U.S. Healthcare Benchmarks and Trends

Transcription

1 U.S. Healthcare Benchmarks and Trends Key Findings Analytics and Consulting Group Employer Practice Leadership Truven Health Analytics Truven Health Analytics October 2014 July 2014

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3 Table of Contents Introduction Executive Trend Summary Historical and Projected Allowed Amount Cost Trend Index MarketScan Cadillac Tax Analysis for Employers Cost Trends Inpatient Services Outpatient Services Outpatient Event Grouper Pharmacy Cost Trends Pharmacy Dispensed Via the Pharmacy Benefit Top Brand and Generic Drugs Pharmacy Dispensed Through Medical and Prescription Drug Benefit Plans Specialty Pharmacy Chronic and Cancer Conditions and Preventive Screening CT Scans for Lung Cancer Screening Health Risk Assessments and Obesity Data and Methodology MarketScan Norms Report Conclusion Reference

4 Figures and Tables Figure 1: MarketScan Trend Index Figure 2: PMPY Medical and Pharmacy Allowed Amounts Figure 3: PMPY Medical and Pharmacy Net Payments Figure 4: PMPY Medical and Pharmacy Out-of-Pocket Costs Figure 5: PMPY Allowed Amount Trend Rates for Figure 6: Inpatient Trends Figure 7: Outpatient Trends Figure 8: Pharmacy Trends Figure 9: Pharmacy PMPY Net Cost Components Brand/Generic/OTC Figure 10: Pharmacy PMPY Components Retail/Mail Order Figure 11: PMPY Net Specialty and Non-Specialty Pharmacy Costs Figure 12: Specialty by Dispensing Source Figure 13: Health Risk Assessments and Obesity Figure 14: MarketScan Research Databases Table 1: Year-Over-Year Inpatient Trend Components Table 2: Year-Over-Year Outpatient Trend Components Table 3: PMPY Outpatient Net Costs High Trend Categories Table 4: Year-Over-Year Pharmacy Trend Components Table 5: Top 20 Brand Drugs Table 6: Top 20 Generic Drugs Table 7: PMPY Pharmacy Costs All Sources Table 8: Chronic and Cancer Conditions Table 9: Preventive Screening Compliance

5 Introduction One of the most significant provisions of the Affordable Care Act (ACA) is the excise or Cadillac tax on high-cost health plans. Although the tax does not take effect until 2018, many employers and their health plans are already focused on opportunities to reduce cost trends in an effort to mitigate the impact of the tax. Highlights Health plans experienced a 3. 4 percent growth in per capita gross (allowed) medical and pharmacy costs from 2012 to We anticipate per capita gross (allowed) medical and pharmacy costs in 2014 and 2015 to increase by 4 to 5 percent annually Enrollee per capita net medical and pharmacy cost trend was 3.0 percent from 2012 to 2013 reflecting continued cost shifting to enrollees out of pocket costs increased by almost 6 percent By taking a data-driven approach, health plans can manage costs and, ultimately, make their benefit programs sustainable in the context of healthcare reform. They can also maximize opportunities to improve population health and productivity and optimize the delivery of care. Timely and appropriate benchmark comparisons are essential to identifying areas for intervention, measuring progress, and providing management with the appropriate context for making critical benefits decisions. The Truven Health MarketScan Research Database is the industry-leading standard for comprehensive healthcare benchmarks. Executive Trend Summary From 2007 through December 2013, U. S. health plan enrollees experienced average increases of 4.3 percent annually in actively employed per member per year (PMPY) net medical and pharmacy claims costs. We anticipate per capita gross (allowed) medical and pharmacy costs in 2014 and 2015 to increase by a little more than 4 percent. Enrollee out-of-pocket costs (deductibles, copayments, and coinsurance) are expected to increase at roughly 12 percent annually over the same period. Total medical and pharmacy allowed costs increased by 3.4 percent from $4,420 PMPY for calendar 2012 to $4,569 PMPY for calendar This trend was driven by a 4-percent increase in underlying outpatient medical services; PMPY outpatient emergency room and outpatient surgery costs increased by $23 (8.5%) and $47 (7.7%), respectively, compared to 2012 rates. Inpatient services increased by only about 1 percent compared to MarketScan Norms Report 1

