Q1 2023 Molina Healthcare Inc Earnings Call
Speaker 2: Good morning and welcome to the Molina Healthcare First Quarter 2023 Earnings Health This Fall.
Speaker 2: All participants will be in listen-only mode.
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Speaker 2: I would now like to turn the conference over to Joe Krutoski, Senior Vice President, Investment Relations. Please go ahead, sir. Good morning, and welcome to Molina HealthCare's first quarter 2023 earnings call.
Speaker 2: Joining me today are Melina's president and CEO , Joseph Brutkey and our CFO Mark Conn.
Speaker 2: A press release announcing our first quarter earnings was distributed after the market closed yesterday and is available on our Investor Relations website.
Speaker 2: Shortly after the conclusion of this call, a replay will be available for 30 days.
Speaker 2: The numbers to access the replay are in the earnings release.
Speaker 2: For those who listened to the rebroadcast of this presentation, we remind you that the remarks made are as of today, Thursday, April 27, 2023, and have not been updated subsequent to the initial earnings call.
Speaker 2: On this call, we will refer to certain non-GAAP measures. A reconciliation of these measures with the most directly comparable GAAP measures can be found in our first quarter 2023 press release.
Speaker 2: During our call, we will be making certain forward-looking statements, including, but not limited to, statements regarding our 2023 guidance, Medicaid redeterminations, our recent RFP awards and related revenue growth, our acquisitions and M&A activity, our long-term growth strategy.
Speaker 2: statements are subject to certain risks and uncertainties that could cause our actual results to differ materially from our current expectations.
Speaker 2: We advise listeners to review the risk factors discussed in our form 10K and in report filed with the SEC, as well as the risk factors listed in our form 10Q and form 8K violence with the SEC.
Speaker 2: Lastly, we want to invite you to attend our 2023 Investor Day meeting scheduled for Monday, May 15.
Speaker 2: where we will share more about our future growth plans and walker term strategy.
Speaker 2: Details for the event can be found at our Investor Relations website. I will now turn the call over to Chief Executive Officer Joe Zabreski. Joe? Thank you, Joe, and good morning.
Speaker 2: Today, we will provide updates on our financial results for the first quarter of 2023.
Speaker 2: our full year 2023 guidance in the context of our first quarter results, and our growth initiatives, and our strategy for sustaining profitable growth.
Speaker 2: Let me start with the first quarter highlights.
Speaker 2: Last night, we reported adjusted earnings for diluted share for the first quarter of $5.81.
Speaker 2: or 19% year-over-year growth.
Speaker 3: Total premium revenues at $7.9 billion were as expected, representing a 5% increase over the prior year.
Speaker 3: Our 87.1% consolidated MCR in the first quarter demonstrates continued strong operating performance.
Speaker 3: We produced a 5.5% adjusted pre-tax margin.
Speaker 3: 4.1% after tax, a very strong result that is above the high end of our long-term target range.
Speaker 3: In the first quarter, we continued to generate excellent margins in our Medicaid business.
Speaker 3: This result was in line with our guidance and long-term target range.
Speaker 3: Our portfolio of 19 state contracts in 2023, growing to 21 states in 2024, provides earnings balanced in diversification related to rate setting and contract repurchurements.
Speaker 3: Actual early sound rates prevail as the rate setting process continues to capture a credible medical cost-based line.
Speaker 3: and core medical cost trends remain stable and well controlled.
Speaker 3: In Medicare, our reported MCR was 88%.
Speaker 3: into high acuity, low income consumer segment.
Speaker 3: In Marketplace, we ended the quarter with 271,000 members.
Speaker 3: of that risk pool.
Speaker 3: Our first quarter marketplace MCR was 68.6%, significantly below full year expectations.
Speaker 3: even when considering seasonal patterns.
Speaker 3: This result reflects the successful implementation of our pricing,
Speaker 3: McCallock-Mix and membership continuity strategy to restore this business to mid-single-digit target margins. In summary, 2023 is off to a very strong start.
Speaker 3: Medicaid, our flagship business representing over 80% of revenue, continues to produce strong, predictable operating results and cash flows.
Speaker 3: Our high-acuity Medicare niche, serving low-income members, continues to grow organically, and Marketplace is now well positioned to achieve target margins in 2023.
Speaker 3: Turning now to our 2023 guidance.
