Benefit Options Annual Report 2005

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TABLE OF CONTENTS
TABLE OF CONTENTS......................................................................................... i
GLOSSARY OF TERMS ...................................................................................... ii
INTRODUCTION ...................................................................................................1
History and Background .....................................................................................................1
Contribution Strategy..........................................................................................................1
Need for Change .................................................................................................................2
Program Goals ....................................................................................................................2
PROGRAM STRUCTURE .....................................................................................3
Integrated Option ................................................................................................................4
Non-Integrated Option ........................................................................................................5
ENROLLMENT ......................................................................................................6
Total Statewide Enrollment.................................................................................................6
Membership by Health Plan................................................................................................6
Membership by Network ....................................................................................................7
Membership by Geographic Region ...................................................................................8
DEMOGRAPHICS..................................................................................................9
Family Coverage Status ......................................................................................................9
Gender Status ......................................................................................................................9
Age Distribution................................................................................................................10
Salary Distribution ............................................................................................................10
Average Age by Plan ........................................................................................................11
Dependents per Member by Plan ......................................................................................12
CONTRACTED PHYSICIANS – Network Statistics...........................................13
CLAIMS & COSTS...............................................................................................14
Total Health Plan Costs.....................................................................................................14
Total Paid Claims..............................................................................................................15
Per Capita Costs – Employees vs Retirees........................................................................16
Per Capita Costs – Males vs Females................................................................................17
Per Capita Costs – By Network ........................................................................................18
TYPES OF SERVICE............................................................................................19
Expenditures by Type of Service ......................................................................................19
Hospitalizations................................................................................................................20
Emergency Room Visits ...................................................................................................21
Emergency Room Visits – Top Diagnoses .......................................................................21
Physician Visits.................................................................................................................22
Paid Claims – Top Diagnoses ...........................................................................................23
PHARMACY UTILIZATION...............................................................................24
Total Costs – Retail vs Mail Order ...................................................................................24
Filled Prescriptions – Retail vs Mail Order.......................................................................24
Top Prescription Drugs Dispensed at Retail Pharmacy ....................................................25
Top Prescription Drugs Dispensed by Mail Order............................................................26
Utilization by Formulary Tier ...........................................................................................27
Specialty Drug Utilization.................................................................................................27
HEALTH PLAN APPEALS..................................................................................28
PERSONAL HEALTH ASSESSMENT ...............................................................29
Demographic Information of Participants.........................................................................29
Top Medical Conditions....................................................................................................30
Risk Factor Analysis – Cholesterol...................................................................................30
Risk Factor Analysis – Depression ...................................................................................31
Risk Factor Analysis – Diabetes .......................................................................................31
Risk Factor Analysis – Nutrition.......................................................................................31
Risk Factor Analysis – Stress............................................................................................32
Risk Factor Analysis – Tobacco Use ................................................................................32
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GLOSSARY OF TERMS
Claim Demand for payment to the claims payor for medical services.
COBRA Consolidated Omnibus Budget Reconciliation Act of 1985. A federal law that requires
an employer to allow eligible employees, retirees, and their dependents to continue their
health coverage after they have terminated their employment or are no longer eligible for
the health plan. Members must pay the full cost of the premium.
Contribution Strategy A premium structure that includes both the employer’s financial
contribution and the employee’s financial contribution towards the total monthly
premium.
Copayment A form of medical cost sharing in the health plan that requires the member to pay a
fixed dollar amount when a medical service is received before a copayment applies.
Deductible A fixed dollar amount during the plan year that a member pays before the health
plan starts to make payments for covered medical services.
Disease Management A comprehensive, ongoing, and coordinated approach to achieving
desired outcomes for a population of patients. These outcomes include improving
members’ clinical condition, reducing unnecessary healthcare costs and improving
members’ quality of life. These objectives require rigorous, protocol-based, clinical
management in conjunction with intensive patient education, coaching, and monitoring.
Exclusive Provider Organization (EPO) Similar to a preferred provider organization plan, an
EPO is a more restrictive type of plan under which members must use providers from the
specified network of physicians and hospitals to receive coverage. There is no coverage
for care received from a non-network provider except in an emergency situation.
Formulary A list of medications covered by the health plan. The list contains generic and name
brand drugs. The most cost-effective name brand drugs are placed in the “preferred”
category and all other name brand drugs are placed in the “non-preferred” category.
Prescription copays are divided by generic, preferred, and non-preferred medications.
Fully-Insured A plan that is funded entirely with a premium to an insurance company. The
employer paying the premium assumes only the risk of paying the premium. The
insurance company assumes all financial and legal risk to provide medical services
covered under the plan.
Health Maintenance Organization (HMO) A health care system that assumes both the financial
risks associated with providing comprehensive medical services to enrolled members,
usually in return for a fixed, prepaid premium. An HMO plan requires additional
restrictions, such as prior authorization for specific medical procedures and a primary
care physician must refer a member to medical specialists. All medical care must be
received by contracted medical providers.
Integrated Health plan operations that are provided by one entity. These operations include
claims processes and payments; a medical network of medical providers; and disease
management services.