6 Recent MarketScan data shows that PMPY allowed pharmacy costs increased by 3.2 percent from $853 to $880 for the period from 2012 to The 2013 specialty pharmacy costs of $236 PMPY reflect a 12.2 percent rate of increase for specialty pharmaceuticals covered under the pharmacy and medical benefit. Specialty drugs such as Humira, Enbrel, Revlimid, Copaxone, and Gleevac are on the top 20 brand drug list based on cost volume in Historical and Projected Allowed Amount Cost Trend Index Based on a study of MarketScan data for an index of large employers, U. S. employers experienced average trends of 4.6 percent annually in the PMPY allowed (gross) for medical and pharmacy costs from 2007 through December 2013 (Figure 1). We expect these costs to continue to increase by 4 to 5 percent annually in 2014 and Projected claims trends do not reflect Patient-Centered Outcomes Research Trust Fund or Transitional Reinsurance fees. However, 2014 and 2015 claims costs reflect adjustment for the anticipated cost of the new hepatitis C treatments and continued market impact of ACA implementation. This study reflects a consistent index of 139 Truven Health clients with complete claims history dating back to Figure 1: MarketScan Trend Index Active Client Weighted PMPY Medical and Pharmacy Claims Costs Allowed Amounts 5.9% 7.1% 5.1% 4.0% 1.8% 3.7% 4.7% 5.4% $3,483 $733 $3,687 $753 $3,950 $4,151 $4,315 $4,393 $4,557 $782 $816 $833 $863 $882 $4,773 $909 $5,033 $944 $2,750 $2,935 $3,169 $3,335 $3,482 $3,530 $3,675 $3863 $4, Proj Proj Medical Pharmacy 2 MarketScan Norms Report

7 MarketScan Cadillac Tax Analysis for Employers Truven Health has developed updated 2014 projections of Cadillac tax liabilities for self-funded, fee-forservice benefit plans using 2011 MarketScan data for both active employee and early retiree plans. Our analysis reflects results, measured at the plan level for 300+ employers with: 6.3 million active employees (2,500+ distinct plans, 13.0 million members) 530,000 early retirees (300+ distinct plans, 940,000 members) We excluded plans with fewer than 200 employees (roughly 500 members) from this analysis. We used net medical and pharmacy payments for each plan to develop per employee per year (PEPY) claims cost rates for employee and employee + family coverage tiers. These rates were then adjusted to include Administrative Services Only (ASO) fees (estimated as the lesser of 6 percent of 2011 per employee per month (PEPM) claims rates or $36.00 PEPM) and trended forward to 2018 (and beyond) to test against projected Cadillac tax thresholds. We did not take into account the impact of health savings account or flexible spending account contributions or the cost of integrated (not standalone) dental benefits. If we had considered these factors, the results would have been less favorable to employers. High-Level Findings Beginning in 2018, 15 percent of active employee plans and 81 percent of early retiree plans are projected to incur the Cadillac tax; these rates are projected to increase to 19 percent and 84 percent, respectively, by For plans projected to incur the tax in 2018, we estimate an average annual PEPY tax amount of $364 for actives and $1,069 for early retirees; these amounts represent 2.9 percent and 5.5 percent of total PEPY costs, respectively, for these two groups. The median annual trend rate needed to avoid the tax in 2018 was 10 percent for active plans and 2 percent for early retiree plans. These results vary by industry sector; we found that 25 percent of active public employer and 33 percent of active health system employer plans were projected to incur the tax in We also examined the relative impact of health risk and actuarial value in plans that are projected to incur the tax compared to plans that are not projected to generate taxes and found that health risk was a dominant factor in driving plan cost relative to the underlying richness of benefits as measured by actuarial plan value. In practice, the assumption of many commentators has been that factors like group health risk and geographic price variance may have as much or more of an impact on exposure to the excise tax as the underlying actuarial benefit value provided by a plan. That is, the dollar tax thresholds for families and individuals do not take into account how sick the population is or the local cost of care. We examined the MarketScan data to try to explicitly measure two of the key factors impacting the price of high cost plans: Actuarial value calculated as the total plan net claims payments divided by plan allowed amount costs Population health risk calculated using Verisk s DxCG relative risk scores. DxCG scores are designed to map population health risk in an empirical way to total costs We mapped the product of actuarial value and normalized risk scores (we assumed an average of 100 for the combined risk of all employer plans in the study) to the projected Cadillac tax. For active employee plans, we found that, not surprisingly, Cadillac plans had a 10 percent greater actuarial value (0.88) than other plans (0.80); Cadillac plans had an even greater differential in population health risk than other plans (42 percent). The combined actuarial value and health risk factor was therefore 52 percent higher in Cadillac plans than other plans not projected to incur the tax. Population health risk, using this approach, has a higher impact on total cost than the underlying actuarial value. Results for early retiree plans were similar. MarketScan Norms Report 3

