Humana (HUM) 1 Feb 232022 Q4 Earnings call transcript

Good day and thank you for standing by. Welcome to the Humana Fourth Quarter Earnings Conference Call. At this time all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions]

to Stoner, conference VP like speaker to now Lisa today, of would hand over the your I Investor Relations. ahead. go Please

Thank will initial discuss financial a In fourth quarter and and good for and Broussard, our Diamond, and our results Susan Officer, President Officer; Chief XXXX. moment, Financial Chief outlook XXXX Humana’s Executive you, Bruce morning.

Susan media Following website, remarks available a Chief This be listen industry and Q&A with Ventura, later humana.com, purposes. and our call the to question-and-answer the Legal analysts. will joining these will Humana’s for analysts. prepared to replay on be remarks, both we today. We investing the will open replay session. prepared with session up the for That and management’s lines Investor is Relations also recorded Officer, encourage for being of related Q&A public Joe Bruce page the

any site. available on news future are our also update press Exchange the filings. the and and could Investor filings or discussed with We our are they XXXX uncertainties. read along participants filings obligation Certain press risks statements advised we relate in of with to publicly advise number Relations as to our in risk a Securities Before our call and SEC matters risks this release Form address discussed factors Investors SEC quarter I results. need Today’s discussed release, the with of our or undertake our regarding releases cautionary earnings statement. begin and involve and to and are forward-looking in other results statements historical to differ our of conference fourth financial or communications discussion, no the other forward-looking materially. our our business forward-looking all latest Actual our detailed XX-K, Commission call filings

for includes accounting that these release. the today’s or are GAAP. participants note are of and press explanation included accepted in reconciliations to generally discussion measures Management’s principles in today’s non-GAAP GAAP accordance measures financial financial with that Call use measures should non-GAAP not of

or conference Finally, share. refer share diluted per any references to to made per earnings earnings call common during EPS this

With that, over Broussard. to Bruce call I’ll turn the

good Humana the an you of We Thank momentum were and appreciate for seen XXXX morning, continued annual operating results. per $XX everyone. was quarter reported previous of us. the growth estimate Today, Adjusted year and share throughout joining our above and Lisa, full you, and financial XX%. represents $XX.XX, which earnings strong approximately of another

earnings touch in compelling which making advancing in I progress a strategy, growth also We while meaningful achieved our will this on more moment.

provided previous our forward representing growth of the EPS full Looking commentary. over $XX growth XXXX least XX% divestiture from Kindred faced of XX% we headwind guidance the this XXXX, we interest in of despite We at for consistent anticipate adjusted year Hospice. strong with

membership XXXX. growth also that We membership an Medicare target to a adjusted individual rate individual above of at underpinned year reaffirmed by Recall XXXX XX.X% $XX full is MA our of year-over-year. assumption Advantage members, EPS our least at growth increase a industry XXX,XXX expectations return for by the or of

are accomplished have of We very pleased this goal to ahead expectations.

supported through to MA seniors while cost ethnic providing operations of fee-for-service Monday. the a the Medicare. is proposition strength additional Advantage that the moment by rule million superior to take I’d final value emphasizing RADV to chosen by providing best outlook, in on of satisfaction and detail high-quality to minorities. improved MA, their helping as program care health rate identify the resulting a program start seniors The released Before racial coordination total want and like enroll our and address Medicare to of XX program, improved talent. have XX% outcomes, savings which XX% to achieve in care delivers and nearly a Medicare lower I

The to adjustment about like believe belief talk cover incentivizes Humana’s regardless rule. a strength long-awaited element program important I’d when final core of an is support an to the RADV we we MA RADV. status. is Namely, risk reiterate and of of as backdrop all it plans important and individuals comes to health

We have auditing, fair, system. have desire transparency We CMS’ long to continue for and through and partner integrity. strive to promote to transparent greater with CMS supported a we’ll program compliant

I we’re share While rule final initial observations. impact, reviewing our considering its of will still and the some

any to payments not XXXX. the of for First, prior extrapolate the we support to years audit CMS’ decision result

truly or results auditing acknowledged produce of CMS accuracy time challenge compliance are the age not reflective plans such [ph]. represent that coding periods that may As a unique

the important of The the the CMS forward is sampling about selection, rule to to methodology, details did to as contract provide learn including we look impact the Therefore, methodology. with extrapolation more part audit fully potential not of RADV and audits. a understand ruling the working needed future

in the determine process, to MA necessary And final amounts believe a we include finally, disappointed not we appropriate are which adjuster rule CMS’ to organizations. fee-for-service is did payment

We are result ensure we With challenge benefits with said compliance are reduced as this CMS integrity of maintained, the options the rule. or and to face higher costs considering and address that admission about to obtain not committed and our our obligations. beneficiaries a to do clarity program of all productively has this working

committed seniors MA a Medicare example works beneficiaries, that for years, that partnership And and option of ensure with of millions MA forward working been come continues depend path to a we’re to be an taxpayers. successful to an CMS that to have For has on. providers public-private on

in strength. at a integrated senior-focused a turning an of in delivering leader operations on and delivery the care, high-quality Now to outcomes of value-based entered lower our cost. update Industry We outlook. position XXXX

diversified relationships through the value-based care, Humana CenterWell platform both gives Our and oriented highly of care that on competitive deep our and our capabilities differentiated focus a one value-based advantage. provider durable solutions locally is

cost of of incentivizes total with reduce care. in engaged providers members We to arrangements, needs MA our closed patient manage XXXX individual and value-based comprehensively XX% which

capabilities, solutions, as contributed have customer-centric and apart Humana interoperable believe We of That’s and our first-mover quality as and value-based customer XXXX use in with MA a solutions. compared well Our extensive to combined our to by experience in products on our these results, deep XX.X% capabilities demonstrated and X.X%. of peers. deployment differentiated care of years from analytics five consecutive four-year of rate leading Stars annual compounded membership from industry growth success as XXXX growth to individual as digital durable growth experience of

the members least investments the for have our MA expectations growth resulting We marketing above capabilities plan in complemented XXXX, resonated in targeted distribution and and our benefits, year. our with accelerated franchise. momentum brokers has The which industry full designs differentiated improved consumers for with strong XXX,XXX of at and

in XXXX growth growth have where AEP. January, XXXX a strong the over space, members in the of members includes Our as D-SNP XX,XXX increase we outlook grown added XX,XXX XX%