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Medicare The federal health insurance program provided to members who are age 65 and older
or members with disabilities who are eligible for Social Security benefits. Medicare has
three parts: Part A, which covers hospitalization; Part B, which covers physicians and
medical providers; and Part C, which expands the availability of managed care
arrangements for Medicare recipients.
Member A health plan participant. This individual can be an employee, retiree, spouse or
dependent.
Network An organization who contracts with a group of providers (physicians, hospitals, and
other health care professionals) to provide health care services. These contracts include
agreed upon fee arrangements for services and performance standards.
Non-Integrated Health plan operations that are provided by multiple entities. These operations
include claims processes and payments; a medical network of medical providers; and
disease management services.
Pharmacy Benefit Manager An organization that provides a pharmacy network, processes and
pays for all pharmacy claims, and negotiates discounts on medicines directly from the
pharmaceutical manufacturers. These discounts are passed to the employer in the form of
rebates and reduced costs in the formulary.
Plan Year The Benefits Options plan year operated from October 1, 2004 through September 30,
2005. Unless otherwise noted, all references to yearly or annual calculations will conform
to this time frame.
Premium Agreed upon fees paid for coverage of medical benefits for a defined benefit period.
Premiums are paid by both the employer and the health plan member.
Point-of-Service (POS) A POS plan is an "HMO/PPO" hybrid and operates as an HMO plan for
in-network medical services, but operates as a PPO plan when the member goes outside
of the network for services.
Preferred Provider Organization (PPO) A PPO plan is a less managed plan that has all of the
features of an HMO plan, however, allows members to go outside of the network for
medical services. A PPO also requires annual deductibles and copayment for services.
Self-Insured A plan that is funded by the employer and is financially responsible for all medical
claims and administrative expenses. The employer also assumes all liability for health
plan appeals and litigation.
Stop-Loss A form of insurance for self-insured employers that limits the amount the employer
will pay for medical expenses.
Third Party Administrator An organization that handles all administrative functions of a health
plan, including the receipt and processing of all medical claims; payment of claims;
compiles data and reports; and provides customer service support through a call center,
correspondence, or the internet.
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INTRODUCTION
HISTORY AND BACKGROUND
In 1971, the Arizona State Legislature created ARS§ 38-651. This statute authorized the Arizona
Department of Administration (ADOA) to offer group health insurance as a benefit to all State
and University employees. Prior to 1971, only the Agencies and Universities that could afford to
pay for health insurance were able to offer this benefit to their employees. With the
implementation of ARS§ 38-651, all State and University employees were offered health
insurance coverage. In 1976, State and University retirees were added to the program.
In 1982, ADOA offered its first Health Maintenance Organization (HMO) plan to the program.
Throughout the next 18 years, employees and retirees were able to choose from several fully-insured
plans, including HMO plans, Point of Service (POS) plans, and Preferred Provider
Organization (PPO) plans. Due to changes in the health care industry, the State transitioned to
one statewide insurance carrier in 2001.
CONTRIBUTION STRATEGY
With the transition to the sole contract in 2001, ADOA developed a contribution strategy that
provided affordable health insurance to all State and University employees. The HMO plan was
offered to employees for $25 single coverage and $125 family coverage. This rate was set at a
flat rate, while the POS and PPO monthly premiums were determined from actual experience
and the true cost of the coverage.
The 2001 contribution strategy allowed employees to pay only 23% of the total premium, while
the State absorbed the remaining 77%.
Over the 5 years between 2001 and 2006, State and University employees enrolled in the
HMO plan (or EPO plan under self-insurance) have not experienced an increase in their
monthly premiums. Employees enrolled in the non-HMO plans have not experienced an
increase for 3 years (2003 through 2006).
Due to continued rising premiums, on average, the State now contributes over 84% of
the total premiums for health insurance.
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NEED FOR CHANGE
Due to the continued rising cost of healthcare, ADOA began exploring its option to rein in the
cost of its health benefit program. All potential alternatives were explored and, after significant
research, self-insurance was determined to be the best option to control spiraling costs and
provide more choice for State employees, retirees, and their families.
In 2002, the Arizona Department of Administration began to develop a self-funded model for the
employee group health program. After considerable research of best practices in other states and
two years of program development, the Joint Legislative Budget Committee gave a favorable
review of the new health plan on May 25, 2004.
PROGRAM GOALS
With the transition to self-insurance, the State will have the ability to maximize the value of
health benefits to State employees and retirees through improved choice and improved program
design. Focusing on this mission allowed the State to achieve the following goals:
• Improve Provider Choice Employees, retirees and their families will have more providers
available to them statewide among multiple networks. Members
are also able to choose an HMO-like managed care plan called
an Exclusive Provider Organization (EPO)1 plan or Preferred
Provider Organization (PPO) plan. In addition, members have
substantially improved administrative choice and are able to
choose among multiple vendors and benefit administration
approaches.
• Improve Program Design The State now has access to all utilization data. Therefore
program decisions will now be made based on data analysis.
This ensures that program changes are implemented to improve
program efficiency, reduce inappropriate healthcare utilization,
and enhance benefits offered to employees and retirees.