8 Cost Trends For all commercial clients, the PMPY allowed amount for medical claims expenses increased by 3.4 percent to $3,689 in 2013, while pharmacy claims expenses rose by 3.2 percent to $880 (Figure 2). Combined allowed medical and pharmacy costs increased by 3.4 percent to $4,569 in Figure 2: PMPY Medical and Pharmacy Allowed Amounts Medical Pharmacy $3,568 $3,689 $853 $ The 2013 PMPY medical net payments increased by 2.5 percent to $3,036, while pharmacy net payments of $729 reflected a 4.9 percent annual increase from 2012 levels (Figure 3). Combined medical and pharmacy net payments increased by 3.0 percent from $3,655 in 2012 to $3,765 in Figure 3: PMPY Medical and Pharmacy Net Payments Medical Pharmacy $2,960 $3,036 $695 $ Combined medical and pharmacy PMPY out-of-pocket costs increased by 5.7 percent from $695 in 2012 to $734 in The PMPY medical out-of-pocket costs for 2013 increased by 8.4 percent to $590, while pharmacy out-of-pocket costs of $144 reflected a 4.0 percent annual decrease compared to 2012 (Figure 4). The decrease in pharmacy out-of-pocket costs reflects a continuing shift to generic drugs, which typically have the lowest co-pay levels in most pharmacy benefit plans. Figure 4: PMPY Medical and Pharmacy Out-of-Pocket Costs Medical Pharmacy $545 $590 $150 $ MarketScan Norms Report

9 Figure 5 summarizes key trend rates for total allowed amounts for 2012 to Figure 5: PMPY Allowed Amount Trend Rates for Pharmacy 3.4% Medical 3.2% Outpatient 3.4% Inpatient 3.8% Allowed Amount 1.2% The next section breaks down the components of medical and prescription drug trends into price and use components. Inpatient Services Inpatient admissions decreased in 2013 to 52.1 admissions per 1,000 members, while the average cost per admission increased by 4.1 percent to $17,420 (Table 1 and Figure 6). As the average length of stay remained almost flat over this same period of time, the cost increase was being driven by a combination of price increases and a change in the mix of types of admissions. Table 1: Year-Over-Year Inpatient Trend Components % Change Allow Amount PMPY Inpatient Acute $979 $ % Allow Amount per Admit $18,216 $19, % Admits Per 1, % Figure 6: Inpatient Trends Percent Change PMPY 1.2% Price 4.1% Use 3.1% MarketScan Norms Report 5

10 Outpatient Services Continued increases in outpatient utilization were expected and, in many cases, may have helped to reduce overall expenses. Some of this increase can be explained by the shift from a higher cost inpatient setting to a lower cost outpatient setting. Outpatient utilization of services increased to 24,777 services per 1,000 members in 2012 or 1.6 percent over 2012 (Table 2 and Figure 7). Table 2: Year-Over-Year Outpatient Trend Components % Change Net Pay PMPY Outpatient Medical $2,512 $2, % Net Pay Per Outpatient Medical Service $103 $ % Outpatient Medical Services per 1,000 24,379 24, % Figure 7: Outpatient Trends Percent Change PMPY 3.8% Price 1.3% Use 1.6% Outpatient categories with notable trend rates include emergency room, home health, surgery, dialysis, and mental health/substance abuse all with trend increases significantly higher than the average for outpatient services (Table 3). Table 3: PMPY Outpatient Net Costs High Trend Categories % Change Dialysis $31 $ % Home Health $12 $ % Mental Health/Substance Abuse $102 $ % Emergency Room $277 $ % Surgery $604 $ % Total $1,026 $1, % 6 MarketScan Norms Report

