Q4 2020 UnitedHealth Group Inc Earnings Call

[music].

Good morning, and welcome to the Unitedhealth group fourth quarter, and full year, 'twenty and 'twenty earnings Conference call.

A question and answer session will follow Unitedhealth group of prepared remarks.

As a reminder, this call is being recorded.

There are some important introductory three information this call contains forward looking statements and.

U S Federal Securities laws.

These statements are subject to risks and uncertainty that could cause actual results to differ materially from historical experience or present expectations.

A description of some of the risks and uncertainties can be found in the reports that we file with the Securities and Exchange Commission, including the cautionary statements included in our current and periodic filings.

This call will also reference non-GAAP amounts.

A reconciliation of the non-GAAP to GAAP amounts is available on the financial and earnings reports section of the company's Investor Relations page at Www Dot Unitedhealth group Dot com.

Information presented on this call is contained and the earnings release, we issued this morning, and and our form 8-K date of January of 'twenty, 'twenty, 'twenty, one which may be accessed from the Investor Relations page of the Companys website I will now turn the conference over to the Chief Executive Officer of Unitedhealth Group, David Wichmann.

Good morning, and thank you for joining us today.

We remain in the time of unprecedented challenges for individuals and employers and the health system broadly, particularly.

Particularly frontline commissions, including our own.

Health systems across the world have been and continue to be stressed.

Amidst these challenges we are grateful for the daily displeased of human spirit to serve others and the resolve to make things better and.

We remain optimistic because we are also of living at a time of unprecedented collaboration and knowledge sharing and innovation.

The health system has come together and ways previously not seen a powerful multi dimensional response to support patients physicians and communities.

I couldnt be prouder.

Of or more grateful to the more than 325000 women and men of this enterprise.

They work each day under difficult conditions with clinicians comprising well more than a third of the total to advance of high performing health care system. One built on personal human connections enabled through information and technology and supported by strong alignment of physician led value based delivery of care.

They are another profound reason for our optimism.

With all of Thats transpired in 2020, we finished the year responsibly and strongly we delivered meaningful advances and NPS and employee engagement and financial results well above the upper end of our expectations, all while navigating the uncertain environment and achieving our commitment to address the financial imbalances.

<unk> from the COVID-19 pandemic.

As we move into 2021, we believe we are well positioned to continue to serve more people, even more deeply and more effectively while continuing to build this enterprise and grow strongly and the decades to come.

Just seven weeks ago, we were privileged to spend a full day with you at our Investor Conference.

Over the course of that day, we tried to convey how we seek to lead and the development of the next generation health care system. We shared the distinctive capabilities, we apply to make health care more connected more informed more human and more deeply personal.

We finished 2020 encouraged by the performance across the businesses of Optum and United Health care.

Let me provide just a few broad highlights.

The Unitedhealth care Medicare advantage offerings are off to an excellent start.

2021 will be one of our strongest years of growth now expected to approach of 900000 more people served across individual and group Medicare advantage and dual special needs plans.

And the health care will have grown to serve $3 5 million more seniors over five years.

<unk> choose our offerings because the of the value they receive better health outcomes and experiences and lower costs.

We've also been enhancing our offerings to better meet expectations about how people want to live their lives.

Focusing on more digital and physical care resources in the home.

Expanding our one on one concierge navigation services and enabling the home is the safest and more effective setting of care.

And health care is Medicaid offerings continued to grow strongly as well, including entry into three new states in 2021.

New business opportunities are substantial with momentum towards managed care adoption by states and RFP activity accelerating this year and next.

And while the economic effects of COVID-19 impacted United Healthcare's employer sponsored growth and 2020, we're encouraged by the positive market response to the new highly consumer centric offerings, we've been discussing with you in recent months.

Among these are digital first on demand and physician led products each provide deeply aligned modern personal and coordinated care experiences and save people up to 20% compared to traditional offerings.

These innovative products are generating significant responses because they are designed to better meet the unique needs and financial means of more people.

All in we expect the United Health care will grow in 2021 to serve upwards of $1 5 million more people across its senior community employer sponsored and individual offerings.

We continue to make important advancements and strategic investments to lay the foundation for the next generation health system.

Over the last many years, you've heard us discuss our ambition to build high performing systems of care, including and aimed to reinvent health care delivery, which is the first of our five strategic growth platforms.

The foundations for those efforts are in our primary and multi specialty care practices of.

<unk> entered 2021 with over 50000 physicians and 1400 clinics.

Over the course of this year, we expect to grow our employed and affiliated physicians by at least 10000.

This work of building local physician led systems of care continues to be central to our mission and as etc. Accelerating with notable progress in the northeast Pacific Northwest.

North West and southern California, and 2020.

Two weeks ago, we announced the combination of change health care and Optum insight.

We expect this combination will greatly advanced the foundational connectivity and collaboration needed for the next generation health system, establishing a new more modern information and technology enabled health care platform.

It will help accelerate the development and use of digital and advanced technologies. Another of our five key growth platforms and critical to connecting the all elements of our business strategy.

This advanced platform will help clinicians make the most informed and clinically advanced patient care decisions more quickly and easily.

Change health care brings widely adopted technology for integrating evidence based clinical criteria directly into the clinicians workflow.

While <unk> clinical analytics expertise and individual health record can strengthen the evidence base needed to deliver effective clinical decision support at the point of care.

This can ensure appropriate clinical pathways are offered and the most appropriate sites of care, leading to consistent achievement of the best possible outcomes experiences and value for the patients we serve.

Another key opportunity will be to enhance the administrative processes by combining optima advanced data analytics with change healthcare intelligent healthcare network to support simpler more informed and accurate services and processing of considerably lower cost.

Finally, combining change healthcare's payment capacities with Optum is highly automated payment networks will simplify financial interactions among care providers payers and consumers and accelerate the movement to a more modern real time and transparent payment system.

This will help physicians get paid more quickly accurately and reliably and provide consumers with more options and convenience and managing their health care finances.

The change health care team has been doing outstanding work and we're looking forward to working alongside them.

We continue to execute on the core initiatives, we laid out for you in December.

One example, as the pandemic disrupted care patterns and we all saw the increased need to enhance and home and alternative settings of care offering patients.

To receive safe effective and efficient care outside of traditional venues.

However, the need for in home care, we will continue to grow well beyond the current environment.

We know that more than 80% of what impacts the person's health happens outside of traditional health care settings.

There is a significant opportunity and offering consistent cost effective care for seniors and people with complex medical conditions and geographically isolated individuals through in home and alternative settings.

Offering of foundational ability to care for people and their homes is essential to developing a health system that is more consumer centric higher quality and lower cost.

We already have well established trusted capacities to bring skilled care resources into the home, including through Optum Housecarl program.

We expect our advanced practice clinicians will conduct over $2 million and home visits this year.

And we are building upon this established home capacity in many ways.

We have introduced vivify remote patient monitoring capabilities to improve connectivity and information sharing with physicians.

This has been received positively by patients with the net promoter score over 80.

Optimate home provides the in person and telephonic touch points across and introduce disciplinary team, including physical social and behavioral aspects.

The program increases preventative care achieved exceptional NPS and the mid eighties lowers medical expense and demonstrates high quality with over 90% of our members and a four star or higher plan.

Similarly, Optimus pharmacy care services enables patients to receive the care and medication they need with capacities to deliver outside of traditional settings.

After <unk> infusion and services now addresses the needs of about 25000 patients per month and is growing double digits, which means more patients can of tape and the care they need outside of the acute settings.

That makes it safer simpler and more affordable for people.

We remain encouraged as well by the traditional pharmacy services provided by <unk> with and over 98% customer retention rate entering 2021.

We are off to a good start for the 2022 selling season as we were recently awarded the honor to serve more than $2 5 million members of Blue Cross Blue Shield of Michigan.

And some we enter 2021 with momentum confident and our capacity to navigate through and begin to emerge from these challenging times as and even more capable diverse and growing enterprise.

Now I'll turn it over to Chief Financial Officer, John Rex.

Thank you Dave the full year 2020, and fourth quarter results were favorable to the outlook. We provided at our December 1st Investor Conference, while continuing to be impacted by the unprecedented environment, which has existed most of the year to.

To begin as we know it is of great interest to you.

I'd like to share what we're seeing and current care patterns.

Starting at the highest level within the broad member categories. We serve people with commercial benefits continue to exhibit overall higher levels of care activity with less deferral and then those served and public sector programs, such as Medicare and Medicaid.

Our top priority remains getting people the care they need.

During the fourth quarter, we saw overall average care activity returned to seasonal baselines compared to the just over 95% we cited for the third quarter.

The pacing over the course of the quarter, perhaps not too surprisingly moved from just below baseline as we began to modestly exceeding baseline and the latter half.

This measure includes increased direct COVID-19 related care, which in total comprised about 11% of all care activity during the fourth quarter compared to about 6% and the third quarter.

Looking deeper within specific care categories outpatient activity began the quarter at baseline and we were gratified people were able to obtain needed care of previously deferred.

By the latter part of the quarter. However, some outpatient activity moderated as COVID-19 incidents elevated.