Speaker 3: Based on our strong start to the year, we are increasing our full year 2023 adjusted earnings per share guidance.
Speaker 3: Based on our strong start to the year, we are increasing our full year 2023 adjusted earnings per share guidance to no less than $20.25.
Speaker 3: or 13% growth year over year, even after absorbing 75 cents of one time implementation costs for new contract wins. We have deliberately refrained from increasing our guidance beyond the first quarter out performance as we continue to apply appropriate conservatism to our forecasts.
Speaker 3: We believe this conservative discipline is appropriate for several reasons. First, we would not project our significant first-order marketplace outperformance to be repeated for the balance of the year. Second, we are not forecasting short-term interest rates to remain at their current levels. Third, as a general matter at this early stage of the year, it is proven to anticipate potential medical cost variations. Third, we are not forecasting short-term interest rates to remain at their current levels.
Speaker 3: And fourth and lastly, we do not believe the acuity shift due to re-determinations will have a significant net margin impact.
Speaker 3: But there is the potential for some sporadic and isolated shifts in acuity.
Speaker 3: If that were to be the case, there are significant mitigants to any potential impact.
Speaker 3: These midagents include a commensurate, mixed effect premium benefit, experience rebate, and minimum MLR offsets in certain states, and, of course, actually really sound rate adjustments, both retrospective and prospective. That being said, we believe that any potential shift in Medicaid member acuity that could increase medical costs for 2023 is captured in our 88.5% Medicaid MCR guidance for the year.
Speaker 3: Turning now to an update on our strategy for sustaining profitable growth.
Speaker 3: Building on our momentum from last year, we are off to a strong start in 2023. At the end of January , the Texas Health and Human Services Commission posted its intent to award our Texas Health Plan a contract for all our existing eight service areas in the state. For more information, visit www.tamu.gov
Speaker 3: Given the continuity of coverage in these service areas and strong brand loyalty, we expect to see continued market share gains and revenue upside in Texas. In March, we announced that our Indiana health plan was awarded a four-year contract to provide managed long-term services and supports.
Speaker 3: We believe this contract will commence in mid-2024.
Speaker 3: As one of four managed care organizations in the program, we expect to serve approximately 33,000 members, resulting in annual premium revenue of approximately $1 billion.
Speaker 3: With the addition of the Indiana LTSS wind, our five recent state RFP winds drive more than $5 billion in incremental revenue.
Speaker 3: with a portion included in our 2023 guidance.
Speaker 3: but most emerging in our 2024 outlook and achieving full run rate in 2025.
Speaker 3: Based on known building blocks, we now have line of sight to $36 billion of premium revenue in 2024, or 13% growth before additional strategic initiatives.
Speaker 3: Our new store embedded earnings are now $4.50 per share, providing meaningful visibility into our future earnings growth potential.
Speaker 3: We see an additional $2 per share of embedded earnings upside if and when the several remaining COVID era corridors are eliminated. Our acquisition pipeline remains replete with actionable opportunities.
Speaker 3: While the timing of transactions remains inherently difficult to predict, the strength of our pipeline and our track record of success give us confidence in our ability to drive further growth from this important element of our growth strategy.
Speaker 3: The company's performance continues to validate our long-term strategy in its value creation potential.
Speaker 3: Our strategy is sound and it's working.
Speaker 3: We are delivering top line growth both organically and with accretive acquisitions.
Speaker 3: while sustaining industry-leading margins. Our model is clear and proven.
Speaker 3: We will grow organically in our existing footprint. We will win new state contracts and sign new acquisitions building clear visibility to new store revenues and their related embedded earnings.
Speaker 3: We will harvest the embedded earnings and include them in our guidance as the contract is set in the acquisition's close, all the while adding yet additional new revenue streams to our forward outlook.
Speaker 3: I look forward to sharing more about our future growth plans and longer term strategy at our investor meeting on May 15.
Speaker 3: as is our hallmark style.
Speaker 3: We will provide you with our detailed playbook for achieving our growth targets and maintaining industry leading margins.
Speaker 3: We will not only declare our goals, but also show you with transparency and specificity how we will achieve them.
Speaker 3: Our May 15th and yesterday session is appropriately titled.
Speaker 3: Sustaining profitable growth the next wave. With that, I will turn the call over to Mark for some additional color on the financials. Mark. Thank you.
Speaker 3: the next wave. With that, I will turn the call over to Mark for some additional color on the financials. Mark, thanks Joe, and good morning everyone.