11 Outpatient Event Grouper Invasive procedures are being performed more frequently in the outpatient setting. Analyzing ungrouped claims data does not provide the complete picture for total costs associated with these procedures. In response to this, Truven Health has developed the Outpatient Event Grouper (OPEG) that automatically builds aggregations of claims data for specific outpatient procedures. The methodology looks across multiple providers and diagnosis codes. The groupings are created by looking at the statistical relationships between claims to best identify those associated with the specific procedure. Groupings have been created for 72 procedures. Examples include: Major outpatient surgical procedures (e.g., knee arthroscopy, tonsillectomy) Invasive diagnostic procedures (e.g., cardiology, colonoscopy) Radiology procedures (e.g., CT scan, MRI) Using 2012 MarketScan data, we created the OPEG for diagnostic colonoscopy. Truven Health is able to prepare an analysis showing how the clients costs compare to the MarketScan average, how costs differ by treatment setting, and the difference in cost due to the inclusion of deep sedation anesthesia. Over the past few years, the use of deep sedation anesthesia has grown significantly, such that it is expected to more than double between 2007 and A May 2012 article in the New York Times said, as much as $11 billion spent on anesthesia for gastrointestinal procedures each year may not be medically necessary. 1 Pharmacy Cost Trends Pharmacy total allowed amount PMPY increased by 3.2 percent in 2012 to $880 PMPY. Although both use and cost components contributed to this trend increase, the primary driver was unit cost (Table 4 and Figure 8). Table 4: Year-Over-Year Pharmacy Trend Components % Change Allowed Amount PMPY Pharmacy $853 $ % Allowed Amount Per Day Supply Rx $2.80 $ % Days Supply PMPY Pharmacy % Figure 8: Pharmacy Trends Percent Change PMPY 3.2% Price 2.1% Use 1.0% MarketScan Norms Report 7

12 Pharmacy Dispensed Via the Pharmacy Benefit Generic use rates increased from 74. 6% of all scripts in 2012 to 77. 2% of scripts in This increase in generic use helped to partially offset the impact of increases in specialty drug costs. Price increases were driven primarily by unit price increases in brand drugs, including specialty pharmacy. Generic PMPY pharmacy costs increased by 0.3 percent to $ , and brand pharmacy increased by 1.7 percent to $ in 2013 (Figure 9). Figure 9: Pharmacy PMPY Allowed Amount Cost Components Brand/Generic/OTC 2013 $ $ $ $ $ $23.11 $0 $100 $200 $300 $400 $500 $600 $700 $800 $900 $1,000 Generic Brand OTC/Other Retail PMPY increased by 5.9% percent to $605.74, and mail order decreased by 2.3% percent to $ PMPY (Figure 10). Retail pharmacy trend reflects comparable increases in both utilization and unit price. Figure 10: Pharmacy PMPY Components Retail/Mail Order 2013 $ $ $ $ $0 $100 $200 $300 $400 $500 $600 $700 $800 $900 $1,000 Retail Mail Order Top Brand and Generic Drugs In the past several years, many popular brand drugs have come off patent, creating a changing drug landscape for both brand and generic categories. Specialty drugs now occupy spots 1 and 2 of the top 20 brand drugs when categorized by total spend, even though they represent a relatively small patient volume. Not surprisingly, Atorvastatin Calcium (generic Lipitor ) is the top generic drug in 2013 data for the second year in a row. Lipitor is no longer on the brand top drug list. The top 20 generic drugs make up just under 8 percent of the total drug spend, while the top 20 brand drugs constitute 23 percent of the total pharmacy spending in 2013 MarketScan data (Tables 5 and 6). 8 MarketScan Norms Report

