EXPERTISE PARTNERSHIP VALUE N o v e m b e r 1 6 , 2 0 1 1

UNIVERS ITY OF ALASKA 1 S T QUARTER FY12 UT IL IZAT ION REV IEW – 7 /1 /2011 TO 9 /30 /2011

TRENDS ANALYSIS STATISTICS PLANNING TOOLS

Premera – Medical

Premera Medical – Inpatient & Outpatient

3

Inpatient

− Paid claims per member per month for inpatient services decreased significantly from $85.94 for 1st quarter FY11 (7/10-09/10) to $64.11 for 1st quarter FY12 (07/11-09/11)

Large Claims stabilized between 1st quarter FY12 compared to FY11

− The average length of stay for inpatient services decreased from 4.03 to 3.61 and 1st quarter FY 12 was below the Premera Norm of 4.19

Outpatient

− Visits per 1,000 members for outpatient services increased from 1,069 to 1,116 from 1st quarter FY11 to FY12 but was well below the Premera Norm of 1,155

− Services per 1,000 members for outpatient services increased slightly from 4,255 for 1st quarter FY11 to 4,286 for 1st quarter FY12 but was below the Premera Norm of 4,395

− Paid claims per service decreased 10.8% from 1st quarter FY11 to 1st quarter FY12

Premera Medical – Emergency Room & Large Claims

4

Emergency Room

− Paid claims per member per month for ER services decreased from $17.81 for 1st quarter FY11 (7/10-09/10) to $16.34 for FY12 (7/11-09/11) and the paid claims per visit decreased 16% from $1,453.42 to $1,221.75

− Visits per 1,000 members for ER services increased from 147 for 1st quarter FY11 to 160 for 1st quarter FY12 but are below the Premera norm of 209

Large Claims

− Large Claims stabilized between 1st quarter FY12 compared to FY11

There are 7 large claimants over $100k for FY12 YTD

The average large claimant paid amount decreased from $195,549 to $129,591, a 33.7% decrease from 1st Qtr FY 12 to 1st Qtr FY11

Large claimants in the 1st quarter FY11 made up 42.6% of the total medical and Rx claims whereas for 1st quarter FY12 it is 22.4%

There were 10 large claimants over $100k in the first quarter FY11

− 2 of those 10 claimants were over $300k

Medical Utilization

5Norm is based on Premera’s Alaska large group book of business

Utilization Category Jul 2010 - Sept 2010 July 2011 - Sept 2011 % Over Previous Qtr NormMedical Contract Months 12,733 12,297 -3.4% ……Medical Member Months 28,964 28,789 -0.6% ……Average Contract Size 2.27 2.34 2.9% ……Medical Total PMPM $407.92 $347.48 -14.8% $373.20

InpatientPaid Claims Per Member Per Month $85.94 $64.11 -25.4% $88.79

Admissions Per 1000 Members 43.50 48.77 12.1% 59.25

Days Per 1000 Members 175.25 175.90 0.4% 248.50

Average Length of Stay 4.03 3.61 -10.4% 4.19

Paid Claims Per Admission $23,707.66 $15,775.39 -33.5% $17,982.70

OutpatientPaid Claims Per Member Per Month $93.72 $87.30 -6.9% $88.60

Visits Per 1000 Members 1,068.50 1,115.84 4.4% 1,155.30

Paid Claims Per Visit $1,052.55 $938.81 -10.8% $920.29

Services Per 1000 Members 4,254.52 4,286.22 0.7% 4,394.87

Services Per Visit 3.98 3.84 -3.5% 3.80

Paid Claims Per Service $264.34 $244.40 -7.5% $241.92

ER Utilization: Paid Claims PMPM $17.81 $16.34 -8.3% $16.05

ER Utilization: Visits Per 1000 Members 147.08 160.48 9.1% 209.17

ER Utilization: Paid Claims Per Visit $1,453.42 $1,221.75 -15.9% $921.07

Professional ProviderPaid Claims Per Member Per Month $199.77 $167.57 -16.1% $159.54

Services Per 1000 Members 17,288.22 16,284.97 -5.8% 14,781.30

Paid Claims Per Service $138.66 $123.48 -10.9% $129.52

Large Claims Analysis

6

1ST QTR FY11 1ST QTR FY12Monthly Medical & Rx Spend $4,593,680 $4,058,430Average Monthly Employees 4,244 4,099PEPM Cost $1,082 $990% Change Over Previous Qtr -8.5%

234.91% 447.39%1st Qtr Large Claimants (Over $100k) $1,955,489 $907,139# of Large Claimants (Over $100k) 10 7Average Large Claimant $195,549 $129,591% Change Over Previous Yr -33.7%

