Medicaid MCOs Ponder Impact of Rate Cuts, COVID Unknowns on 2021 Earnings

Medicaid MCOs Ponder Impact of Rate Cuts, COVID Unknowns on 2021 Earnings by Lauren Flynn Kelly As select publicly traded insurers highlighted how increased Medicaid membership, rising yet still-below-normal levels of utilization, COVID-related costs and rate adjustments affected their third-quarter 2020 earnings, they appeared to approach the remainder of 2020 and full-year 2021 with equal parts caution and optimism. Excluding one-time non-operating items, Molina Healthcare Inc. on Oct. 29 reported adjusted earnings per share of $3.36 for the third quarter of 2020, compared with adjusted EPS of $2.83 for the third quarter of 2019. Molina's overall membership grew sequentially during the quarter by 13%, while premium revenue rose 17% from the prior quarter to $4.8 billion. Meanwhile, Molina reported a medical loss ratio (MLR) of 85.9% for the third quarter, improved from 86.3% during the year-ago quarter. When asked about how Molina is approaching its 2021 guidance, President and CEO Joe Zubretsky told analyst Charles Rhyee of Cowen that uncertainty around future medical costs and how rates will reflect the "medical cost baseline" are two major issues to consider when looking at next year. Reporting third-quarter 2020 earnings on Oct. 28, Anthem, Inc. said its Medicaid membership increased by nearly 390,000 lives during the quarter, for a year-over-year increase of about 18%. The insurer also reported "double-digit" year-over-year growth in MA and a decline in commercial risk-based membership. For the quarter ending Sept. 30, Anthem recorded adjusted EPS of $4.20, down 14% from $4.87 in the same quarter a year ago. The company's revenues for the third quarter increased by 15.9% year over year to $30.6 billion. When asked by analyst Justin Lake about rate actions for 2021, Chief Financial Officer John Gallina said it expects to "achieve an appropriate return on capital and operate well within" the targeted margin range of 2% to 4% in Medicaid in 2021, with a focus on reaching the midpoint, 3%. Meanwhile, Centene Corp. on Oct. 27 reported third-quarter 2020 adjusted EPS of $1.26 — which included a pre-tax net benefit of $398 million related to the Affordable Care Act (ACA) risk corridors receivable settlement — compared with $0.96 for the third quarter of 2019. Centene also reported revenues of $29.1 billion, an increase of 53% over the year-ago quarter due to the acquisition of WellCare, membership growth in Medicaid and the ACA marketplaces, and expansions/new programs in many of its states. From RADAR on Medicare Advantage Subscribers may read the in-depth article online. Learn more about subscribing to AIS Health's publications.