13 Table 5: Top 20 Brand Drugs Drug Ranked by Total Allowed $ % of Total Pharmacy Use Humira 2.79% Rheumatoid arthritis, chronic plaque psoriasis, Crohn s disease Enbrel 2.38% Rheumatoid arthritis, ankylosing spondylitis, psoriasis Nexium 1.91% Gastroesophageal reflux disease Crestor 1.84% High cholesterol and high triglycerides Cymbalta 1.66% Major depressive disorder, general anxiety disorder, fibromyalgia Copaxone 1.47% Multiple sclerosis Abilify 1.28% Depression, bipolar 1 disorder, schizophrenia Lantus SoloSTAR 1.07% Type 2 diabetes Januvia 0.88% Type 2 diabetes Advair Diskus 250/ % Asthma Revlimid 0.79% Multiple myeloma Celebrex 0.78% Pain or inflammation Atripla 0.71% HIV Spiriva 0.71% Bronchitis, emphysema, or COPD Diovan 0.70% Hypertension, heart failure Zetia 0.69% High cholesterol and high triglycerides AndroGel 0.65% Testosterone Victoza 0.65% Type 2 diabetes Gleevec 0.65% Leukemia Lyrica 0.65% Pain Total 23.13% Table 6: Top 20 Generic Drugs Drug Ranked by Total Allowed $ % of Total Pharmacy Atorvastatin Calcium 0.83% High cholesterol (generic Lipitor ) Methylphenidate Hydrochloride 0.50% Attention-deficit hyperactivity disorder (ADHD) Use Montelukast Sodium 0.49% Asthma attacks Modafinil 0.46% Narcolepsy Enoxaparin Sodium 0.44% Anticoagulant deep vein thrombosis, pulmonary embolism Fenofibrate 0.40% High cholesterol and triglycerides Budesonide 0.40% Asthma, non-infectious rhinitis Valsartan and Hydrochlorothiazide 0.37% High cholesterol and triglycerides Clopidogrel 0.35% Stroke, heart attack Fluticasone Propionate 0.35% Asthma, allergic rhinitis Escitalopram 0.35% Depression and generalized anxiety disorder Doxycycline Hyclate 0.35% Bacterial infections Omeprazole 0.34% Gastroesophageal reflux disease Valacyclovir Hydrochloride 0.29% Herpes simplex, herpes zoster (shingles), and herpes B Metoprolol Succinate 0.28% Hypertension Pioglitazone 0.26% Type 2 diabetes Simvastatin 0.26% High cholesterol Zolpidem Tartrate 0.24% Insomnia Venlafaxine Hydrochloride 0.23% Major depressive disorder (MDD), anxiety disorder Mixed Amphetamine Salt 0.23% Attention-deficit hyperactivity disorder (ADHD) Total 7.42% MarketScan Norms Report 9

14 Pharmacy Dispensed Through Medical and Prescription Drug Benefit Plans MarketScan includes pharmacy data for drugs dispensed through both medical and prescription drug benefit plans. In 2013, roughly 14 percent of the total pharmacy PMPY was dispensed through the medical benefit (Table 7). Table 7: PMPY Net Pharmacy Costs All Sources % Change Medical $ $ % Prescription Drug Benefit $ $ % Total $ $1, % Medical % 13.7% 13.9% 0.2% Specialty Pharmacy Specialty pharmacy continues to be a growing and significant component of a typical prescription drug benefit program. Specialty drugs can be dispensed through either the medical benefit in an outpatient facility or doctor s office, or through the pharmacy benefit. Specialty drugs include therapies for autoimmune disorders (rheumatoid arthritis, psoriasis, and Crohn s disease), multiple sclerosis, cancer, and pulmonary hypertension. Overall, specialty drugs increased from $ $ or 21.3 percent of all pharmaceuticals (percentage of allowed amount) to $ or 23.1 percent from 2012 to 2013 (Figure 11). Figure 11: PMPY Net Specialty and Non-Specialty Pharmacy Costs Non-Specialty Specialty $ $ $ $ Net pay for specialty drugs dispensed through the medical benefit grew at a significantly greater rate than those dispensed through the pharmacy benefit (17.4 percent versus 9.9 percent) and accounted for 31% of total specialty drug costs (Figure 12). 10 MarketScan Norms Report

15 Figure 12: 2013 Dispensing Source for Specialty Drugs Dispensed through Pharmacy Benefit Dispensed through Medical Benefit $ % $ % Chronic and Cancer Conditions and Preventive Screening The 15 common chronic or cancer conditions in Table 8 account for more than 23 percent of the medical spend in 2013 MarketScan data for active employees. Osteoarthritis, lower back disorder, coronary artery disease, and breast cancer continue to lead the list with $511 PMPY collectively in medical costs. Asthma (2.83) and lower back disorders (6.23) still top the list in emergency room visits per 1,000 Substance abuse, osteoarthritis, cerebrovascular disease, depression, and coronary artery disease have the highest hospital days per 1,000 Substance abuse (17.5 percent) had the only double-digit PMPY trend increase For the second year in a row, congestive heart failure and cerebrovascular disease had PMPY trend decreases Coronary artery disease, chronic obstructive pulmonary disease (COPD), and colon cancer all had PMPY trend decreases larger than 5 percent Table 8: Chronic and Cancer Conditions Chronic Conditions and Cancer Allowed Amount PMPY Medical PMPY Allowed Cost Trend 2013/2012 Patients/ 1,000 Hospital Days/1,000 Days/Admit Adjusted Length of Stay (ALOS) ER Visits/ 1,000 Visits Office Med/1,000 Osteoarthritis $ % Lower Back Disorder $ % Coronary Artery Disease $ % Breast Cancer $65 0.4% Cerebrovascular Disease $57-2.6% Diabetes $56-0.2% Hypertension $45-1.7% Depression $45 3.2% Substance Abuse $ % Congestive Heart Failure $32-3.8% Colon Cancer $29-6.8% Chronic Obstructive Pulmonary Disease $21-6.3% Asthma $19-0.8% Rheumatoid Arthritis $17 4.4% Cancer $6-0.5% MarketScan Norms Report 11