Without large claims $2,638,192 $3,151,291PEPM Cost $622 $769% Change Over Previous Yr 23.7%

Top 30 Large Claimants– 1st Quarter FY12

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Claimant ICD9 Description Paid Claims

1 CHRONIC RENAL FAILURE $172,329.81

2 OSTEOARTHROSIS AND ALLIED DISORDERS $142,562.42

3 CHRONIC RENAL FAILURE $140,753.72

4 OTHER FORMS OF CHRONIC ISCHEMIC HEART DISEASE $139,384.09

5 CARDIAC DYSRHYTHMIAS $105,221.45

6 OTHER AND UNSPECIFIED PROTEIN-CALORIE MALNUTRITION $104,337.85

7 OCCLUSION OF CEREBRAL ARTERIES $102,649.59

8 OSTEOARTHROSIS AND ALLIED DISORDERS $93,134.38

9 ENCOUNTER FOR OTHER AND UNSPECIFIED PROCEDURES AND AFTERCARE $86,411.10

10 SARCOIDOSIS $79,508.70

11 OTHER FORMS OF CHRONIC ISCHEMIC HEART DISEASE $73,929.27

12 ENCOUNTER FOR OTHER AND UNSPECIFIED PROCEDURES AND AFTERCARE $73,754.38

13 MIGRAINE $71,545.40

14 CHOLELITHIASIS $67,224.80

15 OTHER FORMS OF CHRONIC ISCHEMIC HEART DISEASE $62,654.07

16 CARDIAC DYSRHYTHMIAS $58,361.57

17 OTHER NONINFECTIOUS GASTROENTERITIS AND COLITIS $57,610.21

18 CARDIAC DYSRHYTHMIAS $57,220.32

19 ACUTE PERICARDITIS $55,125.25

20 ENCOUNTER FOR OTHER AND UNSPECIFIED PROCEDURES AND AFTERCARE $54,638.45

21 OSTEOARTHROSIS AND ALLIED DISORDERS $53,894.09

22 MALIGNANT NEOPLASM OF STOMACH $53,361.52

23 MALIGNANT NEOPLASM OF PROSTATE $52,564.06

24 NEUROTIC DISORDERS $48,123.40

25 DIVERTICULA OF INTESTINE $46,849.67

26 CENTRAL PAIN $46,241.87

27 OSTEOARTHROSIS AND ALLIED DISORDERS $45,852.90

28 ENCOUNTER FOR OTHER AND UNSPECIFIED PROCEDURES AND AFTERCARE $45,664.24

29 CHOLELITHIASIS $45,556.97

30 OTHER AND UNSPECIFIED DISORDERS OF BACK $45,506.84

Top 30 Large Claimants– 1st Quarter FY11

8

Claimant Diagnosis Paid Claims

1 LYMPHOID LEUKEMIA $596,100.94

2 OTHER FORMS OF CHRONIC ISCHEMIC HEART DISEASE $372,659.81

3 OTHER AND ILL-DEFINED CEREBROVASCULAR DISEASE $158,843.44

4 OTHER CONGENITAL ANOMALIES OF HEART $142,540.05

5 ENCOUNTER FOR OTHER AND UNSPECIFIED PROCEDURES AND AFTERCARE $138,237.12

6 ENCOUNTER FOR OTHER AND UNSPECIFIED PROCEDURES AND AFTERCARE $122,303.49

7 MALIGNANT NEOPLASM OF FEMALE BREAST $109,961.76

8 SPONDYLOSIS AND ALLIED DISORDERS $109,777.16

9 INTERVERTEBRAL DISC DISORDERS $105,480.39

10 OTHER AND ILL-DEFINED CEREBROVASCULAR DISEASE $100,143.59

11 OTHER DISORDERS OF CERVICAL REGION $93,943.74

12 ENCOUNTER FOR OTHER AND UNSPECIFIED PROCEDURES AND AFTERCARE $89,212.84

13 OTHER FORMS OF CHRONIC ISCHEMIC HEART DISEASE $85,464.90

14 ACUTE MYOCARDIAL INFARCTION $85,142.88

15 OTHER FORMS OF CHRONIC ISCHEMIC HEART DISEASE $79,589.40

16 ENCOUNTER FOR OTHER AND UNSPECIFIED PROCEDURES AND AFTERCARE $79,416.42

17 OSTEOARTHROSIS AND ALLIED DISORDERS $78,242.63

18 MALIGNANT NEOPLASM OF ESOPHAGUS $77,793.62

19 MALIGNANT NEOPLASM OF FEMALE BREAST $75,018.47

20 SECONDARY MALIGNANT NEOPLASM OF OTHER SPECIFIED SITES $71,836.69

21 DIABETES MELLITUS $70,073.47

22 OTHER MALIGNANT NEOPLASMS OF LYMPHOID AND HISTIOCYTIC TISSUE $69,561.81

23 CHRONIC SINUSITIS $66,891.03

