution to reserve or profit of negative 2.2%. Okay. Meaning for every thousand dollars premium cumulatively over the last ten years, eleven years, I think, this exhibit, they've lost twenty two months. I think that just I said thousand dollars. Anyway, so cumulatively, that's 82 or 84,000,000 lost. Again, that's the plus years and then the minus years together, not just acute not just the lost years, but, in this line

[Courtney Harness (Blue Cross and Blue Shield of Vermont)]: of

[Kaj Samsom (Commissioner, Vermont Department of Financial Regulation)]: business, they've lost a lot of money. They lost go ahead.

[Sen. Virginia "Ginny" Lyons (Chair, Senate Health and Welfare)]: I'm just looking at 2023. I'm wondering if you're going to give an idea of why that is so great. Sure. Yeah. I can

[Kaj Samsom (Commissioner, Vermont Department of Financial Regulation)]: get there. Okay. So yeah. And cumulatively, that that 80 plus million in in losses on that line of business is not as significant for the cross of field. In terms of, I think, what you heard from from Melvin about risk based capital, in terms of why that's necessary and how that computation, which is a 50 state accepted computation, it's it's very sensitive to type of business type of risk, something you put a lot of weight in, in insurance regulation of all of all types of insurance. They need that that kind of denominator for risk based capital, what should that denominator be in that calculation is very much driven by fully insured policies. So the easiest way for a company to show really great risk based capital is to stop writing business, sit on their surplus without a lot of risk so that the calculation is very sensitive to what we call underwriting or insurance risk. And the reason I bring that up is, the the single single largest source of risk and weight in that risk based capital calculation for Blue Cross Blue Shield is their fully insured QHP, you know, small group and and individual. They have some large group stuff, but that is the single source of need for capital. And it it makes a lot of sense if you think about, sure, that's charging you however much per month no matter what your claims are, no matter what, horrible diseases you get, and pharmaceuticals you get diagnosed with and need, they're on the hook, whereas with a self insured plan that most employers have, the state has, the employer itself absorbs the majority of that claims volatility. This is a small, relatively small pool between small group, individual, and Blue Cross is an insurance jargon that are on the list. So they they suffer the the slips and arrows of claims and cost. So to so so that need for surplus is acute in the fully insured lines of business, again, which is mostly the QHP fault, like health plan, exchange rate, those markets where they lost all this money. So that that the emphasis I put there is because a huge contributor to their financial challenges, has been inadequate rate, has been this tension between, delivering affordable rates and the regulatory pressure to lower their rate for affordability. But in doing so, those results in the exhibit, I've sent and and I'm referencing have missed the mark a little bit. Another way to look at, these cumulative losses and the cumulative negative 2%, which is not a I don't say this to be cute, but it's just factual that as horrible and expensive as health insurance rates are in this state, they've been getting a bit of a discount. Consumers have been you believe that? They have been inadequate to pay actual claims cumulatively. That's a very sobering fact, and certainly for a solvency regulator, a concern, in fact. So adequacy of rates is, critical. In terms of your question on 2023, these years of loss, those came on kind of steadily. They were detected early on.

[Sen. Virginia "Ginny" Lyons (Chair, Senate Health and Welfare)]: Looks like '22 through '24 were pretty serious.

[Kaj Samsom (Commissioner, Vermont Department of Financial Regulation)]: Yeah. And and the in the act '68 report, you can see a chart that shows that decline. And both the company, Blue Cross, and the department looked into that claim surge, like heavy data analytics to see, you know, is there a smoking gun? And there really wasn't. And it was broad based. There is a higher trend of growth over those years in claims growth from the UVM Health Network hospitals than the other providers, but not so dramatically high that you could say that's it. But that that's the one kind of takeaway. Did you have any other takeaways in terms of that? Mary was there. I was holistically doing internal audit at National Life at the time of call.

