L O C K T O N D U N N I N G B E N E F I T S

UNIVERSITY OF ALASKA 2 N D Q T R F Y 1 3 U T I L I Z AT I O N R E V I E W7 / 1 / 2 0 1 2 T O 1 2 / 3 1 / 2 0 1 2

Premera- Medical

3

Premera Medical – Inpatient & Outpatient

Inpatient

− Paid claims per member per month (PMPM) for inpatient services increased significantly from $66.80 for FY12 (07/11-12/11) to $92.82 for FY13 (07/12-12/12)

− The average length of stay for inpatient services increased from 4.06 to 5.57 and FY13 was above the Premera Norm of 4.62

− Paid claims per admissions increased from $19,825 for FY12 to $21,246 for FY13

Outpatient

− Paid claims PMPM for outpatient services decreased from $80.80 for FY12 to $77.03 for FY13 and was below the Premera Norm of $83.45

− Outpatient services per 1,000 members decreased slightly from 3,976 for FY12 to 3,829 for FY13

4

Premera Medical – Emergency Room & Large Claims

Emergency Room

− ER paid claims per visit decreased from $1,286 for 2nd Qtr FY12 to $1,198 for 2nd Qtr FY13, but was above the Premera Norm of $1,138

− Visits per 1,000 members for ER services increased from 148 for 2nd Qtr FY12 to 152 for 2nd Qtr FY13 and was below the Premera norm of 208

Large Claims

− Large Claims have increased from FY12 compared to FY13 18 large claimants over $100k through FY12

− None were over $400k− $2,913,620 total paid

25 large claimants over $100k through FY13− 2 are over $400k− $5,009,186 total paid

Estimate 37 claims over $100k in a 12 month period

2 claims over $500k

1 claim over $700k

5

Medical Utilization

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

Utilization Category2nd Qtr FY12 2nd Qtr FY13

% Change over

Previous Qtr Norm InpatientPaid Claims Per Member Per Month $66.80 $92.82 39% $82.70Admissions Per 1000 Members 40.44 52.42 30% 58.99Days Per 1000 Members 164.23 291.89 78% 272.50Average Length of Stay 4.06 5.57 37% 4.62Paid Claims Per Admission $19,825.22 $21,246.09 7% $16,823.53OutpatientPaid Claims Per Member Per Month $80.80 $77.03 -5% $83.45Visits Per 1000 Members 1,037.86 1,054.70 2% 1,013.16Paid Claims Per Visit $934.17 $876.37 -6% $988.40Services Per 1000 Members 3,976.01 3,828.73 -4% 3,979.58Services Per Visit 3.83 3.63 -5% 3.93Paid Claims Per Service $243.85 $241.41 -1% $251.64ER Utilization: Paid Claims PMPM $15.92 $15.14 -5% $19.73ER Utilization: Visits Per 1000 Members 148.47 151.72 2% 208.04ER Utilization: Paid Claims Per Visit $1,286.44 $1,197.72 -7% $1,138.35Professional ProviderPaid Claims Per Member Per Month $169.63 $180.42 6% $168.94Services Per 1000 Members 15,867.56 16,301.22 3% 16,112.73Paid Claims Per Service $128.29 $132.81 4% $125.82

6

Large Claims Analysis

Large Claims percentage of Total Medical & Rx Claims

FY12 FY13Medical & Rx Spend $23,376,987 $23,913,208Average Monthly Employees 4,114 3,962PEPM Cost $5,682 $6,036% Change Over Previous Fiscal Year 6.2%

802.33% 477.39%Total Paid for Large Claimants (Over $100k) $2,913,620 $5,009,186# of Large Claimants (Over $100k) 18 25Average Large Claimant $161,868 $200,367% Change Over Previous Yr 23.8%

Without large claims $20,463,367 $18,904,022PEPM Cost $553 $530% Change Over Previous Yr -4.1%

12.5%

FY12

20.9%

FY13

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Claimants over $100k – FY13 ( July 2012 – December 2012)

Claimant Diagnosis Paid Claims

1 UNSPECIFIED ANEMIAS- CLAIMANT TERMED 8/31/12 $775,747.432 OTHER DISORDERS OF ARTERIES AND ARTERIOLES $708,701.013 CHRONIC RENAL FAILURE $266,306.494 DISORDERS OF MINERAL METABOLISM $242,628.185 CEREBRAL LACERATION AND CONTUSION $236,329.766 MALIGNANT NEOPLASM OF BRAIN $210,036.837 MALIGNANT NEOPLASM OF PANCREAS $183,831.198 ACUTE MYOCARDIAL INFARCTION $182,897.529 MALIGNANT NEOPLASM OF LYMPH NODES $181,024.03