Total inpatient activity increased modestly over the course of the quarter as the direct COVID-19 related care components rose as a percentage of the total and the latter half.

For example of the 65000, COVID-19 related inpatient admissions during the quarter about 20% occurred of October and about 50% and December.

Moving to our specific businesses.

Optum health fourth quarter earnings increased 16% year over year as care activity at our fee for service practices and ambulatory surgery centers continued to recover with these businesses now operating near baseline.

Revenue per consumer served grew 29% over the year ago quarter.

The growth and this measure reflects continued development of the value based care arrangements the.

The depth of our offerings and the increasing acuity of the types of care, we can deliver to the people we serve.

You should expect this measure to continue to grow at a strong double digit pace for many years to come.

One example, which highlight the potential of the 20 million patients Optum care serves today under 20% are currently and value based arrangements.

We expect both the number of patients served and the depth and number of value based arrangements to continue to accelerate.

Optum insights earnings were ahead of the outlook, we offered at the beginning of December with overall 2020 performance impacted by lower levels of care with revenues dependent upon care activity volumes for many of these businesses.

And the generally subdued overall business environment.

We continue to expect 10% to 15% growth and 2021 at cure activity returns to normalized levels, and we continue to advance strategic relationships and broad and services with existing customers.

This outlook excludes any impact from Optum insight combination with change healthcare, which we expect will close and the second half of the year.

<unk> earnings were also ahead of this outlook during 2020 revenues and our pharmacy care services and specialty businesses continued to grow at double digits and now comprise nearly half of total <unk> revenue.

Turning to United Health care fourth quarter operating results were above our December view.

And reflect continued customer and provider assistance measures to help people obtained the care of the need and comparatively lower levels of care deferral and higher COVID-19 care costs versus the third quarter.

Results in the fourth quarter were further impacted by additional reserves for rebates and related activity.

The plans with such arrangements moved into these positions as a result of the cumulative care deferral of impacts throughout 2020 and calendar year and assessments were concluded.

As Dave noted sales activity and the Medicare advantage open enrollment period was robust.

Within the 900000, new members members, we expect to serve for full year 2021, about 775000 and will be and individual and group Medicare advantage and the remainder and dual special needs plan, which are included in the community and state Medicaid membership tables.

Strong growth and Medicaid membership continued in the fourth quarter recall, our full year 2021 outlet to serve and additional 202 and 300000 people assumes state Redetermination Nate Redetermination activities are re initiated during the year.

We concluded 2020 with commercial membership about 100000 people ahead of the outlook, we provided at our Investor Conference.

Early January results are well supportive of positive commercial growth in 2021, this even considering the challenging economic environment.

Our liquidity capital positions and capacities remains strong.

Full year 2020 cash flows from operations were $22 2 billion or one four times net income with the fourth quarter result, exceeding the outlook, we provided due in part to early customer receipts.

Our debt to total capital ratio of 38, 9% compares to 42% last year.

As we look enthusiastically toward the combination with change healthcare, we intend to maintain our long standing capital policy, including our approach to returning capital to shareholders via share repurchase and and advancing dividend with ample capacity to continue building upon our strategic growth platforms.

And ongoing priority on expanding our local care delivery capability.

Our full year of 2021 outlook remains consistent with the early December commentary with total revenue approaching 280 billion and adjusted earnings per share in the range of $17 75 to $18 25.

Inclusive of the negative COVID-19 related effects, we described.

Given the still highly dynamic circumstances, we will likely hold this broader than typical range of expectations as we much like everyone else and continue to learn more about the environment.

Now I'll turn it back to Dave.

John.

As you can tell the businesses of this diversified and growing enterprise remains strong and well positioned for sustained balanced growth as we continued to add new capabilities and market positions.

We remain committed to our mission and and intense focus on serving one person at a time at increasing levels of value more affordable better outcomes and improved experiences while generating strong returns for you our shareholders operator, let's open it up for questions one per caller. Please.

Thank you the floor is now open for questions. At this time, if you have a question or comment. Please press star and then one on your Touchtone phone you may remove yourself from the queue by pressing the pound key.

We ask you to limit yourself to one question.

If you ask multiple questions will only be answering the first question and we can respond to everyone in the queue. This morning.

And our first question comes from <unk> <unk> from Citi. Your line is open.

Great. Thanks, good morning.

So I just wanted to go back to some of the commentary you said trends are near baseline just wanted to be clear you're talking about just utilization or spending there and then the commentary that COVID-19 was 11% of activity I guess and the fourth quarter just wanted to clarify that.

Great, Thanks, Ralph John and Rob.

So we're talking about spending when we when we talk about near baseline level of anticipated and again inclusive of the COVID-19 care costs. So that's why I was trying to give you some sense of kind of what component of those what those comprised and their overall.

And your second question Ralph I'd last just the last part of it I just want to make sure I heard that.

And I'm afraid the vamp cut out yes, I didn't hear quite that quite and the very end of it but when you're when we're talking about kind of of the 11% zone I think maybe what you were looking for is probably how that relates.

Think of that 11% zone in terms of medical cost if youre looking at our medical costs on our income statement.

Use about maybe three quarters of that level as a measure of what I would exclude from that because we're thinking about really kind of components fee for service medical costs that we incur on that so it would include the unitedhealth care of payments to capitate and providers. It would exclude it would also exclude things like pharmacy costs and such so I probably.

About three quarters of that and I think thats, where youre going with that question. Thank you.

And Ralph and we didn't get that just circle back with Brett and the team and we'll be happy to answer your question on the site next question. Please.

Thank you. Our next question comes from Ricky Goldwasser from Morgan Stanley.

Yes, Hi, good morning, you recently updated your tele health policies.

Wanted to dig a little bit deeper into this.

And what do you think is sort of the right balance between.

In person medical care versus telehealth.

And when activity normalizes and the.

When do you think for me, where do you think reimbursement.

And we'll settle it seems that you are.

And instead of the parity reimbursement of but as you think about.

Uh huh.

For can you cut out.

While at the same time, Ralph did so we'll take a shot at answering your question.

Around the telehealth policies.

And how do we think this will normalize out.

The <unk> Dirk to do that and then maybe ask Dr. Decker to talk about.

And the pluses and minuses of in person not plus and minuses, but just maybe win more and patient care should be administered versus <unk>.

Digital yes.

Yes, so thanks, Dave So what I would say is.

The good news is of the telehealth is of great vehicle for people to access care. So the number one let's just start with that is the premise.

We at United Health care from a policy standpoint, we work with Optum, we work a lot of telehealth providers.

Different products and capabilities and I would say how it is ultimately going to shake out is going to be related to who provides the best outcome using telehealth for lowest cost and ultimately the best patient experience those are sort of truisms, which youre going to exist the matter what we saw a huge spike at the beginning of.

Real high Telehealth access back in April it's sort of metered out throughout the course of the year I'm not sure what's going to ultimately and.

Clearly, it's here to stay and it's going to be important part of health care going forward.

The conductor Ducker, yes, thanks, David.

Ricky Thanks for the question.

And what's fascinating is not all tele health offerings are created equal and we have found that not surprisingly patients really appreciate being connected to their own personal providers and providers of very much need the real time clinical data to to provide good advice and care for that patient for.

<unk>. So so that's the key one two is certain services like the ambulatory or outpatient behavioral health care lend themselves to a.

Telehealth solution and so we have seen approximately 50% of our Taylor of our behavioral health care being delivered and a telehealth setting and that has been sustained throughout the year, even if the pandemic had subsided and as it returns.

Empowers those populations to get excellent care virtually.

Finally, I will just add debt, it's critical and we're very excited about the ability and optum health to connect physical care virtual care and home based care and a comprehensive model that really differentiates itself by providing personal real time care and the right set of thank you.

Great. Thank you, Dr Ducker and Dirk.

For your question Ricky next question. Please.

Thank you. Our next question comes from Steven Valiquette from Barclays. Your line is open.

Great. Thanks, and good morning, everyone.

I guess as Youre now assess the commercial membership trends exiting 2020 and in the early trend. So far and 2021 is for any further color just on your conviction around the commercial enrollment projections for 2021, you would now need a small increase and commercial risk membership day of the target.

This year, and then whereas fee base range remained essentially flat just looking for more color around that.

Great, Steve and Greg Good question and.

Just like the throne the plug for our commercial team that has worked very hard to get cost structures and line and two of these very innovative around new product offerings and bring greater value to people and I think it's starting to show through in terms of our overall growth performance Bill do you want to.

Respond of Stephen directly yes, thanks for the question.

Start with we're really pleased with how our fourth quarter and January.

2021 enrollment performance of played out of enrollment for <unk>.

For one one is better than we projected at our Investor conference supported by really strong persistency across really all lines of coverage and then less and anticipated attrition, obviously and the current economic environment. It has created some challenges and what we're really well positioned to deliver on our commercial growth strategy that.

And we highlighted at our Investor Day, I think we've also benefited from a broad portfolio of products.

And that all of our customers are accessing to renew their business with us So we feel really nice.

Strong about our growth prospects for the rest of the 2021. Thank you.