[Mary Blatt (Deputy Commissioner of Insurance, Vermont DFR)]: No. I mean, I think it's a combination of things. We did look at at claims trend and utilization, and it is, you know, it's a it's all across the board. I mean, part of it is probably pandemic fallout, right, starting in '22. People started returning to the doctor. People started feeling that they should say, you know, during the pandemic, They couldn't get in to see doctors and so forth, but it just kept escalating. So there's a we literally could not find one thing to come to me. It is higher claims. It's higher costs. It is higher utilization, but there's no So, source. Overutilization and using high cost services, overutilizing high cost services. You know, that's part of it. It's not.

[Kaj Samsom (Commissioner, Vermont Department of Financial Regulation)]: No. Not But certainly, when you have a high cost structure, which we do in the state in terms of cost per per per code or Yeah. You know, service, you you're more sensitive to higher utilization. So then Right. You know, that if you're, you know, you're when you're estimating rates, if you're Blue Cross and then you're the care board hires an actuary to do a third party review of what Blue Cross has filed, you know, you're essentially saying, are the administrative costs fair, accurate based on the actual cost of the company? Is the contribution to reserve what you see is is in this exhibit as well that what was filed for in leave? Yes. What was filed for and what was provided? Is that reasonable in the financial situation, or is it profiteering? You know, is it too much profit in the rate? But the biggest piece, you know, call it 90¢ on the dollar is cost of care and, you know, it's volume and price, cost of care and utilization. And when you if you and you you each based on your contracting with the major providers, and I'll get into that, but utilization is based on history and outside factors that you're considering. When price is that high, if your utilization estimate is off a little bit, it can cost you

[Sen. Virginia "Ginny" Lyons (Chair, Senate Health and Welfare)]: a lot. It's I mean, I'm sure you thought about this but it just seems like people were delaying care during COVID and then they came out of the fog of the pandemic and went to the doctor. They were, they had like delayed care. So, it probably exacerbated their illnesses and then suddenly, more people showing up. Seems like it was a perfect storm. Perfect storm, yeah. Right, well but the twenty million in 2020, so there's that good year. And then But that's because it hits. So nobody went to a backdoor. We allowed to. And the wind starts blowing. Yeah. Yeah. So

[Kaj Samsom (Commissioner, Vermont Department of Financial Regulation)]: in in terms of of contract, I might wanna talk a little bit more about what we've done in response to both the, you know, the the challenges of as Blue Cross as RBC went low and make no mistake if it were not for the Blue Cross Blue Shield of Michigan affiliation and the financial assistance to a loan that Michigan was able to provide, we would have been at an even bank. No one probably went through the the levels of regulatory action based on RBC. And, you know, we hit the first one because of that loan would have been in that second or even third level of or involvement in absent that loan. So that was very crucial. So the first thing that happens when they hit that first of all, the the constant communication between Blue Cross and Mary's team and Auguste Gier, we got them on a corrective action plan for the statute before the filed RBC. You know, it's technically filed RBC's annual confidential filing, and but Blue Cross essentially said, we are in trouble, and we said, we need an action plan. They provided one approved by the department before the year end RBC, and that that loan was part of the action plan to get on solid footing. Then they you know, there was deep digging into the source of the claims surge that we've discussed. They hired a contractor. We hired a contractor. Again, no smoking guns coming out of that. I think New Cross put together a kind of a task force, I'm gonna use the wrong terms, kind of the claims review, the new method for, like, claims review to get more timely and insightful data as as claims have, and that serves on whether or not there's there's a search. More recently, of course, we did an order this summer to compel them to check-in with us, before signing any twenty twenty six provider contracts, with major providers. So I think I think the the order itself references major hospitals. And that before we approve them executing that and that's where the the price comes from. Right? Price times utilization. The price think about 50% of the of their non pharmacy claims comes from the hospitals, 30 something percent from the median balance network. So we were focused on that contract for twenty point six, and we said do not sign that until you could show that deliver savings both for affordability, but also for predictability in their solvency.