And importantly, coming through significant XXXX is XX,XXX AEP, the the membership. added from in members an our a larger for of from the space. non-D-SNP XXXX growth non-D-SNP growth representing XXX,XXX non-D-SNP AEP, year-over-year majority increase We XX% and in approximately XXXX added impressive

our states provider with achieved growth value-based growing robust in penetration. or We strongest

membership better robust points improving basis achieved year. a over members AEP, our The which year-over-year growth, XXX top initial last Georgia, XXX markets. absolute grew than our they example, the XX,XXX For highly states improvement. in reflects Illinois, states of members over Texas, with XXX,XXX Together, outlook points in by those XXX% high-quality are increase a assumption XXXX retention growth Florida value-based basis penetrated were and

partners satisfaction. call see XXX their by our on reflecting customer quality pleased are points external enhanced We retention year-over-year, to center improve focus basis and

significantly from In was addition, approximately XX% improved higher switching anticipated than reflect of MA the plans, members and in sales experienced which new our XXXX. from competitor XX%

higher-quality We also in shift sales channels. channel to a saw our mix overall

channel sales and XX% broker partners sales XX% XXXX in of year. represented compared the to internal external Our total field our AEP last

planned retention channels leading and lifetime to drive with greater before, shared satisfaction, value. engagement As these members better

Our CenterWell across our not strong footprint broad-based our only but more and our enhancing penetration platform, integration to maturing ability drive XXXX our membership business, and our growth geographic and payer-agnostic CenterWell assets. benefits of also growing MA was

Our strong novo our new expected centers. experienced XX,XXX add patients to owned is primary AEP care organization and X,XXX growth to across during wholly and de also

measure of patients engagement and is we appointments of new these of nearly share This scheduled had happy to a as And new is key members retention. to December of engagement us the are driver XX% key XX. for a metric level that

year, grow growth M&A, full patient to growth in experienced by XX,XXX programmatic through higher panels expect the and organic XX,XXX patient XXXX. approximately XX,XXX For we the to meaningfully than

center expansion open XXXX to Our as on we additional an XX with centers ended track, to are and first remains alone. XXX quarter scheduled centers in the XX centers

of the centers build de XX to a in growth – and come annual end XXXX, XX of expect near We our novo previously of combination center through high the communicated M&A. in programmatic centers to

and DME model, value-based and we home to care have health, infusion across continued our In optimizes the services. home, which spend coordinates expand

expanding We additional are to the of our by XX% with the our members a XXX,XXX cover now MA track model coverage of members an XXXX. on approximately value-based supporting with quarter. members to fourth MA during based, approximately XX% fully We remain model,

addition, previously utilization to members bringing We value-based health creating rollout. accelerate capabilities a the advance and of members, enterprise value to total creation. out the incremental In market basis are for to X.X management stand-alone shared, the these capabilities some as million, covered implementing we of X.X in home on rolled value network full million

industry-leading XXXX. business, the order XX.X% pharmacy in use anticipate mail maintaining beginning our a mail XXXX, we individual basis order invest our penetration and increased XXXX increase our penetration of over position comparable levels in encourage co-pays the despite once retail industry-leading We in setting consumer driving this the further year. again this as continued business, Finally, experience MA in point XX we in in

the X. am CenterWell experiences senior CenterWell morning. effective we over clinical it President continue strengthening patients the meaningfully is as we to our capabilities, across to payer-agnostic turning Before created Humana platform announced role platform. speak and able comes April joining the Shetty as of to expand Sanjay the excited This for CenterWell integrating to our Dr. appointments newly this to Susan, be leadership I

will we comes physician assets. and excited of Sanjay of health President Steward understanding extensive him his of care CenterWell. and President. health a integration as he with across where leading accelerate deep experience have currently as team, data are on and workflows Humana Medicaid, to on large differentiated he the to experience Medicare, the as value-based a including new of Care our modernizing and brings He and to board draw the application system his well skills spectrum, broad CenterWell analytics extensive from System, care, the as addition technology to serves management and groups care Health Sanjay’s

In Bringing are success to business. been complements the company spending company the the been of added under Renaudin XX joined years responsibilities XXXX, last announce to his more to of and Medicare thrilled current integral Medicaid the George million promoted management to immediately. and team Medicare leadership core in supporting the and for Supplement addition, Advantage Medicare President having operations our has has effective operations than that we George our and to Medicaid dedicated five team Medicare of members. his joined

With our the the management Sanjay the team, of and George to search President we for have Insurance. closed of addition

now of both team the us within to broader enterprise that depth and confident talent are We well management strategy. we the organization, positions across continue have our to leadership in the the against execute

As our and growth company additions strong leadership size we caliber, synergistic to the of team our evolution across develop continue strategy with we as evaluate to and advance will our enterprise. to any of the strategic

our Humana’s I differentiated a strong Medicare Advantage in position strength. The closing, we that platform, capabilities the entering are XXXX in by grow by is reiterate strength would of and industry. and underpinned the fundamentals again bolstered payer-agnostic In

forward robust solid outlook additional target of EPS updates and XXXX our for the our targets the throughout on path towards progress XXXX. providing puts $XX a look on to towards and in We year. mid-term financial membership Importantly, mid- long-term growth our us

With to call turn that, the over I’ll Susan.