And I'd, just say we have of ways to go and we're kind of turning the corner the growth and obviously maintaining that consistently and continue to accelerate it will be our.

The emphasis as we move forward. Thank you for the question Steven next question. Please.

Thank you. Our next question comes from Lance Wilkes from Bernstein. Your line is open.

Hey, good morning could you just talk a little bit and optimal Rex about.

The pace and status for you guys and online pharmacy, and and home delivery and maybe what your long term.

The strategy of scope is for that.

Great happy to John Prince.

Thanks for the question Lance obviously, we've been very focused on building of our pharmacy care services model for the last several years.

So not only have we been getting into all of our pharmacy and home delivery, but we've been creating the various programs to meet the needs of population of especially and infusion.

John of pharmacies, and why are we why I frame that is because we're trying to meet the needs of the population and unique ways and different and create a very differentiated solution. So I think as you look at online pharmacy and home delivery, it's been a big grower for us.

We've continued to grow share expand our penetration but.

But we've also expanded our services within the pharmacy care services to serve all consumers. So that they don't have to be a member of the pbms.

We've been launching over the counter opt and store and so we see a significant growth of selling more products. We are also of fee and those stores unique ones like optum per <unk>, which is our discount card of bringing them all together and a virtual environment and so we see a good a good prospects and we see as the big grower and the long.

Term.

Great. Thank you Lance next question please.

Thank you. Our next question comes from Steve Willoughby from Cleveland range, Sorry. Your line is open.

Hi, Good morning, just a question regarding one of the lines and the press release. This morning related to additional reserves for rebates related to activity of calendar year assessments for concluded just wondering if you could provide any more color on that and any way to quantify that as compared to the.

The larger favorable reserve development, you experienced during the quarter anything else interested on reserves and movements, one way or another.

Sure Steve John Rex here, I would say the additional color I can provide and that is kind of that those actions.

Well more than offset the magnitude of favorable reserve development and the quarter.

And just as we as those moved into those positions.

And not surprisingly as you can tell because.

Because we were able to as we were.

We provided an outlook in December and December for the full year, and how things would turn out given the greater level of volatility and specific pieces of business over the course of this year as utilization moved around over the quarters, so, thereby putting more plans into those kinds of positions.

And then one would of course normally have.

Part of what one has to anticipate and this kind of environment.

And but certainly kind of that move.

Thank you.

Thank you David next question please.

Thank you our net.

Next question comes from Scott Fidel from Stephens. Your line is open.

Hi, Thanks, good morning.

And I had a question just on your latest.

Banking and expectations, just around Medicaid risk corridor, and the impact that you're expecting there just interested at the.

The impact of the corridor so.

Completed and the fourth quarter and line with the expectations that you had provided at Investor day and where.

There's been any incremental changes there since then in terms of expansion of.

Core of our programs and and how you think about that of Medicaid margin.

One of your competitors had recently cited of larger than expected impact of <unk>. So so wanted to get your feedback on that thanks.

Sure we will send the Tim Spilker Tim.

Yes. Thank you for the question.

Yes states have continued to leverage risk corridors and the MLR structures and.

And many of these were implemented and the back half of 'twenty, we anticipated those based on discussions with our customers now one thing that should be noted as Theyre looking ahead, and CMS has implemented rules requiring corridors to be implemented proactively versus retro retrospectively.

So that will approves improves and predictability and visibility and.

And then overall just in terms of what we're seeing at this point, while most of our one one base rate renewals are in line with expectations.

We're really respectful of the financial pressure and then.

The of our states are under as well as the uncertainty surrounding the pandemic. So we will continue to work with our customers and advocate for sustainable funding in that regard. So thanks for the question.

Alright. Thank you Scott next question please.

Thank you. Our next question comes from Justin Lake from Wolfe Research. Your line is open.

Thanks, Good morning, just a couple of cookies on post the.

Post the Investor day, it sounds like Youre, saying the cost trend and picked up through the quarter of bit can you talk about it relative to what youre, what youre expecting for the full year of 2021, but are you is it ahead of where you are expecting of inline and then the Medicare.

And physician rates went up a bit post the stimulus bill.

I would estimate of about 15 cents of of headwind for you for for the company I'm just curious on your estimate there and are there any.

The offsets that you see.

As you go into the year. Thanks.

And when we have the first part.

John Rex and then Timna I'll handle the second.

Just and I think the outlook for 2021 in terms of Covid impact, though even with what you've cited there in terms of as things were trending in the quarter.

Still consistent with where we were and Investor conference and our expectation is that total direct COVID-19 care costs in 2021 will be similar to what we experienced and for full year 2020. So there isn't anything that would take us off that view right now.

The other element we cited the total COVID-19 care costs higher and then.

And the headwind being that care deferral like.

Likely being meaningfully lower than we saw in 2020.

And Tim second part, yes, thanks for asking for the question. So the fee schedule increase you talked about was of course part of the relief deal that was passed on December 20th and.

And the physician fee schedule and increase that was included there was partially offset by removing sequester for the first quarter of 2021.

And as we look at this environment, it's obviously still quite fluid the.

Phe has been extended again and obviously also in other relief package, that's being worked on.

At this time of the sequester relief has only been extended of quarter and does not match. The phe as it has throughout the pandemic and sequester was extended one more quarter that would offset the small headwind and that we're seeing as a result of all of this so it's something we're still watching but thats where it stands.

The good observation on puts and takes that's going to probably happen as we.

Navigate away through 2021, and that's why we have a wider range and we are of $2 billion estimate on net COVID-19 impacts as well. Thanks for the question next question. Please.

Thank you. Our next question comes from Robert Jones from Goldman Sachs. Your line is open.

Alright, great. Thanks for the question and maybe just to shift over to Optum health I noticed you announced the fairly sizable physician group acquisition, and Massachusetts, and if I heard you correctly I believe you said you expect employed and affiliated physicians to increase of around 10000.

This year and just wondering if you could get your latest thoughts on the on the acquisition environment for Dot groups are you finding a greater willingness and this kind of Covid post COVID-19 world for a willingness to consider.

The acquisition for some of these larger groups.

Yes, just before we get started we have not announced any acquisition as you described.

That's a.

Rumor and speculation.

And as it relates to M&A broadly in the space.

Dr Decker and team have done a terrific job of continuing to build and the northeast I would say in the fourth quarter of the care of Mount transaction was completed.

Strong addition to our I 95 corridor.

Tri State.

And our expectation and we also finished.

Acquisition, and the southwest and in Southern California in particular with the.

And the inland Empire region, and we've also done some work up and the Pacific Northwest This past year as well and some of the center part of the United States I'd say generally speaking the.

The.

The market seems to continue to gravitate towards and Optum care type model, where there is of great sense of stability.

And as well as a very strong quadrupling model, which seems to resonate very well with physicians.

But also with the R. R.

Patients and where they get better experiences and outcomes and overall lower costs as demonstrated by the value. That's being brought every day and the growth of that and then overall in that area. So I think.

As we turn into 2021, and this will be and area of continued focus for us and I think youll continue to see that occur over the next half to full decade, or so as we continue to build out this.

Broad health system and health system, that's much more effective across the four aims that I just described.

Thank you for your question next question. Please.

Thank you. Our next question comes from Whit Mayo from UBS. Your line is open.

Hey, Thanks, guys of really emphasize some of the new innovative solutions and commercial of the consumer centric focus et cetera can you talk maybe more about.

The on demand solutions that <unk> been referencing and the partnership with bi and just the receptivity. Among plan sponsors just curious if theres been any sort of surprises and the market is huge.

Kind of brought back the capability to your to your customer base.

Bill do you want to do you want to take that one.

Yes sure.

And I'll start with you.

We benefit from our broad portfolio of products and plan designs across our business and depending on the type of buyer.

We've seen great interest in all different types of products for us. So we have seen a big uptick in our motion products people looking for digital solutions looking for activity trackers and theres been a huge amount of.

Emphasis and discussion with employers regarding.

Access to better wellness.

Obviously because of the pandemic and so we've seen a lot of receptivity to that we've seen a lot of rest of the receptivity to our wholesalers products as far as bind yes for particular type of buyers. It's really been a very interesting innovative solution we continue to.

Bring that the market and we're excited about the opportunities that will.

Deliver in our fully insured market as well as and our ASO business for bond. Thank you and.

If I can I'm, just going to have Dan Schumacher zone. The buying board also comment on what he's seeing with the with the overall progression there.

Sure. Thank you.

<unk> the interest.

We have seen broad market interest and and bind I'd say that as you look at what happened over the course of 2020 more people were inclined to stay so there was less switching going on and you saw that and the broader United Health care performance in terms of retention. So.

On the new sales side, we saw and probably lower interest and we would have hoped just given the the tendency towards incumbency, but where we had and existing footprint we continue to see.

Employees.

<unk> bind inside those offerings. So we're excited about the prospects forward and expect to build on it, especially as we've returned to more normal buying patterns in the in the future.

And then the progressive model that will continue to evolve and adapt over time like the initial price points and the impact I also like the receptivity broadly by consumers, which I would say, it's probably the been the greatest surprise for me personally is that consumers get it.

