Q4 2020 Humana Inc Earnings Call

Ladies and gentlemen, thank you for standing by and welcome to the Humana fourth quarter, 'twenty and 'twenty earnings call.

At this time all participants are in a listen only mode.

After the speaker's presentation, there will be the question and answer session.

And you asked the question during the session you will need to press Star then the number one on your telephone.

For your quiet any sort of existence simply press star zero.

With that I would now like to hand, the conference over to Amy Smith.

<unk> President of Investor Relations. Thank you and please go ahead.

Thank you and good morning, and the moment, Bruce Broussard, Humana's, President and Chief Executive Officer, and Brian Kane, Chief Financial Officer will discuss our fourth quarter of 2020 results and our.

Our updated financial outlook for 2021.

Following these prepared remarks, we will open up the lines for a question and answer session with industry analysts and our Chief Legal Officer, Joe Ventura will also be joining Bruce and Brian and for the Q&A session.

We encourage the investing public and media to listen to both management's prepared remarks, and the related Q&A with analysts.

Additionally, we have posted supporting materials to our Investor Relations page for reference during Brian's prepared remarks.

This call is being recorded for replay purposes.

The replay will be available on the Investor Relations page of Humana's website Humana Dot com later today.

Before we begin our discussion I need to advise call participants of our cautionary statement.

Certain of the matters discussed in this conference call are forward looking and involve a number of risks and uncertainties actual results could differ materially.

Investors are advised to read the detailed risk factors discussed in our latest form 10-K, our other filings with the Securities and Exchange Commission and our fourth quarter 2020 earnings press release as they relate to forward looking statements and to note in particular that these forward looking statements could be impacted by risks related to the spread.

Oh and response to the COVID-19, pandemic, including the potential impacts to us of one actions taken by federal state and local governments to mitigate the spread of COVID-19, and in turn relax those restrictions.

Two actions taken by us to expand benefits for our members and provide relief for the health care provider community and connection with COVID-19, three disruptions and our ability to operate our business effectively and for negative pressure and economic and employment and financial markets among others all of which creates additional uncertainty.

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Our forward looking statements should therefore be considered in light of these additional uncertainties and risks along with other risks discussed in our SEC filings. We undertake no obligation to publicly address or update any forward looking statements and future filings or communications regarding our business or results.

Today's press release, our historical financial news releases and our filings with the SEC are all also available on our Investor Relations site.

Call participants should note that today's discussion includes financial measures that are not in accordance with generally accepted accounting principles or GAAP.

Management's explanation for the use of these non-GAAP measures and reconciliations of GAAP to non-GAAP financial measures are included in today's press release.

And finally any references to earnings per share or EPS made during this conference call refer to diluted earnings per common share with that ill turn the call over to Bruce Broussard.

Thank you Amy and good morning, and thank you for joining us.

Today, we reported adjusted earnings per share of $18 75.

For 2020, consistent with our commentary throughout the year as expected.

Selecting a loss on the fourth quarter, largely driven by our investments and programs to support members patients employers providers and the communities we serve.

Our fourth quarter results were impacted by the continued waiver of Medicare advantage cost sharing and.

Including for primary care and COVID-19 treatment sales.

Livery of meals.

Masks and prevented tests to our members and home assessments and investments and programs to assist underserved communities and <unk>.

And to ease the financial burden for our provider partners for the full year these initiatives among others and exceeded $2 billion.

Defined by the worldwide pandemic, 'twenty 'twenty wasn't unprecedented and challenging year.

I'm proud of the resilience and the response of our associates, putting our members patients and providers holistic health at the forefront while continuing to advance our strategy to.

Despite the pandemic Humana continued to accelerate on all fronts, and 'twenty and 'twenty, including our short term operating and financial performance, our ability to drive and invest and our long term strategic objectives, and and our customer centric. So the efforts the strength.

Of our underlying core business is compelling.

And our health care of service business, we delivered double digit percentage growth and adjusted EBITDA year over year and 2020.

With our pharmacy provider and home business, all performing well.

And our farm and see business, we processed 478 million scripts and drove mail order penetration of over 37% and <unk>.

M. A P D. Today, our pharmacy business has organically grow into the fourth largest pharmacy benefit manager for Pbms.

And our provider business, we ended the year with.

156 wholly own primary care centers after opening 15, new centers in 'twenty, and 'twenty, including expanding to Louisiana and Nevada.

In addition, our can Veeva primary care clinics delivered significant clinical and financial improvement has the turnaround and the business continued including a 5% reduction and admissions per thousand.

And the home have made important investments and our strategy to offer primary care and post acute services in the home to the minority investments and heal.

Pioneer of in home primary care and disk and dispatch Hell the provider of emergent and home medical care.

In addition, kindred at home's successfully manage the transition to the new CMS payment model, while also implementing a new operating system and twenty-twenty setting it up to drive further operating model of advancement and 'twenty 'twenty one.

We demonstrated and over.

50000 home episodes and integrated new proactive clinical models within the nurse's workflow significantly reduces downstream of emergency room visits and hospital admissions and the <unk>.

Success of these clinical test and learns and provides the confidence scaling these programs will provide meaningful quality and cost improvements and 'twenty 'twenty, one and beyond.

We also delivered strong fundamental results and our core insurance business fallen investing for the long term.

We remain very focused on the consumer experience broadly across all platforms and are proud to have driven and overall 670 basis points increase and our net promoter score for M. P. S and 'twenty 'twenty, one of a meaningfully higher increase and our N P. S for.

The commercial group business.

We also announced that 92% of our MAA members are in plans rated four stars or higher.

Leading the public traded and MA companies.

We ended the year with approximately 4.6 million total Medicare advantage members, reflecting year over a year of growth of 11%.

Fueling consolidated revenue growth of 19% and 'twenty 'twenty the per.

Positive momentum continued and 'twenty 'twenty, one Medicare advantage annual election period or AEP for the full year, we are expecting individual and they growth of approximately 425000 to 475000 members or and 11% to 12%.

Importantly, as in prior years, our robust growth is balanced across multiple and they planned times as a result of the strength of our clinical programs provider partnerships and distribution channels as well as our broad offerings that allow for deeper personalization.

Nation to meet the member needs.

And the AEP, we led the industry in each of HMO special needs plans of our D SNP and and they only membership growth and continued to grow our L. P. P O membership.

We also launched authored by Humana, and South Carolina and January managing five Medicare advantage plans with the approximately 13005 hundred members.

Author is designed to meet the emerging expectations of digital savvy seniors aging into Medicare Levered.

Leveraging health coaches and digital and artificial intelligence.

To create of simplify and integrated experience for consumers.

We plan to scale authored by delegating more MAA lives over time and look forward to sharing our learnings.

We continue to focus on how we can expand our presence with underserved populations and.

Effort to drive improved clinical outcomes and reduce health disparities and.

And Medicare advantage, we experienced industry, leading growth in D SNP and 'twenty 'twenty, increasing the Smith membership for approximately 41% year over year.

We expect another year of robust D SNP membership growth and 'twenty 'twenty one.

Our Medicaid strategy is predicated on the core strength of our Medicare chassis, including our clinical programs provider relationships focused on value based care and commitment to investments and the communities we serve.

We are able to offer states individualized approach to care that considers the physical and mental well being of beneficiaries as well as the critical social determinants that impact the population.

We began serving Medicare members, and Kentucky, and 'twenty, 'twenty, and recently announced our entry into the South Carolina Medicaid program as well as the acquisition of eye care and Wisconsin.

We firmly believe organic growth is the most efficient use of capital for our shareholders and remain committed to further organic Medicaid growth supplemented by smaller tuck in acquisitions.