Speaker 4: This morning I will discuss some additional details of our first quarter performance. I'll then turn to the balance sheet and some thoughts on our 2023 guidance.
Speaker 4: Beginning with some detailed commentary on our first quarter results.
Speaker 4: Our consolidated MCR for the first quarter was 87.1, reflecting continued strong medical cost management in each of our segments.
Speaker 4: In Medicaid, our reported MCR was 88.4.
Speaker 4: a strong result that was in line with our expectations and long-term target.
Speaker 4: During the quarter, flu, RSV, and COVID-related medical costs were minimal.
Speaker 4: The major medical cost categories were largely in line with our expectation and normal quarter-to-quarter trend fluctuations.
Speaker 4: In the quarter, our Medicaid results were burdened with some prior period premium adjustments.
Speaker 4: As in those adjustments, our MCR was at the low end of our long-term target range.
Speaker 4: In Medicare, our reported MCR was 88.
Speaker 4: In Medicare, our reported MCR was 88. Also within our long-term target range.
Speaker 4: During the quarter, we saw sharply lower flu and a continuing decline of COVID-related costs. Somewhat offset by the impact from continued growth in our D-SNIP and MAPD products.
Speaker 4: In Marketplace, our reported MCR was 68.6. This strong result reflects our pricing strategy to return this business to target margins, as well as seasonal patterns which favor the first half of the year.
Speaker 4: Recall, our pricing strategy increased our premium yield by approximately 9% this year, and with approximately three quarters of our book in renewing members and two thirds in silver metallic products, our risk scores should be optimally valued.
Speaker 4: We feel well positioned to achieve our mid-single-digit target margins in this business for the year.
Speaker 4: Our adjusted G&A ratio for the quarter was 7.2, which includes new business implementation spending ahead of the new contract wins in SETT in July and next year.
Speaker 4: Our adjusted G&A ratio for the quarter was 7.2, which includes new business implementation spending ahead of the new contract wins in accepting in July and next year. Turning now to our balance sheet.
Speaker 4: Our capital foundation remains strong.
Speaker 4: We harvested 100 million of subsidiary dividends in the quarter and our quarter end parent company cash balance with 283 million.
Speaker 4: Death at the end of the quarter was unchanged and just 1.7 times trailing 12-month-y bit dub.
Speaker 4: with debt-to-cap ratio at 42.3. Net of parent company cash, these ratios fall to 1.5 times and 39.3 respectively, reflecting our low-leverage position and ample cash and capital capacity for additional growth and investment.
Speaker 4: Turning to reserves. A reserve approach remains consistent with prior quarters, and we continue to be confident in the strength of our reserve position.
Speaker 4: Days and claims payable at the end of the quarter was one day higher sequentially at 48 days of medical cause expense.
Speaker 4: Prior year development was favorable in the quarter, demonstrating the integrity of our actuarial reserving practices. I would note that the reported favorable prior year development includes the release of margin on the prior year reserves, which is re-established in the current quarter. And remaining P&L impact was largely absorbed by prior year minimum MOR.
Speaker 4: above our expectations.
Speaker 4: partially offset by additional new store implementation costs for our recently announced Indiana LTSS win and some general early in the year conservativism.
Speaker 4: We project a little more than half of this year's earnings in the first two quarters. As Joe mentioned, our new store embedded earnings in 2023 is now expected to be $4.50 per share, comprised of two components.
Speaker 4: $4 per share up from previously reported $3.50.
Speaker 4: For our recent new contract wins in California, Iowa, Nebraska, and now including our new Indiana LTSS contract. Plus...
Speaker 4: 50 cents per share for the age well and my choice with content acquisitions achieving their full run rate accretion. We continue to carry approximately $2 per share for COVID-19 risk corridors providing additional potential upside to the 450 of new store embedded earnings. Within our guidance,
Speaker 4: Our outlook on the resumption of redeterminations and the impact on our business is unchanged.
Speaker 4: Through March closing, we estimate we gained approximately 800,000 members organically.
Speaker 4: Through March closing, we estimate we gained approximately 800,000 members organically since the start of the pandemic.
Speaker 4: We continue to expect to retain roughly half of the members gained.
Speaker 4: We expect the premium impact to be approximately 1.6 billion.
Speaker 4: And at portfolio average margins, the earnings impact could be approximately a dollar per share.