[Sen. Virginia "Ginny" Lyons (Chair, Senate Health and Welfare)]: I think they signed every single

[Kaj Samsom (Commissioner, Vermont Department of Financial Regulation)]: It's it's close. It's close. It's

[Sen. Virginia "Ginny" Lyons (Chair, Senate Health and Welfare)]: I mean, it's Yeah. No.

[Kaj Samsom (Commissioner, Vermont Department of Financial Regulation)]: It's what were they saying in labor negotiations? I think tentative agreement. We're we're better with us. We're better. No. And and so we we kind of followed the model that the care board had of appointing a liaison. The care board had appointed the liaison, Mike Smith, and team to the hospital, to the UDM Health Network, and we wanted wanted to.

[Sen. Virginia "Ginny" Lyons (Chair, Senate Health and Welfare)]: But we

[Kaj Samsom (Commissioner, Vermont Department of Financial Regulation)]: thought that was an appropriate model

[Sen. Virginia "Ginny" Lyons (Chair, Senate Health and Welfare)]: Yeah.

[Kaj Samsom (Commissioner, Vermont Department of Financial Regulation)]: To and so we we were able to find someone out of Massachusetts who could work on a contracting basis for the department with very deep and wide experience in provider contracting, total cost of care contracts, value based care contracts. And I really think in addition to being eyes in the negotiation process and for the department, I believe he has also added value to the to the contracting for both for both parties in terms of his experience. And, yeah, the the the UBM contract is is close to being executed, I believe. But that that was really necessary from my point of view because I did have conversations with both parties in that negotiation over the summer, and at times it was just the he said, she said, honest real details of, you know, what's the will, the desire, and motivations, and and I'm like, this is not first of all, I'm not a health care policy expert. I'm a CPA, a finance expert on health care finance. And my health care financial reporting is my background as a regulator. So, you know, we found ourselves, and Mary's an attorney, and she's a compliance expert. You know? So, you know, we there's you have many people at your disposal that sit in these chairs that are health care policy experts.

[Sen. Virginia "Ginny" Lyons (Chair, Senate Health and Welfare)]: You know?

[Kaj Samsom (Commissioner, Vermont Department of Financial Regulation)]: We are not. And so I think having that liaison there, he continues to to work for us, was really important for us to say, I I just want one source who works for for the department to tell us what's going on and, call balls and strikes a little bit when necessary. So, I think that was one of the more significant, positive steps that we were able to make this department, to be more proactive, because those contracts drive a lot. They are an opportunity for the insurer to influence the cost of care, which is really our best route to affordability. It is not rate suppression, and that liaison's been in a position to help with that and help us understand.

[Sen. Virginia "Ginny" Lyons (Chair, Senate Health and Welfare)]: Thank you. So, know that you went through some of the recommendations from Act 68 report when we had HR Rock, and I didn't know whether he would give us a brief look because the issue of reinsurance will be coming up at some point, and then continuing with cost of care. So whether it's reference based pricing or some capitation in the fall over place or global budgeting and I know you've got some recommendations for premiums and so on. Do you mind going through some of that really briefly with us? That would be very helpful. I'm looking at page three of six of your report and just an overview. I think that's where you have your, then it

[Kaj Samsom (Commissioner, Vermont Department of Financial Regulation)]: goes on to reinsurance. Yeah. You mentioned reinsurance, that's there's potential there, again, depending on where CMS and the federal government is on this. But Indiva will be very involved in this too, a 1332 waiver. It's it's in May and also potentially an AHS bill to just authorize the pursuit of that waiver. That can be an area where you can kinda optimize things on exchange policies to lower the cost of insurance. I think outside of that, again, the takeaway for me, I mean, I I joked in the department that this could have been a 2¢ report that the way to sustain a cure like Blue Cross and Solvancy is to provide adequate regulatory period. It's that simple now because, and really I joked about it because there are things an insurer can do to influence the cost of care and we've ramped up our expectations on them for that. It's through the contracting process That needs to be done hand in glove with the care board as they're regulating hospital budgets and wanna do so in a way that rationalizes the price a little bit without an undue degradation of quality and access to care. That's, of course, a challenge. It should not be very well. But at the end of the day, we wanna make sure that the insurers have the tools they need to appropriately limit costs, right? Nobody wants to hear no, whether it's through a prior authorization or a hospital or a provider wants to be challenged on a claim, they just wanna see patients and move on to the next thing, and if it, you know, but you will see some solutions or some middle road kind of partial reversals back on the level of 11 or modifications to next. Is that right? That's right. In May.