16 Employers and health plans have focused significant effort through wellness and disease management programs to encourage enrollees to obtain evidence-based preventive screening measures for common cancer conditions (e.g., mammograms, colonoscopies, pap smears) and chronic conditions (e.g., various tests associated with the management of type 2 diabetes). Table 9 highlights compliance rates for some common screening measures using National Quality Foundation metrics and 2013 MarketScan data. Table 9: Preventive Screening Compliance Percent Compliance, by Quartile (%) Preventive Screening 25th 50th 75th Asthma Drug Management Rate 88.5% 91.0% 93.1% Breast Cancer Screen 64.7% 68.5% 71.7% Cervical Cancer Screen 63.6% 68.9% 72.6% Colorectal Cancer Screen 30.0% 33.0% 35.8% Coronary Artery Disease Lipid Test 71.0% 79.2% 85.5% Diabetes Eye Exam 26.4% 30.2% 35.7% Diabetes HbA1c Test 77.4% 82.1% 86.5% Diabetes Lipid Test 69.2% 75.1% 78.7% CT Scans for Lung Cancer Screening In July 2013, the American College of Chest Physicians released guidelines that recommend an annual computerized tomography (CT) scan for current and former smokers ages 55 to 80. Since symptoms of lung cancer often do not develop until the cancer is at an advanced stage, screening for this population is helpful for early detection. The U.S. Preventive Service Task Force has made this a Grade B recommendation, meaning that employers and insurers must cover the CT Scan under the preventive services provisions of the ACA. Truven Health used the MarketScan database of 2012 claims experience for more than 15.5 million active and early retiree members and developed an algorithm to estimate the additional cost to employers and health plans of the above coverage change. These costs were based upon an age- and gender-adjusted estimate of the number of smokers ages 55 to 64 in this population. The estimated number of smokers ages 55 to 64 was based upon the 2009 Gallup-Healthyways Well-Being Index which shows that, within this age group, men are more likely to smoke than women and that the prevalence of smoking declines with age. Next, we calculated the incremental cost for this population based on covering the out-of-pocket expense for existing CT scans and the entire cost, including enrollee out-ofpocket expenses, for scans for smoking enrollees who did not previously obtain a CT scan. Costs were adjusted to 2014 dollars. Based upon these findings, the total incremental cost is estimated to be $ PMPY in the 55 to 64 age group. 12 MarketScan Norms Report

17 Health Risk Assessments and Obesity Increasingly, Health Risk Assessment (HRA) responses are being relied upon to supplement administrative claims data. For example, obesity is traditionally under-represented in administrative claims relative to actual prevalence due to typical claims coding practices; however, HRA data can provide more robust insight into obesity. In 2013, about 34 percent (down from 35 percent in 2012) of MarketScan HRA respondents fell into the obese category (body mass index (BMI) of 30 or higher). Another percent were overweight (BMI in range of to 29. 9) (Figure 13). Figure 13: 2013 Distribution of Body Mass Index (BMI) 29.5% 35.5% 19.4% 1.1% 8.5% 6.0% 18.5 or less or greater Data and Methodology The MarketScan Research Databases give healthcare researchers access to fully integrated, anonymous, individual-level healthcare claims data to help them understand health economics and outcomes. Patient-level data (inpatient, outpatient, drug, lab, health risk assessment, and benefit design) from commercial, Medicare supplemental, and Medicaid populations reflect realworld treatment patterns and costs. The MarketScan Research Databases offer: Longitudinal Strength. MarketScan provides the longest data history available, extending data back to This enables us to track patients over multiple years in detail. Unique Data Sources. Unlike competitors, MarketScan is comprised of data from both employers and health plans. This allows us to track patients, even when they switch health plans. Multifaceted, Patient-Level Detail. We link MarketScan data at the patient level using a unique identifier that is consistent across services, health plans, and time. This includes patient copayments, mail order prescriptions, specialty pharmacy, carve-out services, manually and electronically submitted claims, and plan summaries. Complete Continuum of Care Views. MarketScan data fully integrate all treatments and plan designs to provide insights into the impact of cost, treatment, and behavioral drivers. Reliability and Validity. Researchers have published more than 100 studies using MarketScan data over the past 5 years. MarketScan Norms Report 13