Speaker 4: Due to the timing of when members disenroll, we are projecting one-third of the premium and earnings impact to emerge in 2023.
Speaker 4: with the remainder mostly in 2024. Given that re-determination and disenrollments have just begun on April 1st and only one of our markets.
Speaker 4: We are unable to share additional data-driven insights. However,
Speaker 4: We remain comfortable with our outlook on margins as we expect numerous items to minimize any potential trend impact from redetermination.
Speaker 4: First, as discussed in past quarters, our internal membership cohort analysis indicates limited acuity shift potential from several perspectives. Second, the mix effect of impacted membership cohorts dampens any impact.
Speaker 4: To be clear, re-determination likely affects lower PMPM members, so any cost pressure would be muted by the weighted average of continuing higher premium PMPM members.
Speaker 4: to be clear, re-determination likely affects lower PNPM members, so any cost pressure would be muted by the weighted average of continuing higher premium PNPM members. Third.
Speaker 4: The gradual rate of disenrollment over the course of 2023 into 2024
Speaker 4: deludes any ultimate impact ahead of normal rate cycle adjustments. Fourth, the remaining COVID-19 risk corridors and pre-existing experience rebate mechanisms and minimum MLRs in many states provide the cushion to absorb potential adverse trend development should it emerge.
Speaker 4: And finally, rate adjustments, both on-cycle and off-cycle, prospective or retrospective, will counter emerging trends as states honor their commitment for actuarially sound rates.
Speaker 4: In summary, we are very pleased with our first quarter performance in each of our segments.
Speaker 4: In summary, we are very pleased with our first quarter performance in each of our segments and our increased full year earnings guidance.
Speaker 4: We look forward to sharing more about our growth strategy and compelling value creation story at our May 15th investor day.
Speaker 4: This concludes our prepared remarks. Operator, we are now ready to take questions.
Speaker 5: Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your touch tone phone.
Speaker 5: If you are using a speakerphone, we ask that you please pick up your handset before pressing the keys.
Speaker 5: To withdraw your question, please press star then two. Today's first question comes from Josh Raskin with Nefron Research. Please go ahead.
Speaker 6: Hi, thanks. Good morning. I appreciate the comments you just made, Mark, on the re-verification impact and that you'll keep 400 of the 800,000 lives that you've gained since the start of the pandemic. But of the 400 that get redetermined, can you just update us on your views on how many you think end up in, you know, of those Medicaid lives end up choosing exchanges?
Speaker 6: And then how granular can you be in terms of assisting your specific re-verified members to find exchanges? You know, for example, can you target specific populations or even specific individuals in terms of trying to get them to choose exchange products? Thanks.
Speaker 4: Great. Thanks for the questions, Josh. Take the second one first. The states have a lot of different protocols and policies about how we can interact with members ahead of re-determination. You know the good news is they're giving us the list of at-risk members once ahead of time.
Speaker 4: which is very helpful to reach out to them, interact with them, see if we can re-verify them or in many cases, put them into a marketplace product if appropriate.
Speaker 4: which is very helpful to reach out to them, interact with them, see if we can re-verify them, or in many cases put them into a marketplace product if appropriate.
Speaker 4: In the cases where members are being redetermined, they lose their eligibility, which we're estimating is about 50%. I don't know that I have great insights on specifically where they'll go. And Josh, it's complicated because what we see is some will get re-verified, lose eligibility, and move right into another product.
Speaker 4: Others may go on and short for a few months and then eventually wind up in one of those products. So I don't have good estimates on that. The only other thing I'll remind you of is we didn't put any upside on retaining redetermined members in our marketplace outlook.
Speaker 4: So anything that we pick up through redetermination is upside to our Marketplace outlook.
Speaker 5: Thank you and our next question today comes from Stephen Baxter at Wells Fargo. Please go ahead.
Speaker 7: Yeah, hi, thanks for the question. I appreciate that your thinking on redeterminations hasn't really changed. Over the past few months though we have seen a lot of states come out with their own projections on membership losses and it does seem like these estimates would generally skew towards the lower levels of retention than the 50%. You're assuming, I assume you spend time, you know, talking to the states about their expectations. I'm curious what you think is the key difference.
Speaker 3: between what they're assuming and what you think will play out. See, and our analysis is bottoms up state by state. And of course, we are in active discussions with our state-based customers and helping them manage the 90 million people nationwide and we're going to go through the re-determination process.