[Sen. Virginia "Ginny" Lyons (Chair, Senate Health and Welfare)]: We gained. Not reversal. We

[Kaj Samsom (Commissioner, Vermont Department of Financial Regulation)]: gained. To to because, you know, to the extent that we put an intruder in a position where they simply just have to write checks, and that's I'm gonna be hyperbolic here. But they can't be in a position where they just have to write checks or they have no influence. We can't we can't then expect them to lower lower insurance rates without feeling inadequate. On the extreme end, you could completely empower an insurer to just make life living, double hockey sticks for for for billers, providers to the extent that care is compromised. You know, it's administratively burdensome, and no patient ever wants to do anything anymore because they get 50 militaries of challenges from the insurer or whatever, same with providers. So somewhere in between there is Magic. Magic, yes. And so we'll be discussing that in May, and of course the the chair board discusses that on the hospital in terms care. Of the

[Sen. Virginia "Ginny" Lyons (Chair, Senate Health and Welfare)]: Well, it all fits together. Ultimately, we need to look at utilization, cost for each service, how we're paying for it.

[Kaj Samsom (Commissioner, Vermont Department of Financial Regulation)]: Geographically, what's provided where by

[Sen. Virginia "Ginny" Lyons (Chair, Senate Health and Welfare)]: all of the above. And all you want is that insurance company to stay solid so they can make adequate decisions. Yeah. You got it?

[Kaj Samsom (Commissioner, Vermont Department of Financial Regulation)]: Yeah. And and I think I don't know if, Nolan's testimony went into it, but it truly is not exaggerating to to say it would be absolutely disastrous to this state to lose.

[Sen. Virginia "Ginny" Lyons (Chair, Senate Health and Welfare)]: Oh, we we understand that one. Oh, yeah.

[Kaj Samsom (Commissioner, Vermont Department of Financial Regulation)]: They they they are the only game in town, and although none of us should speculate, I think we probably should accept the fact that if Blue Cross was not the QHP market, MVPs would have a real challenge staying in greater. Had a

[Sen. Virginia "Ginny" Lyons (Chair, Senate Health and Welfare)]: real challenge. No one did. Okay. He did. Thank you.

[Kaj Samsom (Commissioner, Vermont Department of Financial Regulation)]: No. Good

[Sen. Virginia "Ginny" Lyons (Chair, Senate Health and Welfare)]: to have it reinforced. But no one is perfect, I mean, I'm not talking about Gulick and I'm talking about Blue Cross and Blue Shield's not perfect, we do need to maintain our system of regulation and oversight.

[Kaj Samsom (Commissioner, Vermont Department of Financial Regulation)]: Yeah, and I think from our part, you'll also see in May, the policy's bias to influence how they're governed.

[Sen. Virginia "Ginny" Lyons (Chair, Senate Health and Welfare)]: I sent you a note. The bill went into the house. We don't have a companion over here. She's just

[Kaj Samsom (Commissioner, Vermont Department of Financial Regulation)]: Right. But essentially, you know, I've I've provided an exhibit of of losses on the exchange cumulatively. Those losses are in part due to, reductions in their contribution to reserve and reductions in their medical trend by by the rate regulators, but there are also just misses in terms of, estimating what utilization I mean, it is the responsibility of the insurer to have foreseen as much as possible some of these more dramatic loss years. Right? So even without the reductions in the rate for those years, those would have been loss years. So it's not entirely rate suppression, but it's overall cost of care in the state utilization. It is true, and, you know, that they lost cumulatively about $50,000,000 from inception to leading the market in Medicare Advantage. That is an area that has challenged insurers nationwide. It's an area where state regulators have next to no influence on the rate.