24 ENCOUNTER FOR OTHER AND UNSPECIFIED PROCEDURES AND AFTERCARE $63,457.21

25 MALIGNANT NEOPLASM OF FEMALE BREAST $63,422.35

26 ENCOUNTER FOR OTHER AND UNSPECIFIED PROCEDURES AND AFTERCARE $59,385.95

27 OBESITY AND OTHER HYPERALIMENTATION $58,524.47

28 CARCINOMA IN SITU OF BREAST AND GENITOURINARY SYSTEM $53,354.71

29 OTHER AND UNSPECIFIED DISORDERS OF BACK $53,350.04

30 OSTEOARTHROSIS AND ALLIED DISORDERS $51,113.86

Claimant #’s 1, 2, and 4 dropped off in 2012. Claimant #3 remains #3 in 2012

Major Diagnosis Category

Paid PMPM Total Paid C laimsPercentage of Overall

TotalPaid PMPM Total Paid C laims

Percentage of Overall Total

Musculoskeletal System $72.81 $2,108,988.11 17.85% $62.28 $1,793,095.40 17.92%

Health Status & Services $50.16 $1,452,843.77 12.30% $43.02 $1,238,452.58 12.38%

Genitourinary System $17.38 $503,522.44 4.26% $28.31 $815,070.03 8.15%

Circulatory System $39.89 $1,155,364.51 9.78% $28.11 $809,222.39 8.09%

Ill-Defined Conditions $31.63 $916,266.66 7.76% $27.39 $788,579.33 7.88%

Neoplasms $54.40 $1,575,540.94 13.34% $25.94 $746,891.32 7.47%

Digestive System $24.74 $716,482.23 6.06% $24.96 $718,498.26 7.18%

Nervous System $18.63 $539,601.72 4.57% $24.61 $708,607.96 7.08%

Injury and Poisoning $30.28 $876,964.01 7.42% $18.43 $530,557.81 5.30%

Respiratory System $13.32 $385,668.55 3.26% $13.77 $396,336.41 3.96%

Mental Disorders $12.97 $375,615.04 3.18% $13.24 $381,156.91 3.81%

Endocrine, Metabolic and Immunity $13.21 $382,574.88 3.24% $12.36 $355,715.11 3.56%

Pregnancy and Related $10.35 $299,840.31 2.54% $11.50 $331,146.48 3.31%

Skin and Tissue $7.24 $209,811.02 1.78% $5.08 $146,179.71 1.46%

Infectious and Parasitic $3.09 $89,443.70 0.76% $4.24 $122,034.08 1.22%

Congenital Anomalies $6.19 $179,147.27 1.52% $2.15 $61,915.48 0.62%

Blood $1.05 $30,298.71 0.26% $1.23 $35,459.10 0.35%

Perinatal $0.46 $13,339.89 0.11% $0.81 $23,357.06 0.23%

Other $0.02 $672.00 0.01% $0.05 $1,377.51 0.01%

Injury and Poisoning External Causes $0.11 $3,059.58 0.03% $0.00 $0.00 0.00%

Total $407.92 $11,815,045.34 100.00% $347.48 $10,003,652.93 100.00%

J uly 1, 2010 to September 30, 2010 J uly 1, 2011 to September 30, 2011

Major Diagnostic Category

9

Musculoskeletal system continue to be #1Genitourinary Systems jumped from #9 to #3Neoplams dropped from #2 to #6

Caremark - Pharmacy

Pharmacy Observations

11

The number of total scripts/claims from FY12 1st quarter (7/1/11 to 09/30/11) decreased 4.9% compared to FY11 1st quarter (7/1/10 to 09/30/10)

The number of mail order scripts/claims increased 52.3% from FY11 to FY12 1st quarter

− Introduction of mail order for maintenance drugs at 7/1/2011

The total gross costs increased $205,641 from FY11 to FY12 1st Quarter from $1,965,996 to $2,171,637

The generic dispensing rate increased from 65.1% to 68.1%, a 4.7% increase

Specialty drug gross costs increased 25.7% and made up 13.8% of the total gross pharmacy cost

Eligibility Jul-Sep 10 Jul-Sep 11 % ChangeAverage Eligible Members per Month 9,974 9,734 -2.4%Avg. Monthly Utilizers as % of Members 27.6% 27.2% -1.7%