We have a long history of success growing our Medicare advantage and pharmacy businesses organically and and just the last week. We were awarded the managed Medicare contract and Oklahoma State that previously did not offer managed Medicaid.

I would like to thank the Medicaid team for their tireless efforts and congratulate them on these key wins.

As I reflect on what we've learned from the pandemic I am energized by the way the collective healthcare system responded to the crisis and how actions taken to combat the pandemic strengthened and accelerated critical tenets of the system.

As an industry and partnership with policymakers, we took deliberate and sustained actions to remove financial barriers and the enhanced access to care and the response to the pandemic.

Easing some of the burden on our nation's most of them vulnerable population at a time when they need it most.

Supported by CMS health plans and providers proactively address social determinants of health at work that were exacerbated by the pandemic and quick quickly pivoted to the telephone chronic and in home care.

Advancing in a matter of months, what may have taken years absent of the pandemic.

Our combined actions underscore the strength of the Medicare advantage program as an enduring public private partnership that puts seniors and their holistic health at the forefront.

Humana's pandemic response continues to evolve and we are actively engaged with the binding administration, including HHS and CMS as well as state and local governments regarding our role and the vaccination and process has both a primary care provider and.

And as a health plan, representing a significant portion of the nation's most vulnerable population.

As such our role is multifaceted and we stand ready to assist further as the nationwide distribution progresses to later phases and more and more individuals become eligible for the vaccine.

Driven by our strong care coordination capabilities a role includes identification of eligible members utilizing our analytics and.

The vaccination and education counts and concierge services.

Second dose reminders and ensuring we follow up on any complications.

We are also engaged and industry wide efforts to conduct vaccine surveillance identify regions, where vaccinations are lagging and intervene to help our members access vaccine.

By collaborating with other health insurances.

We can a lot and regionally communication efforts to educate and engage members and reduce disparities and vaccine use across the U S.

And equity and health care is an area that we're particularly focused on recognizing that we must play a critical role working closely with our industry and governmental partners to address the imbalance that exist today.

Data shows that Medicare advantage is continuing to grow as the preferred option for those who are low income and for racial and ethnic minorities.

Of the nearly 26 million of advantage of Medicare advantage members. There is a growing diversity and enrollment with more than 28 per cent of the beneficiaries being racial and ethnic minorities as compared to 21% and traditional Medicare.

This day demonstrates.

Demonstrates that as we think about disparities and health care for underserved populations Medicare.

Medicare advantage plans are uniquely positioned to address the needs of these members.

Humana is committed to leverage our business and platforms to support local communities and their efforts to lower social and health disparities. This.

And this includes enhancing access to care by continuing to expand and build primary care centers and underserved markets.

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And as well as taking the leadership role and enhancing innovative solutions aimed at addressing social determinants for both Medicare and Medicaid.

In addition, we recently named Doctor Wandoo, although all of them to the newly created position of senior Vice President and Chief Equity Officer effective in April of this year and.

Doctor all the while we'll set direction and establish the strategy to promote health equity across all humana lines of business and.

Including our care delivery assets, while working collaboratively with the broader health care community to advance health equity So health Kurt can work better for everyone regardless of background.

Our economic status.

In closing, we remain committed to public private partnerships letters and solution oriented and drive results that will meaningfully benefit the health care system and the coming years.

With that I'll turn the call over to Brian.

Thanks, Bruce and good morning, everyone.

Today, we reported full year of 2020 adjusted earnings per share of $18 75, consistent with our guidance commentary throughout the year.

And as Bruce described in detail. Despite the unique challenges we faced in 'twenty and 'twenty due to the pandemic our fundamentals remain very strong with the underlying core business delivering compelling results for the full year, including a 19% increase and consolidated revenue and an 11% increase and our total Medicare advantage membership.

We were also pleased to be able to maintain stable benefits and premiums for our members. Despite the return of the $1 2 billion dollar health insurance fee or Hiff, which was not deductible for tax purposes, and disproportionately impacted our business relative to the competition.

In addition, I would like to Echo Bruce's congratulations to our Medicaid team for our recent contract awards, and Oklahoma, and our announced expansion and South Carolina.

These awards further demonstrate our ability to drive organic Medicaid growth and together with our <unk> acquisition, and Wisconsin expand our Medicaid presence from three states to six.

I will turn now to our fourth quarter results and underlying trends, which provide important context for our initial 2021 guide.

As expected, we reported and adjusted loss per share of $2 30 for the first for the fourth quarter of 2020 on account of the significant investments made and all of our constituents because of the pandemic.

Further as disclosed in our 8-K filed January as we experienced a significant increase and COVID-19 treatment and testing cost across the nation in November and December.

For full year, 'twenty, and 'twenty, we incurred $1 $5 billion and gross COVID-19 treatment cost $1 3 billion of which were related to Medicare or $825 million net of capitation to providers and risk arrangements.

As a result of the dramatic increase and Covid during these months.

We also experienced a decline in non COVID-19 utilization in the fourth quarter, particularly for Medicare as fewer people saw non emergent care.

As a result, non COVID-19 Medicare utilization was approximately 15% below baseline in November and December after having nearly returned to baseline levels and October.

Overall utilization and the quarter, including Covid costs was a bit below baseline for Medicare and above for commercial.

While the magnitude of these changes was unexpected the decline and non COVID-19 utilization in the quarter relative to our prior expectations more than offset the increase and COVID-19 treatment and testing costs. We were therefore able to increase our spending for ongoing pandemic relief efforts and investments to advance the company's strategy.

It is important to note that investments and the group and specialty segment in the quarter, particularly those intended to ease financial stress for providers, while positioning the business for long term success, we're disproportionate relative to the reduction and non COVID-19 utilization levels for the company's commercial group medical and specialty members significantly increasing.

The segment's benefit ratio.

In addition, as is customary marketing costs associated with the Medicare advantage annual election period, along with Covid related investments were heavily weighted to the fourth quarter and our retail segment as reflected in our operating cost ratio.

I will now speak to our expectations and related assumptions for 2021 today, we are providing adjusted EPS guidance for 'twenty 'twenty, one of $21 25 to $21.75, reflecting approximately 16% growth off of our $18 52020 baseline at the midpoint.

While this guidance is consistent with our previous high level of 'twenty 'twenty, one common share commentary from our third quarter earnings call. The embedded COVID-19 assumptions and todays guidance have changed materially since that time with largely offsetting headwinds and tailwind and revenue and benefits expense.

This is consistent with our previous commentary that there are natural countervailing forces between trends and COVID-19 treatment cost and trends and non COVID-19 utilization.

Importantly, and an effort to simplify any explanations we are going to provide we have included a slide on our investor Relations website, which summarizes the expected full year impact of the various material headwinds and tailwind to our guidance today, rather than discussing any incremental changes since the third quarter conference call.

At the time of that call, we reflected both revenue and expense puts and takes each of our high level commentary about expected 'twenty 'twenty one financial performance.

Since that time, the magnitude of the Covid related impacts have increased significantly.

Therefore, as I said, we will provide full year estimates inclusive of where we stood at the time of the third quarter call. So as to provide our investors with a comprehensive assessment of our latest estimates.

I would note that this heightened level of transparency, whereby we provide granular assumptions on a number of variables is necessitated by the unique the unique uncertainties that the pandemic creates for our 'twenty and 'twenty one financial outlook.

I would also note that the numbers, we're providing today are for individual and group Medicare advantage over.

As the net impact of the pandemic on our other lines of business is currently expected to be relatively immaterial.

Additionally, it is important to note that we are providing reasonably wide ranges given the inherent uncertainty of our estimates for each line item and.

And finally, so as to make it easier for investors to understand the full financial picture all.

All of the Covid related figures, we are discussing today are net numbers.

