EXPERTISE PARTNERSHIP VALUE J a n u a r y 2 6 , 2 0 1 1

2 N D QUARTER UT IL IZAT ION REV IEW – 7 /1 /2010 TO 12 /31 /10

TRENDS ANALYSIS STATISTICS PLANNING TOOLS

Premera – Medical

Premera Medical – Inpatient & Outpatient

3

Inpatient

− Paid claims per member per month for Inpatient services increased significantly from $75.50 for 2nd Qtr FY10 (7/09-12/09) to $100.58 for the 2nd quarter FY11 (7/10-12/10)

Greater intensity and severity of large claims in 2nd Qtr FY11 compared to FY10

− The average length of stay for inpatient services decreased from 4.52 to 4.45 and 2nd Qtr FY 11 was below the Premera Norm

Outpatient

− Visits per 1,000 members for Outpatient services decreased from 1,071 for 2nd Qtr FY10 (7/09-12/09) to 1,058 for the 2nd quarter FY11 (7/10-12/10)

FY11 was below the Premera Norm

− Services per 1,000 members for Outpatient services decreased from 4,222 for 2nd Qtr FY10 (7/09-12/09) to 4,154 for the 2nd quarter FY11 (7/10-12/10)

FY11 was below the Premera Norm

Premera Medical – Emergency Room

4

Emergency Room

− Paid claims per member per month for ER services increased from $15.68 for 2nd Qtr FY10 (7/09-12/09) to $16.87 for the 2nd quarter FY11 (7/10-12/10) and the paid claims per visit increased from $1,122.19 to $1,386.04

− Visits per 1,000 members for ER services decreased from 167 for 2nd Qtr FY10 (7/09-12/09) to 146 for the 2nd quarter FY11 (7/10-12/10)

FY11 was significantly below the Premera Norm

The increase in the ER per member per month cost coupled with the decrease in the number of ER visits for the 2nd Quarter FY 2011 compared to 2nd Qtr FY 2010 implies that members are going to the ER for more appropriate services.

Large Claims

− The number of large claimants over $100k increased from 18 in FY 10 2nd Qtr to 28 in FY 11 2nd Qtr

− Top 30 claims for FY10 2nd Qtr were $4,039,411 compared to $6,428,623 in 2nd Qtr FY11, which is a 50% increase

− 30% of the Top 30 Large Claimants in FY11 2nd quarter are lifestyle related claims compared to 20% for the FY10 2nd quarter

Medical Utilization

52010 Norm is based on Premera’s Alaska large group book of business

Utilization Category Jul 2009 - Dec 2009 Jul 2010 - Dec 2010 % Over Previous Qtr Norm

Medical Contract Months 25,780 25,620 -0.6% ---

Medical Member Months 58,689 57,935 -1.3% ---

Average Contract Size 2.28 2.26 -0.7% ---

Medical Total PMPM $378.73 $431.76 14.0% $379.69

Inpatient

Paid Claims Per Member Per Month $75.50 $100.58 33.2% $89.00

Admissions Per 1000 Members 46.41 51.99 12.0% 62.34

Days Per 1000 Members 209.99 231.16 10.1% 281.21

Average Length of Stay 4.52 4.45 -1.7% 4.51

Paid Claims Per Admission $19,518.86 $23,216.25 18.9% $17,132.22

Outpatient

Paid Claims Per Member Per Month $82.29 $88.80 7.9% $83.07

Visits Per 1000 Members 1,071.00 1,058.84 -1.1% 1,223.80

Paid Claims Per Visit $922.04 $1,006.39 9.1% $814.58

Services Per 1000 Members 4,222.87 4,154.38 -1.6% 4,328.45

Services Per Visit 3.94 3.92 -0.5% 3.54

Paid Claims Per Service $233.85 $256.50 9.7% $230.31

ER Utilization: Paid Claims PMPM $15.68 $16.87 7.6% $17.20

ER Utilization: Visits Per 1000 Members 167.66 146.03 -12.9% 211.05

ER Utilization: Paid Claims Per Visit $1,122.19 $1,386.04 23.5% $977.92

Professional Provider

Paid Claims Per Member Per Month $190.15 $205.97 8.3% $169.64

Services Per 1000 Members 17,357.05 17,209.08 -0.9% 15,222.06

Paid Claims Per Service $131.46 $143.63 9.3% $133.74

Top 30 Claimants – 2nd Qtr FY 2011

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Claimant Enrollment Status Paid C laims