year and morning, growth compelling ahead share $XX XXXX we Bruce, Today, XX% good per earnings and you, of of our of everyone. representing a year-over-year. expectations $XX.XX, full approximately reported Thank adjusted

advancement of to our including membership shared Medicare XXXX Bruce we while for above-market strategy, a Advantage quicker-than-anticipated making significant our in return and CenterWell advancements impressive platform. delivered As growth individual as earnings further growth

our details to discussing clarity that as distinct to I our of realigned structure we with reportable and note segment old outlook our Before in XXXX the and terms would moving to Insurance speak segments XXXX provide segments references of results needed. CenterWell. segments, and the new to December, I performance in two outlook, will

XXXX start before fourth were Results expectations. $X.XX, underlying will our reported quarter internal of discussing adjusted for quarter segment results favorable expectations. and fourth our to by above our trends modestly and I EPS turning to consensus expectations estimates. Insurance We

implemented previous above drugs. costs flu rates higher well during as driven expectations our XXXB medical ranged by eligible business and total Advantage costs, shared, recently reimbursement As Medicare in the slightly COVID for fourth higher-than-anticipated as quarter,

approximately segment items as XX Collectively, impact of quarter points retail on ratio had the an benefit as Insurance both these well previous basis segment. the for fourth the

Importantly, quarter not do the are in carryover items have impact these XXXX. into and discrete a

Excluding our expectation. these business were Medicare items, Advantage total modestly costs our in previous medical below

continued business to the well medical costs. with Medicaid Our lower-than-anticipated in quarter perform

spend. cost favorable discipline expectations the from In benefited our segment the group also in productivity continuing seen commercial businesses addition, cost throughout while medical specialty medical quarter, trends the marketing our in, to were cost discrete just the and quarter. XXXB, driven the utilization the fourth persisted year impacts COVID and flu, covering I in experienced excluding ongoing segment to year. in the Insurance our favorable administrative related in throughout efforts experienced incremental All and described, This also favorability by

segment, the fourth expectations line our business largely Within performed in CenterWell with quarter. each in

care improve to from primary in XXX XX% increased number our to year-end continues at owned XXXX the organization of XX of contribution we’re operating at performance the that end are report a and XXXX, year-over-year. the increase centers we Our margin positive to centers wholly that pleased

from centers at we of contribution XX of million have increased target our to $X addition, number that end in XXXX. reached the XXXX margin the In XX

grew increased our patients in by center or In novo XX%, or count we XX%. our while X,XXX over de XX% centers, de XXXX novo

health for with home, business XXXX. Bruce admissions of X.X% line core growth year both year-over-year quarter X.X% our growth. patient up home fourth we full and center in In expect expectations up and fee-for-service the As the the further were to accelerate in shared, for in mid-single-digit total our

the over XX% the members, covering or the and full MA In Carolina up Humana expected XXXX coverage Virginia of in addition, members we X% continue We in to pace. expand just model implemented both and ending at value-based our model in value-based from XXX,XXX North our year XXXX.

reflecting XX.X% to individual of better leading remain strong, plan. health benefits Finally, outcomes, industry-leading adherence mail members. at Medicare our order our beyond penetration our and The extend operations, order pharmacy results Advantage for medication benefiting our mail health and members pharmacy

to we demonstrate members and points ranging traditional CenterWell XXX As adherence basis from rates XXX an who for than blood points in pressure diabetes example, utilize retail medication see basis cholesterol, pharmacy pharmacies higher treatments.

This of with EPS guidance related XXXX our least and over X.X% Now assumptions. Today, related is provided we line XXXX represents growth turning XX% to which of our and in interest previous to August at XXXX. expectations XXXX, for headwind adjusted Kindred overcomes commentary Hospice $XX. the of a XX% a or divestiture in a approximately $X.XX in

earnings Medicare time, XXXX north first of full Advantage, were represent to quarter to in Kindred XX%, XXXX the At EPS. with expected expect midpoint of our Medicaid businesses. in Group membership. our medical XX% and PDP at adjusted increases $XXX divestiture this above top-line These year and interest revenues a CenterWell XX% growth in commercial Hospice, consolidated we reflects by growth be declines Medicare billion and group approximately individual by Our of partially the projected offset outlook Advantage, driven

of business starting I now XXXX provide with detail on will outlook both additional the our segments, Insurance. for

of As Bruce the the annual and individual growth least XXXX, members strong a discussed, approximately We membership anticipate for increase during [ph] Advantage XXX,XXX remainder anticipate $XXX,XXX period the growth year-over-year. of Medicare we continued at XX.X% election added in year.

expected approximately Advantage loss to XX,XXX membership. MA, reduction a by small a to primarily Touching group pricing We net partially group on disciplined by we competitive members in Group large This Medicare account driven remain expect is reduction account growth continue a in of market. XXXX. of in offset committed the

XXX,XXX decline of our business, approximately and of now an from XXXX, estimate for one plan. retention improvement sales members pre-AEP Value Walmart improvement PDP better-than-expected a expect reduction. membership This a member by we million our was our For driven in

to mail value We by creating affordable our beneficiaries enterprise business the are on contribution driving and providing to coverage Advantage. also improving committed and conversion focused while penetration Medicare from remain PDP order for

our members a expected Advantage PDP a Humana Humana in approximately share represents a convert projecting to are disproportionate of all who members plan Advantage XX,XXX which switch are XXXX. to in PDP to plan to Medicare of We Medicare XXXX,

members our associated the business, members change X, today. as start that our additions to we membership In Louisiana well This went the membership with XXX,XXX Medicaid January Ohio anticipate in began XX,XXX increase reflects live XXXX. the as which contract, will of which contract,

and Ohio We expect a members implementation at to XX,XXX to year-end with members XXX,XXX add membership in of by approximately XXX,XXX in XXX,XXX Ohio Louisiana in total and to ramping XXXX.

