Centene’s quality score for Medicare Advantage plans was worse than executives expected, jeopardizing the insurer’s revenue in 2024.
Federal regulators rate the quality of Medicare Advantage plans through star ratings, which span a five-point scale. Plans that score four or more stars receive bonuses, which insurers rely on to offer generous benefits that differentiate their products in the crowded Medicare Advantage market casting. According to an analysis by the Kaiser Family Foundation, the Centers for Medicare and Medicaid Services awarded $10 billion in bonuses by 2022.
Patients can view health plan scores while purchasing a plan.
Ratings of Medicare Advantage insurers have fallen this year due to the resumption of stricter pre-pandemic standards, as well as the growing influence on consumer experience surveys. Centene’s score fell at a rate higher than the industry average. Membership rates on Centene’s 4-star plans and above will drop to 3% from 48% in 2022, according to a research note published this month by Scott Fidel, an analyst at Stephens, a research firm. financial services company. Some of Centene’s plans will be banned from expanding in 2023 due to persistently low scores.
“Our star score was slightly below internal expectations but much of our revenue is known months in advance,” Chief Executive Officer Sarah London said on Tuesday during its quarterly earnings call. III of the health insurance company with investors.
Centene is working to improve its scores by hiring a quality manager, centralizing quality improvement activities, and setting up a system to track its metrics in real time. The insurer also added quality improvement as a compensation metric to measure the performance of all employees this year, London said. The company’s new pharmacy service provider, Cigna’s Express Scripts, will also drive improvement, she said.
The company has prepared for a drop in star sales in 2024 by offering more conservative benefits this year, she said.
Centene expects a drop in revenue from the star program, coupled with the loss of key counties in California’s Medicaid managed care program, to result in earnings per share falling by as much as 50 cents next year. 2024.
The California regulator’s decision will leave Centene out of several major counties, including Sacramento, Los Angeles and Kern. Centene and other insurance companies have filed objections to the Medi-Cal contract awards. “We plan to eliminate all existing attractions,” London said.
Medicaid remains the largest part of Centene’s business, with its membership growing to 15.7 million patients as of September 30 from the nearly 14.8 million reported during the same time last year. . The company counted a total of 26.7 subscribers. Developments in Medicaid and Medicare plans increased Centene’s net income 1.3% to $755 million on revenue of $35.8 billion.
The company is growing its exchange footprint as states prepare to reassess patients’ eligibility for the Medicaid program. Countries have halted the removal of individuals from public health programs as part of disaster relief efforts in response to the COVID-19 pandemic. Up to 15 million patients could lose Medicaid coverage once states begin reviewing their eligibility for the program, and many are expected to switch to exchange coverage. To attract new subscribers, Centene will expand its virtual-first Ambetter plan to nine new states by 2023, bringing the total number of subscribers to 13 states.
The company also plans to take on a large number of exchange members after Bright Health Group and Friday Health Plans announced that they would end most of their market coverage by 2023. State regulators will automatically assign patients from these plans new coverage if they do not enroll in a health plan during the open enrollment period, which runs from November 1 to January 15.
“We have spent many, many years working very closely with state regulators and that gives us the opportunity to work with them as they face the challenge of when people leave the market. theirs,” Chief Executive Officer Brent Layton said on Tuesday’s call.