10 MALIGNANT NEOPLASM OF STOMACH $157,044.6411 MALIGNANT NEOPLASM OF BRAIN AND SPINE $154,258.7012 AFFECTIVE PSYCHOSES $142,792.2813 CENTRAL PAIN $139,542.5614 OTHER DISORDERS OF CERVICAL REGION $138,883.3915 FUNCTIONAL DIGESTIVE DISORDERS $138,819.4016 OSTEOARTHROSIS AND ALLIED DISORDERS $132,686.8617 OTHER DISEASES OF ENDOCARDIUM $125,481.9318 MALIGNANT NEOPLASM OF TRACHEA, BRONCHUS, AND LUNG $124,653.31

19 ARTERIAL EMBOLISM AND THROMBOSIS $116,565.2620 MALIGNANT NEOPLASM OF LYMPH NODES $116,125.7921 MALIGNANT NEOPLASM OF FEMALE BREAST $112,789.3822 DISORDERS OF LIPOID METABOLISM $111,811.1823 CARDIAC DYSRHYTHMIAS $106,322.1524 CHRONIC ISCHEMIC HEART DISEASE $102,889.2825 MALIGNANT NEOPLASM OF BRAIN $101,017.53

8

Claimants over $100k – FY12 (July 2011 - December 2011)

Claimant Diagnosis Paid Claims

1 DISORDERS OF AMINO-ACID TRANSPORT AND METABOLISM $324,581.382 CHRONIC RENAL FAILURE $324,576.303 MALIGNANT NEOPLASM OF OROPHARYNX $219,738.914 MALIGNANT NEOPLASM OF BONE AND ARTICULAR CARTILAGE $202,620.075 MIGRAINE $159,413.316 OTHER FORMS OF CHRONIC ISCHEMIC HEART DISEASE $155,248.367 MALIGNANT NEOPLASM OF COLON $150,135.298 CHRONIC RENAL FAILURE $147,686.689 OSTEOARTHROSIS AND ALLIED DISORDERS $143,447.84

10 MALIGNANT NEOPLASM OF COLON $139,784.1511 COMPLICATIONS DUE TO OTHER VASCULAR DEVICE $138,929.5012 MALIGNANT NEOPLASM OF BREAST $136,633.0813 MALIGNANT NEOPLASM OF COLON $130,755.2614 CARDIAC DYSRHYTHMIAS $114,176.9015 OSTEOARTHROSIS AND ALLIED DISORDERS $109,581.5716 OCCLUSION OF CEREBRAL ARTERIES $109,185.4617 OTHER CONGENITAL ANOMALIES OF HEART $104,406.9618 SPONDYLOSIS AND ALLIED DISORDERS $102,718.81

9

Major Diagnostic Category

Health Status and Services jumped from #2 to #1Musculoskeletal system dropped from #1 to #2

Circulatory Systems (Heart) jumped from #8 to #3

Major Diagnosis CategoryPaid PMPM Total Paid Claims

Percentage of Overall Total

Paid PMPM Total Paid ClaimsPercentage of Overall Total

Health Status & Services $41.95 $2,427,510.33 12.31% $62.54 $3,378,515.99 16.58%Musculoskeletal System $63.87 $3,695,920.32 18.74% $53.24 $2,876,311.64 14.11%Circulatory System $21.94 $1,269,596.04 6.44% $38.18 $2,062,514.82 10.12%Neoplasms $34.81 $2,014,518.87 10.21% $37.83 $2,043,874.86 10.03%Injury and Poisoning $17.15 $992,344.46 5.03% $28.59 $1,544,462.70 7.58%Ill-Defined Conditions $25.77 $1,491,031.13 7.56% $27.71 $1,496,924.62 7.34%Digestive System $22.19 $1,284,029.11 6.51% $21.52 $1,162,418.96 5.70%Nervous System $22.50 $1,302,170.37 6.60% $20.70 $1,118,267.81 5.49%Genitourinary System $23.00 $1,330,973.93 6.75% $18.35 $991,234.47 4.86%Pregnancy and Related $11.30 $653,795.95 3.31% $16.21 $875,802.70 4.30%Mental Disorders $14.66 $848,541.90 4.30% $15.19 $820,642.18 4.03%Endocrine, Metabolic and Immunity $14.64 $847,162.54 4.30% $12.29 $663,930.70 3.26%Respiratory System $13.61 $787,818.30 3.99% $10.53 $568,930.82 2.79%Skin and Tissue $5.11 $295,694.23 1.50% $4.64 $250,434.99 1.23%Congenital Anomalies $3.49 $201,805.44 1.02% $3.20 $172,980.78 0.85%Infectious and Parasitic $2.59 $150,058.73 0.76% $2.96 $159,903.24 0.78%Perinatal $0.57 $33,038.18 0.17% $1.98 $106,927.46 0.52%Blood $1.64 $94,633.58 0.48% $1.57 $84,612.72 0.42%Other $0.03 $1,975.36 0.01% $0.06 $3,251.93 0.02%Injury and Poisoning External Causes $0.01 $531.20 0.00% $0.01 $635.76 0.00%

