Managed Medicaid

Centene Reports Progress in Value Creation Plan, Despite Headwinds

Despite facing several headwinds over the next year, including anticipated deterioration in Medicare Advantage star ratings and falling Medicaid enrollment, Centene Corp. increased its full-year 2022 earnings projections and unveiled the latest steps in its ongoing value creation plan.

The moves pleased investors, who drove Centene shares to a 52-week high, closing at $93.15 on July 26, the day financial results were posted.

Centene posted second-quarter 2022 adjusted earnings per share (EPS) of $1.77 on revenues of $35.9 billion, besting analysts’ estimate of $1.69. Adjustments included a charge of $1.45 billion related to real-estate divestitures, with $744 million for leased space and $706 million for owned real estate assets. Including the charge and other adjustments, Centene reported a second-quarter 2022 loss of $129 million, or 29 cents per share.

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Boosted by Low Utilization, Humana Posts Robust Earnings for Second Quarter of 2022

Humana Inc. delivered robust financial results in the second quarter of 2020, with earnings far outstripping the Wall Street consensus. The Medicare Advantage-focused insurer credited lower-than-expected utilization for the strong result, provided investors with more detail about its plans to reorganize following several notable provider transactions, and touted plans to expand its Medicaid business.

Humana took in more than $23.7 billion in adjusted earnings in the second quarter, generating $959 million in adjusted cash flow and adjusted earnings per share of $8.67, beating the Street’s estimate by about $1.00 per share. The firm’s medical loss ratio (MLR) for the quarter was 85.8%. Executives raised the company’s end-of-year earnings projection by $0.25, a move that Oppenheimer & Co. analyst Michael Wiederhorn said “reflect[s] some conservatism” in a July 27 note to investors.

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What Happens if ARPA Subsidies Expire?

Approximately 3 million people currently enrolled in the individual marketplace could lose coverage, and more would see premiums double if the Congress fails to extend the American Rescue Plan Act’s subsidies, which are set to expire at the end of this year.

ARPA lowers the share of income enrollees need to contribute toward premiums for households making between 100% and 400% of the federal poverty level, and it temporarily caps enrollees with income above 400% of the FPL from paying more than 8.5% of their income for a silver plan premium. If the subsidies expire, 8.9 million people would be allowed to remain in the marketplace but experience premium subsidy loss. An additional 1.5 million may lose subsidies entirely but choose to remain insured, according to an HHS projection.

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Elevance Delivers Robust Enrollment, Revenue Growth in Second Quarter

Elevance Health Inc. (formerly known as Anthem, Inc.) posted strong results for the second quarter of 2022, raising its end-of-year earnings projection and earning praise from Wall Street. However, the company’s strong results — which were driven by high profitability in Medicare, Medicaid and PBM earnings — could be less robust in the third quarter, executives said, with COVID-19 surging once again due to the BA.5 variant.

The insurer reported adjusted earnings per share (EPS) of $0.29, which beat the Wall Street consensus of approximately $0.28 by 4%, according to Evercore ISI analyst Michael Newshel. According to an Elevance press release, revenue grew by 15.6% year over year to reach $38.5 billion, while profits grew by 13.7% year over year to nearly $2.4 billion. Enrollment reached 47.1 million members, up 2.7 million or 6.1% year over year. The medical loss ratio (MLR) companywide was 87%.

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News Briefs: MCS Advantage Will Pay $4.2M to Settle Kickback Allegations Involving Gift Cards

Medicare Advantage plan operator MCS Advantage, Inc. agreed to pay $4.2 million to resolve False Claims Act allegations that it violated the federal Anti-Kickback Statute (AKS) by offering kickbacks to health care professionals in the form of gift cards. According to the July 1 press release from the U.S. Dept. of Justice, MCS allegedly implemented a gift card incentive program between November 2019 and December 2020, when it distributed 1,703 gift cards to administrative assistants of providers in the aggregate amount of $42,575 to induce them to refer, recommend or arrange for enrollment of 1,646 new Medicare beneficiaries into an MCS plan. The Puerto Rico insurer did not admit liability as part of the settlement agreement. The company voluntarily closed the gift card program in December 2020, which the DOJ and HHS Office of Inspector General took into consideration, according to the press release. “The Settlement highlights the breadth of the AKS, as well as the flexibility that enforcement authorities have in utilizing the AKS as a vehicle to deter behavior deemed to be problematic” and suggest that remuneration to induce referrals of beneficiaries to specific federal health care program plans, along with to specific item or service, may be within the confines of the AKS, the law firm Holland & Knight suggested in a July 11 blog post.