• Improve Long Term Health Wellness and disease management programs are now
incorporated within the health plan to focus on preventative
measures and overall wellness initiatives. Disease management
programs include Asthma, Congestive Heart Failure, Diabetes,
and Perinatal Care. With the implementation of self-insurance,
more employees and retirees are enrolled in the disease
management programs than under the prior fully-funded health
plan. Retirees are now included in wellness initiatves, including
free flu shots and health screenings (skin cancer, cholesterol,
etc.) With the expansion of disease management and wellness,
the State can anticipate a positive impact to improve the long
term health and welfare of all health plan members.
1 Since a self-funded medical plan is not under the jurisdiction of the Arizona Department of Insurance, a managed
care plan cannot be called an HMO (health maintenance organization). An EPO plan is the equivalent to an HMO
under a self-funded program.
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PROGRAM STRUCTURE
The new Benefit Options program began on October 1, 2004. This program offered both an
integrated and non-integrated option, as well as an HMO-like plan called an Exclusive Provider
Organization (EPO) and a Preferred Provider Organization (PPO) plan.
Approximately 60,000 employees, retirees, COBRA participants, and long-term disability
members enrolled in the new plan. This is an increase of over 1,300 new members, versus the
58,666 previously enrolled in the prior fully-insured plan.
PROGRAM STRUCTURE
In order to best meet the needs of the State employees and retirees, integrated and non-integrated
options were developed to deliver health care services for the program. Both of these plans offer
the core functions of health insurance:
• Claims Payment The ability to receive, process, and pay medical and pharmacy
claims.
• Medical Network A statewide network of hospitals, medical professionals, and
ancillary services such as x-rays, laboratories, and physical
therapy.
• Pharmacy Access to a statewide network of pharmacies, as well as the ability
to distribute specialty drugs that require special handling or
injections.
• Disease Management Management of diseases using medical professionals to work with
patients. This function also analyzes data to develop benefit
enhancements and wellness initiatives to prevent or reduce the
impact of future illness and disease.
• Stop Loss Insurance This insurance provides coverage for expensive medical claims
above $500,000.
Over 86% of employees and retirees reported they were satisfied with the Open
Enrollment process and the transition to self-insurance.
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INTEGRATED OPTION2
UnitedHealthcare is offered as an integrated option. This option provides claims payment,
medical network and disease management services through UnitedHealthcare. Pharmacy benefits
are provided through Walgreens Health Initiatives and Stop Loss insurance is provided through
Safeco/Symetra Insurance:
2 PacifiCare Secure Horizons is also contracted under the integrated option. This is a fully-insured Medicare
Advantage plan and is only offered to retirees who are Medicare Eligible.
Stop Loss Insurance
SAFECO/SYMETRA
INSURANCE
Pharmacy
WALGREENS
HEALTH INITIATIVES
Claims
Payment
Disease
Management
Medical
Network
UNITEDHEALTHCARE
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NON-INTEGRATED OPTION
The non-integrated option offers all of the health plan services under separate contracts. Because
some companies specialize in specific services, this option offers “best in class” contract
providers. This option also provides flexibility should one of the providers not perform to the
State’s expectation. A new contractor can be put in place without impacting the other providers
or necessitate an Open Enrollment for employees and retirees. The following contract providers
provide services under the non-integrated option:
• Third Party Claims Payment Harrington Benefit Services
• Medical Networks Arizona Foundation
Beech Street
RAN+AMN
Schaller Anderson Healthcare
• Disease Management Schaller Anderson Healthcare
• Pharmacy- Walgreens Health Initiatives
• Stop Loss Insurance- Safeco/Symetra Insurance
To provide additional flexibility for employees and retirees, both the integrated and
non-integrated options offer open access to specialists. Members do not need referrals
from their primary care provider to see a contracted specialist.
Pharmacy
WALGREENS
HEALTH INITIATIVES
Stop Loss Insurance
SAFECO/SYMETRA
INSURANCE
Claims Payment
HARRINGTON
BENEFIT SERVICES
Disease Management
SCHALLER
ANDERSON
Medical Network
ARIZONA FOUNDATION
RAN + AMN
SCHALLER ANDERSON
BEECH STREET
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ENROLLMENT
State
Employees
34,863
Retirees (58%)
8,836
(15%)
University
Employees
16,211
(27%)
The Benefit Options group health plan is available to all…
• Full-time State employees;
• Full-time University employees;
• Retirees receiving pension benefits through any of the four State Retirement Systems;
• State or University employees accepted for long-term disability benefits; or
• State or University employees eligible for COBRA benefits.
TOTAL STATEWIDE ENROLLMENT3 (59,910)
MEMBERSHIP BY HEALTH PLAN (59,910)
3 Enrollment and demographic data as of February 28, 2005, reflecting the plan year 10/1/04-09/30/05.
Exclusive
Provider
(EPO)
55,086
(92%)
Preferred
Provider
(PPO)
4,824
(8%)
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MEMBERSHIP BY NETWORK (Total Membership 59,910) 4
• Arizona Foundation PPO plan is offered statewide to all employees and retirees.
• Beech Street PPO plan is offered to out-of-state employees and retirees.
• PacifiCare is only offered to Medicare-eligible retirees.
• RAN+AMN EPO plan is offered statewide to all employees and retirees.
• Schaller Anderson Healthcare EPO plan is offered to employees and retirees in Maricopa,
Pinal, Gila, Pima, and Santa Cruz Counties5.