membership in continue will membership from and will months. by losses X, gains Ohio April beginning offset XXXX for which redeterminations The ultimately be resulting Louisiana XX

our that invest awards and million and states additional have seven cover states. strong work a to over proud platform are to We and through will largely our intend established organic continue We organically we span towards grow now members, to that footprint growth. Medicaid one priority platform actively procuring

anticipate as nearly the midpoint. cost we reflecting in in approximately [ph] increase both commercial our Finally, on including billion, the remain decline year-over-year changing of mix the at of well beginning The within XXX,XXX will $XX.X quarter phase-out revenue our line ASO is structure the to The Medicare total medical second billion business. includes year-over-year the products sequestration business. to impact relief as of be range of a $XXX Insurance this of impact an change as of member in segment in insured focused and fully Advantage XXXX of members XX% the XXXX margin membership we and expected optimizing

investments Medicaid benefit made growth, as basis XX.X% plan guidance driven ratio. XXXX well to in XX.X% the in a is carries designs XX as higher expense points Advantage at which XX.X% our higher by Medicare targeted XXXX the segment of benefit ratio than This ratio benefit midpoint, the of

including into assumed that will provider expectation have normalized XXXX the improve trend the we a year. modestly throughout labor capacity Importantly,

In costs quarter. by the in addition, flu to fourth favorability first assumed offset have we in seen the is the date flu higher quarter

In XXXX summary, an at the guiding in from XXXX, the of range to over billion midpoint are XX% more operations increase range. we to $X.X of segment $X.X of Insurance for billion income the than

EBITDA $XXX For impact divestiture of billion our outlook pharmacy XXXX. slight in in XXXX, interest XX% and in the CenterWell year-over-year by segment, care, a growth a $X.XX which the offset headwind, created in XXXX, for XXXX reflects a continued decrease to primary the of our we home from of $X.X businesses. August billion million The range Hospice Kindred expect largely

home core expected be up our In fee-for-service mid-single home business, are admissions health to digits.

While continue we offset have shrinking strategies Medicare, XXXX in reflects more decline penetration year-over-year, growth fee-for-service our Medicare share fee-for-service market of to than Advantage. admission place take to slight a in increasing do with in acknowledge strong the Accordingly, it a Medicare Advantage. admissions we by in for Medicare projected is growth

through capacity home focused CenterWell addition, retention initiatives. nursing on In health and recruiting is increasing

turnover Our voluntary in improved nursing in from XX.X% XXXX XXXX. to XX.X%

invest focused continue orientation in mentors we reducing and drive which We to time expect administrative further and retention. clinicians, recruitment to for tasks nurse in improvement on clinical and drive technology and

an home programmatic we Carson shared, All are XXX,XXX center business, respect throughout and expect by our combination centers Bruce under expansion expand anticipate to the members model, we as in currently expect to XX%. With novo adding venture we under In million through which value-based of in, model. of increase care approximately approximately our XXXX, nearly our with of Welsh, as year M&A. network coverage as joint de the significant primary management served well XXXX, additional year-end a utilization bills XX to one

representing XX,XXX de centers, and to year-over-year. add we during patients addition, our the in expect year XX% XX,XXX In novo nearly growth patients owned wholly to

decrease a will the our guiding rate. cost benefit of in a than which operating the the the in August Hospice value Finally, XX.X% Advantage XXXX. from individual basis operating the we from our Medicare points This divestiture in maintaining ratio adjusted the higher consolidated penetration midpoint as XXXX, ratio to order membership our reflects XXXX, are as has at in initiatives. business consolidated XX% operating well interest decrease ratio rate perspective, of operating From run a a an company’s creation of XX.X% to XX.X% of cost in the XXX of industry-leading anticipate mail incremental significant growth historical ratio for cost impact as pharmacy XXXX, we in cost range ratio Kindred of

losses interest anticipate approximately million XXXX, $XXX realized rate from on income the expense. expect the recur. resulting while impact expected not experienced increase an our approximately we now in investment environment, interest majority We fixed in From Touching interest debt coupled that of and investment income expense in higher with $XXX expense million interest to rate, are million will $XXX the approximately XXXX is do increase to perspective, of year-over-year.

capital will briefly deployment now discuss I XXXX. for

continue businesses. with finally, we primary will an focused of remain to prioritize growing and focus expect growth. particular repurchases. we care our returning to to opportunities drive perspective, shareholders on of organic And capabilities We on and CenterWell enhance to investments a record importance to share track From home our capital maintain the our strong M&A recognize

of use market repurchases the value share repurchase open shareholders. we consider programs well maximize our ensure for to as as will We accelerated

are We that dividend. also we our are committed recognize growing to shareholders, our to and important dividends

in in increases look towards membership The would confidence XXXX. our I outlook that throughout like XXXX $XX our to the forward the updates enter robust our in targets midterm of progress mid- strength. in of year. closing, with position the for We providing to XXXX earnings continued financial growth growth on delivered Bruce’s XXXX combined echo strong we a sentiment In target and longer-term and

will we With your waiting open fairness that questions. ask caller. one limit introduce that, the to please yourself queue, you first question. up In for we Operator, the the in to those lines

Josh Nephron line Josh, your is come will Raskin Research. question open. from Certainly. And our first of

initiatives organic and trying talk to sale. could morning. And maybe on if want CenterWell, I to and the recruiting centers? the bring Thanks. give EBITDA. physicians you could But Good into if some understand hospice focus the the us how you from you’re revenues decline both about thanks. your and on what’s I then Hi, the rate growth color around

Josh, for the thanks questions. Hey Yes.