[Sen. Virginia "Ginny" Lyons (Chair, Senate Health and Welfare)]: That is a question that I've been wanting to ask, and so I'm glad you brought it up, and that is what percentage of loss was due to the sort of benefit that folks were receiving from Medicare Advantage, the risk that was applied to Medicare Advantage? Obviously, must have been charging too little, but the coverage they were given. Yeah. Do

[Kaj Samsom (Commissioner, Vermont Department of Financial Regulation)]: you have a response to that?

[Sen. Virginia "Ginny" Lyons (Chair, Senate Health and Welfare)]: It is very high. CMS sucks the rate. I mean, your hands are absolutely controlled. Like what you

[Courtney Harness (Blue Cross and Blue Shield of Vermont)]: had said.

[Sen. Virginia "Ginny" Lyons (Chair, Senate Health and Welfare)]: You sound like me responding to my constituents. Right. I mean, it's true, and it's something that we talk about as regulators across the country because of that lack of control is very frustrating for insurance regulators, right? You know, it's our understanding from talking to the insurers, talking to other regulators, that the rate CMS has been setting has not been enough to sustain the marketplace. So, insurers all over the country have been losing money, pulling out of markets. Some of the big insurers pulled out of most markets. Some of the hospitals have refused to accept Medicare Advantage payments because they're too old. So this is all a function of sort of what happens with the federal government. We have no control over it. We had no control over the advertising, which we've been trying to get back from them as well. So we had no control over Joe Namath and his promises that he had on TV. We would love better control over what Joe was saying about this. No, wasn't. We haven't seen him recently.

[Kaj Samsom (Commissioner, Vermont Department of Financial Regulation)]: Well, mean, joke aside, mean, that could very well be that insurers are like, oh, wait a minute, we're not making money on this anymore.

[Sen. Virginia "Ginny" Lyons (Chair, Senate Health and Welfare)]: Yeah, we don't wanna. Yeah. I've got two ladies that just can't believe that you can get all this, all this for for no payment for a month. Yes. And every year, I have this conversation with my mother about what she's not really gonna get for free.

[Kaj Samsom (Commissioner, Vermont Department of Financial Regulation)]: You know, I think in for example regulation, not just in insurance, but securities and, you know, that adage that there's no such thing as a free lunch. You know, that's probably the number one concern.

[Sen. Virginia "Ginny" Lyons (Chair, Senate Health and Welfare)]: Health care is what everyone wants. It is. There's no green

[Kaj Samsom (Commissioner, Vermont Department of Financial Regulation)]: But even that would have a, you know, cost somewhere. Someone's bearing the cost somewhere or shortchanging somewhere. I mean, at the end of the day, I do believe that that is a very true statement.

[Sen. Virginia "Ginny" Lyons (Chair, Senate Health and Welfare)]: Yes. The market was terrible. Mean, everything and WellCare, I think, pulled out last year for the same reasons. This year, was THC and Blue Cross. Blue Cross was kind enough to tell us ahead of time. They don't have to. We were kind enough there did not. We found out at the same time everybody else found out because we have no control over that. And so we get no notification. So I know there are a number of folks I represent. I'm doing meetings in various communities and so there are people who have had Medicare Advantage for years and they retired onto it. They love it. Now have they lost those as well or is it idiosyncratic? Anybody who was, who had Medicare Advantage through Blue Cross or UHC lost their ability to have Medicare policy this year, Medicare Advantage policy. The only Medicare Advantage issuer in our marketplace now is Humana, and they are not in all counties. They're in six counties. Right, that's right. And

[Kaj Samsom (Commissioner, Vermont Department of Financial Regulation)]: the big ones.