• UnitedHealthcare EPO and PPO plans are offered to employees and retirees in Maricopa,
Pinal, Gila, Pima, and Santa Cruz Counties.
4 United Healthcare membership reflects members enrolled in both the EPO plan and PPO plan. No other networks
offer both an EPO and PPO option.
5 Schaller Anderson was expanded statewide effective October 1, 2005.
The availability of multiple networks has enabled the State to achieve its goal of
improving provider choice for all employees and retirees statewide. For example,
members are now able to select from four different networks in the urban areas and two
networks in the rural areas. The total number of physicians available in the health plan
continues to grow by 0.5% each month.
14,716
11,699
3,029 2,138
527
27,801
0
5,000
10,000
15,000
20,000
25,000
30,000
United
Healthcare
EPO & PPO
Schaller
Anderson
EPO
RAN+AMN
EPO
Arizona
Foundation
PPO
PacifiCare
(retirees
only)
Beech Street
PPO
(out of state)
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MEMBERSHIP BY REGION
The first chart illustrates the enrolled membership of state and university employees based on
geographic region (total membership is 51,074).
The chart below illustrates the enrolled membership of retirees based on geographic region (total
membership is 8,836).
Central
61.9%
Southeast
3.3%
North
4.7%
South
26.6%
West
3.2%
Out of State
0.4% Central = Maricopa, Gila, and
Pinal Counties
Southeast = Graham, Greenlee,
and Cochise Counties
North = Yavapai, Coconino,
Navajo, and Apache
Counties
South = Pima and Santa Cruz
Counties
West = Mohave, La Paz, and
Yuma Counties
Maricopa
County &
Apache Jctn
53.8%
Rural County
13.0%
Santa Cruz
County
1.0%
Gila & Pinal
County
2.2%
Out of State
3.6%
Pima County
26.4%
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DEMOGRAPHICS
FAMILY COVERAGE STATUS6
The majority of enrolled members have elected single coverage instead of family coverage.
GENDER STATUS7
The majority of enrolled members are male.
6 State employee and University employee enrollment only.
7 State employee enrollment only- ADOA does not receive this information from the Universities.
Family
44.6%
Single
55.4%
Male
53.2%
Female
46.8%
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0.1%
3.9%
9.0%
11.4% 11.9%
13.4%
14.7% 14.5%
12.6%
6.5%
0%
2%
4%
6%
8%
10%
12%
14%
16%
up to 19 20-24
years
25-29
years
30-34
years
35-39
years
40-44
years
45-49
years
50-54
years
55-59
years
60-64
years
AGE DISTRIBUTION OF ENROLLED STATE EMPLOYEES8
The chart below illustrates the distribution of enrolled State employees by age.
SALARY DISTRIBUTION OF ENROLLED STATE EMPLOYEES
The chart below illustrates the distribution of enrolled State employees by salary.
8 ADOA does not maintain this information for University employees
0.1%
2.4%
33.7% 34.4%
14.1%
11.9%
3.4%
0%
5%
10%
15%
20%
25%
30%
35%
40%
less than
$10,000
$10,000 to
$19,999
$20,000 to
$29,999
$30,000 to
$39,999
$40,000 to
$49,999
$50,000 to
$74,999
$75,000
and over
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AVERAGE AGE BY PLAN
The chart below illustrates that the PPO plan attracted older employees than the EPO plan.
The same trend is true among the enrolled retiree population; older members selected the UHC
plan, while younger retirees selected the Harrington plan.
43
45
50 50
38
40
42
44
46
48
50
52
54
Harrington
EPO
UHC EPO Harrington
PPO
UHC PPO
62
64
65
69
60
61
62
63
64
65
66
67
68
69
70
Harrington
EPO
UHC EPO Harrington
PPO
UHC PPO
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DEPENDENTS PER MEMBER BY PLAN9
The chart below illustrates the ratio of covered dependents per enrolled employee member. On
average, for every member enrolled in the EPO plans, there were 1.18 dependents that were
covered, with UHC attracting slightly larger families. On average, for each member that enrolled
in the PPO plans, there were 0.82 dependents that were also enrolled.
On average, retirees (below) enrolled about half the rate of dependents as employees (above),
and the trend of higher dependent ratios in the EPO plans did not hold true among the enrolled
retiree population.
9 Dependents include spouse and any children under age 18 (or under age 24 if attending school full time).
1.11
1.25
0.86
0.75
0.50
0.75
1.00
1.25
1.50
Harrington
EPO
UHC EPO Harrington
PPO
UHC PPO
0.33
0.41
0.43
0.38
0.25
0.30
0.35
0.40
0.45
0.50
Harrington
EPO
UHC EPO Harrington
PPO
UHC PPO
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CONTRACTED PHYSICIANS
NETWORK STATISTICS10
The following illustration reflects the number of contracted physicians in each network by region
(data compiled as of July, 2005):
10 Beech Street provides a nationwide network for out-of-state employees and retirees. Beech Street was not
included in this analysis.
Central
United Health Care 4,252
Schaller Anderson 10,074
RAN+AMN 5,128
Az Foundation 7,199
Western
RAN+AMN 661
Az Foundation 586
Northern
RAN+AMN 911
Az Foundation 743
Southeastern
RAN+AMN 282
Az Foundation 171
Southern
United Health Care 1,745
Schaller Anderson 2,667
RAN+AMN 1,525
Az Foundation 1,929
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CLAIMS & COSTS
With the transition to self-insurance, the State now owns all health plan data and is able to
evaluate the true cost and usage of health care for all members.