After taking into account, our capitation agreements and which provider groups take risk and whole or in part on the member.

With that context, I will now discuss the material COVID-19 related headwinds and tailwind facing our Medicare business and 2021.

I will begin with Medicare risk adjustment or MRA, and we now expect and MRA revenue headwind of approximately $700 million to $1 billion representing.

Representing one to one 5% of Medicare premiums for the full year.

As a reminder, humana 'twenty and 'twenty one Medicare advantage revenue is primarily driven by the risk assumed to care for our membership established through conditions documented by providers within the 'twenty and 'twenty calendar year.

While we know the 2021 perspective payment amounts from CMS based on diagnosis codes incurred through June of 'twenty, and 'twenty and submitted by the first Friday and September over the coming months. These payments will be adjusted to reflect additional conditions documented for claims incurred within the 'twenty and 'twenty calendar year.

While we estimate and accrue for the incremental revenue from anticipated submissions as the year progresses. There is a higher degree of uncertainty and our revenue projections compare to a normal year let.

Let me spend a few minutes addressing the drivers of this increase uncertainty.

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While we worked tirelessly throughout 2020 to ensure members had access to and we are receiving the appropriate level of care, including by significantly increasing outreach and availability of in home care and providing access to video telehealth clinician visits the meaningful drop and non Covid medical utilization and November and December.

Was not expected.

Those are important months as they round out our ability to drive meaningful clinical interactions with our members and therefore, the unexpected decline in utilization affected our ability to appropriately appropriately document their conditions.

Second the mix of utilization was very different in 2020 relative to prior years. For example, the dramatic increase and the number of telehealth visits from 2019, the 'twenty 'twenty, although critical and allowing our members to access care, while affording us the opportunity to document the conditions Nonetheless creates greater uncertainty around.

The type and volume of diagnosis codes collected.

Separately, Utah.

Utilization for inpatient and non inpatient and continued to increase for COVID-19 diagnosis throughout the year accordingly within the mix of submissions from 'twenty and 'twenty that drive our 'twenty 'twenty. One revenue. We also expect organic diagnosis code submissions tied to Covid claims for which we have limited visibility at this time.

These are just two examples of how emerging experience of 'twenty and 'twenty creates more uncertainty and our MRI revenue projections for 2021, because we were not able to place the same level of reliance on historical trends as compared to a normal here.

I will now discuss COVID-19 related utilization.

As a general rule, we have seen an inverse relationship between COVID-19 treatment cost and levels of non COVID-19 utilization and.

As searches and the pandemic led to the led to less nonessential care being sought by our members.

While the ratio of Covid treatments and non Covid depressed utilization has varied to date, we have seen in our Medicare book that the level of depressed utilization has more than offset the treatment cost.

The shape of the Covid case curve is one of the largest driver drivers of these two related factors and as such they remain the two largest sources of uncertainty for 2021, given the unprecedented nature of the pandemic.

Just set a bit more context around what we're seeing currently the COVID-19 and non COVID-19 utilization trends, we saw on the fourth quarter persisted throughout January.

Medicare inpatient non COVID-19 utilization is running approximately 20% below baseline with.

With non inpatient reduction percentages in the low teens with the significant caveat that we are of much better view of inpatient admissions for which we receive weekly authorization data data than we do for non inpatient utilization.

Importantly, the increased COVID-19 treatment costs incurred in November and December 'twenty, and 'twenty ramped up quickly with the reduction in non COVID-19 utilization initially lagging that ramp as would be expected.

We expect the inverse to occur in 2021, such that when COVID-19 treatment costs begin to decline the rate of decline will likely be steeper than the bounce back and non COVID-19 utilization, but essentially creating a favorable impact for a more prolonged period of time.

This is consistent with what we saw throughout 2020 as Covid cases ramped up and then declined in various markets.

As a result, we now expect Medicare Covid treatment and testing costs of 525 million to $925 million.

Which when combined with the Medicare physician fee schedule increase that I will discuss in a minute represents approximately $1 nine to three 1% of normalized Medicare claim costs.

This is similar to what we experienced in 'twenty and 'twenty and is consistent with the expectation that the pandemic will begin to subside as more people get vaccinated through the first and second quarters.

In addition, subsequent to the third quarter call of net claims headwind of $175 million to $200 million.

Resulted from the increase to the physician fee schedule rates for 'twenty and 'twenty, one as part of the December stimulus Bill, partially offset by a net $80 million to $90 million impact from the Medicare sequester relief extension through March 31.

Our guidance today does not assume that the sequester relief will be extended for the rest of the year.

Finally for full year 2021, we currently expect the reduction of $1 3 billion to $2 billion and Medicare non COVID-19 the utilization of a normalized claims pattern, including lower flu costs, which are significantly reduced compared to normal seasonal patterns.

This reflects overall non COVID-19 annual reductions of approximately $3 six the five 5% of a normalized claim pattern and inclusive of COVID-19 treatment costs, a reduction of approximately 1.7 to $2 four per cent.

For full year 2020, the all and reduction within without Covid was approximately $5 nine and eight 6% respectively.

We of course acknowledged that the ranges we are providing our wide and are a consequence of the continued heightened uncertainty surrounding the ongoing pandemic.

We recognize that it will take at least several months to both ascertained from CMS and the negative impact to our 'twenty 'twenty, one revenue growth expectations, resulting from decreased utilization experienced in 'twenty and 'twenty, including in particular, the unanticipated depression, and non COVID-19 utilization and the final two months of 'twenty and 'twenty.

And to the extent to which this reduction and utilization and associated medical cost impact net of Covid related expenses persists into 2021.

With respect of quarterly utilization patterns, and our guidance ranges assume that we will experience non COVID-19 utilization levels that reflect double digit percentage of reductions to baseline levels throughout the first few months of 'twenty 'twenty one.

Before ramping back up and running slightly above baseline levels towards the end of the year.

Similarly, we assume assume COVID-19 testing and treatment costs will continue to run at the higher levels experienced in November and December and the first quarter of 2021 and trend down as the vaccine becomes more widely available and the second quarter.

With that said there are a range of potential scenarios and we would expect any variance in our assumptions around COVID-19 treatment cost to be more than offset by a change and non COVID-19 utilization as.

As I said before we expect that Covid and non Covid utilization are driven by naturally countervailing forces also as a reminder, we believe capacity constraints and the health care system will prevent non COVID-19 utilization from running materially above baseline and also limit the amount of time, a modest increase above the normal baseline could continue.

Therefore, given the deviation from historical patterns, we will experience in 'twenty and 'twenty, one forecasting quarterly EPS splits is much more difficult than usual, but we do expect a meaningfully higher portion of our earnings coming in the first quarter than we typically see.

As such we expect the first quarter to contribute just below one third of the annual total versus a more typical first quarter, which will contribute 800 to 1000 basis points less.

As an important aside while utilization patterns will be most significantly affected and the first quarter of the year, we expect the negative impact on revenue to be more to be more equally split throughout the year.

Now that I've walked you through the material Medicare headwinds and <unk> I'm going to turn to our expected operating performance by segment.

I encourage you to reference the waterfall slide provided on our Investor Relations website with the webcast materials.

As outlined in the waterfall given the pandemic, we must first reset the baseline off of which to grow 2021 adjusted EPS.

And as discussed previously our starting point is $18 50, which represents the midpoint of our initial adjusted EPS Guide for 2020, and effectively neutralizes for any COVID-19 impacts throughout 2020.

Importantly, we believe we struck the appropriate balance and our pricing between top and bottom line growth, while investing for long term sustainability contemplating both the permanent repeal the health insurance industry fee and the significant impact of the pandemic, which creates more uncertainty than we would experience in the typical here.