population area. it we’re the have we’re side, dedicated the recruiting we and that the recruiting in locally. nationally On we then a clinical And older looking to more the recruiting and the an younger the do that we to, ones population, is their also and What in to change also to we’re really both and – finding specifically area around finding the what approach are really moving recruit the experienced able are team from

driven, E&M based. to billing code primary a care of value more

And we importantly, is what – are around they aligned side. with experienced treatment of greater proactive much they finding much once the with we’re as for also oriented life is is for more the value care because them. base, to better prevention opposed that and side the care went quality school to retention it’s a just what it’s more to But

oriented a approach value-based but oriented looking also to centralized are to through people really So and for that locally, payment options.

segment. we to And the for CenterWell organic your Josh that related address just the growth other anticipate to question

that to based revenues in So above is in the expected grow also MA membership. decline although strong X% year-over-year growth, the PDP the pharmacy impacted they’re the by segment about total, on with number slightly individual

business the slightly fee-for-service expansion but reflective growth hospice as about by investment. the the disposition to offset I a and line as expansion is of had is model, the commentary in the home of XX% value-based line in that’s interest the The below well down, again the of of obviously as the my mentioned growth minority of that that movement core and

growth you the primary grow. deal. continues majority part as to the business But Welsh, de off care, balance know, is For that of Carson sheet as the novo of CenterWell

going as But total grow expected So also in reflected X% in portion. revenue the minority for sheet to growth be that the EBITDA investment specifically, segment in reflected isn’t actual well. our on-balance is to it’s and

Thanks. Okay,

our Suisse. question open. your A.J. moment. One next And of from And line will Rice A.J. is come Credit

Okay. Hi, everybody.

RADV was calling the industry. still jumbled review comments and I the the little and by guys on that’s know there. for Thanks I rule, under me, she’s think it you on a

somewhat rates the audit play time or done Kaiser the to up rule some released got seem XXXX one some to various things by period. results And was rate the the that data from data was on in little and Humana some was of have audits the running making the make issue. XXXX invested that audits. higher you going an rates I any that guys could was in initiatives us years forward, future entire try do you’ve error if has sure But than ago. better won’t a error sure I’m done peers. that they be that others know of of sure that to some your One higher release suggesting that on industry wondering that fact thing error to the give I’m and in perspective on to

A.J. question. for Hi, Thanks the

More or we inherent the reason would from that don’t was that that be so reflected variation. think we terms just don’t of differences, population out, the really assess In have Humana comment I to rate error any within would others. variation first, I the report the have the really evaluate would I to say generally, can’t that say meaningfully to access those in different came on data, obviously, be able to the

selection process that and historically. reflective used audit the just maybe so of they’ve And

In periods to they of impossible methodologies final going really rule as might And over this that Even week, question the not they came of assess. on expect I did methodology forward, that will specificity out what saw provide be audit you forward. in different they the terms earlier is that what we period. have going the would used also have in say, the audited,

expect you that error audit the to the highly is be and define. rate on methodology extrapolation so dependent And going ultimately might that they

forward what to going understand fully forward. that things is on to of one CMS assess, better working we so And be that look with to expected the might

Okay, thanks a lot.

One moment.

are there? Operator, you

sorry. I’m Yes,

Wolfe of Lake Research. Justin

is line Your open.

I didn’t they Thanks. I – give error but my just and changing own. of rate an then is and a CMS rates. the of guess, I A.J.’s an Good kind I’ll ask follow-up specificity, on Maybe know assume question lot morning. – first, assume methodology error would I

improved. have has just mean, So can even rates us, errors I tell CMS you industry the said maybe for

you error error period color one, this you the just about see are and in how might audit of years? over on has doing extrapolation rate own these that So us trended last but been how give Maybe the the to have time? XX that, how over all can forget your some own audits in trending your rate,

question as more us give a onetime audit. error And think my terms with kind bidding about first on cut? a in Would on follow-up. think rate a that rate from assume of XXXX a is, as it number some then forward use can as charge you the in Whatever that you build well? how investors. give Can us that share of the perspective? a something would Thanks. premium you whatever number, it that of repayment reserve from be? The and be, you revenue color importantly, it’s extrapolation XXXX, lower kind will an that bids – they might CMS a just about be would you take time And like you color some on of into kind just as was going Would you a how

over assessments of growth improve risk to say course have normal think as broadly Hi, undertake frankly, your is well first the health to about – To Justin. well adjustment, the how as value-based that as may all that Sure. as that plans in-home What Medicare activity the as accuracy. rates within in part increased question timeframe work just provider all just activities over time. how generally, penetration I trended would to error about

to value-based see of would expect those And care have those hopefully that that would and so programs I home improvement particularly grown, some relative we assessments initiatives. some

provider base depend of that of because and that’s organic it broader claims, that. have information. be to how what of it larger assess terms will in fully is And the audit in might difficult much happening don’t in we the methodology to impact say again, order the of But sort on ultimately defined

would bidding say due we and terms any and XXXX and certainly impact that to continue regarding provides the think the methodologies to this based just audit say contract impact focus be the including are from delivering and future. In benefits and that any what within might our MA in advanced just XXXX how that value would premiums the unlikely there few given selection claims forward, we a stable instructions in I be perspective, how from I But will the bids CMS defined XXXX look know today uncertainty members, it’s we’ll to strong XXXX. to value in of XXXX months, of goal need the given of on would But our see be if notice the guidance bid will a about to and that in bids. on exists

forward the forward working in look again time impact, we audit for the will and methodology be XXXX that planned to to going with but bids. understand assessing CMS better So finalized future any unlikely

next America. of you. And of our from Fischbeck Thank question Bank come will Kevin

your MLR on more A little color guidance. insurance

the target MA you guess, I in stable margins think the in your mentioned under that on guys I improvements. was were and comments, part to up design that business. to they I due trying it’s benefit you impression

due And new just you pressure then to So that want mentioned nuance. Medicaid understand contracts. to

I color commercial was there would great. wondering on anything if Thanks. any redeterminations? in then And about finally, be So, there’s