TOTAL HEALTH PLAN COSTS
The following chart illustrates the total costs for the Benefit Options health plan, and the small
percentage of costs that are attributed to administrative expenses.
• During the last plan year, $17.7 million in administrative fees were paid to the contracted
vendors.
• The ADOA Benefits Office is appropriated $3.2 million for personnel and management
of the State’s benefit plans11.
11 The Benefits staff performs tasks on all benefits, therefore, the appropriated amount includes administration of
non-health benefits including, dental, vision, life, and disability insurance.
Evaluation of financial and utilization data will enable the State to achieve its goal of
improved plan design, because program gaps and inefficiencies can now be identified.
Program modifications and changes can be made to improve financial efficiency, impact
inappropriate health care utilization, and specifically target the needs of health plan
members.
ADOA Benefits
Office
0.8%
Administrative
Fees
4.4%
Total Claims
Paid
94.8%
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TOTAL PAID CLAIMS
The chart below outlines the total paid claims for all health plan members12 for the past plan year.
The total amount of paid claims was $377,960,900.
12 Although retirees enrolled in PacifiCare are covered under a fully-insured basis, non-Medicare eligible family
members are covered on a self-funded basis. The State paid $748,000.00 in medical claims for family members
during the 10/1/04-09/30/05 plan year.
Harrington
Benefit Services
$162,349,100
(43%)
Walgreens
Health Initiatives
$70,575,100
(19%)
United
Healthcare
$145,036,700
(38%)
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PER CAPITA COSTS - EMPLOYEES VS. RETIREES
The below chart shows actual per capita expenditures13 for the past plan year comparing costs
between employees14 and retirees. Retirees have higher per capita costs, regardless of which plan
was selected. Most of the difference between employees and retirees can be attributed to
prescription costs.
13 Costs are reflected on a per enrolled member basis- this includes the employee/retiree and any covered family
members.
14 Information includes State employees and University employees.
The Office of the Actuary for Centers for Medicare & Medicaid Services had projected
the national health expenditures on a per capita basis for 2004 would be $6,040. Without
adjusting for risk factors, the per capita costs for the Benefit Options health plan are
slightly higher than the national average.
$5,352 $5,184 $5,400 $5,712
$912
$2,292
$2,688
$1,236
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
$9,000
Harrington
Employee
UHC
Employee
Harrington
Retiree
UHC
Retiree
Medical Costs Prescription Costs
- 17 -
PER CAPITA COSTS- MALES VS. FEMALES
The chart below reflects per capita expenditures for enrolled employees for the past plan year.
Expenditures on a per capita basis were higher for female employees and for employees enrolled
in the Harrington plans.
Retirees (below) had higher per capita expenditures than employees (above), although the
differences between male and females was not consistent across plan types.
Variations in cost between the plans covered by Harrington Benefits and UnitedHealthcare may
reflect differences in medical expenditures between urban and rural areas of the state.
UnitedHealthcare is only offered in the urban areas of the state. The plans covered by Harrington
Benefits are offered statewide.
$4,272
$3,300
$5,706
$4,296
$3,000
$4,000
$5,000
$6,000
Harrington
Male
UHC
Male
Harrington
Female
UHC
Female
$5,466
$6,930 $6,804
$4,752
$4,000
$5,000
$6,000
$7,000
Harrington
Male
UHC
Male
Harrington
Female
UHC
Female
- 18 -
PER CAPITA COSTS- EMPLOYEES BY NETWORK AND ENROLLMENT
The chart below shows total per capita healthcare costs for State and University employees by
network and plan for 10/1/04-08/30/0515:
In the EPO plans, Schaller Anderson has the lowest per capita costs and RAN+AMN members
have the highest. In the PPO plans, Beech Street has the lowest per capita costs, while Arizona
Foundation has the highest.
Variations in cost between the plans covered by Harrington Benefits and UnitedHealthcare may
reflect differences in medical expenditures between urban and rural areas of the state.
UnitedHealthcare is only offered in the urban areas of the state. The plans covered by Harrington
Benefits are offered statewide
15 Total costs include medical and prescription costs. Costs are reflected on a per enrolled member basis- enrolled
employee/retiree to include covered family members. This data is provided by Mercer HumanResource Consulting.
$3,048
$2,724
$2,952
$5,436
$2,784
$5,364
$2,000
$3,000
$4,000
$5,000
$6,000
RAN+AMN Schaller
Anderson
UHC Az
Foundation
Beech Street UHC
- 19 -
TYPES OF SERVICE
PAID CLAIMS BY TYPE OF SERVICE- TOP 5
The chart below illustrates the top 5 total paid expenditures for the past plan year by type of
service for state and university employees. The largest expenditures were for inpatient
hospitalizations, followed by physician services.
The chart below illustrates the top 5 total paid expenditures for the past plan year by type of
service for the retiree population. Relative distribution was similar to the employees, except for
higher expenditures for outpatient hospital visits, and lower emergency room expenditures16.