Our 2021 consolidated revenue guidance of 83 billion to $81 9 billion at the book midpoint reflects year over year growth of approximately 8% from adjusted 2020 consolidated revenue.

This growth is primarily driven by our expected 11% to 12% individual MA membership growth, partially offset by anticipated declines and group of Mei and Standalone PDP membership.

The revenue was also adversely impacted by the Emirate MRA headwinds previously discussed as well as fewer months of support of sequester relief and 'twenty 'twenty one versus 'twenty 'twenty.

Additionally, and as previously discussed the after tax benefit of the hip was worth approximately $2 and EPS and we took a balanced approach and increasing our benefits to our members well, while providing enhanced earnings to our shareholders. We have incorporated the hips impact and the segment waterfall bars.

And our retail segment, we are excited about the balance of Medicare growth, we have seen in particular, and particularly our industry leading DCF growth.

Our Medicaid business also continues to perform very well and we are excited about the opportunities ahead for this growing business taken together. The retail segment is expected to ship to show strong operating improvement as demonstrated in the waterfall contributing an incremental dollar of 21 to adjusted EPS.

With respect to our group and specialty segment, while we are facing some pressures on account of the pandemic specifically as it relates to actions by our competitors to retain membership the business continues to execute on its growth strategy and we are excited about the prospects for our major medical and specialty and military businesses, we expect the segment to contribute.

Approximately <unk> <unk> of incremental adjusted EPS to the enterprise for 2021.

For health care services, we experienced double digit adjusted EBITDA percentage growth for 2019 of 2020 and expect high teens growth year over year and 2021 accordingly.

Accordingly, we expect the increase and health care services adjusted EBITDA to contribute an incremental dollar of 72 to adjusted EPS.

And our pharmacy business, we anticipate continued momentum momentum primarily driven by our strong Medicare advantage membership growth and continued increased mail order penetration.

Likewise, our home business is anticipated to perform well led by kindred at home and our wholly owned provider businesses continue to improved core operating performance, while meaningfully expanding expanding our primary care center footprint as Bruce described in.

In summary, our 2021 adjusted EPS guidance of 21 25 to 21 75 reflects growth of 16% from the $18 50 baseline at the midpoint modestly above our long term target of 11% to 15%.

Since 2017, following the termination of the Aetna merger. The company has achieved an adjusted EPS compounded annual growth rate of 16, 4%, which is above the top end of our 11% to 15% long term growth commitment we have made to our investors.

While it's very early I want to close with some preliminary thoughts on our current view of 2022.

Our expectation is that 'twenty and 'twenty, two will be a more normal year and as we get into the spring and summer. We expect the vaccine the take hold and COVID-19 utilization to decline, allowing non COVID-19 utilization to trend back to more normal levels, enabling providers to see our members and the ordinary course and appropriately document their clinical conditions, resulting.

And more normalized medical cost and revenue expectations for 2022.

Therefore, barring any major unforeseen circumstances or significant changes and the course of the pandemic. The mid point of the 'twenty 'twenty one adjusted EPS guidance that we provided today. We're 21 50 as the baseline off of which investors should think about growing earnings for 2020 due 2022.

As we do every year, we will consider a variety of factors as we approach our bids and the spring, including any lingering impacts of the pandemic either on revenue or utilization relative to baseline as well as other external dynamics.

Before I open up the line for questions. I also wanted to announce that we plan to host an investor day on Tuesday June 15th 2021, Please save the day with that we will open the lines of for your questions and fairness to those waiting in the queue. We ask that you limit yourself to one question operator, please introduce the first caller.

Thank you we have our first question from the line of Kevin Fischbeck from Bank of America. Your line is open. Please go ahead.

Great. Thanks, maybe just following up on that last point about kind of how you guys of viewing this year's guidance.

As the baseline I guess when you guys submitted your bids.

Back in June obviously, theres been some legislative changes.

Things like that that have happened.

So basically what you're saying is that COVID-19 has completely.

Offsets all of the kind of external.

Sales of changes and everything else I, just want to make sure that I.

Understanding that correctly and that against everything can be.

Sort of quote.

I guess I'm, just struggling a little bit with the $2 of Pip and how to think about that over a multiyear period. It feels like it's a relatively low.

Net addition overtime.

Well good morning, Kevin Let me, let me just try to provide some context on on our bids and how we roll forward today, when we approached our bids and the spring and early summer. This past year. We obviously knew we had a significant pandemic that we had to contend with and we ran a host of scenarios.

On the revenue and the cost side to put into pricing, what we felt was and appropriate adjustments and the were certainly countervailing forces. We anticipated that there could be a revenue headwind, we ran various utilization scenarios to see whether it would be any offsets and we put on.

Our assumption into our pricing.

Rolling forward for the third quarter, when we gave guidance obviously a lot of things by definition change since pricing and the sort of the high level guidance. We gave at the time reflected our current view of those headwinds and tailwind that we would face and would also remind you that as we've said multiple times throughout the year that our operators are spending of significantly.

A significant amount of time working to try to mitigate any of those revenue headwinds I really trying to see our members, which was really important to get into their homes visit them either in person or via telehealth, where we'd also have the benefit of being able to document their conditions and so we took a really significant effort.

Invested a lot of dollars to be able to do that and so as we approach the third quarter of we understood where we were relative to those expectations and obviously updated our utilization expectations for 2021 and in that context, we provided 2000 and 'twenty, one guidance or high level guidance.

November and December happen lot changed significant decrease in utilization, which was unexpected as the COVID-19 pandemic really took off and it hit levels that really exceeded any expectations and were much higher levels than where even a hit and the spring and was nationwide and so that clearly impacted our perspective and so as we.

We approach the the JP Morgan Conference in January we felt that was important to get out to our investors and provide some high level commentary on what we're seeing off of that potential countervailing headwinds and tablets.

And so we've done that here, we provided obviously a lot of granular detail on that but theres a lot of variation and these numbers I mean, you can see there are wide range, it's and we've deliberately provide those wide ranges. We think what's on this page is obviously reasonable.

And there's nothing that we're seeing that suggests that these numbers arent reasonable, but where we fall and these ranges on all of these on all of these variables matters a lot and that's something obviously that we're going to continue to watch closely and as appropriate we would update investors on that but I would just say and as we said and our remarks that 'twenty and 'twenty one has heightened uncertainty relative.

<unk> too on what we thought coming into the year and to your question on the hip.

We actually feel.

We achieved and appropriate balance between giving dollars back to our members through higher benefits, which we did and giving higher.

EPS growth to our shareholders, where we're exceeding our typical of 11% to 15% growth and had our mid point notwithstanding all of the the COVID-19 headwinds the tailwind we were still able to guide to the mid point that's above that range. So we think we've achieved the right balance there's no doubt the 'twenty and 'twenty. One is the heightened level of uncertainty and we're gonna be monitoring it very.

Closely and keep you updated which is why we've also I think anchor of investors on 'twenty and 'twenty two with the hope and expectation that that will be a much more normal year.

Alright, Thanks, and then just suit yeah, just to add a lot of it on the left side of our historical practice has been.

And passing the trade tax on to the to our members of both the cost and the.

And the benefit and as.

Do you Wanna has come and gone and the years. So this past.

Bid season is very consistent with what we've done on the pre tax item on the <unk>.

The tax side of the tax benefit and we've always tried to be Cheryl as malls.

And so both of our members and shareholders and we tip up quite a divided the 50 50 of your public when the cost side and.

And on the and of the benefit side. There. So I think what we've done the share is pretty consistent from from our historical treatment of of the of the half.

Great.

We have our next question comes from the line of Wiki Goldwasser from Morgan Stanley. Your line is open. Please go ahead.

