City of Los Angeles Periodic Utilization Report 3rd Quarter 2017 (10/1/2016 9/30/2017)

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1 Dr. Craig Collins, MD, MBA, FACS General and Minimally Invasive Surgery Physician Marketing Leader, Los Angeles Metro Area Associate Clinical Professor, UCLA Geffen School of Medicine City of Los Angeles Periodic Utilization Report 3rd Quarter 2017 (10/1/2016 9/30/2017) Presented by: Justin Cao, MPH Executive Account Manager

2 Agenda Topic 1. Review the Objective & 2019 Renewal Considerations 2. Review Utilization for Active Population Key Findings Summary Subscriber and Member Demographic Information Total Paid Claims Per Member Per Month (PMPM) Inpatient Overview Inpatient Detail - Maternity Outpatient Overview Pharmacy Overview Top 10 Pharmacy Prescriptions by Total Cost Specialty Drug Impact 3. Questions Page 2

3 City of Los Angeles KEY FINDINGS SUMMARY Reports Referenced: October 2016 September 2017 Periodic Utilization Report KEY FINDING METRIC RELEVANCE The City of Los Angeles Demographics are higher than that of Kaiser Permanente s Regional Average The average age for a City of Los Angeles member enrolled in KP is 35.5, which is higher than KP s Regional Average of 33.9 years old. As a population ages, it is often associated with higher utilization of services. Total Paid Claims for the City of Los Angeles have decreased during this reporting period. Total Paid Claims have decreased 1.1%, while claims for the KP Regional Average have increased 1.6%. The City s Total Paid Claims are higher than KP s Regional Average by 10.8%. Total paid claims decreased overall during this reporting period largely due to a decrease in the Inpatient service category. Total Inpatient Claims decreased during this reporting period Inpatient claims have decreased by 4.7%, while claims for the KP Regional Average decreased by 1.6%. Inpatient Medical decreased by 2.5%, while claims for the KP Regional Average increased 1.7%. The Inpatient Medical decrease is primarily attributed to decreased admits for extreme immaturity neonates, and the decrease in Inpatient Surgical is attributed to no further claims for liver transplants (as compared to 4 admits in the prior period). Total Pharmacy Claims have decreased during this reporting period Inpatient Surgical decreased by 10.1%, while claims for the KP Regional Average decreased by 5.1%. Total Pharmacy Claims decreased by 7.6%, while claims for the KP Regional Average decreased 2.6%. Brand Formulary costs decreased by 6.8%, while claims for the KP Regional Average increased by 0.3%. Additionally, Specialty drug costs decreased by 19.3%. With regards to Inpatient Maternity, admits for vaginal delivery without complication diagnosis has increased by 23%. This category is increasing mainly due to increased admissions. Generic Formulary prescribing accounts for 94.5% of total prescriptions for the City of Los Angeles. The efficacy of generic drugs allows for proper treatment at a lower out-of-pocket cost for members, as well as the reduction of overall pharmacy costs for the City. Specialty prescriptions for Hep-C decreased by 76%, and claims for Harvoni decreased by $1.1 Million. Page 3

4 City of Los Angeles KEY FINDINGS SUMMARY Reports Referenced: October 2016 September 2017 Periodic Utilization Report KEY FINDING METRIC RELEVANCE Outpatient Paid Claims have increased during this reporting period. Clinical Health Information for City of Los Angeles Members An additional three months of new data will be included in the 2019 renewal, as well as important factors such as pooling, retention charges, etc. Total Outpatient paid claims have increased 4.2%, while Outpatient paid claims for the KP Regional Average increased 7.5%. Outpatient Visits paid claims have increased 15.3%, while Outpatient paid claims for the KP Regional Average increased 17.9%. Outpatient visits/1,000 have decreased 4.8%, while Outpatient visits/1,000 for the KP Regional Average decreased 1.1%. Outpatient $/visit increased 21.2%, while Outpatient $/visit for the KP Regional Average increased 19.3%. 84.9% of members were seen by a Kaiser Permanente clinician. 75.7% of Adult members and 35.8% of Child members are considered overweight or obese. 64.9% of Adult members are not meeting the recommended 150+ minutes of exercise per week. 59.1% of members have a prediabetic or diabetic test result (fasting glucose < 100 or hemoglobin A1c <5.7). This utilization report contains nine months of new data since the 2018 renewal period. The 2019 renewal will include three new months of data. The increase in Total Outpatient Paid Claims is attributed primarily to an increase in specialty appointments. Approximately 25.6% of members are diagnosed with at least one chronic condition, which further explains increased outpatient visits for treatment of the various chronic conditions. Many services are moving to an outpatient setting, so members are encouraged to receive care in the proper setting. Kaiser Permanente continues to expand the number of services available to members through a telephonic and video appointments. Utilization of these types of visits can help members seek more timely care, as well as help reduce the outpatient utilization costs for the City. It is proven that excess weight increases the risk of major health problems. People who are overweight or obese are more likely to have heart disease, strokes, diabetes, cancer and depression. The Centers for Disease Control recommend at least 150 minutes of exercise per week at moderate-intensity for substantial health benefits. This report contains three months of old data that was used in the 2018 renewal calculation, in order to provide a 12 month comparison. Important factors such as pooling, retention charges, ACA taxes and fees are not reflected in this utilization report. Page 4

