Centene has lowered its earnings guidance for 2024 as Medicaid redeterminations create the potential for mismatched rate adjustments versus acuity, executives said on Tuesday.
Some states began redeterminations on April 1, but the vast majority of states Centene covers will begin culling their rolls later in the year, pushing potential financial impacts into 2024. However, disparities in rates and acuity are expected to be temporary, CFO Drew Asher said on a call with investors.
“We don’t take the change in 2024 lightly but it’s not something we would be doing if we didn’t firmly believe it was the right thing for Centene in the long term,” CEO Sarah London said on the call.
The payer is continuing outreach to Medicaid members who could be affected through multiple channels including providers and brokers, London said.
Other factors affecting the change in expectations include payment adjustments for health equity the CMS is rolling out in 2024 and investments in customer experience, provider enablement tools to boost value-based care offerings and infrastructure, executives said.
The payer in the first quarter beat Wall Street expectations on both earnings and revenue, according to Seeking Alpha analysts. Revenue reached $39 billion, with increases in Affordable Care Act marketplace and Medicaid rolls boosting total membership up almost 9% to 28.5 million.
Asher said medical utilizations rates are increasing as screenings return to pre-COVID-19 levels. The payer hasn't detected increases in acuity.
Centene still expects to lose money on its Medicare line of business in 2024 and is focusing on getting more members into plans with ratings of 3 1/2 stars or higher. Currently 80% of members are in plans below that threshold, executives said.
The payer is moving away from a growth-at-all-costs mentality used in earlier Medicare Advantage annual enrollment periods to focus more on core members, and aims to create a solid foundation for growth in the back half of the decade, according to London. “So in some ways we’re slowing down to speed up,” she said.
Asher said Centene is bullish about growth and margin potential for the marketplace business following the fortification of premium tax credits. Membership in ACA plans was up more than 50% in the first quarter.