Yeah, Hi, good morning, and thank you for all of the details.

And just couple of questions of clarification, when we think about and your guidance instead of the balance the cadence between first half and second half of what are the embedded assumptions for return of utilization for the Medicare population versus the versus baseline or at least what is the range.

And then secondly, when we think about 'twenty 'twenty two to your point, you know, who you want us to anchor and 2022.

And after that starting point of 21 50, but when you think about the the 'twenty 'twenty, one and Covid related headwinds could you maybe help us quantify what is reasonable for us to back out.

Of the 'twenty 'twenty, one numbers and we think the more normalized 'twenty and 'twenty two.

Well I think were really one time and nature yeah. Yeah. So let me start with the utilization patterns and and try to address 'twenty and 'twenty to recognize and we just gave 2021 guidance. So.

And we're not going to provide a lot of details on 2022, obviously.

With respect to the utilization patterns as we mentioned and our remarks, we expect the first quarter to see the most depressed utilization and certainly the highest COVID-19 treatment cost and and so those as I mentioned offset one another.

But again, we expect that the most sort of utilization of depression will occur and the first quarter, we expect the utilization to remain depressed and the second quarter, although not as much and then we expect it to ramp up more towards normal and then a bit above normal as we approach the back half of the year and the end of the year and so that's how we're how we're broadly.

And thinking about it which.

And which we think is consistent with what we're seeing with the vaccine and the vaccinations and the progress there.

And as that impacts 2022, it's really hard to give specifics at this point again, we will have to decide when we get to the spring what what's appropriate to reflect in our beds.

And we'll be very mindful of what we're seeing in terms of headwinds of tailwind with respect of Covid and revenue and utilization like we were this year, but beyond that I wouldn't want to comment other than to say, we do think 'twenty, one and 50 is a reasonable baseline off of which to think about 2022 without providing any more specifics beyond that.

Today.

Next question please.

I think of our next question comes from the line of Josh Raskin from Nephron Research. Your line is open. Please go ahead.

Hi, Thanks. Good morning, So I know you guys just spoke of in the past about new members and MMA coming in at higher MLR and that first year.

Could you just give us a sense as to what the typical first year of MLR looks like for and I'm a member and then.

The inability to risk code is that affecting new lines at all or is that really just an existing book that typically sees the revenue improvement.

And then apologies, but I'd just clearing I know 2022 isn't a we're not looking for guidance here, but is it correct to think that there'll be kind of a bolus of premium benefit you'll have all of the older members that have been with you for a couple of years that get coded correctly as well as the new cohort in 2021 is that a fair way to think about the MRA benefit in 'twenty and 'twenty two.

Yes.

Josh So the way I would think about it rather than focusing on and the ours and rather just focus on on pre taxes, what we what we've discussed in the past I think it's fair to say that that new members tend to be breakeven and diesel.

And you run a little bit better.

Out of the gate, but not of lot of profitability and the first year certainly as we get to the second and third year, we start getting to more of our normalized margins as we're able to document.

Our members' conditions and also get them and our clinical programs and that really Hasnt change I think that's consistent.

With what we've seen and and certainly that's what we typically plan for.

And our bids where the.

And without providing too much detail on 'twenty and 'twenty two I think it's fair to say that you you might see effectively of catch up in 'twenty and 'twenty. Two so any MRA revenue headwinds we've seen in 2022, which is a function of sort of our existing membership base and remember it's not just the members that we've had but it's also the new members that we got.

Particularly if they were in other Medicare plans. So if there were a switcher. They would also have sort of we would have less of their documentation of the normal for the same reasons, because our competitors weren't able to get those coke those conditions documented either and so you will see sort of and the.

For the for US the 22021 cohort as well as strength some of our other cohorts, where we werent able to re document their conditions you will see a more of a sort of an increase of 2022 and that will be something that we planned for and our bids as we figure out what what percentage of normal do do do we expect to be for <unk>.

And 22 based on 2021 utilization.

The whole hopefully that hopefully that was clear.

Perfect perfect. Thanks, Okay. Thanks, Josh.

We have our next question comes from the line of Ralph Giacobbe from Citi. Your line is open. Please go ahead.

Thanks, Good morning.

Just wanted to go back and understand the assumptions on the core again or the non COVID-19 utilization I think of the slides at CIT and minus three six to minus <unk> 5.5, it sounded like that was off of the 2021 normalized baseline.

One of make sure that's right and it I guess it would be helpful to understand what you normally assume for utilization increases or maybe even just how it compares the kind of 2019.

And then it sounds like the first quarter running down 20% on the non Covid the did I hear that right.

Sure.

Yeah. So Ralph so we don't we're not going to give you a specific sort of utilization assumptions.

We're very transparent, but we can't be that transparent on some of our core stuff on that regard.

But I would just say.

And as it relates to utilization we have been.

Thoughtful about sort of normalized trends and then think about what the impact might be when we when we did our pricing for for 2021 and all of these various variables that we've that we've talked about really what we mean by normalize baselines is actually really straightforward, which is to say if you were if you just stripped out COVID-19 entirely what would the.

The assumption be based on sort of the normal inflator, we would use from 'twenty and 'twenty, one and over 2020 and.

So whatever sort of secular trends and other things that we build and trend vendors and other things we'd get to the sort of a net trend ex COVID-19 and that's really the baseline just to give you a make it easier for you to compare.

Relative to say on 2020 ex Covid, what the baseline reduction is and that's why.

And I tried to say sort of ex Covid for Medicare and it was call. It eight eight and a half a 0.6% down.

For for 2020 relative to the $3 six to five and 5% that we guided today. So again, we think that we think that number is reasonable again, we could be wrong.

And there's there's a wide range here and I guess and I'd just emphasize that there is more uncertainty around the 2021 number than we would typically have because when we formulate those trend assumptions that you were asking about we have a lot of historical experience. We have hundreds of actuaries very smart people working on our trend assumptions and something that we think we are.

We were very good at and ensuring we baked in the appropriate levels of potential tret variances were dealing here and a whole new world with the pandemic, where we have no historical experience and so that's created some of the challenges and are forecasting.

Okay. That's helpful. Thank you.

Our next question comes from the line of AJ Rice from Credit Suisse. Your line is open. Please go ahead.

Thanks, Hi, everybody.

Just.

Drill down a little bit on the 'twenty one the outlook so.

You've got the Covid testing and treatment.

Wind is substantially less than the tailwind for the Bruce Covid utilization, but you're talking about the interplay there and I'm thinking of the prepared remarks, you said is the vaccine gets a widely disseminated you'd expect.

The COVID-19 testing and treatment to come off quicker than the utilization of non COVID-19 sort of come back so long winded setting the stage for the question. So if you if.

Of the vaccine gets widely distributed quicker than you think or later than you think.

Does that move the assumptions around within the range or could that throw you outside the range and I guess I'd also ask and you've talked a lot about the investments that you've made this year I know a lot of that investment was just giving help to your constituents, but does that give you any flexibility within the guidance range, because you pulled forward investments and <unk>.

'twenty and 'twenty that would've otherwise kind of happened and 21, how much flexibility does that is that give you and your range.

Yes.

Good morning, a J I would say on the first question Theres, a lag really because as people are not so we are seeing their doctor and and going to going to the hospital, they're not able to schedule of the surgeries. For example, it just takes time for the system to ramp back up. So there is just sort of natural trail off.

And that.

Given the volumes, we're talking about they're not they're not insignificant and its one of the reasons why we had the tailwind. We had in 2020 was that was that delay and just takes time to get the gears cranking again, and they will crank again, and we and we certainly forecast that but there is that that that delay to the extent the vaccine rolls out more.

Slowly or Theres, a variant and the and the virus.