1 Active $637,444.16

2 Active $596,946.25

3 Active $407,432.60

4 Inactive $398,412.15

5 Inactive $362,998.06

6 Active $286,552.25

7 Active $284,553.80

8 Active $272,970.34

9 Active $232,411.38

10 Active $216,179.57

11 Active $214,206.56

12 Active $185,502.06

13 Active $167,695.86

14 Active $167,424.31

15 Active $165,856.79

16 Active $162,320.61

17 Active $149,910.68

18 Active $146,128.05

19 Active $142,529.21

20 Active $134,866.57

21 Active $126,545.56

22 Active $125,642.66

23 Active $120,684.21

24 Active $114,832.69

25 Active $111,887.70

26 Active $102,220.46

27 Active $100,881.79

28 Active $100,152.28

29 Active $98,437.11

30 Active $94,997.44

ICD9 Description

SEPTICEMIA

CHRONIC ISCHEMIC HEART DISEASE

MALIGNANT NEOPLASM

MALIGNANT NEOPLASM OF ESOPHAGUS

MALIGNANT NEOPLASM

ACUTE MYOCARDIAL INFARCTION

LYMPHOID LEUKEMIA

ABSCESS OF LUNG AND MEDIASTINUM

SUBARACHNOID HEMORRHAGE

CHRONIC ISCHEMIC HEART DISEASE

INTRACEREBRAL HEMORRHAGE

CHRONIC RENAL FAILURE

DISEASES OF OTHER ENDOCARDIAL STRUCTURES

DIABETES MELLITUS

TWIN BIRTH, MATE LIVEBORN

SPONDYLOSIS AND ALLIED DISORDERS

MALIGNANT NEOPLASM

MALIGNANT NEOPLASM MOUTH

MALIGNANT NEOPLASM OF STOMACH

MALIGNANT NEOPLASM OF FEMALE BREAST

INTERVERTEBRAL DISC DISORDERS

MALIGNANT NEOPLASM

OTHER MALIGNANT NEOPLASMS OF LYMPHOID AND HISTIOCYTIC TISSUE

OTHER CONGENITAL ANOMALIES OF HEART

MALIGNANT NEOPLASM

ACUTE MYOCARDIAL INFARCTION

CEREBROVASCULAR DISEASE

INTERVERTEBRAL DISC DISORDERS

MALIGNANT NEOPLASM

CARDIAC DYSRHYTHMIAS

Paid PMPMTotal Paid

Claims

Percentage of Overall

TotalPaid PMPM

Total Paid Claims

Percentage of Overall

Total Musculoskeletal System $72.99 $4,283,540.39 17.46% $72.21 $4,183,260.55 15.29%Circulatory System $32.63 $1,914,920.94 7.80% $55.01 $3,187,103.13 11.65%Health Status & Services $41.96 $2,462,572.87 10.04% $48.41 $2,804,881.77 10.25%Neoplasms $29.69 $1,742,734.62 7.10% $44.05 $2,552,074.11 9.33%Other $39.34 $2,308,722.83 9.41% $40.63 $2,353,835.37 8.60%Ill-Defined Conditions $32.48 $1,905,970.45 7.77% $31.72 $1,837,462.80 6.71%Digestive System $29.02 $1,702,904.93 6.94% $27.60 $1,598,787.40 5.84%Injury and Poisoning $27.78 $1,630,364.10 6.64% $26.93 $1,560,049.66 5.70%Nervous System $22.72 $1,333,152.63 5.43% $22.88 $1,325,725.43 4.84%Genitourinary System $21.49 $1,261,117.03 5.14% $21.64 $1,253,743.55 4.58%Respiratory System $16.25 $953,551.62 3.89% $19.54 $1,132,307.28 4.14%Mental Disorders $18.20 $1,068,080.90 4.35% $15.90 $921,243.97 3.37%Endocrine, Metabolic and Immunity