And as well as they as they do so I think thats part of the reason why you're seeing strong receptivity and the market overall. Thanks for the question next question. Please.

Thank you. Our next question comes from Josh Raskin from Nephron Research. Your line is open.

Hi, Thanks, good morning, and with Eric as well a question relates to Optum health and.

You show the 98 million consumers served in 2020 and the average revenue per consumer at $34. I think John you mentioned that was up.

Close to 30%, but that's still a fraction of the opportunity of how we think about the traditional risk bearing capitation rates. So the question really is what percentage of the Optum health revenues are sort of pure fee for service.

What about what's the percentage on the other end of the spectrum sort of global capitation and how do we think about what's in the middle of really just trying to see where that number can get to overtime.

John Rex of answer and then I went Dr. Decorative maybe talk a little bit about the evolution from fee for service to risk.

Good morning, Josh and Eric John Rex here so.

And looking at that and looking at that membership. So youre right in terms of where it is the risk based let me frame. It from the very top level of first up two thirds of overall Optum health revenue is and a risk as risk bearing revenue and we've sized the for that and think about is two thirds of optum care.

Also and risk bearing relationships do you want to get downtown kind of the levels.

Within Optum care.

There are 20 million members that are served by Optum care of that $94 million debt that you're referring to.

And then within that $23 4 million or in some kind of risk bearing relationship and then a smaller percentage than that and a true global cap. The relationship I would put it below well below half well below half of that $3 4 million and of global cap relationships.

And one of the reasons, we were I was speaking to that and my prepared comments is the cause of that opportunity, there's a relative comparatively small amount.

Yes.

Of the total membership the potential that is currently and a global cap relationship that's really what's driving the growth of Optum health and Optum care.

It comes down to with the primarily an organic revenue growth story, because when we affiliate with with.

Physician groups.

And typically those come in and many of them come in and largely fee for service arrangements and then we seek to convert those to.

Risk arrangements are.

With more accountability more value based care over several years.

And so when you look at kind of the overall revenue growth story of that company.

It is.

Predominantly organic revenue growth story, just because of that and that's really going and I was talking about kind of why do we think there is double digit revenue growth potential there for years to come it because of the still very I'd say kind of early stage of where that stands for.

That could occur.

Thanks, Josh So I think Rex covered it nicely. So I would just underscore a couple of points. One is this is of major growth engine for Optum as we go forward as we convert fee for service practices to value based care models second is.

We touched on earlier this is very compelling for our physician colleagues.

It's quite attractive it actually allows us to decrease the administrative burden and allow our doctors to practice medicine, which is what they want to do and the third is that we have of deep expertise in the space because we've been practicing fully cap date of fully delegated risk models for over 12 years and.

We're able to bring that expertise to our our new practices.

Throughout the country, David you touched on the Pacific Northwest and the northeast those are areas, where you can expect to see.

<unk> growth and our risk bearing capacities and care delivery.

And so this is the critical anchor strategy both for Optum.

As well as for Unitedhealth group is very important part of how we will continue to advance the outsized growth for this enterprise going forward.

With and aimed towards serving obviously more people and doing so.

And with better experiences comes and lower costs.

It was designed by the Optum team through the strategic process led by Andrew witty and they've done a really nice job deploying of this capability not only behalf of Optum, but of course on behalf of all of the United Health Group.

Thank you for the question next question please.

Thank you. Our next question comes from a J Rice from Credit Suisse. Your line is now open.

Hi, everybody just wanted to ask about M&A a little more.

You've got obviously, a nice step up and growth expected this year.

Any thoughts about what youre, assuming relative to your ability to do normal risk assessments and get appropriately reimbursed for the patient population of you taken a more conservative view given the COVID-19.

Covid backdrop or do you think you can get back to normal there and just any quick comment on the 2022 day rate notice the final rate notice that David just released and how you view that.

Sure Tim Mill head of MLR, yes.

Yeah. Thanks, a J for the question.

First on the two.

2022 revenue that Youre getting out there with the.

Diagnosis of capture for 2021.

Little bit early to talk about that at <unk>, but a couple of things I'll offer is one we're really focused and MMR about by getting our members vaccinated as soon as possible and across the enterprise is also a focus and doing the same for the frontline health care workers and as both of these things happen I think senior.

It will become increasingly more comfortable accessing care and that will have obviously and impact on diagnosis capture in 2021 that impacts revenue for 2022 remains missing and exactly how that timing plays out and we obviously have a bit of time remaining as we think about of the 2022 bed to inform.

And what.

It does play out at the time of the bid and when that is submitted.

With respect to the final notice that was published by CMS on January 15.

As you know number one earlier then that's normally published and the all in rates that were included and that final notice of just north of 4% was a little bit of and increase over the advance notice of beyond that nothing really surprising with respect of rules or policy changes contained and the final note of.

And this year I'm really too early to comment on what that means for rates and benefits of lot of moving parts that remain as we think about the 2022 bid filing certainly COVID-19 is one of those things that we're watching as well with respect to that.

Thanks for the question and just if I can add on a little bit. The first one of the key things for us and the reason why Tim and start with vaccine is because it's important for us to get our substantial health workforce vaccinated and <unk>.

Our nurse house calls workforce, so that they can safely.

Pass into the home.

More broadly and.

And then what maybe what we've seen and including in the.

More volatile circumstances.

And then the other thing just to recognize the to the extent that there was impacts on risk adjustment for 2021, and we did take those into consideration and providing you with our estimates back in December.

Thanks for the question next question please.

Thank you. Our next question comes from Kevin Fischbeck from Bank of America. Your line is open.

Alright, great. Thanks, just wanted to maybe dig back into the the $1 80, Covid headwind is there any way for you to kind of.

Give us more dimension and around kind of how that and.

And this from a relative size perspective flows across the three operating businesses in the three health plan businesses and it sounds like commercial is coming in better than you thought is there anything that maybe is different than what you thought a couple of months ago. When you first provided that anything better anything worse.

John Rex.

Kevin and John Rex.

The.

Broad view on that is about two thirds of that relates to the United Health care businesses. When we think about just over $2 billion and impact of negative impact from COVID-19, and 2021 and about a third relates to the optum businesses.

And that's kind of the general view of it doesn't.

And as we as we break down to different businesses and think about impacts on those some of the commentary I would offer so with and Optum insight.

Is most sensitive to just kind of broadly claims volumes and business activity general business activity. Those are kind of the factors that have been a component within that.

And the risk bearing businesses of Optum health are impacted similarly to the United Health care businesses.

And as you would expect also in terms of in terms of activity there.

Within the different categories.

Across Optum health.

And our across the United Health care in General I would just tell you kind of as we look at that so day.

David just cited that as it relates to how we how we.

Anticipated and incorporated thoughts about.

Ability for seniors to access care and get proper of risk adjustment done so fast and impacted mostly felt within Medicare and retirement and terms of that component of it as you would expect to also.

And to some extent and the hope to a lesser extent and the community and states, where you'd have some of the dual special needs plans membership also.

We then optimize Rex.

That is mostly also a volume driven component has to do largely just with the physician visit activity often often in terms of scripts being written and and.

And as those of those flow through the system. So those are kind of the broad overall impacts I'd offer and Dirk any other comments, yes, I think and one of the things you mentioned was the commercial I think what's what's the resulted and sort of a little stronger outlook and what we expected from a membership standpoint.

Persistency was better and there was a lot of groups the decided to stick I would also say the various government stimulus packages health and I would also say one products stood out for us.

It's our all savers level funded product, which has done extremely well, which is kind of.

And you get back if the group performed better than expected to get of refunds. If it was worse than they expected and you ultimately get a.

Better than expected and then.

And they have a.

And if they get the refund of this better than expected.

The good thing if it's worse than the stuff and the stop loss policy kicks in but long story short I think of some good products as we've talked about plus.

I'd say, good persistency was a big big benefit to commercial.

Thank you Kevin that's all we have time for today.

And so apologies to Ralph and Ricky both whose questions got cut off somehow. So please I'm glad we were able to fix that but please give our team of call.

And we will be happy to answer any other questions that you have.

Like to thank you all for joining US again today I hope this morning's call provided you with useful.

Non tax and importantly, clarity and help you better understand our ambitions for the year ahead as I said in my opening remarks, we are starting 2021 with an optimistic view despite.

Despite these extraordinary circumstances, our team continues to manage the challenges at hand with unprecedented resiliency and ingenuity at.

And at the same time, we continue to pursue our long term growth strategy with an even greater sense of urgency and intensity building upon the agility insights and considerable new capabilities develop this past year to deliver a high performing health care system built on personal and human connections enabled through information and technology and supported by.

The alignment of physician led value based delivery of care sort.

Moving millions of people one person at a time, while delivering distinguished returns for our shareholders. Thanks again for joining US we'll see you soon.

Ladies and gentlemen. This concludes today's conference call. Thank you for your participation and you may now disconnect everyone have a wonderful day.

[music].

Yeah.

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[music].

