FY 2019-20 9+3 Forecast

FY 2020-21 BudgetBoard of Governors Meeting

September 3, 2020

AgendaFY 2019-20 YTD Performance

4+8 Forecast vs. 9+3 Forecast July 2020 Financial Performance

FY 2019-20 9+3 Forecast & FY 2020-21 Budget Membership Budget Assumptions Financial Performance Comparison Administrative Expenses FTE Budget and History Community Programs Operating Margin by Segment Opportunities/Risks/Key Initiatives Balance Sheet Comparison TNE & Days of Cash On-Hand Comparison

Key 2020-21 Capital Projects and Programs

Informational Items Monthly Investment Transactions

2

3

Consolidated Financial Performance4+8 Forecast vs 9+3 Forecast

4

Consolidated Financial Performancefor the 10 months ended July 2020

Membership Trend

5

6

Membership: 2020-21 Projections

The projected membership growth between FY 2019-20 9+3 forecast and FY 2020-21 is expected to be 2,500 members or 0.12 percent, with member months growing approximately 10,000 or 0.04 percent.

Medi-Cal membership is projected to drop to pre-COVID levels (March 2020) in October, once the State restarts monthly redeterminations and the delayed redeterminations are processed. Moving forward from that point, we project modest growth of 2% over the course of the year.

LACC & CMC are modeled to include retention and new membership driven by Broker support.

FY 2020-21 Budget Assumptions

7

Pharmacy carve-out effective Jan 1, 2021 with significant reduction in revenue and healthcare expense for Medi-Cal

1.5% rate cut (except LTC) for the bridge period thru Dec 2020 Additional 1.5% rate cut (except LTC) effective Jan 2021 10% rate increase for LTC rate and healthcare expense through Dec

2021 FFS incurred costs based on current run rate 1.5% decrease in capitation expense effective Jan 2021 COVID risk corridor: $25 million in FY 19-20 9+3 Forecast and $278

million in FY20-21 Prop 56 programs to end in July 2021 (except Family Planning)

Financial Performance Comparison

8

Financial Performance Comparison

9

10

FY 2020-21 Administrative Expenses

11

FY 2020-21 FTE Budget and History

FY 2020-21 Community Programs

12

FY 2020-21 Operating Margin by Segment

13

14

Opportunities Improvement of claims trends Provider contract re-negotiation Shifting more contracts to dual risk arrangement Better than expected CCI rates for CY 2020 Better than expected LACC membership due to favorable pricing Improved administrative efficiencies

Risks Claims trends continue to deteriorate Higher than expected rate cut by DHCS for CY 2021 COVID risk corridor is not extended through CY 2021 COVID risk corridor mechanism does not provide as much risk

mitigation COVID healthcare costs are higher than expected DHCS retroactive Institutional member reclassification CCI risk corridor/IHSS final reconciliation

Opportunities & Risks: All Segments

15

Key Initiatives Revert claims floor holding periods back to the pre-

pandemic process to slow down claims paid and allow more time for review

Re-negotiate contracts with outlier groups and hospitals

Analyze and audit the root cause for continuous high monthly paid claims

Shifting more contracts to dual risk arrangement

Key Initiatives: All Segments

Balance Sheet Comparison

16

TNE & Days of Cash On-Hand Comparison

17

Key 2020-21 Capital Projects

and Programs

19

2020-21 Capital Projects and Programs

Project Description Business Owner

Capital

Expense

Operating

Expense Total

Thrasys - Health Services Systems Health Services 2,898$ 4,029$ 6,927$

SAP/ERP - Finance System Finance 4,921 1,085 6,006

Total Provider Management (TPM) Provider 2,605 1,466 4,071

Voice Program - Member and Provider Customer Service 2,257 1,151 3,408

Encounters & Risk Adjustment/EDIFECS Operations 1,826 598 2,424

Compliance & Accreditation Enhancements Various 3,380 2,143 5,522

Operational Efficiencies & Other Initiatives Various 3,970 1,310 5,280

Subtotal 21,856 11,782 33,638

Leasehold Improvements Facilities 18,852 - 18,852

Total Capital Projects 40,708$ 11,782$ 52,490$

L.A. Care Health Plan

Capital Projects

Fiscal Year 2020-2021(dollars in thousands)

Portfolio Program Descriptions“Big 5” Programs

Strategic Project Portfolio | 20

• Thrasys – Health Services System (Care Catalyst Program) – A multi-

year program focused on replacing the existing Care Management

platform (Clinical Care Advance – CCA) to effectively and efficiently

manage the workflows, data integration, analytics, and reporting for all

core functions within L.A. Care’s Health Services organization.