CostTotal Gross Cost $1,965,996 $2,171,637 10.5%Total Net Cost $1,669,777 $1,856,867 11.2%Gross Cost PMPM $66 $74 13.2%Net Cost PMPM $56 $64 13.9%Member Cost Share 15.1% 14.5% -3.8%

Drug Mix% Single Source Brands 32.4% 29.8% -8.1%% Multi Source Brands 2.5% 2.1% -16.1%Generic Dispensing Rate 65.1% 68.1% 4.7%Generic Substitution Rate 96.3% 97.0% 0.7%

UtilizationTotal Prescriptions 21,660 20,599 -4.9%% Retail Prescriptions 87.0% 80.1% -7.8%% Mail Prescriptions 13.0% 19.9% 52.3%Days' Supply PMPM 24 26 8.1%

SpecialtySpecialty Total Gross Cost $276,273 $347,199 25.7%Specialty Utilizers as % of Members 0.6% 0.7% 17.1%Specialty Gross Cost PMPM $9 $12 28.8%Specialty % of Total Gross Cost 14.1% 16.0% 13.8%Specialty % of Total Prescriptions 1.0% 1.1% 13.7%

Pharmacy 1st Qtr FY 11 to FY12 Comparison

12

Top 25 Drugs by Gross Cost

13

Book of Business

Rank*Prior Rank

Current

Rank Drug NameDispense Type Therapeutic Class

Generic Launch Date** Gross Cost

Total Prescriptions

GrossCost

Per Day1 1 1 Lipitor Brand Antihyperlipidemics Q4-2011 $110,362 488 $4.146 3 2 Humira Specialty Analgesics - Anti-Inflammatory NA $67,683 33 $74.382 2 3 Nexium Brand Ulcer Drugs Q2-2014 $57,446 192 $5.707 4 4 Singulair Brand Antiasthmatic And Bronchodilator Agents Q3-2012 $55,032 254 $4.50

10 9 5 Copaxone Specialty Psychotherapeutic And Neurological Agents - Misc. Q4-2014 $42,561 12 $118.2212 10 6 Cymbalta Brand Antidepressants Q4-2013 $38,661 149 $6.1811 7 7 Lexapro Brand Antidepressants Q1-2012 $38,091 236 $3.558 5 8 Advair Diskus Brand Antiasthmatic And Bronchodilator Agents NA $36,160 118 $6.285 6 9 Crestor Brand Antihyperlipidemics NA $33,996 171 $4.16

41 8 10 Rebif Specialty Psychotherapeutic And Neurological Agents - Misc. NA $31,544 10 $112.664 11 11 Enbrel Specialty Analgesics - Anti-Inflammatory NA $31,381 17 $65.93

13 13 12 Abilify Brand Antipsychotics/Antimanic Agents Q2-2015 $30,957 43 $17.0637 12 13 One Touch Ultra Test Strips Brand Diagnostic Products NA $23,809 98 $4.9415 17 14 Celebrex Brand Analgesics - Anti-Inflammatory Q2-2014 $23,562 105 $4.7735 16 15 Humalog Brand Antidiabetics Q4-2014 $22,479 55 $8.7343 21 16 Lovaza Brand Antihyperlipidemics NA $19,563 82 $4.6823 23 17 Seroquel Brand Antipsychotics/Antimanic Agents Q2-2012 $19,347 48 $11.1721 25 18 Venlafaxine Hcl Er Generic Antidepressants $18,095 141 $2.6839 71 19 Zolpidem Tartrate Generic Hypnotics $17,538 343 $1.4869 45 20 Restasis Brand Ophthalmic Agents NA $17,460 52 $7.359 14 21 Actos Brand Antidiabetics Q3-2012 $16,861 50 $6.83

40 0 22 Gleevec Specialty Antineoplastics And Adjunctive Therapies NA $16,202 3 $180.0264 20 23 Bupropion Xl Generic Antidepressants $15,988 216 $1.7214 26 24 Januvia Brand Antidiabetics NA $15,583 49 $6.5749 24 25 Valacyclovir Generic Antivirals $15,393 158 $3.77

Appendix

Medical Utilization Definitions

15

Contract Months – Number of enrolled employees for a 12 month period

Medical Total PMPM – Total medical cost on a per member per month basis

Inpatient – Services provided to patients who are hospitalized

Outpatient – Hospital based services where the employee is not admitted

Professional – Primary Care or Specialist Care Physician services

Average Contract Size – The average number of dependents (Spouse and Children) for each enrolled employee

16

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