University of Alaska

1. University of Alaska Analysis Period:January 2009 through December 2010 Paid Basis Although this report is not intended to contain any individually identifiable health information, it is possible that some of the information might be considered protected health information under federal or state privacy laws.  As such, you are strictly limited in your ability to use this information for anything other than plan administrative functions as described in your health plan document and HIPAA privacy and security policies, as applicable. 

2. Agenda • Demographics • Health Cost Analysis • Financial Analysis • Clinical Risk and Conditions • Population Stratification • Disease States • Appendix

3. Demographics

4. Demographics - Overview • The University of Alaska has fewer men than the norm with greater male and female proportions from ages 50 to 64 • Higher employee age/gender factor of 1.13 which translates to above norm per member per year (pmpy) cost profile of approximately 13% • Employees are driving the costs of the plan accounting for 46.6% of the costs whereas the norm has the spouses driving the plan costs. • 0.3% of the University population is driving 16.1% of the costs • 20.0% of the University population is driving 84.4% of the costs • The University of Alaska has a lower than norm proportion of women in child-bearing age with lower pregnancy and neonatal related cost than the norm but neonate UA inpatient cost per neonate per year increased from $2,590 to $5,053 • Approximately 83.6% of the current members have been enrolled for 2 or more years

5. Demographics – Total Members Norm from Lockton InfoLock Book of Business.

6. Demographics - Total Members Norm from Lockton InfoLock Book of Business.

7. Health Cost Analysis

8. Medical Financial Analysis Overview • Medical and Pharmacy Costs • Medical and Pharmacy costs are increasing below Premera Alaska trend of 14.5% for calendar year 2010 • Inpatient • Average allowed per Admission increased 11.4% and the average allowed per day increased 32.8% from $3,910 to $5,194 from calendar year 2009 to 2010; whereas the average length of stay decreased from 5.6 days to 4.7 days • Increase in severity of inpatient claims • Emergency Room • ER visits per 1,000 decreased from 178 to 169 and the cost per visit increased indicating that members are utilizing the ER for appropriate services • Low percentage of (7.86%) of non-emergent like condition ER visits • Moderate rate of members with 2 ER visits (16.2%) and 3 plus ER visits (8.2%) • Recommendation: Care manage those with 3 or greater visits to develop solutions to determine cause and appropriate management thru Alere

9. Medical Financial Analysis Overview • Outpatient • All office visits per 1,000 increased from calendar year 2009 to 2010 • Mental health visits per 1,000 increased 5.7% • Preventive visits per 1,000 increased 2.8% • Large claims were a major driver of University costs • Large claims made up 33.7% of the total University medical/Rx costs compared to the norm of 29.4% • The average paid per high cost claimant increased from $111,444 to $126,649 • The cost increase resulted predominately from a $2M increase in costs of claims greater than $150,000 • 52% of the large claimants had 3 or more conditions, e.g. high blood pressure, high cholesterol and diabetes • Four categories accounted for the higher costs: Cancer/Cancer therapy, cardiovascular disease, diabetes & renal failure and back/osteoarthritis

10. Financial Summary Norm from Lockton InfoLock Book of Business.

11. Utilization Summary Utilization is provided on an incurred basis and lagged three months. Norm from Lockton InfoLock Book of Business.

12. Claim Expense Distribution Norm from Lockton InfoLock Book of Business.

13. High Cost Claimants Norm from Lockton InfoLock Book of Business.

14. High Cost Claimants

15. Emergency Room Utilization

16. Emergency Room Utilization

17. Pharmacy Financial Analysis Overview • Generic usage increased from 2009 and 2010 from 53.6% to 57.9% • For each 1% increase in generic usage the pharmacy plan costs should decrease 1% • Estimated savings of $300,000 from 2009 to 2010 • Nexium per script usage decreased from 2009 to 2010 from 1,318 to 1,197 & Simvastatin per script usage increased from 2009 to 2010 from 1,137 to 1,258 • Step Therapy implemented in July 2010 • Four specialty drugs made up 6.8% of the total University pharmacy spend in the calendar year 2010 • Therapeutic class (condition): Anti-Inflammatory and Multiple Sclerosis • % paid per member per month increased 33.5% for MS and 66.0% for Anti-Inflammatory drugs between 2009 and 2010 • Potential savings of $166,351, if 50% of cholesterol scripts moved to Simvastatin • Potential savings of $129,587, if 50% of PPI scripts moved to Omeprazole

18. Prescription Drugs - Top 20 Therapeutic Classes

19. Prescription Drugs - Top 20 Drugs by Paid Amount

20. Prescription Drugs - Top 20 Drugs by Script Count

21. Anti-Hyperlipidemics Generic Analysis Potential Savings If 50% of scripts for:Lipitor,Crestor, and Lescol XL moved to Simvastatin last year costs would have been reduced by approximately:

22. Peptic Ulcer Generic Analysis Potential Savings If 50% of scripts for:Prevacid, Nexium, Aciphex, Protonix,Kapidex, Prilosec, Axid, and Zantac moved to Omeprazole last year costs would have been reduced by approximately:

23. Prescription Drugs - High Cost Scripts (>$1,000)

24. Brand versus Generic Analysis Norm from Lockton InfoLock Book of Business.

25. Clinical Risk and Conditions Members included in this section were active plan participants as of the last month of the reporting cycle. Each individual member is assigned a risk score indicating disease burden and a care gap score quantifying appropriate medical care. Depending upon the prevalence of disease and the extent of gaps in medical care, the population is stratified into low, moderate, and high risk for disease burden, and compliant or non-compliant for disease management.

