Medicare Outlook and Stars Improvement
Q: Any changes to MA enrollment/revenue expectations, the $200 million PDR in Q4, and the path to 85% members in 3.5 Star plans by Oct 2025?
A: No change; we anticipate Medicare revenue down $4 billion in 2024, focusing on lower-income complex population. We're pleased with Stars results aligning with expectations but more work is needed to reach 85% of members in 3.5 Star plans by October 2025. We're investing in operational capacity, infrastructure, and tracking metrics like CTM and call center performance to improve member experience and care gaps. We have a robust governance structure and aligned incentives. Our guidance allows for a PDR in the mid-$200 million range; final calculation will be in December.

Exchange Performance and Margin Outlook
Q: What's driving exchange membership growth, and how does this affect 2024 margins?
A: Our established brand, pricing discipline, and foresight into market trends like enhanced APTCs have driven strong exchange growth, reaching over 3.6 million members. Currently, marketplace margins are just below our 5%-7.5% target due to growth and first-year commissions, not HBR. We expect to be well within that margin range in 2024; we've priced accordingly and focus on retaining 2023 growth.

Medicaid Redeterminations and MLR
Q: How are procedural disenrollments affecting utilization, and what's your path to 90.1% Medicaid MLR in 2024?
A: Leavers have lower HBR than stayers, as expected. The rejoiner rate has picked up to about 25%, with most rejoiners having no coverage gap, minimizing acuity impacts. Rejoiners' HBR is similar to stayers. We're on track for our 90.1% Medicaid MLR target for 2024, with 7 draft rates including acuity adjustments, boosting our confidence for 2024.

PBM Cost Savings and Margin Impact
Q: Is there upside in PBM cost savings, and how does this impact margins?
A: Our PBM transition is on track, contributing to greater than $660 million in cost savings. Many savings are guaranteed by our PBM, enhancing our confidence in margin improvement. This positively affects our cost structure and helps us make our products more affordable.

Behavioral Health Trends and Magellan Opportunities
Q: What's the update on behavioral utilization and Magellan's outlook, and how will the California minimum wage law impact costs?
A: Behavioral health utilization remains an underlying factor but less pressure than before. Substance use and opioid disorders are industry-wide focuses. Magellan benefits from increased attention on integrating medical and behavioral care; governors cite behavioral health as a top issue, providing tailwinds and new opportunities, such as a recent win in Idaho. The California minimum wage law doesn't apply to MCOs, but we're monitoring for potential provider cost pass-throughs.

Medicare Benefit Adjustments and Revenue Outlook
Q: How will benefit reductions affect individual MA vs. D-SNP, and can you update the Medicare figure for this year including PDR?
A: We've heavily trimmed Part B giveback and PPO plans but invested in D-SNP, combining supplemental benefits into a simple spendables card to simplify for members. We maintain our forecast for $16 billion in Medicare Advantage revenue for 2024, down about $4 billion.

Complex MA Population and Margin Strategy
Q: What's the target margin for the complex MA population, and how does this align with your long-term strategy?
A: Managing complex MA populations aligns with our expertise; while reimbursement is higher due to higher acuity, through value-based arrangements, we can profitably manage this fastest-growing Medicare segment. This focus is part of our long-term fundamental strategy.

Medicaid Rejoiners and Exchange Share Gain
Q: Are you seeing 25% of redeterminations rejoining Centene, and are you gaining exchange members from other plans?
A: Yes, we observe a consistent 25% rejoiner rate from April to August cohorts. We're recapturing about 10%-15%, aligning with our target of 200,000 to 300,000 members. We're also pulling share from other players in exchanges and tracking members coming from other Medicaid programs.

Marketplace Utilization and Margin Tailwinds
Q: Do you expect higher Q4 utilization as deductibles are met, and how does this population contribute to margin tailwinds into next year?
A: Yes, we anticipate a healthy uptick in HBR in Q4 as deductibles are met. For SEP membership, we're seeing increased retention due to enhanced APTCs and affordability. With a full year of risk adjustment and early utilization behind us, this provides a margin tailwind for the retained SEP population into 2024. Our focus is on retaining 2023 growth and expanding margins into the 5%-7.5% range.

Retro Rate Adjustment Confidence
Q: Why are you confident an incomplete rate update will be reversed?
A: A 40 basis point rate issue increased our HBR in Medicaid this quarter. Based on negotiations and the construction of the incomplete, possibly rushed, retro rate, we expect a favorable outcome, potentially in Q4 but it might extend into 2024.

Medicaid Redetermination and Double Coverage
Q: Have you analyzed leavers for double coverage, such as 0% MLR?
A: Yes, we saw duplicative coverage in Medicaid increase from 2.7% in 2019 to 3.4%, which informed our forecasts. With over 40% redeterminations completed, we're on track with our expectations.

PDP Strategy and PBM Transition
Q: What's the strategy around low-priced PDP products next year, given PBM switching and changes in Medicare Advantage focus?
A: Our PDP business, a legacy WellCare asset, focuses on managing pharmacy spend and serving as a future feeder for MA-PD rather than generating earnings on $2.5 billion of revenue. The change to a new PBM improved our cost structure just as rule changes (e.g., elimination of pharmacy DIR, insulin cap) impact PDPs. This allowed us to offer affordable products while the direct subsidy increased significantly, benefiting our members and helping other businesses with pharmacy cost structure.