• SAP/ERP – Finance System – Implementation of a new enterprise

financial management platform to enable streamlined, scalable business

functions including procurement, accounts payable, premium billing,

recoveries, reconciliations, budgeting & forecasting, and financial

reporting.

• Total Provider Management (TPM Program)– A multi-year program

focused on improving L.A. Care’s provider data quality and management,

including enhancements to data intake, validation, storage, and reporting

processes.

Portfolio Program Descriptions“Big 5” Programs (continued)

Strategic Project Portfolio | 21

• VOICE – A multi-year customer service infrastructure program enhancing

systems, tools, and processes that transform the way L.A. Care’s

members and providers navigate and find information, including self-

service options.

• Encounters & Risk Adjustment / EDIFECS – Leverage and extend the

new EDIFECS encounter platform to more effectively manage and report

risk adjustment data for CMC (Medicare) and LACC (commercial) product

lines.

“Big 5” Programs – Technology Architecture

Strategic Project Portfolio | 22

INBOUND FILES

EDI - 834 EDI – 837 Claims /

Encounters

TRR

SPF

EDI 274

COB(HMS)

ELDA

Reports

EDW

DATA LAKETPM

Optum Impact Suite (Analytics & Stratification)

Claims Workflow

CES

QNXT®

EDIFECS

ORACLE B2BEDIFECS EM

Claims Adjudication, Payer & Capitation System

Clinical Management System

Clinical Care Advance®

-to be retired

Syntranet® (Thrasys)

PCT

Encounter Reporting

Operational Reporting

Canon Therefore®

OUTBOUND FILES

ETO DHSExtracts

Compliance Reports

VendorExtracts

ORACLE SOA OSB

sFTP

Fulfillment Vendor

Enterprise Letters

Solution

Letters from Applications Letters from work-flows

Documents Archiving & Indexing ENTERPRISE SERVICE BUS

File Gateway

sFTP

Health Information Exchanges

APIs

Service Gateway

837 Processing 834 Processing

QNXTe-MAA

CARE COMMUNITYPORTAL (S)

ClinicalSystem

Authorizations

AssessmentsLOA

G&A Cases

Identification &Stratification

Edifecs

Premium InvoicePremium Payments

Broker Payments

Real Time Data

Batch Data

Grievances &Appeals

Collected Data

PCT

Master Data

SAP

Raw Data

Master Data(leftover)

CRM

Target Architecture - Contextual Diagram

MasterData

HEDIS Process

Data ScienceRisk Adjustment Processes

Member Eligibility & Enrollment

Self-Service Analytics

Provider Person

DemographicsRelationship

Mgmt

Clinical ClaimsSocial

Determinants Finance

EncountersReference

Data

sFTP

ACCIOProviderContracts

ProviderContracting

SAP®

Premium Billing

& Payment

SUCCESSFACTORS

CONCUR

GENERALLEDGER

IVR

Pay Now

Online Payment

FinancialSystem

Provider Incentives

CapitationPayments

Salesforce®

Provider Portal

Member Portal

Broker Portal

Member Data

ProviderData

Broker Data

Interaction Data

IDTServiceSales &

Marketing

Workflow Management

(NICE)

CCI

TelePhony

CISCO UCCE

IVR(NUANCE)

FINESSE

Outbound(Nobel)

CTICRM

Portals

EmployeePortal

HR Data

LANES, EDI-PREMANAGE, E-CONNECT

Encounters(LAC Claims – QNXT,

PPG EncountersPlan Partner Encounters

Vendor Encounters)

TPM Transaction

DocumentManagement System

Additional Portfolio Initiatives

Strategic Project Portfolio | 23

• Compliance & Accreditation Enhancements – Enterprise-scale enhancements to technology platforms and business processes to improve regulatory compliance and performance in areas impacting member experience, provider engagement, and clinical care.

• Operational Efficiencies & Other Initiatives – Enterprise-scale enhancements to technology platforms and business processes to improve operational performance and cost efficiency.

Questions & Considerations

24

Motion FIN 105 To accept the Financial Report for the nine months ended

June 30, 2020 and the ten months ended July 31, 2020, as submitted.

Motion FIN 106 To recommend the draft FY 2020-21 Capital and Operating

Budget for Board Consideration.

Informational Items

25

Investment Transactions As of June 30, 2020, L.A. Care’s total investment market

value was $1.6B $1.3 billion managed by Payden & Rygel

$72 million in Local Agency Investment Fund

$201 million in Los Angeles County Pooled Investment Fund

As of July 31, 2020, L.A. Care’s total investment market value was $1.6B $1.3 billion managed by Payden & Rygel

$72 million in Local Agency Investment Fund

$201 million in Los Angeles County Pooled Investment Fund