5 Subscribers and Members The Average Contract Size (ACS) (i.e., Total Members divided by Total Subscribers) has decreased on average 1.3% during the past five periods. The average member age as of Q is 35.5, which is higher than the KP Regional Average of The percentage of males is 50.1% for the City of Los Angeles, vs. 49.2% for the KP Regional Average. Page 5

6 Percentage of your costs driven by chronic conditions Percentage of members compared to percentage of cost by condition * Page 6

7 Prevalence by Chronic Condition Page 7

8 Lifestyle Risks Overview Page 8

9 Total Paid Claims Per Member Per Month (PMPM) The table above reflects only paid claims. It does not incorporate other key elements of the renewal calculation such as pooling, trend, IBNR, retention, and ACA. Paid claims for the City have decreased 1.1%, while claims for the KP Regional Average have increased 1.6%. The current PMPM for the City is 10.8% higher than the KP Regional Average. The average increase in claims over the past five periods for the City has been 4.3%. The average increase in claims over the past five periods for the KP Regional Average has been 3.3%. Page 9

10 Inpatient Overview IP Maternity: 8.8% IP Surgical: -10.1% IP Medical: -2.5% Note: not shown here, inpatient mental health increased 46%, but those claims account for 3% of total inpatient claims. Total inpatient claims decreased 4.7%, while the KP Regional Average decreased 1.6%. Inpatient Medical for the City decreased 2.5% vs. an increase of 1.7% for the KP Regional Average: The top 10 mix of services remains consistent however, claims have decreased. Admits for extreme immaturity neonates (DRG 790) decreased from 13 to 5, and paid claims decreased $3.88 PMPM Inpatient Surgical for the City decreased 10.1% vs. a decrease of 5.1% for the KP Regional Average: There was a change in the mix of services. In the prior period there were 4 admits for liver transplant (DRG 5) with $6.65 PMPM in paid claims vs. no claims in the current period. Page 10

11 Inpatient Detail - Maternity City of Los Angeles Maternity DRG's Jan Dec 2015 Jan Dec 2016 Oct Sept 2017 Jan Dec 2015 Jan Dec 2016 Oct Sept 2017 City vs. KP Claims PMPM Admits/1,000 Average Length of Stay $ $ $ $ $ $ % Change % Change % Change (4.3%) (4.7%) (8.5%) (0.4%) (12.3%) 3.0% 8.8% 6.1% (4.1%) 2.8% (2.8%) (0.2%) 9.0% (2.5%) (1.8%) 2.4% (1.5%) (0.1%) (21.3%) (25.8%) (0.8%) Diagnostic Related Grouping (DRG) is how hospitalization costs are categorized. Admits for DRG 775 increased 23%. The Average Length of Stay for DRG 775 decreased 6%. Paid claims for DRG 775 increased 21% ($381,000). Note: clinical measurements related to maternity claims can be found in the appendix. KP SoCal. Regional Average Current Period: Oct 1, Sept 30, 2017 Average Commercial Members: 32,794 Admits Admits Admits per Admits Admits Claims Claims Claims % of Total Rank DRG DRG Label Category Count 1000 Days ALOS DRG Total PMPM per Admit PMPM PMPM Claims % VAGINAL DELIVERY W/O COMPLICATING DIAGNOSES MAT $1,997,137 $5.07 $12, % 21.4% CESAREAN SECTION W CC/MCC MAT $1,466,495 $3.73 $28, % 15.0% CESAREAN SECTION W/O CC/MCC MAT $723,958 $1.84 $21, % 7.5% VAGINAL DELIVERY W COMPLICATING DIAGNOSES MAT $329,224 $0.84 $14, % -7.1% VAGINAL DELIVERY W STERILIZATION &/OR D&C MAT $160,063 $0.41 $20, % -1.9% Top 5 Inpatient DRG - MATERNITY $4,676,877 $11.88 $17, % 13.7% All Other MATERNITY $288,258 $0.73 $13, % -36.4% Total MATERNITY $4,965,135 $12.62 $16, % 8.8% Page 11