Hospital-
Inpatient
46%
Hospital-
Outpatient
Facility
10%
Emergency
Room
7%
Physician
Services
20%
Xray/
Laboratory
17%
Hospital-
Inpatient
46%
Emergency
Room
4%
Physician
Services
21%
Hospital-
Outpatient
Facility
15%
Xray/Laboratory
14%
- 20 -
HOSPITALIZATIONS
Inpatient hospital care accounts for the highest expenditures in overall health plan costs.
Therefore, it is important to look at the utilization of hospitalizations:
State and University Employees
Number of
Admits per
1000
Average
Length of
Stay
Avg. Hospital
Days per 1000
Avg. Paid per
Day in
Hospital
Per Member
Per Month
Cost
Harrington
Benefit Services
49.8
4.50 days
224
$2,996
$55.93
UnitedHealthcare 75.0 4.12 days 309 $2,191 $56.42
Retirees
Number of
Admits per
1000
Average
Length of
Stay
Avg. Hospital
Days per 1000
Avg. Paid per
Day in
Hospital
Per Member
Per Month
Cost
Harrington Benefit
Services
107.2
5.30 days
559
$3,188
$159.13
UnitedHealthcare did not provide this information for all retirees.
• Although State and University members enrolled in the UnitedHealthcare plans had
higher hospital admissions, the average cost per hospitalization was lower than members
enrolled with the Harrington plans.
16 UnitedHealthcare did not report figures for Medicare-eligible retirees for emergency room services. These costs
are underreported.
- 21 -
EMERGENCY ROOM VISITS
Evaluation of emergency room encounter data will provide an opportunity for the State to review
the types of conditions presented and possibly reduce potential unnecessary visits through
improved medical management and urgent care utilization:
Total ER
Visits
Total Costs
Avg. Per Visit
Harrington Benefits
Employees and Dependents 11,976 $11,324,422 $945
Retirees and Dependents 15,803 $ 2,796,430 $176
UnitedHealthcare
Employees and Dependents 16,062 $6,654,201 $414
UnitedHealthcare was unable to provide this information for all retirees.
• Although employees and dependents enrolled with the Harrington Benefit plans have
fewer total emergency room visits, total costs are higher than employees and dependents
enrolled with UnitedHealthcare.
EMERGENCY ROOM VISITS BY DIAGNOSIS
The top 5 conditions diagnosed at the emergency room according to volume of occurrences:
Harrington Benefits UnitedHealthcare
1. Respiratory System and Symptoms 1. Respiratory System and Symptoms
2. Abdominal Pain (including pelvis) 2. Ear Infections
3. General Symptoms, Illnesses 3. Acute Pharyngitis (sore throat)
4. Head and Neck Pain and Symptoms 4. Urinary Tract/Kidney Symptoms
5. Urinary Tract/Kidney Symptoms 5. Chest Pain
According to the 2003 National Hospital Ambulatory Medical Care Survey (NHAMCS),
approximately 39 emergency room visits occurred per 100 persons. It appears the
Benefit Options health plan membership has lower utilization of emergency rooms at 27
per 100 covered lives than the national average.
According to the 2003 National Hospital Ambulatory Medical Care Survey (NHAMCS),
the top 5 conditions presented nationally to an emergency room (according to volume of
occurrence) are:
• Stomach pain
• Chest pain
• Fever
• Cough
• Headaches
It appears utilization of emergency rooms by Benefit Options health plan members are
consistent with national norms.
- 22 -
PHYSICIAN VISITS17
The table below outlines total physicians office visits18 for the plan year:
Total Physician
Visits
Total Costs
Ave. Per Visit
Harrington Benefits
Employees and Dependents 240,645 $40,912,235 $170
Retirees and Dependents 40,500 $ 5,559,738 $137
UnitedHealthcare
Employees and Dependents 309,777 $37,938,286 $122
UnitedHealthcare was unable to report this information for all retirees.
• Employees and dependents enrolled in UnitedHealthcare attended more physician office
visits than employees and dependents enrolled in the Harrington Benefit plans; however,
the average paid per office visit was lower for UnitedHealthcare members.
17 http://www.cdc.gov/nchs/data/ad/ad346.pdf
18 Includes all physicians on an outpatient basis only; these numbers do not include inpatient hospitalizations.
According to the 2003 National Hospital Ambulatory Medical Care Survey (NHAMCS),
approximately 317 physician visits occurred nationally per 100 persons. Therefore, it
appears the Benefit Options health plan membership has higher utilization of physician
office visits at 438 visits per 100 covered lives than the national average.
- 23 -
PAID CLAIMS BY TOP 5 DIAGNOSES
Musculoskeletal diagnoses accounted for the largest expenditures among state and university
members.
Circulatory disorders accounted for the largest expenditures among the retiree population.
Overall, back disorders account for the highest number of services (162,882) and the
highest cost for any medical diagnosis ($11,258,830) for both employees and retirees
during the past plan year.