Good morning, and welcome to the Unitedhealth group fourth quarter, and full year, 'twenty and 'twenty earnings Conference call.

A question and answer session will follow Unitedhealth group of prepared remark I sort.

A reminder, this call is being recorded.

There are some important introductory information. This call contains forward looking statements and other U S Federal Securities law of.

These statements are subject to what's gonna uncertainty that could cause actual results to differ materially from historical experience or present expectations.

The description of some of the rest of and uncertainty can be found in the reports that we file with the Securities and Exchange Commission, including the cautionary statements included in our current and periodic filings.

The call will also reference non-GAAP them out of it.

Reconciliation of the non-GAAP to GAAP amounts is available on the financial and earnings reports section of the company of Investor Relations page at Www Dot Unitedhealth group Dotcom.

Information presented on this call is contained and the earnings release, we issued this morning, and and our form 8-K date of January of 'twenty, 'twenty, 'twenty, one which may be accessed from the Investor Relations page of the company's website I will now turn the conference over to the Chief Executive Officer of United.

Good Health group David Wichmann.

Good morning, and thank you for joining us today.

We remain in the time of unprecedented challenges for individuals and employers and the health system broadly, particularly.

Particularly frontline commissions, including our own.

Health systems across the world have been and continue to be stressed.

Amidst these challenges we are grateful for the daily displays of human spirit to serve others and the resolve to make things better and.

We remain optimistic because we are also of living at a time of the unprecedented collaboration knowledge sharing and innovation.

The health system has come together and ways previously not seen a powerful multi dimensional response to support patients physicians and communities.

I couldn't be prouder.

Of or more grateful to the more than 325000 women and men of this enterprise.

The work each day under difficult conditions, the clinicians comprising well more than a third of the total to advance of high performing health care system, one built on personal and human connections enabled through information and technology and supported by strong alignment of physician led value based delivery of care.

They are another profound reason for our optimism.

With all of that's transpired in 2020, we finished the year responsibly and strongly we delivered meaningful advances and NPS and employee engagement and financial results well above the upper end of our expectations, all while navigating the uncertain environment and achieving our commitment to address the financial imbalances, resulting.

<unk> from the COVID-19 pandemic.

As we move into 2021, we believe we are well positioned to continue to serve more people, even more deeply and more effectively while continuing to build this enterprise and grow strongly and the decades to come.

Just seven weeks ago, we were privileged to spend a full day with you at our Investor Conference.

Over the course of that day, we tried to convey how we seek to lead and the development of the next generation health care system. We shared the distinctive capabilities, we apply to make health care more connected more informed more human and more deeply personal.

We finished 2020 encouraged by the performance across the businesses of Optum and United Health care.

Let me provide just a few broad highlights.

The United Healthcare and Medicare advantage offerings are off to an excellent start.

2021 will be one of our strongest years of growth now expected to approach and 900000 more people served across the individual and group Medicare advantage and dual special needs plans.

And the health care will have grown to serve $3 5 million more seniors over five years.

The seniors choose our offerings because of the value they receive better health outcomes and experiences and lower costs.

We've also been enhancing our offerings to better meet expectations about how people want to live their lives for.

<unk> on more digital and physical care resources in the home <unk>.

Expanding our one on one concierge navigation services and enabling the home is the safest and more effective setting of care.

And I had health care is Medicaid offerings continue to grow strongly as well, including entry into three new states in 2021.

New business opportunities are substantial with momentum towards managed care of adoption by states and RFP activity accelerating this year and next.

And while the economic effects of COVID-19 impacted United Healthcare's employer sponsored growth and 2020, we're encouraged by the positive market response to the new highly consumer centric offerings, we've been discussing with you in recent months.

Among these are digital first on demand and physician led products each provide deeply aligned modern personal and coordinated care experiences and save people up to 20% compared to traditional offerings.

These innovative products are generating significant responses because they are designed to better meet the unique needs and financial means of more people.

All in we expect the United Health care will grow in 2021 to serve upwards of $1 5 million more people across its senior community employer sponsored and individual offerings.

We continue to make important advancements and strategic investments to lay the foundation for the next generation health system.

Over the last many years, you've heard us discuss our ambition to build high performing systems of care, including and aimed to reinvent health care delivery, which is the first of our five strategic growth platforms.

The foundations for those efforts are in our primary and multi specialty care practices at.

Optum care entered 2021 with over 50000 physicians and 1400 clinics.

Over the course of this year, we expect to grow our employed and affiliated physicians by at least 10000.

This work of building local physician led systems of care continues to be central to our mission and as et cetera, accelerating with notable progress in the northeast.

<unk> northwest and southern California, and 2020.

Two weeks ago, we announced the combination of change health care and Optum insight.

We expect this combination will greatly advanced the foundational connectivity and collaboration needed for the next generation health system, establishing a new more modern information and technology enabled health care platform.

It will help accelerate the development and use of digital and advanced technologies. Another of our five key growth platforms and critical to connecting the all elements of our business strategy.

This advanced platform will help clinicians make the most informed and clinically advanced patient care decisions more quickly and easily.

Change health care brings widely adopted technology for integrating evidence based clinical criteria directly into the clinic missions workflow, while optimist clinical analytics expertise and individual health record can strengthen the evidence base needed to deliver effective clinical decision support at the point of care.

This can ensure appropriate clinical pathways are offered and the most appropriate sites of care, leading to consistent achievement of the best possible outcomes experiences and value for the patients we serve.

Another key opportunity will be to enhance the administrative processes by combining optima and advanced data analytics with change healthcare is the intelligent healthcare network to support simpler more informed and accurate services and processing at considerably lower cost.

Finally, combining change health care's payment capacities with Optum is highly automated payment networks will simplify financial interactions among care providers payers and consumers and accelerate the movement to a more modern real time and transparent payment system.

This will help physicians get paid more quickly accurately and reliably and provide consumers with more options and convenience and managing their health care finances.

The change health care team has been doing outstanding work and we're looking forward to working alongside them.

We continue to execute on the core initiatives, we laid out for you and December.

One example, as the pandemic disrupted care patterns, we all saw the increased need to enhance and home and alternative settings of care offering patients to.

And to receive safe effective and efficient care outside of traditional venues.

However, the need for in home care and will continue to grow well beyond the current environment.

We know that more than 80% of what impacts of persons health happens outside of traditional health care settings.

There is a significant opportunity and operating consistent cost effective care for seniors and people with complex medical conditions and geographically isolated individuals through in home and alternative settings.

Offering of foundational ability to care for people and their homes is essential to developing a health system that is more consumer centric higher quality and lower cost.

We already have well established trusted capacities to bring skilled care resources into the home, including through Optum Housecarl program.

We expect our advanced practice clinicians will conduct over $2 million and home visits this year.

And we are building upon this established home capacity in many ways we.

We have introduced vivify remote patient monitoring capabilities to improve connectivity and information sharing with physicians.

This has been received positively by patients with the net promoter score over 80.

Optimate home provides the in person and telephonic touch points across and introduce disciplinary team, including physical social and behavioral aspects the.

The program increases preventative care achieved exceptional NPS and the mid eighties lowers medical expense and demonstrates high quality with over 90% of our members and a four star or higher plan.

Similarly, optimist pharmacy care services enables patients to receive the care and medication they need with capacities to deliver outside of traditional settings.

After <unk> infusion and services now addresses the needs of about 25000 patients per month, and it's growing double digits, which means more patients can have tape and the care they need outside of the acute settings.

That makes it safer simpler and more affordable for people.

We remain encouraged as well by the traditional pharmacy services provided by Optum Rx with and over 98% customer retention rate entering 2021.

We are off to a good start for the 2022 selling season as we were recently awarded the honor to serve more than $2 5 million members of Blue Cross Blue Shield of Michigan.

And some we enter 2021 with momentum and confident in our capacity to navigate through and begin to emerge from these challenging times as and even more capable diverse and growing enterprise.

Now I'll turn it over to Chief Financial Officer, John Rex.

Thank you David the full year 2020, and fourth quarter results were favorable to the outlook. We provided at our December 1st Investor Conference, while continuing to be impacted by the unprecedented environment, which has existed most of the year to.

To begin as we know it is of great interest to you.

Like to share what we're seeing and current care patterns.

Starting at the highest level within the broad member categories. We serve people with commercial benefits continued to exhibit overall higher levels of care activity with less deferral, then those served and public sector programs, such as Medicare and Medicaid.

Our top priority remains getting people the care they need.

During the fourth quarter, we saw overall average care activity returned to seasonal baselines compared to that just over 95%. We cited for the third quarter.

The pacing over the course of the quarter, perhaps not too surprisingly moved from just below baseline as we began to modestly exceeding baseline and the latter half.

This measure includes increased direct COVID-19 related care, which in total comprised about 11% of all care activity during the fourth quarter compared to about 6% and the third quarter.

Looking deeper within specific care categories outpatient activity began the quarter of baseline and we were gratified people were able to obtain needed care of previously deferred.

By the latter part of the quarter. However, some outpatient activity moderated as COVID-19 incidents elevated.

Total inpatient activity increased modestly over the course of the quarter and.