[Sen. Virginia "Ginny" Lyons (Chair, Senate Health and Welfare)]: And not the big ones. They are in Orange County. I know. Okay. They, so they have a very limited footprint, And so everybody, for the most part, had to either switch back to standard original Medicare or to buy a Medicare supplement plan, which is more expensive. So people had to make that choice, this enrollment period.

[Courtney Harness (Blue Cross and Blue Shield of Vermont)]: There was a

[Sen. Virginia "Ginny" Lyons (Chair, Senate Health and Welfare)]: lot of chaos. The ship took thousands of phone calls, mutual phone calls, the drug care department's office took phone calls, trying to help people navigate how, what their rights were and what their options were and so forth. Oh, yes. No.

[Kaj Samsom (Commissioner, Vermont Department of Financial Regulation)]: I don't see. It's only, you know, silver lining that's not even that silver is that by having I am not offered anymore, you get reenrollment Right. Ability Go up to March? As, in fact, similar choices to you had when you were in single, whereas absent losing your Medicare Advantage plan, you're kinda stuck in Medicare Advantage, and it is a plan that doesn't work for everyone, You know? It's a plan that really delivers great benefit for folks that fit the right health profile, but for others, they realize where the free lunch was coming from in other benefit reductions. It's a pretty much And then that's one way street. So what the the only kind of silver lining to this was that it opened up the one way street for those who wanted to turn around.

[Sen. Virginia "Ginny" Lyons (Chair, Senate Health and Welfare)]: Want to get out of it?

[Kaj Samsom (Commissioner, Vermont Department of Financial Regulation)]: Yeah. And but, yeah, the the cost shock is very real and universal. They just

[Sen. Virginia "Ginny" Lyons (Chair, Senate Health and Welfare)]: And that's really so the cost of the

[Kaj Samsom (Commissioner, Vermont Department of Financial Regulation)]: Yeah. And I think those nationwide issues that everyone saw in the Medicare Advantage was was pretty widespread in Medicare Advantage, of course, were more acute from us because we didn't have a lot of layers. We have an high cost of care here, so all those issues hit kind of harder, faster here.

[Sen. Virginia "Ginny" Lyons (Chair, Senate Health and Welfare)]: Other questions? Do you maintain a relationship with CMS? We try. Do you have any relationship with regard to, I'm ignoring that, with regard to sort of the prescription drug Part D and the penalties that people pay and all those things, though. It's hard to have an influence. We don't have that influence, do we, as a state? Yeah, we try to use, you know, we the the National Association of Insurance Submissions, NAIC. Oh, yeah. Mayor. Leave comments, testifies. Yeah. So we try to use that organization to sort of push those agendas because it's a little bit more critical mass instead of the model. We do, know, you file comment letters and things like that when we can. So, that only makes sense for us to do something to to comment on the little little process and things like that. Even if she's done with her voice to add to file. Well, thank you. I know that a couple of our team are going leave very shortly and but I appreciate your coming in because this sort of supports what Nolan was telling us about, but it's from your perspective as regulators and it's important to hear. This is not the last time you'll be here, they think, and definitely not the last time you'll be at the center of Cummings' Committee.

[Kaj Samsom (Commissioner, Vermont Department of Financial Regulation)]: I never got confirmed by it, So I don't know if that still happened, but it's Wouldn't it? Yeah. Well, because I started in Naples.

[Sen. Virginia "Ginny" Lyons (Chair, Senate Health and Welfare)]: I said that the other day. Are they no. It was I haven't got a confirmation letter.

[Kaj Samsom (Commissioner, Vermont Department of Financial Regulation)]: Oh, okay. Who's that come from?

[Sen. Virginia "Ginny" Lyons (Chair, Senate Health and Welfare)]: The governor.

[Kaj Samsom (Commissioner, Vermont Department of Financial Regulation)]: Okay. I'll

[Sen. Virginia "Ginny" Lyons (Chair, Senate Health and Welfare)]: You should mention that. Yeah.

[Kaj Samsom (Commissioner, Vermont Department of Financial Regulation)]: I'll mention too.