We've heard and that they're not as effective that for sure can affect our ranges here. We've tried to capture what we think are reasonable ranges based on todays sets of facts and circumstances to the extent those facts and circumstances change. It's conceivable that some of these sort of COVID-19 treatment versus non COVID-19.

Cost of that that could be impacted again, it's likely that.

There's a.

Theres that inverse correlation and they will offset one another but when the Medicare business. It tends to lead to a tailwind as we've mentioned the commercial business is not as clear.

You mentioned and the fourth quarter, we were running a little bit above a little bit above par all in but for the Medicare business we were below.

On the investments to your question there, we we really I would say all of those out for 'twenty 'twenty. One so there's really not any additional flexibility. There we were very clear to confine those investments for 2020 and as we've described we benefit all of our constituents and really getting back a lot of those dollars, which was important to do but that was not.

Baked in and any and any wage for 'twenty 'twenty one pricing.

Our tour guide.

Okay. Thanks.

Yep.

And we have our next question comes from the line of Robert Jones from Goldman Sachs. Your line is open. Please go ahead.

Great. Thanks for the question I mean, maybe just to go back to the MRA headwind you know I know I know, it's a tricky thing to get.

Your arms around but maybe just more of a tactical question. If you are in fact expecting non COVID-19 utilization to be down again, because of obviously because of COVID-19.

Obviously, the risk adjustment was an issue coming into this year I guess, just tactically speaking one thing specifically are you thinking about doing differently in 'twenty, one as it relates to getting the appropriate risk coding.

And that there's probably going to be a similar dynamic at least for part of the year.

That made it and the challenge coming into this year just curious if there's a different approach maybe you're taking on more aggressive approach of taking this year as it relates to the risk coding.

Yeah, Brian and I'll take that and to give you a little break.

The.

Just on the Oh, we and the and the ROE at the third and fourth quarter were more of a fairly aggressive and trying to ensure that our members.

Utilizing the health system.

And in addition that we are of being able to provide and home assessments and.

Other areas of our documentation was the appropriate and I would say.

And we would continue and to carry that forward and the and the first part of the share and and continuing throughout the year because we did bring the dress why were at and and began to really become kind of aggressive and use all of our availability I do believe the biggest area that we are.

The challenge with this is the just the normal course of the people not using the health care system.

We are very active with our value based providers and in addition, with with our outbound.

Ah bound.

Engagement with our with our members to ensure that they are going to the to the.

And all of US are are utilizing the health care system.

Well continue to do that and we have a team of people that are and focused on those every day to try to really help whether it's lining of transportation to the ability to for us to provide telehealth to them to the the ability to have and in the home assessment and I.

Really I would say well just continue to do all we did the third.

The quarter.

But getting people and to the health care system is I guess about the opportunity and and challenge and as the health care system and re.

And we adjust itself to really true trading COVID-19 and and this.

And the social isolation and becomes more and more of an issue and where are the markets are spiking and really gives us the largest challenge I think and it was just COVID-19 related and it was Charlie.

The stable on the marketplace for me would be able to navigate through this kind of trailing effect of fashion with the programs we have.

Thanks Bruce.

Yeah.

Our next question comes from the line of Justin Lake from Wolfe Research. Your line is open. Please go ahead.

Good morning.

Just a couple of questions here on numbers of first U can you and you've given us a lot of detail here can you tell us what the what the total Medicare risk adjustment impact was for 2021 on a gross basis, meaning how big of an impact is it true your yields overall and what do you expect your yields to be for.

<unk> 2021 on a year over year basis, and then just on Medicare advantage margins. It looks like the retail margins were about 3%.

And the within guidance and.

Can you confirm thats kind of where you expect the individual Medicare advantage margins to be in 2021. Thanks for.

And good morning, Justin.

So on the MRO side of that what we're showing here effectively as the total headwind.

Net of of mitigation and so as Bruce just described and we did a lot too.

Really try to get our members into the health care system and make sure we can see them and so this is this is this is the sort of the full the full headwind that we that we currently face and and again, we wanted to be very transparent, but this is net of our mitigation efforts.

As it relates to yields.

We typically don't as you know guide to the Pea and Pms, but just to help you out I would say sort of flat maybe modestly up is the way I would describe our our individual and eight P. M. P M expectations, and we'll see where that ultimately goes on but there are a lot of things that impact that Justin as you know obviously MRA is one of them the right notices and <unk>.

Other sequester is another member.

And remember the fewer months of sequester relief this year business mixes of very significant and driver because they're pretty disparate rates around the country and so depending on where you grow that can impact and so there are a host of things that impact yields.

But it's a fair question and understand where we're going now.

Now I would I would be disappointed if you didn't ask us about the margin question. So I'm glad you took the opportunity.

And.

And I know, it's a fair question I think it's important when you look at the overall retail margin is to remember that there are.

The multiple businesses inside the retail segment first off the margin has been impacted by the hits and the fact that it was non deductible. So theres a lot of geography going on there and certainly we thought about after tax.

And we sort of manage the pretax but think about the after tax impact as we thought about our pricing et cetera.

We just discussed we balance giving back some of the tax benefit both to our members and the form of higher benefits as well as to our shareholders. So there's some geography issues that will impact and and depressed. The margin. There also as we've discussed on the PDP side a lot of the margin has come out of that product and back most of the margin today on <unk>.

All of the margin today is in the pharmacy for us.

We've talked about how that product has become much more of a commodity product that at these levels of premium it's hard to make money on the insurance side and so we're doing nicely on the pharmacy side and so we want to we will continue to be aggressive and this business and as Bruce commented in his and his remarks, our mail order penetration.

<unk>.

So we think reached a very very high levels of both on the MH side, but also on the PDP side, so but again, that's the geography issues as you think about individual and a margins you need to take that into account and also just to be transparent here he'll group of ne has.

And has seen some margin impacts from some of the larger accounts that had been shifting back and forth between major competitors other when theres margin of those accounts when they get rebid sometime.

And sometimes it takes a few years to recover that margin and so that's also driving some of the impact there too. So it is for it is for sure and the case that we are below our four and 5% to 5% target I would say reasonably below that target.

We are committed to that over the long longer term to get back to that for five to five but I would just say there are a lot of things impacting the.

That number and Theres a lot of sort of variables embedded in that retail overall guide that you are looking at.

Thank you your next question.

Our next question comes from the line of Matt Smith from Bernstein. Your line is now open. Please go ahead.

Yeah could you talk a little bit about the.

Investments and provider assets and in particular was interested in.

We are seeing as far as MLR differential in growth rate differential for members and.

And the lines of business that are and value based care partner were owned and primary care assets. Thanks.

I'll take that.

We see great results on the primary care clinic.

Clinics boats and the ones, we own and the affiliated ones.

And we would say and we shouldn't demonstrable and showed a slide on for a number of years as is.

The physicians continue to evolve the deeper value based.

And that should model, we face the superior performance and the.

The star scores and you know.

Typically greater than Florida for and a half we see a credit to MLR.

And that's kind of like boy, what the averages and the industry and we all seem to say great net promoter score all of that combined and that's why you see us aggressively pursuing and both our affiliated relationships and in addition, and building our primary care clinics to price.

Twice of our members and those clinics and the challenge with the clinic side is it just the organic there's not enough capacity in the marketplace.

To sell the demand so you see a lot of.

Startup.

Thanks for a startup of point of view of being invested in the.

Two of them to build the capacity there and so for us for more capacity constraint as opposed to for.

For our growth.

Growth traditionally has been out of it.

Equal to and greater than <unk>.

What you say and the traditional kind of 10% to 12% growth that you've seen over the last few years and these clinics and getting more and more members and those clinics and I think he'll say that grant to accelerate as the capacity becomes more and more available for us on the value based provider side of the business outside of the ones that.