And the direct COVID-19 related care components rose as a percentage of the total and the latter half.

For example of the 65000, COVID-19 related inpatient admissions during the quarter about 20% occurred in October and about 50% and December.

Moving to our specific businesses.

<unk> health fourth quarter earnings increased 16% year over year as care activity at our fee for service practices and ambulatory surgery centers continued to recover with these businesses now operating near baseline.

Revenue per consumer served grew 29% over the year ago quarter.

The growth and this measure reflects continued development of the value based care arrangements the depth of our offerings and the increasing acuity of the types of care, we can deliver to the people we serve.

You should expect this measure to continue to grow at a strong double digit pace for many years to come.

One example, which highlights the potential of the 20 million patients Optum care serves today under 20% are currently and value based arrangements.

We expect both the number of patients served and the depth and number of value based arrangements to continue to accelerate.

Optum insights earnings were ahead of the outlook, we offered at the beginning of December with overall 2020 performance impacted by lower levels of care with revenues dependent upon care activity volumes for many of these businesses.

And the generally subdued overall business environment.

We continue to expect 10% to 15% growth and 2021 as care activity returns to normalized levels, and we continue to advance strategic relationships and broad and services with existing customers.

This outlook excludes any impact from Optum insight combination with change healthcare, which we expect will close and the second half of the year.

<unk> earnings were also ahead of this outlook during 2020 revenues and our pharmacy care services and specialty businesses continued to grow at double digits and now comprise nearly half of total <unk> revenue.

Turning to United Health care fourth quarter operating results were above our December view.

And reflect continued customer and provider assistance measures to help people obtain the care they need and comparatively lower levels of care of deferral and higher COVID-19 care costs versus the third quarter.

Results in the fourth quarter were further impacted by additional reserves for rebates and related activity.

The plans with such arrangements moved into these positions as a result of the cumulative of care deferral of impacts throughout 2020 and calendar year and assessments were concluded.

As Dave noted sales activity and the Medicare advantage open enrollment period was robust.

Within the 900000, new members members, we expect to serve for full year 2021, about 775000 and will be and individual and group Medicare advantage and the remainder and dual special needs plans, which are included in the community and state Medicaid membership tables.

Strong growth and Medicaid membership continued in the fourth quarter recall, our full year 2021 outlets to serve and additional 200 to 300000 people assumes state Redetermination Nate Redetermination activities are re initiated during the year.

We concluded 2020 with commercial membership about 100000 people ahead of the outlook, we provided at our Investor Conference.

Early January results are well supportive of positive commercial growth in 2021, this even considering the challenging economic environment.

Our liquidity capital positions and capacities remains strong.

Full year 2020 cash flows from operations were $22 2 billion or one four times net income with the fourth quarter result, exceeding the outlook, we provided due in part to early customer receipts.

Our debt to total capital ratio of 38, 9% compares to 42% last year.

As we look enthusiastically toward the combination with change healthcare, we intend to maintain our long standing capital policy, including our approach to returning capital to shareholders via share repurchase and and advancing dividend with ample capacity to continue building upon our strategic growth platforms.

And ongoing priority on expanding our local care delivery capabilities.

Our full year 2021 outlook remains consistent with the early December commentary with total revenue approaching 280 billion and adjusted earnings per share in the range of $17 75 to $18 and 25.

Inclusive of the negative COVID-19 related effects, we described.

Given the still highly dynamic circumstances, we will likely hold this broader than typical range of expectations as we much like everyone else and continue to learn more about the environment.

Now I'll turn it back to Dave.

Thank you John.

As you can tell of the businesses of this diversified and growing enterprise remains strong and well positioned for sustained balanced growth as we continue to add new capabilities and market positions.

We remain committed to our mission and and intense focus on serving one person at a time at increasing levels of value more affordable better outcomes and improved experiences while generating strong returns for you our shareholders operator, let's open it up for questions one per caller. Please.

Thank you the floor is now open for questions. At this time, if you have a question or comment. Please press Star then one on your Touchtone phone you may remove yourself from the queue by pressing the pound key.

We ask you the limit yourself to one question.

If you ask multiple questions will only be answering the first question and we can respond to everyone and thank you. This morning.

And our first question comes from Wow via Colby from Citi. Your line is open.

Great. Thanks, good morning.

So I just wanted to go back to some of the commentary you.

<unk> said trends are near baseline just wanted to clear you're talking about just utilization or spending there and then the commentary that COVID-19 was 11% of activity I guess and the fourth quarter just wanted to clarify that.

Great. Thanks, Ralph John I'm, sorry, Ralph Yes, so were talking about spending when we when we talk about near baseline level of anticipated and again inclusive of the COVID-19 care costs. So that's why I was trying to give you some sense of kind of what component of those what those.

The comprise and their overall.

And your second question, Ralph I lost the last part of it I just want to make sure I heard that.

And I'm afraid the vamp cut out just I didn't hear quite debt quite the very end of it but when you're when we're talking about kind of the 11% zone I think maybe what you were looking for is probably how that relates to.

Of that 11% zone in terms of medical cost if youre looking at our medical costs on our income statement.

Use about maybe three quarters of that level as the measure.

What I would exclude from that because we're thinking about really kind of components fee for service medical costs that we incur on that so it would include Unitedhealth care payments to capitate the providers. It would exclude it would also exclude things like pharmacy cost and size. So I'd, probably use about three quarters of that and I think thats, where youre going at that question. Thank you.

And Ralph and we didn't get that just circle back with Brett and the team and we'll be happy to answer your question on the site next question. Please.

Thank you. Our next question comes from Ricky Goldwasser from Morgan Stanley.

Yes, Hi, good morning, you recently updated your tele health policies.

I wanted to dig a little bit deeper into this.

And what do you think is sort of the right balance between.

In person medical care versus Tele health.

And when activity normalizes and the.

And when do you think for I mean, what do you think reimbursement.

We will set all of it seems the QR code.

Instead of of the parity reimbursement of it as you think about.

Uh huh.

For can you cut out.

While at the same time Ralph debt. So we'll take a shot at answering your question.

Round the telehealth policies.

And how do we think this will normalize out.

The <unk> Dirk to do that and then maybe Dr decorative and talk about.

The pluses and minuses of in person not plus and minuses, but just maybe win more inpatient care should be administered versus <unk>.

Digital yes.

Yeah. So thanks, David So what I would say is.

The good news as of the Telehealth is of great vehicle for people to access care. So of number one let's just start with that is the premise.

We at United Health care from a policy standpoint, we work with Optum, we work a lot of telehealth providers.

Different products and capabilities and I would say, how it's ultimately going to shake out is going to be related to who provides the best outcome using telehealth for lowest cost and ultimately the best patient experience those are sort of truisms, which youre going to exist no matter, what we saw a huge spike at the beginning of.

Real high Telehealth access back in April it's sort of metered out throughout the course of the year I'm not sure what's going to ultimately and.

Clearly, it's here to stay and it's going to be important part of health care going forward.

And Dr. Decker, yes, thanks, David and territory.

And Ricky Thanks for the question.

And what's fascinating is non.

Not all tele health offerings are created equal and we have found that not surprisingly patients really appreciate being connected to their own personal providers and providers of very much need the real time clinical data to to provide good advice and care for that patient for.

Actual settings. So so that's key 0.1 0.2 is certain services like the ambulatory or outpatient behavioral health care lend themselves to a telehealth solution and so we have seen approximately 50% of our teller of our behavioral health care being delivered.

And of telehealth, setting and that has been sustained throughout the year, even as the pandemic had subsided and as it returns it empowers those populations to get excellent care virtually.

Finally, I will just add debt, it's critical and we're very excited about the ability at Optum health to connect physical care virtual care and home based care and a comprehensive model that really differentiates itself by providing personal real time care and the right set of thank you.

Great. Thank you, Dr Ducker and Dirk.

For your question Ricky next question. Please.

Thank you. Our next question comes from Steven Valiquette from Barclays. Your line is open and then.

Great. Thanks, and good morning, everyone.

I guess as you know assess the commercial membership trends exiting 2020 and in the early trend so far and in 2021 is for any further color just on your conviction around the commercial enrollment projections for 2021 as you would now need a small increase and commercial risk membership day of the target.

Of this year and then whereas fee base range remained essentially flat just looking for more color around that thanks.

Great, Steve and Greg Good question and.

Just like the throne, the plug for our commercial team who has worked very hard to get cost structures in line and two of these very innovative around new product offerings bring greater value to people and I think it's starting to show through in terms of our overall growth performance Bill do you want to.

Comment respond as Stephen directly yes, thanks for the question.

Start with we're really pleased with how our fourth quarter and January two.

2021 enrollment performance of played out of enrollment for <unk>.

For one one is better than we projected at our Investor conference supported by really strong persistency across really all lines of coverage and then less and anticipated attrition, obviously and the current economic environment. It has created some challenges and what we're really well positioned to deliver on our commercial growth strategy that.

We highlighted at our Investor Day, I think we've also benefited from a broad portfolio of products.

