Contract Exits and Guidance Impact
Q: How will strategic exits affect financials and guidance?
A: The company is exiting certain contracts effective in Q2, ending financial responsibility for those members by quarter's end. This is expected to benefit medical margin by over $10 million, more than offsetting negative prior year development in Q1. These exits are incremental to initial guidance and have been added to the updated outlook. ,

Payer Relationships Post-Exits
Q: Will contract exits harm payer relationships and future deals?
A: All exit decisions are made collaboratively with payers, focusing on long-term partnerships. Despite exiting certain arrangements, payers remain interested in working together in other markets, ensuring ongoing relationships are maintained. ,

Utilization Trends and Cost Pressures
Q: What utilization trends are impacting costs?
A: The company sees dynamic utilization trends, with Q1 trend at 9.1%, up from 8.7% in Q4. Elevated utilization in inpatient, outpatient surgeries, and Part B drugs (notably oncology) was noted in January and February but began to step down through March and into April. ,

Confidence Amid Payer Margin Compression
Q: How confident are you in your outlook despite payer challenges?
A: With comprehensive data from payers and internal indicators, the company confidently maintains its outlook. The Q1 trend of 9.1% aligns with expectations, and improved data visibility supports their financial estimates. ,

Impact of Final Notice and Offsetting Strategies
Q: How does the final notice affect expectations, and how will you offset it?
A: While disappointed by the final notice, it reinforces the value provided to payers and partners. The company is driving improved performance in 2024, expects this to continue into 2025, and is collaborating with payer partners on final bids to mitigate impacts.

Payer Contract Renegotiations Progress
Q: How far along are you in contract renegotiations?
A: The focus has been on improving 2024 contracts, securing benefits like retroactive relief from 2023 losses and adjustments to unsustainable terms. They are now pivoting to 2025 renewals, with over one-third of the book to be renewed, aiming for favorable terms. ,

Retroactive Relief and Guidance Inclusion
Q: Did retroactive relief impact Q1, and is it in guidance?
A: Retroactive relief from certain payers flowed through entirely in Q1 due to prior year adjustments. These benefits are incremental and have been added to the updated guidance for the year. ,

2025 Class Expectations
Q: What are expectations for the 2025 class performance?
A: The company is adding groups in four states, three with existing infrastructure (Kentucky, Minnesota, North Carolina), which should aid smooth integration. Performance is expected to align with historical year-one markets, even in the current environment.

Annual Wellness Visits Progress
Q: How is AWV completion tracking this year?
A: Enhanced support for primary care physicians has led to increased performance in Annual Wellness Visits and assessments. There's been a 15–20% improvement in palliative program enrollments and development of 15,000 care plans for complex patients.

Strategies for TBC Changes
Q: How are you adjusting for pending TBC changes?
A: In early discussions with payer partners about 2025 filings, acknowledging TBC limits as a constraint. Payers are considering adjusting benefits down, which would directly benefit the company. More details will emerge in the coming months.

Supplemental Benefits Negotiations
Q: What's the status of supplemental benefits in contracts?
A: All current contracts have supplemental benefit requirements for 2024. The company has secured incremental percentage of premium in some markets and capped exposure in others. Payers are receptive to adjusting arrangements for 2025. ,

Older Cohorts' Medical Margin Progress
Q: How are older cohorts progressing toward margin targets?
A: It's early in the year, but the company continues to see good progress with partners in reducing variability and improving medical margins. The performance is on track with previous communications.

Technology and Data Platform Enhancements
Q: What's behind the new analytics platform?
A: The company uses a hybrid approach with a data lake format, integrating third-party software with internal data systems. This enables innovative use of data, including machine learning and AI, enhancing financial reporting and operational performance.

Pipeline Impact from Cost Pressures
Q: How do cost pressures affect your pipeline?
A: The current environment accelerates the value provided to payers and physician partners. The company's value proposition attracts leading groups, indicating that fee-for-service models are unsustainable and boosting their pipeline over the next years.

Utilization Type Details
Q: Which utilization types are driving costs?
A: Increased costs are seen in inpatient services, outpatient surgeries, and Part B drugs, particularly in oncology. Inpatient trends have been decreasing from January through April. ,

Characteristics for Contract Changes
Q: What factors lead to contract exits or changes?
A: Decisions are made collaboratively, considering higher utilization, payer benefit design changes in 2023 and 2024, final notices for 2025, and TBC limits affecting long-term sustainability in specific markets. No similar situations exist in other markets currently.

Receptivity to Supplemental Arrangements
Q: Are payers open to different supplemental arrangements?
A: Yes, payers are receptive to adjustments, including carve-outs or caps on exposure. These discussions are part of broader strategies to develop sustainable, value-based partnerships for 2025 and beyond.

Financial Responsibility Post-Exits
Q: Do you have ongoing responsibilities after contract exits?
A: The company is responsible for performance up to the exit dates, with no responsibility thereafter. There will be normal run-out periods and settlements for performance during contract periods, but no obligations beyond exit dates.

Mechanics of Retroactive Relief
Q: How does retroactive relief work?
A: Retroactive relief was agreed upon with payers due to significant changes in benefits approaches compared to original contracts. All benefits from this relief were recognized in Q1 as prior year adjustments.