Speaker 3: As Mark mentioned, many of the states have various protocols and different protocols on how interactive we can be. We are in very active discussions with our state-based customers. They have given us lists of what they consider at-risk members, maybe members that will...
Speaker 3: likely have to go through a revertification process. And from everything we've learned since this all started months ago, and now it's only started in one state, actually, in the month of April . We stand pretty firm that our 800,000 member increase during the pandemic will decrease by 50% and end up at 400,000.
Speaker 4: And just to put a point on what Joe said, Steven, maybe what you're reacting to is some of the at-risk member data points. The states are putting those out specifically so that managed care organizations can reach out to those members, and whether it's eligibility issues or verification issues.
Speaker 4: interact with those members to minimize it. So the list of at risk is certainly bigger than the list of folks that will actually lose eligibility. So has time break. There are fewer questions and we can stop now for questions or any other people appreciate those first questions. Thank you because if there is a function T when shall we correct it and be STEP somebody
Speaker 8: And ladies and gentlemen, our next question today comes from Justin Wake at Wolf Research. Please go ahead. Thanks. Good morning. A couple things. One, Medicare Advantage talked about MIPS pushing you to the higher end of the MLR range there. What is the long-term MLR range expect for Medicare Advantage?
Speaker 8: can you give us a little color on the mix of business and why it's pushing it towards the higher end. And then lastly just a number of questions on investment income. What is assumed in your guidance for investment income this year? Thanks.
Speaker 3: Just in on the MLRs for Medicare, we continue to hold firm on our long-term forecast of between 87 and 88 percent. And I would just summarize it by saying the faster we grow.
Speaker 3: it would push you toward the higher end of that range because the members are not yet risk-sourced, they're not yet into care management programs, and it takes a while for that, a year or two, for that MLR to settle back into our target range. So if we're growing nicely, which we are today, at greater than 10% a year, it'll push the MLR up into the higher end of that range, and we're very comfortable with that.
Speaker 3: On investment income, sure, short-term interest rates are very high currently. As our guidance suggested, we do not forecast them to remain at this level. I will remind you that half of our investable base is locked in at two to three year duration in short-term bonds.
Speaker 3: But the other half is entirely floating. It's cash and it's floating at short-term rates. And Mark and his team were, I think, appropriately cautious in projecting those rates to decline for the balance of the year. Yeah, that's exactly right, Joe. The things to think about there is the investable balance will decline over the year from where it is. I'm at about $8.2 billion right now. It'll decline as we pay down previous year corridors.
Speaker 5: So we are cautious in our outlook. Thank you. And ladies and gentlemen, our next question today comes from Nathan Rich, a Goldman Sachs. Please go ahead.
Speaker 9: Great, thanks for the question. Wanted to ask on the marketplace business, you know, how much of the MCR outperformance do you see as sustainable? It sounded like it was mainly driven by pricing and I guess helped by strong retention. You know, I guess do you have an updated view of where MCR will land for the year?
Speaker 9: And then enrollment was a little bit lower than we had expected. I just wanted to get your updated thoughts on if 230,000 members by year end is still the right target.
Speaker 3: Our strategy is working, the strategy to reallocate capital to businesses that had less inherent volatility like Medicare and Medicaid. And to keep this at about 5% of the portfolio, keeping it small, 5% of the portfolio, keeping it silver with...
Speaker 3: two-thirds of our members in silver products and keeping it stable, 75% of the members renewing, not only has this projected toward our target mid single digit pre-tax target margins, but probably with less inherent volatility. So we're really pleased with that.
Speaker 3: The first quarter MCR has some seasonality aspects to it and we did outperform. I would say that our guidance includes something closer to the bottom end of our long-term range of 78 to 80, perhaps a little lower than that. Did I miss something?
Speaker 3: Particularly that more of the business was bronze than we had projected, and bronze has higher deductibles. The seasonality tilt is a little steeper than we originally projected. We're on target for the bottom end of our 78 to 80% long-term target range for the full year.
Speaker 8: Thank you. And our next question today, comes from Scott Sadow, it's Stephen. Please go ahead. All right, thanks. Good morning. We're hoping to get some of your analysis on the final 2024 MA race and then the risk model as well in terms of what you're estimated.