Total $340.82 $19,723,149.97 100.00% $377.31 $20,382,579.15 100.00%

7/ 1/ 2012 - 12/ 31/ 20127/ 1/ 2011 - 12/ 31/ 2011

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Member Responsibility

FY12Allowed Charges $35,363,153

Deductible $3,300,349 Copays $671,580 Coinsurance $3,343,266Member Responsibility $7,315,195Member Cost Share (% of Allowed Charges)

20.7%

Employee Out of Pocket

FY13Allowed Charges $35,238,880

Deductible $3,220,594 Copays $601,399 Coinsurance $3,567,779Member Responsibility $7,389,772Member Cost Share (% of Allowed Charges)

21.0%

Employee Out of Pocket

Caremark - Pharmacy

12

Pharmacy Observations

The total gross costs decreased $187,127 for 2nd Quarter FY12 to FY13 from $4,253,408 to $4,066,281

The percent of mail order scripts/claims decreased from 20.0% to 18.8% for 2nd Qtr FY13

The generic dispensing rate increased from 68.7% to 75.3%, a 9.6% increase

Specialty drug gross costs increased 29.8% from $659,867 to $856,288

0.7% of membership utilize the specialty drugs accounting for 21.1% of pharmacy spend

13

Eligibility Jul - Dec 11 Jul - Dec 12 % ChangeAverage Eligible Members per Month 9,879 11,431 15.7%Average Monthly Utilizers as % of Members 26.7% 22.6% -15.4%

CostTotal Gross Cost $4,253,408 $4,066,281 -4.4%Total Net Cost $3,615,538 $3,498,713 -3.2%Gross Cost PMPM $72 $59 -18.3%Net cost PMPM $61 $51 -16.4%Member Cost Share 15.0% 14.0% -6.7%

Drug Mix% Single Source Brands 29.1% 22.2% -23.7%% Multi Source Brands 2.2% 2.4% 9.1%Generic Dispensing Rate 68.7% 75.3% 9.6%Generic Substitution Rate 96.9% 96.9% 0.0%

UtilizationTotal Prescriptions 40,454 39,076 -3.4%% Retail Prescriptions 80.0% 81.2% 1.5%% Mail Prescriptions 20.0% 18.8% -6.0%Days' Supply PMPM 25 20 -20.0%

SpecialtySpecialty Total Gross Cost $659,867 $856,288 29.8%Specialty Utilizers as % of Members 0.8% 0.7% -12.5%Specialty Gross Cost PMPM $11 $12 13.3%Specialty % of Total Gross Cost 15.5% 21.1% 36.1%Specialty % of Total Prescriptions 1.0% 1.1% 10.0%

Pharmacy FY 12 to FY13 Comparison

14

Top 25 Drugs by Gross Cost

Book of Business

Rank

Prior Rank

Current Rank

Drug NameDispense

TypeTherapeutic Class

Generic Launch Date

Gross CostTotal

UtilizersTotal Rxs

1 2 1 Humira Specialty Analgesics- Anti-Inflammatory NA $148,350 19 666 5 2 Copaxone Specialty Psychotherapeuctic And Neurological Agents- Misc. Q3-2015 $100,568 6 242 3 3 Nexium Brand Ulcer Drugs Q2-2014 $100,538 123 2765 7 4 Cymbalta Brand Antidepressants Q4-2013 $78,065 78 221

