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Dive Temporary:
Centene beat investor expectations on earnings and income within the third quarter regardless of Medicaid headwinds which might be difficult different payers.
The insurer reported revenue of $713 million on a topline of $42 billion in contrast with $469 million on income of $38 billion throughout the identical interval final yr.
Centene, the nation’s largest Medicaid insurer, continues to handle elevated medical wants amongst its beneficiaries within the safety-net program, however executives on an earnings name stated the corporate is making progress working with states to spice up fee charges.
Dive Perception:
Elevated prices in Medicaid have pressured insurers this yr as states redetermined beneficiaries’ eligibility for this system after a interval of steady enrollment through the COVID-19 pandemic. Greater than 25 million folks have been disenrolled, in keeping with a tracker by well being coverage analysis agency KFF.
Payers say the redeterminations course of created a mismatch between member acuity and charges, as folks leaving this system are seemingly more healthy than these left behind. UnitedHealth referred to as out the elevated value development in third quarter earnings final week, whereas Elevance Well being lowered its revenue steerage for 2024 because of the “unprecedented challenges” in this system.
However Molina, one other giant Medicaid payer, additionally beat investor expectations on earnings and income within the third quarter, because of what executives say was cautious planning and enterprise development.
Larger acuity in Medicaid contributed to elevated medical utilization for Centene. The insurer’s medical loss ratio — a marker of spending on affected person care — was 89.2% for the third quarter, in contrast with 87% final yr.
Members who have been faraway from this system through the unwinding however later rejoined contributed to greater utilization as effectively. These beneficiaries got here again to Centene largely as a result of they wanted providers, nonetheless, their care patterns later normalized, CEO Sarah London stated on an earnings name Friday.
“Had we been receiving premiums for these members through the time that we had the hole, it will have normalized their HBR [Health Benefits Ratio] greater than what we’re seeing,” she stated.
Centene ended the quarter with about 13 million members enrolled in its Medicaid phase in contrast with greater than 15 million final yr.
There are nonetheless some small pockets of redeterminations happening, however Chief Monetary Officer Drew Asher stated he expects stability in Medicaid enrollment on the finish of the yr. The third quarter also needs to be the “excessive water mark” for MLR within the safety-net program, he stated.
“We stay assured that this isn’t a matter of if, however when, we get again to equilibrium between charges and acuity,” Asher stated on the earnings name. “We’re happy and inspired by the progress since our final name, however there’s extra wooden to cut with our state companions.”
A diversified portfolio of insurance coverage merchandise helped Centene navigate challenges within the third quarter, the payer stated. Membership in its Reasonably priced Care Act market plans elevated 22% over final yr, and enrollment in Medicare prescription drug plans rose 49%.
The insurer has additionally improved its Medicare Benefit star rankings, which charges the non-public Medicare plans on high quality. About 46% of its MA membership is enrolled in plans rated 3.5 stars or greater for 2025, in contrast with 23% this yr.
Centene’s star rankings might enhance much more if an attraction goes via, the corporate stated in a press launch. Earlier this week, Centene sued the HHS over alleged mishandling of a “secret shopper” name that was meant to evaluate a text-to-voice service utilized by clients who’re deaf or onerous of listening to.