12 Inpatient Detail Maternity (cont.) The age band has the highest total paid claims for Non C-Section deliveries, while the 40+ age band has the highest cost on a per admit basis for Non C-Section deliveries. The age band has the highest total paid claims for C-Section deliveries, while the 40+ age band has the highest cost on a per admit basis for C-Section deliveries. Page 12

13 Outpatient Overview OP Surgical Claims Cost: 1.0% Emergency Room Claims Cost: -19.2% OP Visits Cost: 15.3% City of Los Angeles KP SoCal Regional Average Jan Dec 2015 Jan Dec 2016 Oct Sept 2017 Jan Dec 2015 Jan Dec 2016 Oct Sept 2017 OP Visits PMPM $54.67 $60.80 $70.10 $49.66 $55.46 $65.42 % Change 10.3% 11.2% 15.3% 9.3% 11.7% 17.9% OP Visits/1000 4, , , , , ,673.7 % Change 4.5% 3.0% -4.8% 3.7% 2.7% -1.1% OP Visits $/Visit $ $ $ $ $ $ % Change 6.5% 8.0% 21.2% 4.6% 8.7% 19.3% Notable increases in the OP minor service categories include: Allergy 44% Ear, Nose, Throat 15% Obstetrics/Gynecology 26%: Screening and Immunization rates for the City of Los Angeles are higher than the KP average in most instances. Refer to the appendix. Page 13

14 Pharmacy Overview Generic Formulary Cost: -9.6% Brand Formulary Cost: -6.8% Total pharmacy claims for the City of Los Angeles decreased 7.6%, while the KP Regional Average decreased 2.6% Generic Formulary for the City decreased 9.6% vs. a decrease of 8.6% for the KP Regional Average. Generic Formulary accounts for 94.5% of total scripts for the City, which is inline with the KP Regional Average. Brand Formulary for the City decreased 6.8% vs. an increase of 0.3% for the KP Regional Average Page 14

15 Top 10 Pharmacy Prescriptions by Total Cost The table represents the Top 10 pharmacy scripts by cost. Humulin is the only Generic Formulary drug, and 40% of the drugs in the Top 10 are specialty drugs. The Top 10 drugs represent 1.1% of total scripts, and 24.5% of the total pharmacy costs. A key contributor to the decrease in pharmacy claims can be attributed to the decline in specialty drugs with details on the next page. Page 15

16 Specialty Drug Impact Page 16

17 APPENDIX Page 17

18 Preventive Services Overview Page 18

19 Behind the Numbers - Maternity The percent of Moms with Other Conditions has decreased for three consecutive periods. The City is inline with the Regional Average, and below the Industry Average. The percent of Moms with Major Chronic Conditions has decreased from The City is below the KP Industry Average, but the City is still above the KP Regional Average. 95.1% of all Moms received a timely prenatal care visit, which is inline the KP Regional Average of 95%, but below the Industry Average of 96.4%. Other conditions include: cancer, back pain, arthritis, injury Major Chronic Conditions include: diabetes, depression, CAD, heart failure, asthma, COPD, chronic kidney disease Page 19

20 Behind the Numbers Immunizations and Screenings For most measurements, the City is exceeding the KP Regional Average and Industry Average for immunizations and screenings. However, there is room for improvement especially for cervical cancer screenings. Page 20

21 Top 10 Pharmacy Prescriptions by Volume Page 21