18 Figure 14: MarketScan Research Databases Employers, Health Plans, States Fully Adjudicated Claims: Medical, Pharmacy, Dental, Vision MarketScan Family of Research Databases and Other Truven Health Information Tools Semi-Annual Employer Norms Hospital Claims and Discharge Records Lab Orders and Results Health Risk Appraisals Patient Surveys Psychographic Clusters Data Management Research Database Licenses Online Information Tools Outcomes and Market Research Studies Analytic Reports and Studies MarketScan Norms Report We create the MarketScan Norms Report from the claims experience of 330 clients representing million covered lives and crossing the full spectrum of industry types, health plans, and pharmacy benefit managers. We design these semi-annual norms to focus on measures and segments of particular value to employers and health plans. We aggregrate the norms at the member level. A key difference between the MarketScan Norms Report and other available healthcare cost trend data is that the MarketScan norms reflect actual client experience data from health plans, PBMs, disability, workers compensation, eligibility, and other vendors. MarketScan data are not self-reported survey data. MarketScan norms are also not limited to a single vendor s book of business or narrow industry segments, but reflect data from hundreds of data suppliers and clients. The norms reflect our independent status in the marketplace across health plans and healthcare providers. We build the MarketScan norms using data gathered from our clients data warehouses. The data undergo standardized processes to aggregate, scrub, and report health and productivity. Our processes are compliant with the Statement on Standards for Attestation Engagements (SSAE) No. 16 (formerly SAS-70). This means that we define and calculate values for a given measure consistently across all clients. 14 MarketScan Norms Report

19 All year-over-year trend results in the MarketScan Semi-Annual Norms Report reflect a convenience sample drawn from a consistent group of 330 employer clients with million active members (7. 1 million active employees) across the two years ending December 31, By including only clients with complete data for the 2 years of this study, we minimize the impact of variance over time in our MarketScan book of business data. Unless otherwise indicated, data reflect paid as opposed to incurred claims data. This feature allows us to produce trends for the most current data available without application of completion methodologies necessary for trend analysis on incurred basis data We also include in this report a multi-year trend study that reflects a consistent group of 139 clients with more than 8.3 million covered lives, whose data are available for all years in the period from 2007 through Results, unless otherwise indicated, reflect averages of values calculated at the member level. PMPY rates included in the study reflect the experience for the employees and their covered dependents at the contract level. PMPY rates also reflect the experience for the employee and his or her covered dependents on a per-capita basis. Conclusion Our clients experienced continued moderate cost trend in 2013, but we anticipate that trend rates will rebound over the next several years. Employers with high cost plans will need to manage plan trend rates proactively while there is still time to minimize exposure to the Cadillac tax in 2018 and thereafter. Employers and health plans stand the greatest likelihood of success in managing these trends to the extent they carefully analyze data to identify and prioritize opportunities and mitigate trend drivers. Reference 1 MarketScan Norms Report 15

20 GET CONNECTED Send us an at or visit truvenhealth.com/healthplan ABOUT TRUVEN HEALTH ANALYTICS At Truven Health Analytics, we are dedicated to delivering the answers our clients need to improve healthcare quality and reduce costs. We are a healthcare analytics company with robust, widely respected data assets and advanced analytic expertise that have served the global healthcare industry for more than 30 years. These combine with our unique perspective from across the entire healthcare industry to give hospitals, clinicians, employers, health plans, government agencies, life sciences researchers, and policymakers the confidence they need to make the right decisions, right now, every time. With our healthcare-specific expertise and tools for managing complex and disparate data, we understand how to implement and integrate tailored analytics that drive improvement. Truven Health Analytics owns some of the most trusted brands in healthcare, such as Micromedex, ActionOI, 100 Top Hospitals, MarketScan, and Advantage Suite. Truven Health has its principal offices in Ann Arbor, Mich.; Chicago; and Denver. For more information, please visit truvenhealth.com. truvenhealth.com Truven Health Analytics Inc. All rights reserved. All other product names used herein are trademarks of their respective owners. HP