S.F. officials blast Kaiser for hiking rates for public workers

SAN FRANCISCO — Officials who oversee the healthcare plans of San Francisco public employees and their families excoriated Kaiser executives Thursday for failing to adequately explain a proposed rate increase, but ultimately voted to back it as the clock ran out.

Public workers have seen their healthcare costs spiral while accepting pay cuts and furlough days at the bargaining table. In an unusual move, labor unions teamed up with San Francisco’s Health Service System earlier this year to demand greater transparency from Kaiser.

The showdown has introduced public political muscle into a broader nationwide push inspired by the Affordable Care Act to make the healthcare industry more responsive to consumers.

Health Service System commissioners had directed Kaiser officials to show up at Thursday’s meeting with a detailed accounting of the proposed 2014 rate hike of more than 5%, which comes as San Francisco’s 45,000 Kaiser members as a pool are younger and healthier — and using fewer services.

In a presentation, Cindy Striegel, vice president of strategic accounts for Kaiser Foundation Health Plan, said Kaiser continues to focus on “accountability and quality.”

But commissioners who drilled down with detailed questions for Striegel and Andrew See, vice president of actuarial services, were repeatedly told that the answers they sought were proprietary.

“There is some concern about a nonprofit having a profit margin that they can’t reveal,” Commissioner Jean Fraser told them during a lengthy public scolding. “You’re struggling with a substantive issue perhaps — or at least a perception issue — that you’re hiding something.”

After Kaiser officials declined to approximate the portion of the increase going to salary hikes, Supervisor Mark Farrell — the sole elected official who serves as a health service commissioner — lost his patience.

“For us to bear your wage increases on our shoulders is incredibly difficult for us to swallow and at some point it has to stop,” he said, noting that the city has saddled its own workers with years of salary freezes and reductions.

Health Service System Deputy Director and COO Lisa Ghotbi last month released an analysis that showed Kaiser took in $87 million more from San Francisco members between 2010 and 2012 than it cost to serve them, a 15% profit that outpaces its overall margin of 5%.

She also found that while members’ use of hospital, doctor and prescription services has trended down by as much as 16% since 2011, plan costs had risen by 11%. And although hospitalizations had dropped by more than a third over the past seven years, charges in that category had risen by nearly 90%.

Kaiser officials have said that its integrated model of care makes it difficult if not impossible to itemize certain costs.

The pushback against Kaiser came after the city achieved success with Blue Shield, which covers 40,000 city workers. The Health Service System worked with Blue Shield to create “accountable care organizations” of partnered medical groups and hospitals that have delivered improved quality of care -- and flat or reduced rates for the last two years, Ghotbi said.

Public workers and union leaders Thursday pushed the board to reject Kaiser’s renewal proposal.

“We are tired of being gouged,” said Brenda Barros, a clerk at San Francisco General Hospital. “We need to force them to tell us the truth about why they need more money, and if they don’t you, shouldn’t approve it.”

But Ghotbi said the commission’s decision had to be placed before the Board of Supervisors by Tuesday in order to keep a planned fall open enrollment on track.

Ultimately the board voted 4 to 2 to approve the rate increase and “immediately begin negotiations for 2015,” telling Kaiser officials that more detailed financial accounting would be required.

Ghotbi added that the health service system would work to find cost-effective alternatives to Kaiser, in case future negotiations “don’t go well.”

“We find ourselves in a stuck place,” commissioner Randolph Scott told Striegel. “We cannot cancel your contract or run around outside with our hair on fire saying ‘this is awful,’ because it’s just not helpful” to our members.

Farrell, who voted to approve the rate increase, vowed to introduce a measure before supervisors calling for open data from health insurers and said Thursday marked “only the beginning of the discussion.”

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