And that our clinical oriented and we.

Continue to see really really great.

Good results from that and as a result are a little less and one of the clinic results we see.

Good Bye and star scores received.

And for and above and we see good net promoter scores, but it does not compare to the the outcomes that we see on the clinic side.

Great. Thanks.

Okay.

Our next question comes from the line of Scott <unk> from Stephens. Your line is open. Please go ahead.

Hi, Thanks, good morning.

Wanted to ask just about maybe an update on how youre thinking about some of the puts and takes with the ESR D comm.

Coverage expansion that played out and obviously that was already one of the big changes for MAA and 2021 before COVID-19 kicked in and so just interested maybe first if you could if you have an estimate of how much your kind of the membership for yesterday actually changed for 2021 and then.

As we think about the impacts of the pandemic on that population and.

And then try to overlay that into the rates that you have.

And how youre thinking about sort of the overall margin profile expectations that you had for that population now versus pre pandemic X.

I'm happy to start and.

And Bruce can chicken the color on any of the strategic side here, but I would say just from a share numbers perspective, we got about call. It 10000, or so plus or minus lives for me srd in the AEP, which puts us to around 29, 30000 members, which was really right in line with our expectations, what we expect of us.

As we've said for a number of quarters here, we think it's going to take several years to get up to the Medicare advantage penetration, we think that that continues to be the case and so.

Again, I would say right in line with our expectations. These are not profitable members I think over time as we continue to manage them and work with partners and really try to get them before they get the ESR D and slowed their disease progression, we think there's real opportunities to drive profitability, but but I would say, we're getting to the point where it's.

More or less breakeven as opposed to.

And any meaningful losses on these members, but Bruce I don't know if you want to add anything on that I would just I would just add.

Scott and I know this was the active conversation for us and <unk> and.

And 2020, and how we were going to deal with it and I really have to take and that's off to the team and how they've been able to really develop some deep partnerships with the two major of dialysis providers and and really be able to have all the relationships to valeant.

Volume based payment model the chairs of the risk in that that has helped us and being able to.

Effectively manage the <unk>.

Then of course side of the say on the cost side, but the clinical side of the Saar day and then the second thing is we continue to invest and innovative models and that's around the the coordination of care and.

And then also where the care is provided and the home and that was.

And those two strategies really have given us more confidence and the ability to manage these patients.

Ryan said of the patients will continue to be costly and continue the two the.

No margin or very very low margin business for us.

Going forward, so and again I think we're in great shape from where we were a year ago on wage began talking about this and as Brian also said is that we do see this won't be years, and we're making to the season and the penetration to the yen to the average penetration of of M. A overall.

And Bruce do you think that the pandemic itself has much impact on this population I know that some of the providers have talked given some updates recently just thinking about that population as it relates to the pandemic itself.

Yeah and Tim.

Typical to any vulnerable population.

Population of why they're at CSR D R.

Other chronic conditions you you do have a higher likelihood of having a more severe cases and and those populations and.

And for US we are very active and managing the populations that have those as well.

One of all conditions, so that's and.

I would say they are different than the average population because of their conditions, but they are not different than our other chronic members and how we effectively reach out to them and manage them on and they are reflected obviously in and the results that Brian was talking about and are and.

And we're we like our COVID-19 of being paying more costly.

And our and our forecast.

Okay. Thanks.

Yes.

Our next question comes from the line of Matt Borsch from BMO capital markets. Your line is open. Please go ahead.

And yes. Thank you.

And maybe if you'd asked about on <unk>.

Medicaid.

What you are assuming or how you were thinking about the Medicaid.

Rate process.

Given the action States took and the second half of last year and then maybe also.

And what you were assuming on the resumption of re determinations, if you could just address that.

Okay.

Sure I'm happy to take that so just on the rate side, we're waiting to see and our major states of our Kentucky and Florida.

I think we expect some rate adjustments and we're waiting to see and we certainly bake what our expectations might be into our assortments of our Medicaid budget and.

And so we're waiting to see the impact there with respect to Redetermination and you see the we'd go to pretty wide guidance range on on Medicaid membership.

And secondly, the assumption is.

The public health emergency ends in April.

Will that happens and we expect to lose some lives because we saw a nice increase this past year, but as the redetermination to happen.

That will cause the that membership to decline and so I would say that's sort of our base case expectation as we think about our overall guidance and revenue et cetera to the extent that the public health emergency has extended the Redetermination is don't happen and that will cause the increase and membership to continue which.

And again I think it would be relatively immaterial to tick two of the overall enterprise, but would cause us to have a higher membership at the end of the year and that of course excludes anything from South Carolina, or Oklahoma, which will kick in later this year and our guide excludes that.

Got it thank you.

You bet.

Our next question comes from the line of Steven Valiquette from Barclays. Your line is open. Please go ahead.

Great. Thanks, and good morning, So maybe just the question for Bruce just on the Covid cost of risk yes.

Yes, we do think about your ability to control of the medical costs, and 21 versus 2000, Twenty's and specifically for Covid and.

Has there been any evolution on the provider side for 'twenty, one where value base provided and wanted to go at risk for any sort of episodic bundled payments related to COVID-19 patients.

Or is that not really evolve and if not.

Are there any other evolving payment arrangements and provided you can talk about specifically tied to COVID-19, that's different for 'twenty, one versus 2000 and thanks.

Yeah.

Good question, we don't have on bundled type of payment model for Covid I mean, we have many bundles and other.

The conditions and president, but not for Covid, and we haven't seen that really of any uptake with with physicians on that.

Keep in mind and a lot of the Covid cost is on the DRG basis, and incorporated and the DRG side of the testing is something of a lesser and lesser on that.

Magnitude here of something going at risk for that and I think is fairly small and in Ontario kind of.

And.

And kind of I think and to broaden your question of all of that while we do see is is that when the when we do have volume based.

Relationships, the proactive ness and have.

And I really helping the the member and this time is is so important for us and especially as you think about downstream costs and other conditions that are Kurt.

Curtis on properly.

Well maintained and and traded so to answer your question, we don't say much and covered bundling and other types of payment, but we do see very different proactive care models and our value based payment and the relationships and this time, especially with the more vulnerable populations.

Okay got it okay. Thanks.

Our next question comes from the line of George Hill from Deutsche Bank. Your line is open. Please go ahead.

Yeah. Good morning, guys and thanks for taking the question Bruce and I, just wanted to circle back and make sure I heard you right to say, it's at the pharmacy mail penetration was 37% was that for the quarter or for the year I assume that was for the quarter and I guess is it your expectation that that kind of comes down a bit as things return to normal and would love to hear you talk a little bit more about the strategies that you guys.

[noise] of used to drive mail penetration to such a high level.

Okay, Great Yes, that's that's for.

And I would that is actually for the year.

Did see an increase in net.

And I'll mail penetration as we look to them for the.

And the and the early part of the coupon with Covid.

Pandemic, we saw it in the March and April timeframe and as people are really.

Concerned about the.

The locked down and that was happening and there for war.

And taking 90 day prescriptions and ROE of utilizing the mail order along with the fact that they couldn't get to the drug stores and if they were normal users and and became our active users of the mail order, but we have seen is as a result of the convenience of mail order and and really I would say as a result of our service and for.

<unk> seen more and more people are really converting to mail order as a result of that and so the pandemic. We have seen has helped educate and individuals of the benefit of.

Mail order and and the ability to continue to utilize it on an ongoing basis as opposed to just to the sort of the content.

Pandemic and some of the shutdown periods.

So we look at ourselves and Hasbro.

Oh and accelerator for us and that the <unk>.