Hey is Susan. Kevin, Yes. this

value that savings So way in targeted for impact terms XXXX, were have the across it of generated keep in of mind earnings guide enterprise all line generated been our wouldn’t business. the that did the overall were of to enterprise. They by through Medicare about entirety without enterprise those we should the MLR fund But capacity the and with create EPS. to the investments is that think creation the initiative, you

And of would that MLR, to impact things all members saw you always, given have some year we given mentioned Bruce and that the you other the to retention that the of for being dynamics of to MLR Medicare. those consider, switching well. all as equal for redirected members, go about new and see for was into And as then so growth Medicare, our investment estimates the some all would

MLR and general of of acuity be the the Medicaid Outside higher will – MLR. members that in be access out, through has a impact the commented deferral course as the And will the to the impact had of growth lower the redeterminations Medicaid tend will you certainly the the who at the mitigated redeterminations. year over happen Ohio, previously, Medicaid just through Medicare trend, higher the be will beginning year pointed did that And we’ve it of contributing. in given as and also growth

as impact So as well. have MLRs an would that they Medicaid off, roll the to

and the say, those, more a they are expectations. hopefully would set I as just as – mean of So the drivers initial guide certainly two we as well approach those main intend exceed to our expectations more generally, conservative with continued

Wells moment. And come is Baxter Thank of Stephen you. question next One your Stephen, line open. our from will Fargo.

to Hi, in ask thanks. retention about wanted Medicare I Advantage.

said than you for you doubled more that targeted you improvement the think I XXXX.

you is pacing initially sounds like heading And evolve talk from like sense can planned you. open would back enrollment if have look your for can Any great. Thank you what outlook it it I retention gotten channel would what hoping into XXXX. for here? think retention So you your retention could as think continue it you strategy? is improve? stable to improve? the about would to Do Do was you you’ve of be where

our as Thanks about with combination the It channel, basis point a question. in combination very both Yes, of work the for basis articulated, happy internal and is retention increased the partnership this we’re the the they XXX of year. points. XXX you improvement

going And that, in the XXXX. large going you’re channel to improvement, we points. and see it. increase in [Technical to is look really we As an XXXX on the outside that XXX the to improvement don’t large Difficulty] contributed But be know continue basis to about we’ll some I if think it’s with of more that stabilized in probably as it with forward, improvement work

I me Unfortunately, Scott, Fidel line your is not This speaking. operator. [Stephens] hear is have could twice. Scott introduced your open. you

either Thanks. you hear first Scott, of you can Can those introduction hear me okay?

Yes.

Okay, good.

wanted to you and Just the did details the home on the give. follow-up home, appreciate just outlook

When at the trends expecting growth view can health XXXX. us your expectations you indicators give, with you then revenue just the margins just to for of interested be volume some there of business, And that what in gave on hospice also in when given you’re considering home us? moving your looking interested divestiture. just home the health give the some pieces the Just

rates considering the shift the fee-for-service out playing final care? that’s and to Thanks. when both value-based Just

is this Scott, Hi Sure. Susan.

the of year-over-year. So in It’s terms you will of a hospice trends, divestiture, $XXX decline see just decline. revenue over million because

have a which a in meaningful model, offset in arrangement the the is We with growth capitated plan. risk-based of health the particular, value-based

so we close for that drive does pressured would from one billion the XX% appreciation, And consider coverage hospice to $X That’s members XXXX. the otherwise divestiture have what million to offsetting the that meaningful expand that of asset. as revenue significantly been of

EBITDA that’s contribution, an mature down is year-over-year, model divestiture From being of primarily hospice replaced less higher-margin the that you again, being and a value-based segment of, contribution. with can function think this

expect time. They don’t contribution start immediately increasing in markets over We full at impact.

value-based And the is And expansion, the model you by in think being loss of XXXX. of so can our in closer hospice to the then earnings that breakeven offset reporting.

and in further and to on core commentary, investments but margins services, labor trends And in the watch would relative I I home business. I’d in recruiting health my relatively stable expect, stability. we some would retention, margin nursing, continue say make the health I say, do mentioned certainly say We’ll as home

Okay, thanks.

is Stephen question our Stephen, open. Baxter line come will And next of your Fargo. Wells from

I’ve next the back had and floor you to person. my the move so questions, give happy Yes, Hi. I’m to

Certainly.

will Taylor Our next from question come Gary of Cowen.

open. Your line is

through at side guidance, from ask angle in what being morning. And you although really up patients should look in XXXX. We last imply from and which at to more where XXXX patients. years, tried keeping the to enrollment above-trend more back coded from XX% was the HIF XXXX mostly trying of XXXX, Kevin plan but it I’m But enrollment retention the the about think like to growth decade good I your coded XXXX which comprehensively higher, MLR and had of come also probably MLR Hi, generally, just asked. the should wanted imply was those comprehensively years holiday. switching, other commentary about maybe

if new progression margin of an a of expect class So, is to improvement guide that inherent MLR new implications I’m than the wondering assumption patients better ascribe XXXX and is profitability just we class would XXXX. kind typically any would in that on you the in of your

Hi Gary, great question.

things will that the are impact there of a a result membership So the as mix. number of MLR

lower As margin higher breakeven competitor positive. you new think you viewed coming full members would the being numbers but of rate times many rate. We’ve the members that of members based even from the – in switching contribution be generally general, of new year. that’s when cohort be than margin Those positive do from to contribution a as MA new plans historically typical basis, commented as on said, first tend on, in

we that be fact that the would positive. saw incrementally viewed So as switchers, more

expectations, from be relative a least, said, those perspective you current at as a margin retention positive As from our the to certainly standpoint. to previous impactful are higher contribution contribution the is most going year

attract and one particular, plan meaningful did other originally we structured, One B Part two growth than plan see the the we do work expect expected. MLR. the would and We The that I plan design offered an way in negatively is, where we against will plan plan that giveback. overall it’s given things a acuity in say, membership lower stronger had

to be relative negative that would all again, members So likely MLR. a to other

that plan-to-plan And this JPMorgan switching on the and then year, we would say as I finally, commented this saw we at well.