26. Population Stratification High Cost High Risk PRIORITY Non-Compliant Moderate Risk Employee Population High Risk Compliant Moderate Risk Low Risk

27. Population Risk Norm from Lockton InfoLock Book of Business.

28. Population Risk (continued) Norm from Lockton InfoLock Book of Business.

29. Cost of Non-Compliance Moderate Risk - Non-Compliant members on average cost $627* more per year than Compliant members. High Risk - Non-Compliant members on average cost $1,035* more per year than Compliant members. This exhibit excludes high cost claimants. PMPY costs include comorbidities. *Norm from the Lockton InfoLock Book of Business.

30. Chronic Conditions per Member

31. Top 5 Chronic Conditions

32. Cost Adjustment • 1In the ACCRA Cost of Living Index, health care costs in Alaska’s cities ranged from 30.4% to 44.6% spendier than the average U.S. city in 2010 • The Norm has not been adjusted for the higher costs in Alaska • Analysis Summary will compare UA costs to adjusted norm of norm plus 37.5% 1http://labor.alaska.gov/research/col/col.pdf

33. Asthma Summary & Observations • Asthma • Prevalence is comparable to the norm but has higher costs of $7,636 per member per year (pmpy) compared to the adjusted norm of $6,407 pmpy • 81% of the members with asthma are compliant in medication and doctor visits • Patients with more than one asthma-related emergency room visit is higher than norm • 18.3% of members with Asthma are without inhaled corticosteroids or leukotriene inhibitors compared to the norm of 27.2% without inhalers • Recommendation: • Alere send communications and out-reach to members with emergency room visits for Asthma • Provide information on new free generic program if actively engaged in Alere DM Asthma program

34. Asthma Members with Asthma Excludes High Cost Claimants Norm from Lockton InfoLock Book of Business.

35. Asthma Quality and Risk Measures Risk Measures Quality Care Measures Norm from the Lockton InfoLock Book of Business.

36. COPD Summary & Observations • COPD • Prevalence is below the norm with higher UA costs of $12,692 pmpy compared to the adjusted norm of $11,390 pmpy • 47% of the members with COPD are non-compliant due to doctor visits • 40% have 3 or more co-morbidities • Low percentage of hospitalizations to due to COPD compared to the norm • The number of members with COPD with an ER visit is comparable to the norm • Typically COPD is related to smoking • Communicate smoking cessation programs

37. COPD Members with COPD Excludes High Cost Claimants Norm from the Lockton InfoLock Book of Business.

38. COPD Quality and Risk Measures Risk Measures Quality Care Measures This exhibit excludes high cost claimants. PMPY costs include comorbidities. Norm from the Lockton InfoLock Book of Business.

39. CAD Summary & Observations • CAD (Coronary Artery Disease) • Prevalence is below the norm with lower UA costs of $8,787 pmpy compared to the adjusted norm of $11,647 pmpy • Greater percentage of spouses than employees with CAD • High Risk members make up 50% of the group • Higher than the norm CAD-related hospitals, cardiac catheterizations and cardiac stentings • This relates to higher intensity of CAD related services • There is significant non-compliance with only 54% of members being complaint • 8.6% of the CAD population did not have hypertensive drugs and the norm is 5.6% • July 1, 2011 implementation of new disease management program for actively engaged members and free generic drugs

40. CAD Members with CAD Excludes High Cost Claimants

41. CAD Quality and Risk Measures Risk Measures CABG – Coronary Artery Bypass Graft Quality Care Measures Norm from Lockton InfoLock Book of Business.

42. Depression Summary & Observations • Depression • Prevalence is significantly above the norm and UA costs are lower at $7,258 pmpy compared to the adjusted norm of $7,661 pmpy • Employees make up 60% of the depressed population • Back and Neck pain are the top 2 co-morbidities • There is a high compliance rate of 92% • Anti-depressants are number two out the top 20 therapeutic drug classes by paid amount and number one by script count

43. Depression Members with Depression Excludes High Cost Claimants Norm from Lockton InfoLock Book of Business.

44. Depression Quality and Risk Measures Risk Measures Quality Care Measures Norm from Lockton InfoLock Book of Business.

45. Diabetes Summary & Observations • Diabetes • Prevalence is slightly below the norm with UA costs of $9,459 pmpy higher than the adjusted norm of $8,984 pmpy • 71% of the population is non-compliant • There is significant non-compliance in this population with 56% falling in the high risk category • Patients with diabetes-related ER visit is above the norm at 4.6% compared to 4.1% • Patients without a retinal exam is higher than the norm as InfoLock does not collect third party vision information • Currently VSP and Alere and working on a data exchange to better identify these individuals • Obesity is an issue within this group and percent of the diabetes population that is obese is greater than the norm

46. Diabetes Members with Diabetes Excludes High Cost Claimants Norm from Lockton InfoLock Book of Business.

47. Diabetes Quality and Risk Measures Risk Measures Quality Care Measures Norm from Lockton InfoLock Book of Business.

48. Hyperlipidemia Summary & Observations • Hyperlipidemia (High Cholesterol) • Lower prevalence to the norm with higher UA costs of $7,493 pmpy compared to the adjusted norm of $6,792 • 66% of the population are employees • 45% of the population is high risk but has significant compliance of 88% • Hyperlipidemics are the number one therapeutic drug class by paid amount and number two by script count

49. Hyperlipidemia Members with Hyperlipidemia Excludes High Cost Claimants Norm from Lockton InfoLock Book of Business.

50. Hypertension Summary & Observations • Hypertension • Prevalence is significantly lower the norm and UA costs of $7,335 pmpy are higher than the adjusted norm of $7,034 pmpy • 46% of the population is high risk but with a high compliance rate of 84%