Centene to exit Medicare Advantage market in 6 states

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Centene will exit the Medicare Advantage market in at least six states in 2025, according to an August 5 research brief by Stephens. This is a recent development, according to Stephens, an independent financial services firm and privately owned investment bank headquartered in Little Rock, Arkansas. Stephens maintains a market in the common stock of Centene.

"Based on our channel checks, we can confirm that CNC's (Centene) Wellcare Medicare Advantage subsidiary will exit at least six states in 2025," Analyst Scott Fidel said in the report. "These actions won't impact CNC's Marketplace/Medicaid contracts in these markets."

The six states are Alabama, Massachusetts, New Hampshire, New Mexico, Rhode Island and Vermont. These states account for about 3% of Centene's Medicare Advantage membership.

In Alabama, Centene's MA membership represents about 1% market share; in Massachusetts about 2% market share; in New Hampshire about 5% market share; in New Mexico about 6% market share; in Rhode Island about 1% market share; and in Vermont, about 9% market share, according to the report.

"Notably, CVS and UNH (UnitedHealth Group) both maintain presences across each impacted market," the report said.

WHY THIS MATTERS

Medicare Advantage, a profitable business for insurers, has become problematic during recent quarters due to higher patient acuity and utilization of services.

During Centene's July 26 Q2 earnings call, an investor asked about the company's statement to "optimize its footprint" in Medicare and whether this included exiting markets. 

CEO Sarah London responded, "Yes. So relative to Medicare, I think the team has done a really good job in terms of thoughtfully defining the 25 bids consistent with the long-term strategy, even in a challenging rate year. But also, as I mentioned, we've been thinking about how to streamline that book and further align it with our Medicaid footprint, because that's where the puck is going. And so as a result of that, you will see us exit a handful of states with that longer term strategy in mind."

London also said that Centene's Medicare segment continues to be on track with the company's expectations for 2024 as it looked forward to improving MA star rating scores in October and "the requisite revenue to drive better performance." 

THE LARGER TREND

Centene has long positioned itself in the business of government sponsored healthcare programs.

Stephens said Centene is increasingly focused on the re-procurement of Medicaid contracts in a more competitive environment.

The managed Medicaid market recently has been challenged by the Medicaid redetermination process that began in April 2023, a month before the end of the COVID-19 public health emergency.

During the Q2 earnings call London said, "We are now more than halfway through 2024, and we are making good progress moving the organization beyond real but temporary headwinds, including Medicaid redeterminations and a well-documented Medicare Advantage ARS (Annual Report to Shareholders) revenue challenge."

Centene's second-quarter earnings report brought good financial news for the insurer as it posted $1.1 billion in profit and $39.8 billion revenue, both improvements over the $1.05 billion in profit and $37.6 billion revenue it logged in Q2 2023.

Email the writer: SMorse@himss.org