[Sen. Virginia "Ginny" Lyons (Chair, Senate Health and Welfare)]: Well, you were and when there's tax commissioner like that.

[Kaj Samsom (Commissioner, Vermont Department of Financial Regulation)]: You have

[Courtney Harness (Blue Cross and Blue Shield of Vermont)]: to return your paycheck.

[Sen. Virginia "Ginny" Lyons (Chair, Senate Health and Welfare)]: Coming. We have you in for an interview.

[Kaj Samsom (Commissioner, Vermont Department of Financial Regulation)]: Oh, it's

[Sen. Virginia "Ginny" Lyons (Chair, Senate Health and Welfare)]: And I will double check with Charlotte, but to the best of my knowledge, it hasn't been submitted.

[Kaj Samsom (Commissioner, Vermont Department of Financial Regulation)]: Okay.

[Sen. Virginia "Ginny" Lyons (Chair, Senate Health and Welfare)]: You check on that. I'll get it down, and we'll get it done. Tell them to send contact information too. We always they send us a thing and no no way to

[Kaj Samsom (Commissioner, Vermont Department of Financial Regulation)]: Yeah.

[Sen. Virginia "Ginny" Lyons (Chair, Senate Health and Welfare)]: To read people to. For you, we know where to find you.

[Kaj Samsom (Commissioner, Vermont Department of Financial Regulation)]: Right. Or Yeah. Most As a general rule. Yeah.

[Sen. Virginia "Ginny" Lyons (Chair, Senate Health and Welfare)]: As a general rule. Yeah.

[Kaj Samsom (Commissioner, Vermont Department of Financial Regulation)]: K.

[Sen. Virginia "Ginny" Lyons (Chair, Senate Health and Welfare)]: That's one thing, Stan. Thank you. Thank you. Thank you very much.

[Kaj Samsom (Commissioner, Vermont Department of Financial Regulation)]: Yeah. Appreciate it.

[Sen. Virginia "Ginny" Lyons (Chair, Senate Health and Welfare)]: It's good. So we've got about five minutes, and I'm gonna ask Blue Cross and Blue Shield if there are comments, and you could come up and just give us a quick introduction to you, and then I

[Courtney Harness (Blue Cross and Blue Shield of Vermont)]: will be brief.

[Sen. Virginia "Ginny" Lyons (Chair, Senate Health and Welfare)]: That's all. But we will have more formal.

