Centene says a 'lot of work' is needed to turn around Medicare Advantage star ratings
The company doesn't expect to grow MA in 2024, and it will likely shrink a little, says EVP and CFO Andrew Asher.
Photo: Morsa/Getty Images
Medicare Advantage and Part D Star Ratings declined this year, and while that was expected, the poor showing by Centene was somewhat of a surprise, with EVP and Chief Financial Officer Andrew Asher saying during a recent earnings call that the company "has a lot of work" to do to change the star ratings around.
Only four plans received a low two-star rating, compared to none last year in the one- to five-star rankings. All were Wellcare plans by Centene Corp., according to the star ratings list released by the Centers for Medicare and Medicaid Services.
At the time, Centene CEO Sarah London outlined "aggressive action" to turn around results, including hiring an experienced chief quality officer, assigning strong operational leaders to manage key operations and administration programs, investing in new technology to enhance access to clinical data around gaps in care, and integrating the company's platforms into a single workflow.
In addition, a newly installed management team this year added quality improvement as a key compensation metric for every Centene employee. The goal is to achieve 60% of members in four-star plans, London said.
But in the most recent earnings call, Asher acknowledged potential difficulties ahead.
"Medicare is going to be challenging for us in 2024," said Asher. "We knew it was going to be tough given the cards we were dealt in star scores, stemming from poor decisions in 2020. And the impact of a disappointing advanced notice on 2024 rates does not help."
He said the company will be temporarily pricing for a negative margin in Medicare Advantage in 2024. He added the company doesn't expect to grow MA in 2024, and it will likely shrink a little.
"We have a lot of work between now and the first Monday in June when the bids are due to refine our estimates and products further," said Asher. "And obviously, the industry will be asking a lot of questions about the components of the advanced notice in anticipation of final rates in a couple of months."
He did offer a silver lining, however. If Centene can achieve at least $7.15 of adjusted earnings per share in 2024, with an underperforming Medicare business embedded in that result, that becomes a margin expansion and growth opportunity in the back half of the decade, he said.
"We know what needs to be done," he said. "It just takes time, especially in stars."
WHAT'S THE IMPACT?
Star ratings are released annually, and they reflect the experiences of people enrolled in Medicare Advantage and Part D prescription drug plans. The system supports CMS' efforts to empower people to make healthcare decisions that are best for them, the agency said. One star represents poor performance, and five stars represent excellent performance.
Medicare Advantage star ratings were projected to decline due to CMS lifting COVID-19 guardrails and changing measures that impacted performance.
McKinsey & Company authors Cara Repasky and Sonja Pedersen-Green addressed the projected decline in star ratings in an article written in September. Repasky, a partner in McKinsey's Pittsburgh office, and Pedersen-Green, an associate partner in Minneapolis, reported that the changes to the methodology used to calculate Medicare Advantage Star Ratings could make it difficult for highly rated plans to retain those ratings in 2023 and 2024.
THE LARGER TREND
The decrease in star ratings this year was driven by the expiration of certain disaster relief provisions put in place during the COVID-19 pandemic, as well as changes to measures. Four related to drug adherence got much harder, Jason Rose, CEO at AdhereHealth told Healthcare Finance News prior to the star-ratings release.
This bonus for plans is most effective at the four-star level, Rose said. At 4.5 stars, there is no change. Within the elite of five stars, there is no new revenue, but the plans can enroll members year-round, instead of just during open enrollment.
At 3.5 stars, plans get some benefit having to do with drug rebates.
Below three stars, plans don't get anything, Rose said. CMS can revoke the license of a plan rated below three stars for three years in a row and notify its members that they are in a low-performing plan.
Twitter: @JELagasse
Email the writer: Jeff.Lagasse@himssmedia.com
