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| Statement |
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| Our marketplace chassis continues to be well positioned for both growth and margin |
| Then as we sit here today, we’ve got really solid visibility into the rate for our 2024 member month - it’s 63% of the book we’ve got visibility for |
| Today, we reported a strong finish to a very productive 2023 |
| The quarterly and full year EPS results were slightly ahead of internal expectations and provide the organization with positive momentum as we head into 2024 |
| We obviously have Florida in flight, and really proud of the sunshine team and the work they’re doing, as well as Georgia, and then Texas for later this year and 2025 go-live, so we continue to track that |
| If you take that all together, acknowledge it’s still early in the year, but that’s what makes us feel good about our 90.1 midpoint for the ’24 Medicaid HBR |
| We continue to have, I believe, the best BD team in the business, incredibly strong local teams that are being really thoughtful and incrementally forward looking in terms of, as we said at investor day, making sure that we’re competing on promises kept, not just promises made |
| In fact, Centene wasted no time setting the tone for 2024 by successfully delivering what we believe to be the largest ever PBM platform migration and improving our pharmacy cost structure on behalf of our customers and members |
| We have processed more than 40 million scripts so far through ESI and are pleased with the way this massive undertaking has rolled out |
| That, I think goes to the second part of your question, which is really what are we seeing in the market in terms of the investments we’ve made over the last two years around customer satisfaction and that local community partnership, and we’re really starting to see improvement in terms of partner satisfaction, provider relationships, as well as quality |
| If you look at our Medicaid quality scores year-over-year, you’re seeing really nice improvement there |
| I think the distribution system has responded to obvious opportunities to improve quality, persistency, and product mix, as Sarah said, is directly in line with what we were targeting, so the level of precision is both impressive, important and directionally where we’re going to go |
| We were, as Drew said, very pleased with the way the Medicare team executed in AEP and precision across all of the dimensions that you talked about, again largely in line with expectations |
| Marketplace growth was more robust than anticipated, fueled by better than anticipated overall market growth as individual commercial offerings continued to gain traction with an expanding consumer set |
| I think really good improvement in the places that we’ve focused and really good core strength in the areas that are going to matter going forward |
| Together, these dynamics position us well to achieve our 2024 adjusted earnings per share guidance of greater than $6.70 |
| Within Medicaid, we have delivered important proof points around the power of incumbency while navigating the unprecedented dynamics of redeterminations |
| Then we’re also seeing the gold tier as an industry pick up a little bit, which we see as supporting our view that there’s small group migration coming into the market - obviously we’ve got anecdotal evidence around that, but that’s true in our book, that’s true in the overall industry, and again I think very consistent with what we think is driving 31% overall market growth, but pleased as well with the fact that within that growth, we were able to grow our market share within footprint |
| That same month, we added approximately 90,000 members to our care and coverage through the successful go-live of Medicaid expansion in North Carolina, and in early January we successful re-procured our New Hampshire contract, earning the top score in the Granite State among competitors |
| Our uniquely local footprint fosters important and trusted relationships with the communities and state partners we serve, and continues to differentiate us as we retain and grow our largest business |
| To that end, we received some but not all of the outstanding 2023 retrospective rate adjustments we mentioned during our December investor day before year end, and we still feel good about our 2024 Medicaid guidance as we sit here in early February |
| I’m happy to say that we sold our first customer in January, so good early proof point; but the goal there for us is really to test and learn and gather data, and we’re pretty confident that we’re going to be incrementally smarter about how that market is evolving as we go throughout the year |
| As we turn the page from 2023, we can quickly reflect back on our second strong year of execution from this management team and positive progression of the company |
| Sarah London On that point, I would just note that we’re seeing increase year-over-year in retention of SEP members, which means that we’re poised to capture the benefit of that sophomore effect from that heavy growth we had in SEP last year, so that’s a really nice trend that we’ve been watching and seeing that retention grow year-over-year |
| Marketplace growth is running ahead of our previous expectations, allowing us to raise our full year 2024 consolidated premium and service revenue guidance by $2.5 billion, which takes our guidance to a midpoint of $136 billion Appetite for marketplace products continues to be strong as these offerings successfully provide both healthcare access and affordability for millions of beneficiaries |
| As you pointed out, we’ve had some great positive momentum of late with New Hampshire, Arizona, North Carolina expansion, as well as Oklahoma, and that makes us feel good as we roll into what’s an active RFP season |
| At the same time, we invested in digital data and provider connectivity, successfully deploying direct EMR connectivity to over 640,000 provider practices; and finally, we continue to drive core administrative and customer experience performance with service levels remaining in the high 90s through Q4 |
| While Medicare Advantage is only a $16 billion revenue stream for us, it represents a meaningful margin expansion opportunity as we improve stars over the next few years and begin to have that reflected in revenue in 2026 and beyond |
| Obviously our long term algorithm has 1% to 2% of margin expansion built in, and we do see additional opportunities to drive efficiency in the business as we standardize our workflows, the ability to then automate that with technology, so really pleased not just with the execution thus far and the discipline to get us here |
| As you’ve heard from us with increasing enthusiasm in recent months, marketplace presents Centene with a unique opportunity for simultaneous revenue growth and margin expansion in 2024 |
| Statement |
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| For us, the rate change as it sits today is approximately minus-1.3% before risk coding trend, and the new risk model introduced last year and that’s being phased in still has a disproportionate negative effect on partial and full duals, the most vulnerable populations in Medicare |
| The line item of HCC model changes, which includes the risk score normalization that you pointed out, was about a point--in our evaluation of the advance notice, it was about a point worse than last year, and part of that is the normalization change and calculation in going to a regression model versus omission of a base period |
| It’s certainly a concern that cost in the fourth quarter could be coming in higher than expected, and you certainly reported in MLR that it was a bit above consensus, even ex- the PDR |
| Q4 was a heavy member roll-off quarter, as we talked about, and later in the quarter we saw some acuity pressure in the portfolio ahead of those 1/1 rates that had been designed to address that acuity clicking in |
| I was wondering if you could give us some color on the Medicare Advantage membership losses coming into the year |
| Both of those have come back down, as we’re seeing in January run-out data |
| That’s really what drove that lingering pressure in Q4 |
| Obviously you mentioned the retro adjustments, you didn’t get the marginal headwind, I guess |
| I give the Medicare team credit for precision in sales, disenrollment and membership product mix forecasts, as well as execution in a challenging year |
| Now, that’s before risk score trend - obviously that would push it into the positive zone, and we’re going to push on some of the mechanics and then we will--you know, we’re in the position of not trying to grow Medicare Advantage, we’re trying to ultimately recover margin back half of the decade, and so we’ll just adjust the bids accordingly, and the products may be a little bit less attractive for seniors from an industry standpoint if we don’t make a lot of progress on the final rates |
| The ’24 guidance has that 50 basis point headwind that was, I think, put in place for any sort of timing mismatch as it relates to acuity |
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