New CMS Bulletin Could Mean Greater Oversight of Medicaid Network Adequacy

CMS in a recent bulletin unveiled a “suite of new resources” aimed at guiding states and CMS in their oversight of Medicaid and CHIP programs, including managed care programs. Two items of particular interest to managed care organizations in a July 6 Center for Medicaid and CHIP Services Informational Bulletin (CIB) are templates that provide a standard format for states to report managed care medical loss ratios and network adequacy to determine how well a plan actually delivers its benefits. As plans struggle to meet network adequacy standards, the new template could lead to more intense oversight of network adequacy within managed care, industry experts suggest.

Centene Will Join Delaware in Value-Based, Person-Centered Medicaid Revamp

With a focus on value-based care, health equity and social determinants of health, Delaware this month selected three managed care organizations to serve some 280,000 Medicaid and CHIP recipients through the statewide Diamond State Health Plan and DSHP Plus managed care programs. Incumbents AmeriHealth Caritas and Highmark Health Options Blue Cross Blue Shield were both selected for the new pacts, while Centene Corp.’s Delaware First Health will round out the trio of plans, the state’s Dept. of Health and Social Services (DHSS) said on July 12.

Delaware’s Medicaid managed care program, comprised of DSHP and DSHP Plus, is currently operating under the authority of a Section 1115 demonstration waiver that was most recently extended through Dec. 31, 2023. It provides integrated physical health, behavioral health and long-term services and supports (LTSS) to eligible Medicaid and CHIP enrollees.

Kaiser Permanente, in No-Bid Deal, Will Take Members From California MCOs

California elected officials approved a controversial plan that will enroll members of Medi-Cal, the state’s Medicaid program, in Kaiser Permanente’s MCO — shifting those same enrollees off the books of the insurers that currently claim them as members. That’s despite the vociferous objections of 16 county-run MCO plans, which stand to lose hundreds of thousands of members in the transfer to Kaiser Permanente, according to the CEO of the largest plan involved.

Kaiser Permanente did not have to participate in the normal Medi-Cal MCO bidding process to strike the deal. Instead, the integrated health system and insurer, which is based in Oakland, worked directly with the office of Democratic Gov. Gavin Newsom to develop a bill, Assembly Bill No. 2724 (A.B. 2724), authorizing the no-bid contract. State legislators approved the bill on June 29, with the lower chamber, the Assembly, voting 48-15 in favor and the Senate approving the deal 25-7.

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Payers, Government Are Increasing Focus on Health Inequities

Health insurers, states and the federal government are beginning to take more seriously health inequities, according to experts who spoke with AIS Health, a division of MMIT, as the issue becomes a hot topic due to the health and financial costs caused by disparities in health care access and outcomes.

Health inequities related to race, socioeconomic status and sex/gender account for $320 billion in annual health care spending for five high-cost diseases, according to a Deloitte report released on June 22. Deloitte actuaries project that could increase to $1 trillion by 2040 and lead to an average $2,000 increase in health spending per person in the U.S. if those issues are not addressed. The researchers examined the costs of health inequities related to the treatment — or lack thereof — of breast cancer, diabetes, colorectal cancer, asthma and coronary heart disease.

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California Expands Medicaid Eligibility to All Undocumented Residents

By no later than 2024, California will allow residents aged 26-50 with any immigration status to enroll in Medi-Cal, the state’s Medicaid program — making the state the first in the nation to allow all undocumented residents to enroll in safety-net insurance programs. State officials estimate that Medi-Cal enrollment statewide could grow by more than 700,000 as a result of the expansion, and follows a similar move last year to expand Medi-Cal eligibility to undocumented Californians aged 50 and over, a cohort of about 185,000 people, according to the office of Democratic Gov. Gavin Newsom.

That enrollment surge will likely come at the same time as state agencies and managed care organizations wind down record Medicaid enrollment backed by pandemic relief funds and the national suspension of eligibility redeterminations required by the federal pandemic response measures. The CEO of the state’s largest MCO, L.A. Care, tells AIS Health, a division of MMIT, that the insurer is staffing up to address the administrative challenges — and said the expansion should improve health outcomes for a group of residents who are underserved and disadvantaged by the current setup.

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