394 0 5 Kuvan Specialty Endocrine And Metabolic Agents - Misc. NA $72,637 1 54 9 6 Crestor Brand Antihyperlipidemics Q3-2016 $66,875 111 2698 72 7 Atorvastatin Calcium Generic Antihyperlipidemics $61,725 315 7687 8 8 Advair Diskus Brand Antiasthmatic And Bronchodilator Agents NA $58,383 86 17364 0 9 Incivek Specialty Antivirals NA $56,381 1 39 10 10 Abilify Brand Antipsychotics/Antimanic Agents Q2-2015 $55,620 25 6227 13 11 One Touch Ultra Test Brand Diagnostic Products NA $47,577 103 20510 70 12 Novolog Brand Antidiabetics Q4-2014 $41,331 38 1003 12 13 Enbrel Specialty Analgesics- Anti-Inflammatory NA $40,895 5 2014 14 14 Celebrex Brand Analgesics- Anti-Inflammatory Q2-2014 $40,279 83 16716 0 15 Escitalopram Oxalate Generic Antidepressants $40,223 169 46213 27 16 Lantus Solostar Brand Antidiabetics NA $40,119 52 12411 0 17 Montelukast Sodium Generic Antiasthmatic And Bronchodilator Agents $38,828 154 313157 35 18 Temodar Specialty Antineoplastics and Adjunctive Therapies Q3-2013 $36,244 2 1247 21 19 Valacyclovir Generic Antivirals $35,613 181 30822 42 20 Lyrica Brand Anticonvulsants NA $33,304 34 9832 16 21 Lovaza Brand Antihyperlipidemics Q2-2015 $32,581 60 11462 25 22 Restasis Brand Ophthalmic Agents NA $30,672 60 8912 24 23 Januvia Brand Antidiabetics NA $28,884 33 7218 29 24 Oxycontin Brand Analgesics - Opioid NA $27,848 17 6234 33 25 Victoza 3-Pak Brand Antidiabetics NA $27,241 16 46

15

Top 25 Drugs by Script Count

Drug Name Therapeutic Class Total RxsAmount

PaidHydrocodone/Acetaminophen Non-Narcotic Analgesic 951 $5,078Lisinopril Antihypertensive 947 $4,794Atorvastatin Calcium Antihyperlipidemics 768 $54,705Levothyroxine Sodium Thyroid Agents 651 $264Synthroid Thyroid Agents 621 $276Azithromycin Macrolide Antibiotic 575 $4,367Hydrochlorothiazide Diuretics 546 $573Omeprazole Ulcer Drugs 498 $21,726Zolpidem Tartrate Hypnotics 488 $7,578Escitalopram Oxalate Antidepressants 462 $36,173Simvastatin Antihyperlipidemics 456 $17,838Bupropion XL Antidepressants 396 $19,812Metformin HCL Antidiabetics 395 $6,518Sertraline HCL Antidepressants 390 $6,368Amoxicillin Penicillin 389 $611Amlodipine Besylate Calcium Channel Blockers 350 $3,663Alprazolam Anti-anxiety 341 $704Ventolin HFA Antiasthmatic And Bronchodilator Agents 336 $8,421Venlafaxine HCL ER Antidepressants 317 $19,643Lisinopril-Hydrochlorothiazide Antihypertensive Agent 315 $1,887Montelukast Sodium Antiasthmatic And Bronchodilator Agents 313 $36,938Fluoxetine HCL Antidepressants 310 $5,948Valacyclovir Antivirals 308 $33,908Metroprolol Succinate Beta Blockers 307 $6,509Citalopram HBR Antidepressants 288 $2,113

Appendix

17

Medical Utilization Definitions

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

18

Major Diagnostic Code Definitions

The Major Diagnostic categories are aligned with the major sections of the ICD9-CM. In general, categories 780-796 include the more ill-defined conditions and symptoms that point with perhaps equal suspicion to two or more diseases or to two or more systems of the body, and without the necessary study of the case to make a final diagnosis. Practically all categories in this group could be designated as "not otherwise specified," or as "unknown etiology," or as "transient."Examples: Fever, Convulsions, Chest Pain, Abdominal Pain.

Other

The Major Diagnostic categories are aligned with the major sections of the ICD9-CM. The “Other” category consists of claims with diagnoses that don’t map to the ICD9-CM, mostly Rx and Dental claims. Excluding those benefits from the Benefit checkbox list will usually reduce “Other” to a negligible amount.

Also known as "V-Codes" (i.e., V70.0) Usually used as a secondary diagnosis, but sometimes appears in the primary. Full details available in the ICD9 diagnosis book. General Medical Examination is common

1.      Non-sick persons encountering the system (donors, family doc counseling, vaccines, etc)

2.      Sick person encountering the system for treatment of a known (ongoing) disease or injury.

3.      When a circumstance or problem is present that influences the patient's health, but isn't itself an illness (personal or family history health hazards, circumstances related to reproduction and development, etc)

Injury & PoisoningFactures, Wounds, Burns, Poisoning by Drugs, Medicinal and Biological Substances (DX Code 800 - 999)Factures, Wounds, Burns, Poisoning by Drugs, Medicinal and Biological Substances (DX Code E800 - E999)Transport accidents (E800-E848) include accidents involving:aircraft and space craft (E840-E845)watercraft (E830-E838)motor vehicle (E810-E825)railway (E800-E807)other road vehicles (E826-E829)

I njury & Poisoning External Causes

I ll Defined category

Health Status and Services