By Leslie Small
During their recent third-quarter earnings calls, Centene Corp.
and Anthem, Inc. sought to assure investors and analysts that they have a
handle on the Medicaid payment rate issue that has dogged some insurers this
year.
On Centene's Oct. 22 call, CEO Michael Neidorff touted the
firm's new Medicaid contracts in Iowa, New Mexico and Pennsylvania, saying
"our new business more than offset the enrollment and revenue headwinds
caused by ongoing eligibility redeterminations in certain states."
The redetermination process can result in a Medicaid population with a higher risk profile, Neidorff explained, but he noted that the company views it as a "temporary issue as we continue to work with our state partners to appropriately adjust our rates."
During Anthem’s Oct. 23 call, CEO Gail Boudreaux noted that "Medicaid results improved this quarter, but at a slower rate than previously anticipated." Elevated medical cost trend in the insurer's Medicaid business was the primary culprit behind Anthem's heightened medical loss ratio (MLR) in the second quarter, the company reported this summer.
To Oppenheimer analysts, Centene's results "overcame a slight impact from the Medicaid re-determination process, which appears to be merely a time-lag as the states are adjusting rates accordingly," Michael Wiederhorn and Matt Nirenberg advised investors in a research note.
For Anthem, Medicaid is "still a drag" on the company's MLR results, Jefferies analyst David Windley concluded. The insurer "continues to negotiate rates with states that match the changing risk pool when redeterminations take healthy members off the rolls," he added. "Like [Centene's] description, the shortfall is a continuation of the rate mismatch issue that is well-known by the market, not higher utilization."
Overall in the quarter, Centene reported adjusted earnings per share of 96 cents. Its MLR was 88.2%. Anthem's adjusted net income was $4.87 per share, and its second-quarter MLR was 87.2%.
From Health Plan Weekly
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