Medicaid redeterminations have cost Centene 1 million members so far

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Centene, the largest Medicaid managed care organization in the country, is down over one million members since March, according to CFO Drew Asher during the company's third quarter earnings call on Tuesday.

The loss of 1.1 million Medicaid members is due to the Medicaid redetermination process that began on April 1. The numbers are on track with Centene's forecast, Asher said.

From April through August, Centene experienced rejoining rates in the mid 20% range. Importantly, the 90-day grace period in most states means that the majority of these members had no break in coverage as they returned to the Medicaid program, the company said.

Centene said its view of 2024 Medicaid performance is unchanged other than revenue looking to be a little stronger than the $77 billion the company outlined during its first quarter call.

"... We have not changed our view that the ultimate impact of redeterminations would be 2.3 million to 2.4 million members," CEO Sarah London said. "We continue to track in line with our expected 200,000 to 300,000 members moving from Medicaid into (the) marketplace as a result of the redetermination's process. Overall, we are encouraged by the progress that states are making with respect to Medicaid redeterminations and pleased to be moving through the process with operational stability and results that are consistent with our modeling."

Growth includes North Carolina becoming the 41st state to expand Medicaid. This will go live in December, according to London.

The Centers for Medicare and Medicaid Services has played an important role with respect to the oversight of the Medicaid redeterminations process, London said, including the recent intervention to pause redeterminations in certain states as well as the effort to reinstate children and individuals who were incorrectly dropped from coverage due to system issues. 

Based on recent actions by CMS and ongoing conversations with state partners, Centene expects the overwhelming majority of redeterminations will be completed by May 2024.

WHY THIS MATTERS

Much of the company's business is in managed care, serving vulnerable populations.

Centene has 13.4 billion members in traditional Medicaid, compared to 14 billion in 2022, according to its earnings statement. 

This compares to Medicare, in which the company has 1.3 million members and another 4.5 million in Medicare with a prescription drug plan.

The recently released Georgia request for proposal includes for the first time the state's aged blind and disabled population, the company said.

"As we look ahead to our procurement pipeline we feel good about the opportunity to leverage our incumbent position and our differentiated depth of expertise in managing complex populations to defend and grow our Medicaid footprint," London said. 

In support of this work, Centene has appointed Wade Rakes as chief growth officer.

Centene's adjusted net earnings for the three months ending September 30 were $1 billion compared to $755 million during the same quarter in 2022.

Revenues from Medicaid rose 2% year over year while Medicare revenues fell 4% year over year and commercial revenues jumped 50% year over year, according to Yahoo Finance.

Centene announced the $1.2 billion divestiture of Circle Health, a U.K. hospital company. The deal is expected to close during the first quarter of next year.

Affordable Care Act marketplace membership exceeded 3.6 million members as of September 30, compared to 2.1 million during the same quarter last year.

"Strong fundamentals and excellent marketplace growth and performance contributed to the strength in the quarter, as well as our improved outlook for 2023," London said.

THE LARGER TREND

Medicare Advantage star ratings has been a challenge for Centene, which saw four of its Wellcare plans get a 2-star rating earlier this month.

In the 1-5 Medicare Advantage star ratings released by CMS each year, these four plans were the only ones to receive the lowest ranking of 2 stars.

Medicare open enrollment opened on October 15. 

"The final stars results for this cycle were consistent with our July and September commentary, where we expected two thirds of our membership associated with contracts showing year-over-year raw score improvement. That result was approximately 73%," London said. "We also said we are expecting roughly 90% of our membership to be associated with contracts rated 3 stars or higher, and that final result was 87%."

She added, "While we delivered star results in line with our Q2 expectations, these results certainly do not reflect the ambition of this organization. Medicare Advantage remains an integral part of our portfolio of businesses, strategically aligned with our Medicaid and marketplace platforms and a long-term driver of both earnings and growth." 

Centene last month announced it would by laying off about 2,000 employees, representing about 3% of its total workforce, after it reported a $213 million net earnings loss to end 2022, although it saw a 9% increase in revenue, driven by organic Medicaid growth and a 21% increase in membership in its Medicare business.

Twitter: @SusanJMorse
Email the writer: SMorse@himss.org