Second thing is of that we have a very active investment going in and making it much more consumer friendly on the palm of mail order side, all the way from the digital platforms that are being used to the turnaround time of the delivery.

To be able to ensure that we can meet.

The expectations and the changing expectations of customers today, and when they expect the libraries to happen and I would say that.

Our goal is to really.

Grow the penetration of <unk>.

On mail order and our existing and.

Book of business.

And I ask why sort of high of the penetration I would say, it's been a very concentrated effort by our management team and really all the way for them our service centers on the insurance side to our providers that we have relationships with two R. R. R of specialty pharmacy area of continuing to.

And mind are members of the benefits of the mail order and that continued use of throughout the organization of being and bring the mail order conversation then.

And the appropriate period of time is really assisted and us being able to increase net debt right from the very well much different right and the average and the industry to really of a superior rate that you see day.

A man of having.

Thank you.

Our next question comes from the line of Dave Windley from Jefferies. Your line is open. Please go ahead.

Hi, good morning, Thanks for taking the taking my question and wanted to ask about Telehealth. Bruce You've mentioned you mentioned a couple of times during the call. How how is humana Incentivising telehealth. How are you looking at it as a facilitator to whether it's the primary care effort that you're putting forth.

Home home health and extension there I guess I'm, just wondering where are you using it aggressively and how are you incentivizing and reimbursing its use.

And where.

The big believers and telehealth for now all the way from the convenience of the member to really being able to have a channel that is.

Actively engaging with the member and tight especially of the more vulnerable members of the transportation, there's always a limiter for them.

But the answer the question about how do we incentivize them and we're really doing it on two sides for Sun. We did carry over of the co pay and the zero co pay this year too to tell of health and care of that.

Going forward and then the second thing that we've also done as we continue to pay equal to our members and providers of visiting nurses, a telehealth visit and then the both of those have been I think and reducing the barriers and really creating as you said some incentives to use the use telehealth and really have a few different strategies of you.

And telehealth on and one is around.

And really helping our providers if they don't have telehealth and providing them. Some some some technology that the.

And offer them to utilize it that's on a small.

And the need for external.

Providers as they evolve and sharp.

Alright, and acquainted with tenet of telehealth and being able to use of our internal.

Our own providers and we offer all of them very sophisticated telehealth platform that they can outreach.

On the telehealth side and then the.

And third area that we like kind of is continuing to work with hospital systems, especially on the specialty area, where we can have on outreach for our specialist might be and.

In short supply in certain markets and being able to offer that kind of convenience and and the local marketplace.

And we do see to help members and help providers, but more important and I, we do see as partnering and once the weather, especially on the hospital sessions systems and offer special shout, and specialty and kind of remote areas kind.

Can I clarify real quickly is that reimbursement at parity as that and your commercial book as well as Medicare.

I don't know for deferred the Amy I read the or where you're giving and the different.

Payment and a payment.

But by and by the different divisions and I don't think we're providing that I would just say in general and.

In general, we're providing but I wouldn't want to get into the specifics. Okay. Thanks for taking on which one of the distinction. It also is if it's in the office that we're and we can follow up but and even to the office.

Doing the full full reimbursement of its not and it gets more of a reduced rate, but we can get you all the details of gun. That's great. Thank you you bet.

Our next question comes from the line of Gary Taylor from Jpmorgan. Your line is open. Please go ahead.

Hi, good morning, Thanks for all of the color I just wanted to maybe just go back Big picture just for that.

The second Brian you talked about a lot of the the.

Moray COVID-19 related headwinds of normalizing as we move into <unk>.

2022, using the 21 50, the jumping off point, so when we think about 'twenty two given we've got a.

And early and known final rate notice of above historic rate.

Rate increases is there any reason from this distance that we shouldnt be thinking about the.

The long term of 11% to 15% growth.

Also of that 'twenty 150, and 2022.

Well again, I really don't want to be giving giving guidance on on this call for 2022, I would say at the highest level certainly are our goal is to deliver that 11% to 15% growth and.

That's the long term growth rate and sometimes we're above there've been times when we've been below but certainly our goal is to to hit the 11% to 15% and we always have to take the facts and circumstances at the time of when we price so.

Hopefully that the right.

I know, it's the way off just just thinking about from where we are.

But I appreciate the comments thanks.

You bet.

Next question.

<unk>.

Our next question comes from the line of Charles Smith from Cowen. Your line is open. Please go ahead.

Yeah. Thanks, Thanks for taking the question I just wanted to follow up about telehealth.

And the prepared comments.

You spoke about how our.

Documentation with using telehealth.

Create some uncertainty around coding.

I think later on Bruce you talked about number one issue was trying to get people back into the health care system itself.

And it sounds like is there a disconnect there.

And that win telehealth is used to accurately kind of code people to understand sort of there the actual health status and and as that of.

Is that of fundamental problem with the way telehealth is set up today I know on just the previous question.

You talked about how you're trying to incentivize your or all providers to use it.

Is this and integration issue or is this ah and issue itself with how telehealth is being deployed.

And no it's truly more on the member side, what you find the first telehealth.

If you use of the audio and video today can can.

And support documentation and so that that is that is that as you know.

Possible on on <unk>.

The Charlie.

The came into place in the latter part of last year. So it is it is a way to the.

And bring documentation of the problem is is that what we see is once there. There's when someone uses telehealth and then use it more frequently and.

And so we see a significant use of telehealth with the members that are using it are are more contained I should say are more refined and and it's not across all of our membership. So we could see a significant increase and telehealth, but that increase for telehealth will be over.

Confined the membership base as opposed to cross on membership base and that really comes to one of the barriers were working with.

And the communities. We serve is is that not every one of the access either of shelf comfortable with telehealth as a result of some of the technology.

The limitations, there or just needs to be educated more and I might have the technology, but it might not be integrated and that's why we see and a lot of work needs to be had is and the ability for for our telehealth of of use and a more broad and membership base and as opposed to the narrow our membership base and that it has today.

And if I could follow up does that mean, when you guys talked earlier, the about going into 'twenty and 'twenty. One is it that just the usage of telehealth itself you are uncertain, whether the the coat index for the documentation of that Youre getting is is going to persist at that kind of level.

Yes.

And Brian can add to this but the the they're really the tele health.

As well and they give you. An example, we have members today that are using telehealth, we are receiving documentation from the and those members.

The next visit could be a telehealth visit and therefore work, we're not going on that's not going to improve our documentation of any better.

We would love to see another member that that isn't been documented as being able to reshape the telehealth, but they're there and they're.

Not comfortable with using telehealth for whatever the reasons I attributed to so our penetration is more and on and narrow our membership base. We are working hard to try to broaden that but there's a lot of barriers that require of that whether it's the access to cash.

Two of the technology itself for.

On the ability to educate people on how to use telehealth and that's really what we're talking about it.

As a barrier because of the narrowing of the membership and we only are.

Penetrating the merit of smaller membership for documentation.

Great. Thank you.

Okay.

And we have no questions at this time I will now turn the call back to Bruce Broussard, Sir. Please go ahead.

Well, thanks, and thanks, everyone again, we continue to thank you for your support and our and.

And especially on this time of complexity and.

And of the.

Two of the pandemic and through 'twenty and 'twenty one.

As you can see the organization is performing quite well and I had at all levels of strategically.

From a consumer point of view and from our financial performance, there and as we in 'twenty and 'twenty I think it's a great. Thank you too are of 50000 employees that had been dedicated to really delivering these results on behalf of all of our constituencies. So thank you again and I hope everyone. The safe and have a great day.

Ladies and gentlemen that does conclude the conference for today. Thank you all for participating and you may now disconnect have a great day.

Okay.

Right.

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The net.

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