And that all of our customers are accessing to renew their business with us. So we feel really nice we're feeling really strong about our growth prospects for the rest of the 2021. Thank you.

And I'd, just say we have of ways to go and we're kind of turning the corner to growth and obviously maintaining that consistently and continue to accelerate it will be our.

Emphasis as we move forward.

For the question Steven next question. Please.

Thank you. Our next question comes from Lance Wilkes from Bernstein. Your line is open.

Yes. Good morning could you just talk a little bit and optimal Rex about.

The the pace and status for you guys and online pharmacy, and and home delivery and maybe what your long term.

The strategy of scope is for that.

Great happy to John Prince.

Thanks for the question Lance obviously, we've been very focused on building on our pharmacy care services model for the last several years.

So not only have we been getting into all of our pharmacy and home delivery, but we've been creating the various programs to meet the needs of population, especially and infusion John.

So one of the pharmacies and why we why I frame that is because we're trying to meet the needs of the population and unique ways and different credit very differentiated solution. So I think as you look the online pharmacy and home delivery, it's been a big grower for us.

We've continued to grow share and expand our penetration but.

But we've also expanded our services within the pharmacy care services to serve all consumers. So that they don't have to be a member of the pbms.

We've been launching over the counter Optum store and so we see a significant growth of selling more products. We are also of fee and those stores unique ones like optum per <unk>, which is our discount card of bringing them all together and a virtual environment. So we see a good a good prospects and we see as the big grower and the long.

Term.

Great. Thank you Lance next question please.

Thank you. Our next question comes from <unk> <unk> from Cleveland Research. Your line is open.

Hi, Good morning, just a question regarding one of the lines and the press release this morning and related to additional reserves for rebates related to activity of the calendar year of assessments for concluded just wondering if you could provide any more color on that and any way to quantify that as compared to the.

The larger favorable reserve development, you experienced during the quarter anything else interesting on reserves and movements, one way or another.

Sure Steve John Rex here, I would say the additional color I can provide and that is kind of that those actions.

Well more than offset the magnitude of favorable reserve development and the quarter.

And just as we as those moved into those positions.

And not too surprisingly as you can tell because.

Because we were able to as we as we provide an outlook in December and December for the full year and how things would turn out given the greater level of volatility and specific pieces of business over the course of this year as as utilization moved around over the quarter, so, thereby putting more plan.

<unk> into those kinds of positions than one would of course normally have.

And part of what one has to anticipate and this kind of environment.

And the but certainly kind of that move.

Thank you.

Thank you David next question please.

Thank you. Our next question comes from Scott Fidel from Steven Your line is open.

Hi, Thanks, good morning.

And of question just on your latest thinking and expectations just around Medicaid risk corridor, and the impact that you're expecting there just interested and.

The impact of corridor so complete.

Completed and the fourth quarter and line with the expectations that you had provided at Investor day and.

Whether there's been any incremental changes there since then in terms of the expansion of.

Core of our programs and and.

How you think about that of Medicaid margin.

What are your competitors had recently cited of larger than expected impact of <unk>. So so wanted to get your feedback on that.

Sure we will send the Tim Spilker Tim.

Yeah, Hey, Thank you for the question.

Yes states have continued to leverage risk corridors and the MLR structures and.

And many of these were implemented in the back half of 'twenty, we anticipated those based on discussions with our customers.

Now one thing that should be noted as Theyre looking ahead, and CMS has implemented rules require and corridors to be implemented proactively versus retro retrospectively.

And so that will approves improves and predictability and visibility.

And then overall just in terms of what we're seeing at this point.

Most of our one one base rate renewals are in line with expectations, we're really respectful of the financial pressure and many of our states are under as well as the uncertainty surrounding the pandemic. So we will continue to work with our customers and advocate for sustainable funding in that regard.

For the question.

Great. Thank you Scott next question please.

Thank you. Our next question comes from Justin Lake from Wolfe Research. Your line is open.

Thanks, Good morning, just a couple of cookies on post the.

Most of the Investor day, it sounds like Youre, saying the cost trend and picked up through the quarter of bit can you talk about it relative to what youre, what youre expecting for the full year 2021.

Ahead of where you are expecting or in line and then the Medicare.

And physician rates went up a bit post the stimulus bill.

I guess the negative of about 15 cents of of headwind for you for for the company just curious on your estimate there and.

The offsets that you would see.

As youre going through the year. Thanks.

And we have the first part John.

John Rex and then Timna I'll handle the second.

Jeff and I would say the outlook for 2021 in terms of Covid impact, though even with what you've cited there in terms of as things were trending in the quarter.

Still consistent with where we were and Investor conference and our expectation is that total direct COVID-19 care costs in 2021 will be similar to what we experienced and for full year 2020. So there isn't anything that would take us off that view right now.

The other element we cited the total COVID-19 care costs higher and then.

The headwind being that care deferral likely being meaningfully lower than we saw in 2020.

And Tim second part, yes. Thanks for the question. So the fee schedule increase you talked about was of course part of the relief deal that was passed on December 20th.

And the physician fee schedule and increase that was included there was partially offset by removing sequester for the first quarter of 2021.

As we look at this environment, it's obviously still quite fluid the.

<unk> has been extended again and obviously also in other relief package, that's being worked on and on at.

At this time of the sequester relief has only been extended of quarter and does not match. The phe as it has throughout the pandemic NFL sequester was extended one more quarter that would offset the small headwind and that we're seeing as a result of all of the sell something we're still watching but thats where it stands.

The good observation on puts and takes that's going to probably happen as we.

Navigate away through 2021, and that's why we have a wider range and the $2 billion estimate on net COVID-19 impacts as well. Thanks for the question next question. Please.

Thank you. Our next question comes from Robert Jones from Goldman Sachs. Your line is open.

Alright, great. Thanks for the question and maybe just to shift over to Optum health I noticed you announced a fairly sizable physician group acquisition, and Massachusetts, and if I heard you correctly I believe you said you expect employed and affiliated physicians to increase around 10000.

This year I just wanted to get your latest thoughts on the on the acquisition environment for Doc groups are you finding a greater willingness and this kind of Covid post COVID-19 world for a willingness to consider.

Acquisitions for some of these larger groups.

Yes, just before we get started we have not announced any acquisition as you described.

That's a.

Market rumor and speculation.

As it relates to M&A broadly in this space, we've Dr. Decker and team have done a terrific job continuing to build and the northeast.

And I'd say in the fourth quarter of the care of Mount transaction was completed and that has a strong addition to our I 95 corridor.

Tri State.

Our expectation and we also finished.

Acquisition and the <unk>.

Southwest and southern California in particular with the.

And the inland Empire region, and we've also done some work up and the Pacific Northwest This past year as well and some of the center part of the United States I would say generally speaking the.

The <unk>.

Market seems to continue to gravitate towards and Optum care type model, where there is of great sense of stability.

As well as a very strong quadruple aim model, which seems to resonate very well with physicians.

But also with R. R.

Patients and where they get better experiences and outcomes and overall lower costs as demonstrated by the value. That's being brought every day and the growth of that and then overall and that area. So I think as.

We turned into 'twenty and 'twenty, one and this will be and area of continued focus for us and I think youll continue to see that occur over the next half to full decade, or so as we continue to build out this.

Broad health system and.

The health system, that's much more effective across the four aims that I just described.

Thank you for your question next question. Please.

Thank you. Our next question comes from Whit Mayo from UBS. Your line is open.

Hey, thanks.

As of really emphasize some of the new innovative solutions and commercial of the consumer centric focus et cetera can you talk maybe more about the on demand solutions that you've been referencing and the partnership with bi and just the receptivity. Among plan sponsors just curious if theres been any sort of surprises and the market as you've kind of for.

All of that capability to your to your customer base.

Bill do you want to do you want to take that one.

Yes sure.

I'll start with we benefit from our broad portfolio of products and plan designs across our business and depending on the type of buyer.

Seeing great interest in all different types of products for us. So we have seen a big uptick in our motion products people looking for digital solutions looking for activity trackers.

A huge amount of.

Emphasis and discussion with employers regarding.

Access to better wellness.

Obviously because of the pandemic and so we've seen a lot of receptivity for that we shed a lot of rest of the receptivity to our all favors products as far as bind yes for particular type of buyers. It's really been a very interesting innovative solution we continue to.

Bring that to the market and we're excited about the opportunities that we will.

Deliver in our fully insured market as well as and our ASO business for bond. Thank you.

And if I can I was just going to have Dan Schumacher is on the buy and board also comment on what he's seeing with the.

And with the overall progression there.

Sure. Thank you I appreciate the interest.

We have seen broad market interest and brought in mind I'd say that as you look at what happened over the course of 2020 more people were inclined to stay so there was less switching going on and you saw that and the broader United Health care performance in terms of retention. So.

And the new sales side, we saw and probably lower interest and we would've hoped just given the the tendency towards incumbency, but where we had and existing footprint we continue to see.

Employees.

Choose bind inside those offerings. So we're excited about the prospects forward and expect to build on it.

Especially as we have returned to more normal buying patterns in the future.