$14.88
$17.02
$13.08
$13.46
$17.32
$12.67
$13.83
$12.23
$18.14
$17.55
$10
$11
$12
$13
$14
$15
$16
$17
$18
$19
$20
Musculoskelatal Circulatory Other Neoplasms(tumors) Injury/Poisoning
Millions
Harrington UHC
$2.65 $2.75
$1.94
$1.41
$2.50
$2.12
$1.31 $1.25
$3.06
$2.35
$0.0
$0.5
$1.0
$1.5
$2.0
$2.5
$3.0
$3.5
$4.0
Circulat ory Musculoskelat al Neoplasms(t umors) Ot her Nervous System Injury/Poisonings
Millions
Harrington UHC
- 24 -
PHARMACY UTILIZATION
The following chart illustrates the total cost for prescriptions during the past plan year, and
compares prescriptions filled at a retail store compared with prescriptions filled through mail
order. On average, the state pays for slightly more than 75% of the cost of medications.
The chart below shows the number of prescriptions filled at a retail store compared with the
number of prescriptions filled through mail order.
$54.39
$18.85
$17.56
$3.97
$0
$10
$20
$30
$40
$50
$60
$70
$80
Retail Mail Order
Millions
State Cost Plan Member Costs
Retail
91%
Mail Order
9%
- 25 -
Number of prescriptions per eligible and utilizing members:
Claims Per
Eligible Member
Claims Per Utilizing
Member
Prescriptions Filled at a Retail Store 10.07 20.49
Mail Order 1.01 12.74
OVERALL AVERAGE 11.08 21.24
Utilization demographics:
Average
Member Age
Average Days Supply
Prescriptions Filled at a Retail Store 48.1 24.7
Mail Order 57.3 87.3
TOP 10 DRUGS BY FREQUENCY OF USAGE AND COST
Top 10 Drugs Dispensed at Retail Pharmacy by Frequency of Usage
Hydrocodone (narcotic) 7,340
Lipitor (cardio) 6,463
Levothyroxine S. (thyroid) 6,406
Lisinopril (hypotensive) 6,075
Metformin (diabetes) 5,074
Atenolol (cardio) 4,063
Prevacid (stomach) 3,783
Albuterol (bronchial) 3,539
Zoloft (antidepressant) 3,418
Amoxicillin (antibiotic) 3,208
Top 10 Drugs Dispensed at Retail Pharmacy by Cost
Lipitor (cardio) $570,102
Prevacid (stomach) $546,054
Enbrel (arthritis) $398,758
Advair Diskus (asthma) $355,690
Oxycodone (narcotic) $346,972
Effexor (antidepressant) $339,435
Zoloft (antidepressant) $311,080
Singulair (asthma) $242,534
Oxycontin (narcotic) $235,406
Zocor (cholesterol) $228,447
- 26 -
Top 10 Drugs Dispensed by Mail by Frequency of Usage
Lipitor (cardio) 1,547
Levothyroxine S. (thyroid) 1,158
Fosamax (multiple uses) 846
Lisinopril (hypotensive) 836
Prevacid (stomach) 716
Atenolol (cardio) 659
Metformin (diabetes) 648
Hydrochlorothiazide (diuretic) 518
Zocor (cholesterol) 466
Triamterene w/ HCTZ (diuretic) 429
Top 10 Drugs Dispensed by Mail by Cost
Lipitor (cardio) $363,842
Prevacid (stomach) $273,012
Zocor (cholesterol) $156,111
Fosamax (multiple uses) $155,231
Advair Diskus (asthma) $122,930
Enbrel (arthritis) $106,452
Effexor (antidepressant) $105,206
Singulair (asthma) $98,804
Zoloft (antidepressant) $94,656
Avandia (diabetes) $92,521
- 27 -
UTILIZATION BY FORMULARY TIER
The State has implemented a three-tier formulary:
1st Tier – Generic medications
2nd Tier – Preferred medications- these are brand name medications that have the
highest discounts.
3rd Tier – Non-Preferred drugs- these are brand name medications with lower or
no discounts.
Most of the prescriptions filled are generic medications.
SPECIALTY DRUG UTILIZATION AND COST
The State has also implemented a specialty drug program. Specialty drugs are medications that
are injected, have special handling requirements such as refrigeration, or are very costly.
Top 10 Specialty Drugs by Cost
Enbrel (arthritis) $505,210
Humira (arthritis) $200,516
Avonex (multiple sclerosis) $129,997
Betaseron (multiple sclerosis) $116,513
Pegasys (hepatitis C) $97,314
Xolair (asthma) $89,569
Copaxone (multiple sclerosis) $87,052
Lovenox (anticoagulant) $78,954
Neupogen (blood pressure) $72,267
Copegus (hepatitis C) $71,847
Specialty drugs account for 7% of all prescriptions filled in the Benefit Options
program, however, these drugs account for 26% of the total pharmacy costs.
Generic
57.5%
Preferred
33.9%
Non-
Preferred
8.6%
- 28 -
HEALTH PLAN APPEALS
During the past plan year, both Harrington Benefit Services and UnitedHealthcare received 961
appeals. This represents less than 0.06% of the total number of claims processed.
• Harrington Benefit Services received 491 appeals.
• UnitedHealthcare received 470 appeals.
Claims
Processed
99.94%
Harrington
Benefit
Services
0.03%
United
Healthcare
0.03%
- 29 -
PERSONAL HEALTH ASSESSMENT
An online Personal Health Assessment survey was conducted 10/3/05 through 10/31/05 by
Walgreens Health Initiatives and Quest Diagnostics. This survey was available to all State and
University employees and asked questions regarding their general health status and lifestyle
choices.