[Courtney Harness (Blue Cross and Blue Shield of Vermont)]: Thank you. For your record, Courtney Harness, Blue Cross and Blue Shield for bond. Thank you. And I do have notes for the committee. Our CFO, Ruth Green, did testify in House Health Care on January 9. I will email her full written testimony to Calista the Good. That's good. In the interest of being free. So I do wanna just mention, first, thanks to JFO and to EFR for their testimony this morning. Both, I think, reflect real financial pressure that Blue Cross and Vermont has experienced. It's important to us that we do acknowledge that directly and understand that our financial condition doesn't just matter materially to our members, but Nolan and Commissioner Sampson both mentioned essentially to the entire healthcare ecosystem of the state of Vermont. And so there are some pretty sobering financial news in their testimony, and so I do wanna just share some high level updates, as there were questions. 2025 results, although not final and year to date through September, we have realized a $47,000,000 gain, and that was in contrast to a loss that was in the $20,000,000 range, dollars 29,000,000 maybe, through the same period of 2024. And we do expect that our fourth quarter numbers are tracking similar number of factors weigh in, particularly in the month of December that we'll need to let play out. And I will mention, typically while we're out on town meeting break in the March is when we're preparing a more formal communication relative to our actual year end financial results. So some of that 47,000,000, and there was some commentary about the loan from Michigan. At this point, that has been fully repaid in the month of December, in two separate installments in December, And so any of the financial progress that we've made relative to the corrective action plan with VFR would be representative of the repayment of that loan as well. I do wanna mention, in particular, of course, this does take work across all levels, including DFR, and Commissioner Sampson was very right on it and bringing Green Mountain Care Board into the conversation, obviously a critical component of our rates. And Chair Lyons, you mentioned some of the legislation from last session, and really, really important work that happened here to make sure that things happen. I also wanna say part of our corrective action plan and some of the look that we do internally is what we do so that we're not always saying, what legislation can you pass and what regulations can occur? And for us in 2025, that was a reduction in operating expenses of approximately $7,000,000 during 2024. And so that's no small amount. That is material and took a lot of hard work for us to get to that number and more proud of the work that we did to reduce those operating expenses. I would say, as far as your role and what helped, in particular, Act 55 and the pharmaceutical bill that passed lowering rates by what we estimate the dollar amount of that to be allowed us to offset about a 4% premium reduction just from that legislation alone. I also want to mention a couple of other things that we did, and some of you have seen it. 2025, we did launch the Affordability Matters initiative, and it's been in the news recently, where we're really trying to help Vermonters better understand the relationship between health care prices, utilization premiums, and affordability. We do believe that that reflects our responsibility to our members and to Vermonters, that there's a shared understanding of what drives some premium increases, and that being particular cost of care. I would say, looking ahead to this year, and Commissioner Sampson did mention this, obviously, you continue to work very closely with the FR and the entire team there, regular ongoing conversation, usually multiple times a week between some members of our teams, as well as the Green Mountain Care Board, and as well as not just this committee, House Healthcare. And as you might imagine, I'm up there a great deal, and some of you may have met our new CEO, Beth Roberts, last week. She was in the building on Thursday, and we're very grateful for the time that some of you were able to spend with her. We do believe that that's experience, along with the partners, with regulators, and health care systems, and legislators, really have us positioned well. I think the last thing that's really important, progress in 2025, and we've heard about a corrective action plan. We still have several years to go on that corrective action plan, And one year is one year. And while we're really proud of the work and the results that we've achieved, in particular for our members, it's important to know that there's a long game ahead of us on this, and there's no one piece that will fix it all. I do it, like I said, there's more updates, I'll make sure Calista has some to pass along.

[Sen. Virginia "Ginny" Lyons (Chair, Senate Health and Welfare)]: Thank you. Thank you for being available. This is really short notice for you, but this is a helpful sort of overview and obviously you'll be back in. Might be good to have Beth Robertson just to talk, share with the entire committee her background a little bit. She's got an interesting background. Questions? All right. Thank you. Thank you so much. Appreciate Thank you all. I understand that Green Mountain Air Board is robbing us of two members taking away for a little field trip. So we're gonna finish early today. Are there any other things that you'd like to put on the table, Senator? I'm not sure if everybody got invited to the legislative breakfast at Gafford. I didn't make it. It might have been just legislators in this area. I think it was. But I had a really good conversation with Michael Costa. He's gonna come in. Good. That's what I'm Let me share my goal with you because the hospitals are working really hard right now and they've made significant change and transformation. Doing all the things that one could hope they do at an early stage. Some of it is low hanging fruit and some of it is really greater depth. And I would like to have an opportunity for them to present to us and to the House Health Care Committee, a joint meeting with us to have that, to share what they've done. It's very good. I had the great advantage of going to a meeting with the hospitals, a couple of meetings with the hospitals in the fall, as I said before. So that's my goal. The House hasn't been as enthusiastic about doing that as I am, so regardless we're going to do it somehow and it may be a three committee process, we'll see, because it also involves other folks, human services. So just wanted to put that in and I appreciate your bringing up because Michael is one of the ones that is a star. Yeah, unlike Cloning. I'll try to convince him he should go in as you can. Have to pass a law before we can phone him. I know. Michael has a law. Well, that is true. Starting with our first Blue River attack. He might have been here when you were here, and he's very good. They don't have a primary care or a mental health waiting list anymore. I know. Too. Excuse me. Yeah. Too. So, with that good news, there's a little bit of good news within every bit of bad news. This is good news.

[Kaj Samsom (Commissioner, Vermont Department of Financial Regulation)]: So,