Centene’s Medicare Advantage star ratings for 2023 will be “disappointing,” executives warned investors on a second-quarter earnings call this week.
CFO Drew Asher said the rating results, expected to be released in the fall, are considered “unacceptable” to the current management team, which already have steps to improve underway.
Medicare Advantage plans are rated annually on a scale of one to five stars to help seniors shop and compare coverage options. If plans capture a high enough score, they can earn financial bonuses. Those bonuses have attracted scrutiny due to the added costs.
CEO Sarah London said the issues surrounding stars stemmed from a recent acquisition.
Centene’s $17 billion buy of WellCare in 2020 more than doubled its Medicare business, and moved Centene up to the third-largest publicly traded managed care company.
But London said the deal brought together two partners who were operating in fundamentally different ways.
WellCare’s operating model was centralized while Centene’s was not.
“It’s very hard to run an enterprise quality program at our level of size and scale in a decentralized model,” London said on the earnings call.
Remote work due to COVID-19 exacerbated the issue. “What we saw was the degradation of operations and performance,” London said.
Quality performance is now “baked in” to short-term incentive pay for every employee, London added.
About 68% of Medicare Advantage plans with drug coverage earned four stars or higher for 2022, the CMS said.
WellCare of California did receive 5 stars for plan year 2022, according to the CMS.
This week, Centene reported a net loss of $172 million for the second quarter, narrower from the previous period last year.
Despite the loss, Centene beat analyst expectations in a number of key metrics and raised its financial outlook for the remainder of the year.