DEMOGRAPHIC INFORMATION OF SURVEY PARTICIPANTS
Of the approximately 43,699 enrolled State and University employees, only 7,547 or 14.8%, of
the employee population participated in the survey. The table below outlines the demographics
of these survey participants. This information is important, since certain demographic groups
have higher risk for various conditions such as diabetes, hypertension, or bone loss. The table
compares the State participant results against the Quest database average of other employers who
have utilized the same survey:
State Survey Results Quest Database Average
Participation Rate 14.8% N/A
Male Participants 33% 45.4%
Female Participants 67% 54.6%
Average Age of Participants 44 44.3
African American Participants 3.4% 2.5%
American Indians Participants 1.7% 0.5%
Asian Participants 3.3% 2.9%
Caucasian Participants 73% 89%
Hispanic Participants 15.5% 3.1%
Multi-Ethnic Participants 1.9% 0.9%
High School graduates or less 10.3% 15.4%
Participants with some College 36.3% 30.1%
Participants who are College graduates 29.3% 35.1%
Participants with Post Graduate degree 24.1% 19.1%
Responses from this survey will assist the Benefit Options program in its goal to focus on
preventative measures and overall wellness initiatives. The results of this survey will
enable the Benefit Options program to target specific programs addressing the risks and
issues identified by the survey.
- 30 -
The top 10 medical conditions reported by the survey participants:
Top 10 Medical Condition State Survey Results Quest Database Average
Allergies 29.1% 30.2%
Hypertension 16.5% 13.8%
Arthritis 11.6% 9.5%
Asthma 10.2% 8.3%
Migraines 9.9% 10.0%
Sciatica/pinched nerve in back 6.0% 5.7%
Diabetes Type 2 5.6% 2.9%
Osteoporosis 5.0% 1.9%
Cancer 2.2% 3.0%
Angina or Chest Pain 1.4% 1.6%
Risk Factor Analysis
Based on survey responses, the following risk factors have been identified and compared to the
Quest database average:
Cholesterol
State Percent At Risk Database Average
Cholesterol of 200 to 239 19.75% 22.8%
Cholesterol of 240 or greater 4.4% 5.6%
Exercise less than 4 times/week 75.3% 74.8%
Consume more than 2 fat servings/day 20.1% 18.7%
• Desirable cholesterol level should be 200 or below. 75.85% of respondents either did not
know their cholesterol level or their level was 200 and lower.
• Cholesterol levels at 200 to 239 are considered borderline high risk.
• Cholesterol levels above 240 are considered high risk. These individuals have twice the
risk of developing coronary artery disease.
According to the American Heart Association, 20% of the population has high blood cholesterol
levels.
- 31 -
Depression
State Percent At Risk Database Average
Feelings of hopelessness or guilt 15.0% 9.4%
Loss of appetite, weight gain/loss 23.3% 14.6%
Decreased energy/fatigue 40.5% 27.6%
Persistent sadness 15.8% 10.0%
Insomnia/oversleeping 28.2% 13.8%
Difficulty concentrating/decisions 20.2% 13.8%
Lack of interest in enjoyable activities 21.1% 13.9%
Persistent or troublesome anxiety 17.9% 12.7%
• It appears the State survey respondents have a higher risk for depression than the Quest
database average.
Diabetes
State Percent At Risk Database Average
Diabetes Type 1 1.2% 0.8%
Receiving Treatment 1.0% 0.8%
Diabetes Type 2 5.6% 2.9%
Receiving Treatment 5.2% 2.6%
At-risk for Prediabetes 40.5% 28.8%
• It appears the State survey respondents have a higher risk for diabetes and developing
diabetes than the Quest database average.
Nutrition
State Percent At Risk Database Average
< 5 fruits/vegetables per day 87.8% 86.9%
< 6 servings of fiber per day 0% 94.7%
> 2 servings of fat per day 20.1% 18.7%
• 93% of the State respondents report poor nutrition.
- 32 -
Stress
State Percent At Risk Database Average
Problem with stress 78.0% 67.7%
Stress affects health 50.3% 36.9%
Problem with friend/coworker/boss 23.5% 16.4%
Death of a loved one 18.1% 15.3%
Depression 21.0% 13.8%
Divorce/separation 5.9% 4.9%
Finances 33.7% 21.7%
Job loss/fear of job loss 10.7% 7.0%
Job stress 49.9% 39.8%
Moving/relocation 17.0% 12.0%
Violence 3.1% 1.4%
Family/relationships 28.4% 21.5%
Your health 23.7% 13.4%
Doesn’t use stress reducing techniques 67.4% 67.9%
• 94.2% of the State respondents are at elevated risk for stress-related disorders.
Tobacco Use
State Percent At Risk Database Average
Participants who use cigarettes 13.9% 11.1%
Participants who use cigars/pipes 0.7% 0.6%
Participants who use chew tobacco 0.8% 1.1%
Participants who are ex-tobacco users
for less than 1 year
1.4%
27.2%
Participants who attempted to quit but
were unsuccessful
78%
39%
• 16.2% of the State respondents are at high risk for tobacco-related diseases.