$10.72 $629,178.84 2.56% $13.92 $806,641.56 2.95%

Pregnancy and Related $12.23 $717,511.59 2.92% $12.24 $709,293.22 2.59%Skin and Tissue $4.42 $259,455.57 1.06% $6.26 $362,547.54 1.32%Infectious and Parasitic $1.58 $92,710.17 0.38% $6.17 $357,488.98 1.31%Congenital Anomalies $2.16 $127,059.43 0.52% $5.26 $304,900.99 1.11%Blood $1.72 $100,888.47 0.41% $1.31 $76,008.99 0.28%Perinatal $0.69 $40,264.72 0.16% $0.62 $35,922.11 0.13%Injury and Poisoning External Causes

$0.01 $738.00 0.00% $0.05 $3,059.58 0.01%

Total $418.06 $24,535,440.10 100.00% $472.36 $27,366,337.99 100.00%

7/1/2009 to 12/31/2009 7/1/10 to 12/31/2010

Major Diagnosis Category

Major Diagnostic Category

7Circulatory system jumped from #4 in 2nd Qtr FY 10 to number #2 in FY 11

Caremark - Pharmacy

Pharmacy Observations

9

The number of total scripts/claims from FY11 2nd quarter (7/1/10 to 12/31/10) increased 4% compared to FY10 2nd quarter (7/1/09 to 12/31/09)

The number of mail order scripts/claims increased 9% from FY 10 to FY11 2nd quarter

− The University as well as the member receives costs savings with the utilization of mail order

The total gross cost increased 8% from FY10 2nd quarter to FY11 2nd quarter

− Pharmacy trend is currently around 10% nationwide and 14.5% for Premera Alaska

The total amount paid by members decreased 1% and the average amount paid per member per claim decreased from $12.87 to $12.21, a 5% decrease from the FY10 2nd quarter

The generic dispensing rate increased from 58.9% to 62.1%, a 5% increase

− Caremark’s book of business is 66.1% and its Colleges and Universities benchmark is 65.2%

− The increased utilization of generic drugs provides cost savings to the University and its employees

MetricsCombined

BenefitRetail

ClaimsMail

ClaimsCombined

BenefitRetail

ClaimsMail

Claims

Member UtilizationTotal Claims 130,311 114,905 15,406 135,618 118,882 16,736Distribution of Payable Claims 100.0% 88.2% 11.8% 100.0% 87.7% 12.3%Average Eligible Members Per Month 9,927 10,016Average Utilizing Members Per Month 2,743 2,822Percent of Utilizing Members 27.6% 28.2%Eligible Member Utiliz. Rate Per Month 0.73 0.64 0.09 0.75 0.66 0.09Gross CostTotal Gross Cost $11,663,853 $8,536,815 $3,127,037 $12,634,997 $9,181,360 $3,453,637Average Gross Cost Paid/Claim $89.51 $74.29 $202.98 $93.17 $77.23 $206.36Total Gross Cost PMPM $65.28 $47.78 $17.50 $70.08 $50.93 $19.16Net CostTotal Net Cost $9,986,111 $7,255,281 $2,730,829 $10,979,723 $7,934,029 $3,045,694Average Net Cost Paid/Claim $76.63 $63.14 $177.26 $80.96 $66.74 $181.98Total Net Cost PMPM $55.89 $40.60 $15.28 $60.90 $44.01 $16.89Member PaidTotal Member Paid $1,677,742 $1,281,534 $396,208 $1,655,274 $1,247,331 $407,943Average Member Paid/Claim $12.87 $11.15 $25.72 $12.21 $10.49 $24.38Average Member Paid/Brand $23.60 $21.17 $42.02 $23.78 $21.26 $42.00Average Member Paid/Generic $4.97 $4.54 $9.47 $4.76 $4.34 $9.06Percent Member Amount Paid 14.4% 15.0% 12.7% 13.1% 13.6% 11.8%Drug MixSingle-Source Brand Dispensing Rate 38.1% 36.8% 47.3% 35.0% 33.5% 44.0%Multi-Source Brand Dispensing Rate 3.1% 3.0% 2.6% 3.0% 2.9% 2.4%Generic Dispensing Rate 58.9% 60.2% 50.1% 62.1% 63.6% 53.5%Generic Substitution Rate 95.1% 95.2% 95.0% 95.4% 95.7% 95.6%