Some of the progressive model that will continue to evolve and adapt over time like the initial price points and the impact I also like the receptivity broadly by consumers, which I would say is probably the been the greatest surprise for me personally.

The consumers get it.

As well as they as they do so I think thats part of the reason why you're seeing strong receptivity and the market overall and thanks for the question next question. Please.

Thank you. Our next question comes from Josh Raskin from Nephron Research. Your line is open.

Hi, Thanks, Good morning here with Eric as well a question relates to Optum health and.

You show the 98 million consumers served in 2020 and the average revenue per consumer at $34. I think John you mentioned that was up close.

Close to 30%, but but that's still a fraction of the opportunity of how we think about the traditional risk bearing capitation rates. So the question really is what percentage of the Optum health revenues are sort of pure fee for service.

What about from whats the percentage on the other end of the spectrum sort of global capitation and how do we think about what's in the middle of really just trying to see where that number can get to over time.

Since you and John Rex of answer and then I went Dr. Decorative maybe talk a little bit about the evolution from fee for service to risk.

Morning, Josh and Eric John Rex here so.

Looking at that and looking at that membership so youre right in terms of where it is the risk base, let me frame. It from the very top level of first up two thirds of overall Optum health revenue is and a risk as risk bearing revenue and we've sized the for that and think about is two thirds of optum care.

Also and risk bearing relationships do you want to get down to kind of the levels.

Within Optum care.

John.

There are 20 million members that are served by Optum care of that 94 million debt, you're that you're referring to.

And then within that $23 4 million or in some kind of risk bearing relationship and then a smaller percentage than that and a true global cap the relationships I've put it below well below half well below half of that $3 4 million and of global cap relationships.

Youre right and one of the reasons, we were I was speaking to that and my prepared comments is the cause of that opportunity. There is a relative comparatively small amount.

Of the total membership the potential that is currently and a global cap relationship that's really what's driving the growth of Optum health and Optum care.

A.

Comes down to it the primarily an organic revenue growth story, because when we affiliate with the with physician groups.

And typically those come in in many of them come in and largely fee for service arrangements and then we seek to convert those to.

Risk arrangements are.

And with more accountability more value based care over several years.

And so when you look at kind of of the overall revenue growth story of that company.

It is.

Predominantly organic revenue growth story, just because of that and that's really go and I was talking about kind of why do we think there is double digit revenue growth potential there for years to come because of the still very I'd say kind of early stage of where that stands for.

The decker thank.

Thank you. Thanks, Josh So I think Rex covered it nicely. So I would just underscore a couple of points. One is this is of major growth engine for Optum as we go forward as we convert fee for service practices to value based care models.

<unk> is as we touched on earlier this is very compelling for our physician colleagues, it's quite attractive it actually allows us to decrease the administrative burden and allow our doctors to practice medicine, which is what they want to do and the third is that we have of deep expertise in the space because we've been practicing.

And fully cap, David fully delegated risk models for over 12 years, and we're able to bring that expertise to our our new practices.

Throughout the country, David you touched on the Pacific Northwest and the northeast those are areas, where you can expect to see.

Significant growth and our risk bearing capacities and care delivery. Thank you.

And so this is the critical anchor strategy both for Optum.

As well as for Unitedhealth group, it's very important part of how we will continue to advance the outsized growth for this enterprise going forward.

With the name towards serving obviously more people and doing so.

And with better experiences comes and lower costs.

It was designed by the Optum team through the strategic process led by Andrew witty and they've done a really nice job deploying of this capability not only in behalf of Optum, but of course on behalf of all of the Unitedhealth group.

Thank you for the question next question please.

Thank you. Our next question comes from a J Rice from credit Suisse. Your line is open.

Hi, everybody just wanted to ask about and a little more.

You've got obviously, a nice step up and growth expected this year.

Any thoughts about what youre, assuming relative to your ability to do normal risk assessments and get appropriately reimbursed for the patient population of you taken a more conservative view given the COVID-19.

Covid backdrop and do you think you can get back to normal there and just any quick comment on the 2020 day rate notice the final rate notice that David just released and how you view that.

Sure Tim No head of MMR.

Yeah. Thanks, a J for the questions. So first.

2022 revenue that youre getting out there with kind.

Diagnosis of capture for 2021 of them a little bit early to talk about that at <unk>, but a couple of things I'll offer is one we're really focused and <unk> are about getting our members vaccinated as soon as possible.

Across the enterprise is also a focus and doing the same for the frontline health care workers and as both of these things happen I think seniors will become increasingly more comfortable accessing care and that will have obviously and impact on diagnosis capture in 2021 that impacts revenue for 2022 remains.

<unk> seen exactly how that timing plays out and we obviously have a bit of time on <unk>.

Remaining as we think about the 2022 bed to inform what does play out at the time of the bid and when that is submitted.

With respect to the final notice that was published by CMS on January 15.

As you know number one earlier then that's normally published and the all in rates that were included and that final notice of just north of 4%.

And there was a little bit of and increase over the advance notice.

And that nothing really surprising with respect of rules or policy changes contained and the final notice of this year I'm really too early to comment on what that means for rates and benefits of lot of moving parts that.

And that remain as we think about the 2022 bid filing.

The call of it is one of those things that we're watching as well with respect to that.

Thanks for the question. It just if I can add on a little bit first one of the key things for us and the reason why Tim start with vaccine is because it's important for us to get our substantial health workforce vaccinated and apart.

And our nurse house calls workforce, so that they can safely.

Pass into the home.

More broadly than what than what maybe what we've seen and including and the.

More volatile circumstances.

And then the other thing just to recognize the the extent that there was impacts on risk adjustment for 2021, we did take those into consideration and providing you with our estimates back in December.

Thanks for the question next question please.

Thank you. Our next question comes from Kevin Fischbeck from Bank of America. Your line is open.

Alright, great. Thanks.

Just wanted to maybe dig back into the the $1 80, Covid headwind is there any way for you to kind of.

Give us more dimension and around kind of how that and.

At least from a relative size perspective flows across the three operating businesses and the three health plan businesses and it sounds like commercial is coming in better than you thought or is there anything that maybe is different than what you thought a couple of months ago. When the first provided that anything better anything worse.

John Rex.

Turning of Kevin and John Rex.

The.

Broad view on that is about two thirds of that relates to the United Health care businesses. When we think about just over $2 billion and impact of negative impact from COVID-19, and 2021 and about a third relates to the optum businesses.

And that's kind of the general view of it doesn't.

As we as we break down to different businesses and think about impacts on those some of the commentary I would offer so with and Optum insight.

Is most sensitive to just kind of broadly claims volumes and business activity general business activity. Those are kind of the factors that have been a component within that.

And the risk bearing businesses of Optum health are impacted similarly to the United Health care businesses.

As you would expect also in terms of in terms of activity there.

Within the different categories.

Across Optum health.

And our across the United Health care in General I would just tell you kind of as we look at that so David just cited that as it relates to how we how we.

Anticipated incorporated thoughts about.

Ability for seniors to access care and get proper of risk adjustment done so fast and impact, but mostly felt within Medicare and retirement and terms of that component of it as you would expect also.

And to some extent and the hope to a lesser extent and the community in states, where you would have some of the of dual special needs plans membership also.

We then optimize Rex that is mostly also a volume driven component has to do largely just with the physician visit activity Oftenly often in terms of scripts being written and and as those of those flow through the system. So those are kind of the broad overall impacts I'd offer and direct any other comments yes.

I think and one of the things you mentioned was the commercial I think what's what's the resulted and sort of a little stronger outlook and what we expected from a membership standpoint.

Persistency was better and there was a lot of groups the decided to to stick I would also say the various government stimulus packages health and I would also say one products stood out for us.

It's our all savers level funded product, which has done extremely well, which is kind of a.

You get back.

The group performed better than expected they get of refunds. If it was worse than they expected and you ultimately get a.

Is it better than expected and they have.

And if they get the refund of this better than expected. So that's the good thing is it's worse than the stuff and the stop loss policy kicks in but long story short I think some good products as we've talked about plus I.

I would say group persistency was a big big benefit to commercial.

Thank you Kevin that's all we have time for today, so apologies to Ralph and Ricky both whose questions got cut off somehow. So please I'm glad we were able to fix that but please give our team of call.

And we will be happy to answer any other questions that you have.

I'd like to thank you all for joining US again today I hope this morning's call provided you with useful context, and importantly, clarity and hope to better understand our ambitions for the year ahead as I said in my opening remarks, we are starting 2021 with an optimistic view.

Despite these extraordinary circumstances, our team continues to manage the challenges at hand with unprecedented resiliency and ingenuity at the same time, we continued to pursue our long term growth strategy within the even greater sense of urgency and intensity building upon the agility insights and considerable new capabilities developed this path.

Year to deliver a high performing health care system built on personal human connections enabled through information and technology and supported by strong alignment of physician led value based delivery of care, serving millions of people one person at a time, while delivering distinguished returns for our shareholders. Thanks again for.

Joining us we'll see you soon.

Ladies and gentlemen. This concludes today's conference call. Thank you for your participation and you may now disconnect everyone have a wonderful day.