Speaker 8: your MA impact will be and then maybe give us some insights just into how you're thinking about the impact of the risk model to your particular, you know membership base, which is heavily weighted obviously towards towards D steps. Thanks. Scott, it's Joe.
Speaker 3: Yes, there are a variety of factors, regulatory factors, that have been introduced in the past number of months that have caused folks in the Medicare Advantage business to think differently about the earnings trajectory. First, let me remind everyone that
Speaker 3: Medicare is only 50% of our total book. Also, we might do that over that Medicare book. Half of it are the MMP demonstrations. Now while MMP demonstrations aren't totally insulated from these industry dynamics, they do not have stars, scores. They're not subject to the rate notice, although rates come in a different way. 40% of that revenue is actually Medicaid-driven and not Medicare-driven. So I wouldn't say we're insulated from it, but we'd have to book.
Speaker 3: being an MMP which is not responsive to those various rate type actions, we're pretty well insulated. But it does relate to our D-SNP book. We believe that our product is competitive. It is replete with value-added benefits. Many of these factors affected the entire market.
Speaker 3: So if we have to pull back on value-added benefits to keep the product at zero premium and competitive, we think we can do so. I think we're well positioned for a couple of other good years in Medicare.
Speaker 5: Thank you. And our next question today comes from Michael Ha with Morgan Stanley . Please go ahead. Thank you. Just quickly, first on Medicaid revenue PMPM looks like it was roughly flat year to year, which may have driven your Medicaid revenue slightly below the street this quarter. I'm having a tough time just thinking of what could have driven this, especially given the higher LTSS mix, which presumably would have increased the blended PMPM.
Speaker 5: And then on your comments about redetermination, not expecting the acuity shift to have net margin impact, but could see some sporadic cases. I know you mentioned, Joe, that the shift in acuity is captured in your current 88.5% guide, but comments today do sound a bit more optimistic. Is it fair to say what you've learned since fourth quarter about the acuity of your at-risk to redetermined lives might be more incrementally positive?
Speaker 3: you have greater than a year or less than a year. How many members do you have that have 0, 25% MCRs? What's your own lapse rate? Didn't go to 0, it decreased, but members were terminating during the pandemic. What's your coordination of benefits rates? It's up slightly, but not a lot. So the data does not suggest that there's a huge shift.
Speaker 3: of durational acuity members, and we start there. Second, all we did was mention the mitigants, that if something should occur somewhere in one of our markets, there's...
Speaker 3: premium adjustments, premium mix will help us if we're deep into a rebate mechanism or a minimum MMR in that market, that'll be the first cushion for potential effect. And then of course you're into the Rape cycle. And we believe, not only we believe, we know that the states and CMS have been inactive discussions.
Speaker 3: about what could potentially happen, and they're not only amenable, but they're very supportive of potential retrospective or prospective rate actions.
Speaker 4: So that's our point of view. It really hasn't changed from the fourth quarter because we know very little more today than we knew at that point. And Michael, it's Mark. Let me just take the first question on Medicaid. Not sure what your model was, but the Medicaid revenue for me came in right about on expectation. But you know, there's things that can move it a little up, a little down, quarter to quarter, which is.
Speaker 4: minimum MLRs or any form of experience rebate, those run through the revenue line as well. So you put those things together, my hunch is that's what explains what you're seeing, but overall I think we're pretty close to just about everybody's model on first quarter. Thank you. And our next question today comes from George Hill at Deutsche Bank. Please go ahead.
Speaker 4: Good morning, guys. Thanks for taking the question. Joe, one of your competitors talked about getting enhanced data from the states as they start to go through the redetermination process. We'd just be interested to hear what kind of data you guys are having access to as this process begins to kick off and how that impacts your early thoughts about 24.
Speaker 3: Sure, I'll send to our book. For the most part, what we're getting from states is what we were calling members at risk members that will have to go through some form of process either specifically or an X part day basis to be a reed. We're getting ready to turn the market to your post into the situation. Absolutely. So we started one state in April .
Speaker 4: But the vast majority of my states won't actually go through eligibility and redetermination until June and July . So we're fairly back-end loaded here, which is why we're a little limited on data just at the moment. We've got one state. But as Joe mentioned, the way this works is long before a member would actually get...
Speaker 4: or lose eligibility, they go on an at-risk list. And the states define at-risk in two ways. One, the place is where they have some data that suggests the member will lose eligibility. Some data point that suggests that or just verification failures where they can't reach that member. They're giving us those lists months in advance. There are applications of fraud? rank. They're not against it.