did the market Typically, more members another initially For switch offering than anticipated. existing Humana see see richer members we they select we that that to where we and will do that’s in have, had plan. plan a

while planned they still So than see more the that otherwise change year-over-year, less and initiated. they positive so member, would given contribution new an

benefits of rebate. cost order A&B offerings, to point a level CMS dynamics I’ll savings did and is that the bid last in recall for additional in bit work, in to unique And create relative to the the Medicare our shares through make we year savings way just that those we this the out to the investment thing those fund have that is

in in then billion to of more to than some actually that share so and $X And invest have benefits, that order CMS. save with you

the at so would been that to is otherwise level. relative have what implication MLR and increased a it investment lower And of to

at well as moment year year. approach contemplated those as, I our guide view beginning just the taking are our as continued of the said things current the a of ago, conservative of all in a guidance So of

Thank you.

our Sachs. Goldman And of from next Nathan will question you. Thank Rich come

Your line is open.

that to is I to for wanted good elimination significant uncertainty to more element an there contract fee-for-service seems selection of Hi have the set could where a and around mentioned sampling of go methodology? like back bit impact could. if Thanks effect. I other you adjuster, the I question. RADV, go morning. guess, how of It be looks to into the factors the to relative some

It’d the your I previously for try final to the out? rule you kind these could litigate think to play process to had you potential the that thoughts talked resolve some uncertainties. on great to get of of Susan, be of about then outcome industry And updated how think

Sure, Nathan.

that consider would say, that the view exposure I of ruling, as to been not as the Bruce mentioned, those fact would about for positive immaterial. completed prior, as be the certainly periods extrapolating and So, XXXX audits we they think we to periods we for the be will and have

that So definitely positive. was

of be think we And about adjuster our evaluate and need in forward, of we said our addressed. compliance options we normal selection understand MRI methodology the commentary, also we activities. methodology. continue course as And all that concerns will to of to part and audit the as it XXXX a for impact we that, the resulting and evaluate extrapolation is obviously, fee-for-service – our our what As will omission as shared ensure has to and CMS do

this that’s really of our lack continue to need all just adjuster. some evaluate can at issue to be to the the of we again, primary address acknowledgment say. better a continue to collaboration the with understand activity, of so options for CMS we’ll the to fee-for-service And of to but additional we time, have – and of all go-forward going There’s

Thank you.

question will Our from JPMorgan. next Gill, come Lisa

open. is Your line

Good that in be number just that could you expectations as relationships any number XXXX. XXXX? if risk just be wondering Susan, of I relationships we maybe much. very was of And overall, patients discuss type the thanks will your capitated Hi, around think for will about the maybe morning. in

say the our another we in in would – I a Sure. capitated Hi, every members more as would the percentages disclosed of a third third growth, of and full minimum membership level. and form to type goal value-based Lisa. maintain some we’ve is enrolling get stable year fee-for-service who new in arrangements. that consider then third to that given just the that and probably arrangement, arrangements with penetration historically, strong you our about penetration relatively that final expect are ensure And us

you’ll year, given growth we said, in So certainly highly this penetrated growth markets. strong have the strong evaluate very to But Bruce that. saw as

that those rate. maintain you the bit be that market hopefully, – a the So may a can goal of But generally, already, ratios. the is penetration to respect to or above we to given tailwind at high as as grow continue

medical just penetration, you around here guidance to remind that that if see for help the given better XXXX? trend you’ve you And initial improve us, cost will can

estimate. claims do to some the we’ll material see And year. from we we’ll the evaluate while positive, certainly, I And would say itself, would But considered apprised. every we the overall you I do XXXX. trend that growth in have if for as And as as really would think we’ve earlier in you relative the the but to would our net-net, what all can growth evaluated that. of net to say, of we said previously XXXX immaterial quality expected, membership commentary, and overall be estimates positivity, keep certainly our not we’ve positive

Great. Thank you.

Next question.

from And will you. Stanley. question come of our Michael Thank Ha Morgan next

line is open. Your

you. thank Hi,

Susan’s value to creation follow-up quick Just and the Gary’s then a plan. quick question response on one

switching So Part a higher plan MA meaningful to MLR. a impact had at B a rebate least with members existing mentioned Susan

members many creation well. I MLR? how And larger to tracking then impact very related wondering plan. understand Just the it’s quickly is value approximate on

I to savings. exceed billion think on track in $X

billion in great. much And couple XXXX? are questions, targeting like of for $X a how to save that’s So just excess now of you

your how think sales $X planned you does Are And strong $X then over, about compare the increased investments and the billion? tracking And line billion with relation to growth, it in investments in the you. original to expectation? that margin? now membership AEP is Thank

that the more is guarantee to comment. benefits, premium of switched clarify, of Part majority for Hi, related there a plans. to the We new from the members members. to just our a that the members the plans terms other those saw enrollment as relative side, of the sort say provides I to benefits giveback And certainly, alternative in Mike. product was choice within some sure I’m switching. on of Part But and strong the trade-off may than richness B in of in broad the a a relative But would B outperformance product existing new have And well. different Yes. was plans way the

that would say, attract just of would negatively would other the that So of lower based I being sort of being those would say why acuity expect. membership on, things plans impact we you expect that, to again, equal, I more the all MLR the that is

plan plan richer it’s broadly changes that member to The to. typically identified when that a just change usually benefits is plans, recognizing plan that they will move because has they’ve a

positive, than year-over-year, less was so the plans. contribution, And it their previous in while just be will

did of XX% outperform terms value you as In say sort initial outperformance. I to can $X that XX% our you would of said, goal the of we creation of a billion. yes, think plan, as