Jul 08-Dec 09 Jul 09-Dec 10UNIVERSITY OF ALASKAUNIVERSITY OF ALASKA

Pharmacy 2nd Qtr Comparison

10

Appendix

Medical Utilization Definitions

12

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

Top 30 Claimants – 2nd Qtr FY 2010

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Claimant Enrollment Status Paid C laims

1 Inactive $456,517.00

2 Active $365,543.64

3 Active $219,824.84

4 Inactive $211,650.97

5 Active $181,150.39

6 Active $173,402.09

7 Inactive $165,240.29

8 Active $156,331.18

9 Inactive $132,186.15

10 Active $129,902.27

11 Active $117,407.24

12 Active $113,823.53

13 Active $106,721.36

14 Active $105,626.39

15 Active $104,227.67

16 Inactive $103,975.20

17 Active $103,067.50

18 Active $102,124.21

19 Active $96,458.03

20 Active $91,949.18

21 Active $90,321.39

22 Active $87,048.39

23 Active $83,581.03

24 Active $79,800.97

25 Active $79,689.79

26 Active $79,579.22

27 Active $77,066.53

28 Active $75,572.52

29 Active $74,936.13

30 Inactive $74,686.34

OTHER AND ILL-DEFINED CEREBROVASCULAR DISEASE

CHRONIC RENAL FAILURE

CARE INVOLVING USE OF REHABILITATION PROCEDURES

MALIGNANT NEOPLASM OF BRAIN

ENCOUNTER FOR OTHER AND UNSPECIFIED PROCEDURES AND AFTERCARE

OTHER FORMS OF CHRONIC ISCHEMIC HEART DISEASE

ICD9 Description

MALIGNANT NEOPLASM OF BODY OF UTERUS

SYMPTOMS INVOLVING HEAD AND NECK

OTHER DISEASES OF LUNG

PLEURISY

COMPLICATIONS PECULIAR TO CERTAIN SPECIFIED PROCEDURES

MALIGNANT NEOPLASM OF FEMALE BREAST

LYMPHOID LEUKEMIA

POLYARTERITIS NODOSA AND ALLIED CONDITIONS

MALIGNANT NEOPLASM OF PANCREAS

OTHER DISEASES OF LUNG

DIVERTICULA OF INTESTINE

ATHEROSCLEROSIS

OSTEOARTHROSIS AND ALLIED DISORDERS

OTHER COMPLICATIONS OF INTERNAL PROSTHETIC DEVICE, IMPLANT, AND GRAFT

MALIGNANT NEOPLASM OF FEMALE BREAST

SPONDYLOSIS AND ALLIED DISORDERS

OSTEOARTHROSIS AND ALLIED DISORDERS

OSTEOARTHROSIS AND ALLIED DISORDERS

OSTEOARTHROSIS AND ALLIED DISORDERS

INTERVERTEBRAL DISC DISORDERS

ACUTE MYOCARDIAL INFARCTION

ACUTE MYOCARDIAL INFARCTION

OSTEOARTHROSIS AND ALLIED DISORDERS

MENINGITIS OF UNSPECIFIED CAUSE

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