Speaker 4: So I'm mostly back-ended for June and July , but in many cases I have lists of those members already. We can start reaching out to them, contacting them through all of our different channels long in advance. Now that data is not particularly helpful on what will happen, because the whole point of that data is to preempt some of the people that shouldn't lose coverage.
Speaker 4: So it's very helpful on us retaining members, but it's not helpful in saying from a data perspective how many will we lose or what would the economic impact be if any. Now the real data points on real stairs and levers don't happen until redetermination actually occurs and again for us that's just one state so far.
Speaker 4: The states published files, 834s, 820s, which let us know specifically who's coming and going, who the stairs and levers are, and we're way too early to have real insights on that given one state so far.
Speaker 5: Okay, so maybe just a quick follow up to simplify this is what you guys largely have now is kind of the medical data and the claims data on all these numbers. You guys don't have the economic and eligibility data and it's kind of the eligibility. I'm trying to figure out what is the data like. Like what changes from a data access perspective, the kind of better informs what you guys say and it sounds like it's really kind of like the eligibility data and the at risk list. Yeah.
Speaker 3: Just because a member has been identified as someone who will have to go through the re-elegibility process, and by the way, that data is very mature. It's not in hundreds of thousands of members, it's tens of thousands of members. We can extrapolate very little from that. So it's way too early to make, draw any conclusions from the early at-risk member data that we've seen.
Speaker 3: It'll build over time and as we have insights and we report quarters, we'll fill you in on where we are. Thanks a lot.
Speaker 10: Appreciate it. Thank you. Thank you. And our next question today comes from AJ Rice from Credit Suisse. Please go ahead.
Speaker 11: Hi everybody thanks for the question. Two I guess really, one when you think about the flow of information as it comes in both on the your enrollment assumptions and whether they're correct and then also on the risk pool itself and what's happening there and you think about claims experience
Speaker 11: incremental information developing, at what point over the next 12 months do you think you'll have a pretty good sense that hey, our estimates are pretty accurate on enrollment, our estimates about the risk pool are pretty accurate. I guess I'm trying to figure out.
Is that a fourth quarter of this year? Is it a first half of next year or any thoughts on that? And then you've mentioned a couple times some protection from being in a Medicaid court or payable position. I guess I'd love to get a little bit more color if there isn't on how extensive that is across your...
Medicare, a Medicaid book rather, and how much protection you think that provides on its counter to your duration in the risk pools. A.J. Allianz is the second question first. We talked about risk-sharing corridors during the pandemic that were introduced and it doesn't of our states.
Coming in at much lower levels due to the cut off at 150 per cent of Ah of M. P. L. So we have our arms around that the risk pool has somewhat stabilized which gives us really good visibility not only into the acuity of our members given that 75% of them are renewed members.
Also two thirds of them are in a silver product, which gives us the opportunity to optimize the value of a restore.
Good shape in the marketplace, so far and we expect that operate at the low end of or a longterm target range for the full year. The only thing I would add to that is with risk adjustment the correlation between medical cost experience and risk adjustment at this point is pretty tight.
So at the risk pool changes, a little bit I'm expecting effectively a hedge from our performance on risk adjustment.
And then just one last quick one if I could you mentioned the prior period premium adjustments and Medicaid having impact on Medicaid and my <unk> I mean, presumably there's a pretax in earnings headwind that you that you bore in the quarter for that as well.
Yes, given where are we perform.
I'm, sorry, I couldn't hear the first part of your question, you're referring to Medicaid correct.
Yeah.
Thank you, yes, as I said 17 of our states have always.
For a long period of time had mechanisms experienced rebate mechanisms amendment minimum MLR mechanisms, which are setup pretty low levels, which allow you to actually earn excellent margins as we have been even though we still been paying into these mechanisms. So yes as I mentioned last year, we had a good year and paid into them.
And in the first quarter again, good first quarter, we also paid into them in the first quarter, we don't disclose how much but it's a it's a routine part of the business. It's part of the overall earnings trajectory of how do we think about the business in the first quarter with business as usual excellent margins and Medicaid and still paid into these quarters.
And rebates ticket.
Thank you gentlemen.
Gentlemen, this concludes today's question and answer session and today's conference call.
Thank you all for attending today's presentation, you may notice some extra lines and have a wonderful day.
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