1. LOCKTON DUNNING BENEFITS UNIVERSITY OF ALASKA 2ND QTR FY13 UTILIZATION REVIEW 7/1/2012 TO 12/31/2012

2. Premera- Medical

3. 2 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. 3 Premera Medical – Emergency Room & Large Claims  Emergency Room − ER paid claims per visit decreased from $1,286 for 2 nd Qtr FY12 to $1,198 for 2 nd Qtr FY13, but was above the Premera Norm of $1,138 − Visits per 1,000 members for ER services increased from 148 for 2 nd Qtr FY12 to 152 for 2 nd 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. 4 Medical Utilization Norm is based on Premera’s Alaska large group book of business

6. 5 Large Claims Analysis Large Claims percentage of Total Medical & Rx Claims

7. 6 Claimants over $100k – FY13 ( July 2012 – December 2012)

8. 7 Claimants over $100k – FY12 (July 2011 - December 2011)

9. 8 Major Diagnostic Category Health Status and Services jumped from #2 to #1 Musculoskeletal system dropped from #1 to #2 Circulatory Systems (Heart) jumped from #8 to #3

10. 9 Member Responsibility

11. Caremark - Pharmacy

12. 11 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 2 nd 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. 12 Pharmacy FY 12 to FY13 Comparison

14. 13 Top 25 Drugs by Gross Cost

15. 14 Top 25 Drugs by Script Count

16. Appendix

17. 16 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. 17 Major Diagnostic Code Definitions