and given historically some distribution those and to did relative center bit back see fully progress to investments, intent admin time, we fund shifting over on to XXXX, a the we plan savings which we’ve with costs for to front-loaded. lower our requiring investment, in but the are our proprietary though little those channels. that our mentioned, of market share proprietary the the other external commissions is call for continuing external we of some categories particularly reinvest We’ll intent As channels, marketing take described channel, of upfront some more into marketing

that increased our does so can contemplate continue so plan to investment further we in progress. XXXX make that, And XXXX,

might of we and and opportunity far what of to our currently certainly optimize of channel also all point plan, particularly seen will we’ve developing that, the and said a we have the will expected. in how AEP sort overall, there’s of that we stronger-than-expected initially go-forward but about Having for XXXX results whether view XXXX think evaluating metrics evaluate by the is so team marketing

those that, creation on contemplate more come for to last level at our So we time bids our the same planned investment. fund of the that of and use year of some increased to savings that does value but the claim investment of planned

you. Barclays. Thank your will come is from Valiquette next Steven, question open. of Steven And our line

thanks. guidance Great, we the this Yep. for a Yes, talked Good Thanks. XXXX on about lot everybody. MLR Yes. call so far. morning

of question other sort you that around But one capacity expect a year. to clarification. the mentioned Just modestly labor that you improve throughout the provider

of do – when to get you around that? that pent-up referring a demand in to quick Just to some be that wanted you’re terms consider clarification

the out And to guidance, coming the Thanks. are midpoint midpoint. any question at be of be pent-up just elective in maybe to other just any the you related of other or MLR procedures pent-up may XXXX care assuming non-COVID sort the of have would XXXX that at demand guidance absorbed

have would provider see labor capacity, I as of the at capacity more than as COVID. know, throughout COVID, is Hi that clinician labor been which, that lower say the still exchanged mention so about absence we Steven, we and impacted believe we thought over would a belief of time, specifically all improved will and levels MLR in we we broad has the

increase So do that correction, capacity clinician it labor won’t when will that and we immediate that our follow. belief time we utilization is but also an over additional be time, will over see

the the to think continue lower than sense are utilization what is can the in as COVID utilization in within ER commented we’ve I is their we of the sort which stays, see spaces Today, that to as throughout historical for think maximize any lower, And shorter given observation the hospital one materially seen stays, makes of systems. revenue which observation within duration the inpatient look before, hospitals would space stays certainly beds you of sort patient. as we’ve of

those So some would see capacity labor will levels to one as in to increases. additional is imagine where the start expect That will return pre-COVID I be there support sufficient as facilities. patients we capacity to area we

some believe pent-up of to say demand. needs of So seen the large large time, seen it’s utilization, there’s all based of typically through after evidence non-COVID I it’s forecasting a that, And again where but a in are we we’ve work XXXX. demand Historically, analysis which occur spike done, we have some significant not way on don’t we amount of event that pent-up and for sort system. fortunately would the explicitly very haven’t type that COVID depressed to we its not there’s

XXXX. explicit guide assumption Increasing resulting does as well the that in expectation around returns. pent-up sort have than but course trend expectation labor as of our an So of for as some in XXXX see not will flu we and higher trend is mentioned baseline we normal just the the rather taking demand, that capacity higher utilization in And commentary saw I as costs well. experienced also

Thanks. helpful. That’s right. All Okay.

Thank you.

Deutsche question Our from will Bank. come next Hill of George

Your open. line is

that late. going court was to with around. in discounts to for drove want morning increased talking know cost taking they duration it good guys and sure and of to XXXB minute minutes another the of the which with it’s they just spend wondering flexibility manufacturers was looks a would the give provide more you year. this I thought about, on like pharmacies drugs I guys, Hey, – couple could after ruling I want I’m what participate kind Monday which on the hopped question. and Susan, And if just thanks I guess a you

love XXXB guys So just going color in kind more happened what kind forward? you see what and on of would of

Sure, George.

And saw September an for XXXX. we XX, increase after offset in was in to fourth as CMS a quarter in claims ASPC that budget was the impact any defined for no That the neutrality XXXX So schedule. ability paid provide XXXX. of result was or the there of on

higher neutrality And we the what previously anticipated. cost so the lack that that the we a in quarter had offset is not caused incurred of fourth

effect. about we As will going forward higher that XXXX, same ASPC you schedule have think in in

you is reduces did services conversion a haven’t ongoing neutrality, seen and closer other rate implement change which the why budget the CMS much impact to outpatient something into However, cost which for in factor, XXXX. drive run

Thank you.

Hendrix And will our of moment. next One from Ben question RBC. come

Your line is open.

how very novo you Can development contribution plans you payer-agnostic center plan you’ve as your with CenterWell, us MA integration to regard with book. noted on development versus you margin payer-agnostic Hi. strong going focus engagement you’ve With you remind noticed you. forward? from platform, much. prioritizing Thank also but your are MA de Yes. Thank

strategy to our addition, on in Well, value overall. we MA the part continuing and an believe actively industry other that’s But provide dependent of engage pursue payers it back on to the is We growth do of this. growth important and the highly plan.

you quite result this as a So year, – the significant insurance of well. our doing growth MA saw side

is payer-agnostic, grow. dependent And very so oriented I broad would and ability our to say on highly but it’s continuing plans very the be engagement insurance to to

you. Thank

I turn to to the Broussard for Bruce now back conference like questions. further would remarks. No closing

continued your these that Thank our support. most thanks allow importantly, you, operator, And really XX,XXX us and thanks for for to report teammates wonderful results.

to based strength. look entering a As XXXX to updates the Susan are we and strength continuing on throughout with provide – this of and year on you I have position reiterated, forward in

and you wonderful thank So everyone a day. have

now conclude you to I participating. like Thank would conference. today’s for

disconnect. now may You