EXHIBIT 24 

Case:17-03283-LTS Doc#:3126-24 Filed:05/23/18 Entered:05/23/18 11:45:37 Desc:

Exhibit Letter from FOMB to Governor (8/30/17) Page 1 of 4
PO Box 192018 San Juan, PR 00919-2018; www.oversightboard.pr.gov; comments@oversightboard.pr.gov

FINANCIAL OVERSIGHT AND MANAGEMENT BOARD

FOR PUERTO RICO

 

Members

Andrew G. Biggs

Carlos M. García

Arthur J. González

José R. González

Ana J. Matosantos

David A. Skeel, Jr.

 José B. Carrión III 

Chair Natalie A. Jaresko

Executive Director

BY ELECTRONIC MAIL

August 30, 2017

The Honorable Ricardo A. Rosselló Nevares

Governor of Puerto Rico

La Fortaleza

P.O. Box 9020082

San Juan, PR 00902-0082

The Honorable Thomas Rivera Schatz

President of the Senate of Puerto Rico

The Honorable Carlos J. Méndez Núñez 

Speaker of the House of Representatives of Puerto Rico

Dear Governor Rosselló Nevares, President Rivera Schatz, and Speaker Méndez Núñez:

We write in response to the certification, dated August 1, 2017, that Act 47 is compliant with the 

Commonwealth’s Fiscal Plan pursuant to Section 204(a) of PROMESA (the “Compliance 

Certification”). Having carefully reviewed Act 47, the Compliance Certification, and the 

supporting materials provided with the Compliance Certification, the Oversight Board concludes 

that the Compliance Certification failed to provide the formal estimate of the fiscal impact that the 

law will have as required under paragraph (2)(A) of Section 204(a). Moreover, as further 

explained below, the Oversight Board’s preliminary analysis leads us to conclude that Act 47 is 

significantly inconsistent with the Fiscal Plan for the Commonwealth, contrary to the conclusion 

reached in the Compliance Certification. 

* * *

Case:17-03283-LTS Doc#:3126-24 Filed:05/23/18 Entered:05/23/18 11:45:37 Desc:

Exhibit Letter from FOMB to Governor (8/30/17) Page 2 of 4
Honorable Ricardo A. Rosselló Nevares

Honorable Thomas Rivera Schatz

Honorable Carlos J. Méndez Núñez

Page 2

PO Box 192018 San Juan, PR 00919-2018; www.oversightboard.pr.gov; comments@oversightboard.pr.gov

Section 204(a)(2)(A) provides that a compliance certification shall include a “formal 

estimate . . . of the impact, if any, that the law will have on expenditures and revenues.” The 

Compliance Certification is deficient in two ways. 

First, whatever fiscal impact that Act 47 will have will be determined to a large degree by the fiscal 

effect of the Patient Advocate’s expanded powers to commence Summary Proceedings on behalf 

of private citizens to stay a health insurance company’s coverage determination. Act 47 requires 

the Patient Advocate to issue regulations (the “Required Regulation”) to control the application of 

Summary Proceedings. The Required Regulation has not been promulgated and therefore their 

fiscal impact cannot be determined. The Section 204(a)(2)(A) formal estimate cannot be complete 

without an analysis of the fiscal impact of the Required Regulation. 

Second, the Compliance Certification by its own terms does not provide an analysis of the impact 

that Act 47 will have on the Commonwealth’s Fiscal Plan. See Compliance Certification at 4

(stating that “the fiscal impact of Act 47 on the Fiscal Plan cannot be conclusively determined”). 

This is not surprising given the first deficiency. Indeed, the Compliance Certification admits as 

much: “The impact of Act 47 on the Fiscal Plan is indeterminable before the approval and 

implementation of the Required Regulation.” Yet the Compliance Certification, inexplicably, goes 

on to certify that “Act 47 is not significantly inconsistent with the Fiscal Plan.” The Section 204(a) 

certification must include an analysis of the impact that Act 47 will have on the Commonwealth’s 

Fiscal Plan before it can certify that the law is not significantly inconsistent with the Fiscal Plan. 

Moreover, based on the information currently available, it appears unrealistic to expect that Act 

47 will not increase medical costs. MMAPA, in a letter addressed to the Governor and copied to 

the Oversight Board, conservatively estimated that the yearly economic impact of Act 47 would 

be $70 million to the GHP and $15 million to other governmental entities, including public 

corporations. This estimate alone suggests that healthcare costs would increase from the current

cost base, inconsistent with the Fiscal Plan. 

More importantly, Act 47 will likely interfere with the Commonwealth’s ability to meet the 

healthcare savings goals over the next several years that are required by the Fiscal Plan. The Fiscal 

Plan commits to $500 million in savings by 2020 and $1 billion by 2026. All of the savings for 

the years after 2020 are projected to come from a new MCO model. While we recognize that 

ASES is still in the process of designing the new MCO model, because MCOs are to be the primary 

vehicle to deliver future healthcare savings, we are concerned that Act 47 will impede whatever 

progress MCOs are able to make toward achieving the Fiscal Plan’s significant healthcare savings 

targets. In particular, we are focused on the impact that the expanded powers of the Patient 

Advocate and the ability of healthcare providers to challenge MCO decisions regarding utilization 

management will have on the Fiscal Plan. We strongly encourage you to consider carefully the 

impact that Act 47 will have on MCOs’ ability to produce the targeted healthcare savings through 

care and utilization management when you submit a revised Compliance Certification. 

* * *

Case:17-03283-LTS Doc#:3126-24 Filed:05/23/18 Entered:05/23/18 11:45:37 Desc:

Exhibit Letter from FOMB to Governor (8/30/17) Page 3 of 4
Honorable Ricardo A. Rosselló Nevares

Honorable Thomas Rivera Schatz

Honorable Carlos J. Méndez Núñez

Page 3

PO Box 192018 San Juan, PR 00919-2018; www.oversightboard.pr.gov; comments@oversightboard.pr.gov

Accordingly, the Oversight Board is notifying you, pursuant to Section 204(a)(3)(A), that the 

formal estimate required by Section 204(a)(2)(A) is missing, and directing you, pursuant to Section 

204(a)(4)(A), to provide the missing estimate within seven (7) days of the date on which the 

Required Regulation is promulgated. Should the Oversight Board determine that you have failed 

to comply with our directive under Section 204(a)(4)(A), we reserve the right to take such actions 

as we consider necessary, consistent with Section 204(a)(5), including preventing the enforcement 

or application of Act 47.

Sincerely,

José B. Carrión

Chair

Andrew G. Biggs 

Carlos M. García

Arthur J. González

José R. González

Ana J. Matosantos

David A. Skeel, Jr.

CC: Natalie A. Jaresko

Christian Sobrino Vega

Case:17-03283-LTS Doc#:3126-24 Filed:05/23/18 Entered:05/23/18 11:45:37 Desc:

Exhibit Letter from FOMB to Governor (8/30/17) Page 4 of 4