Q3 2024 Humana Inc Earnings Call

Operator: Good day and thank you for standing by.

Good day, and thank you for standing by welcome to the Humana third quarter earnings call.

Operator: Welcome to the Humana third quarter earnings. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 1 1 on your touchtone telephone. To withdraw your question, please press star 1 one again. please be advised that today's conference is being recorded.

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

After the Speakers' presentation, there'll be a question and answer session.

To ask a question during the session you will need to press star one one on your Touchtone telephone.

Or withdraw your question. Please press star one again.

Please be advised that today's conference is being recorded.

Lisa Stoner: I would now like to hand the conference over to Lisa Stoner, Vice President, Investor Relations.

Speaker Change: I would now like to hand, the conference over to Lisa Stoner Vice President Investor Relations. Please go ahead.

Lisa Stoner: Thank you and good morning. I hope everyone had a chance to review our press release and prepared remarks which are available on our website.

Lisa Stoner: We will begin this morning with brief remarks from Jim Rechtin, Humana's President and Chief Executive Officer, followed by a Q&A session where Jim will be joined by Susan Diamond, Humana's Chief Financial Officer, and George Renaudin, President of Humana's Insurance Bank.

Jim Rechtin: 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 third quarter 2024 earnings press release as they relate to forward-looking statements along with other risks discussed in our SEC filings. We undertake no obligation to publicly address or update any forward-looking statements in future filings or communications regarding our business or results.

Jim Rechtin: Today's press release, our historical financial news releases, and our filings at the SEC are also available on our Investor Relations site.

Jim Rechtin: 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 references to earnings per share, or EPS, made during this conference call refer to diluted earnings per common share.

Operator: Finally, this call is being recorded for replay purposes. That replay will be available on the Investor Relations page of Humana's website, Humana.com, later today.

Jim Rechtin: With that, I'll turn the call over to Jim Rechtin.

Jim Rechtin: Thanks, Lisa, and good morning, everyone. Thank you for joining us. In the last quarter, I outlined four basic drivers of our business that we need to be able to deliver against over and over again. Those are, first, providing a Medicare product and experience that delivers against consumer needs and is priced with discipline. Second, it is operating with clinical excellence. This really is the foundation of industry-leading margins. It is Third, managing a highly efficient back office. And it's fourth, deploying growth capital in a way that complements our Medicare Advantage core business, but really focused around center role in Medicaid.

Speaker Change: Four basic drivers of our business that we need to be able to deliver against over and over again those are first.

Speaker Change: Providing a Medicare product and experience that delivers against consumer needs and is priced with discipline second it is operating with clinical excellence. This really is the foundation of industry leading margins. It is.

Speaker Change: Third managing a highly efficient back office and its fourth deploying growth capital in a way that complements our Medicare advantage core business, but really focused around central in Medicaid.

Jim Rechtin: I'd like to review the quarter's results with a little bit of a lens towards those four drivers. Before I do that, let me just start with a few headlines. First of all, as we noted, we exceeded expectations for the quarter. We're also confident that we will achieve at least $16 of EPS for the full year, and we are comfortable with where 2024 EPS consensus sits today. Exactly where we're going to land is largely dependent on a number of investment decisions in AEP and in STARS that we continue to evaluate. We also feel good that we priced our M.A.

Speaker Change: I'd like to review the quarters results with a little bit of a lens towards those four drivers before I do that let me just start with a few headlines first of all.

Speaker Change: As we noted we exceeded expectations for the quarter.

Speaker Change: We're also confident that we will achieve at least $16 of EPS for the full year and we are comfortable with where 2024 EPS consensus sits today.

Speaker Change: Exactly where we're going to land is largely dependent on a number of investment decisions in AEP and in stars that we continue to evaluate.

We also feel good that we priced RMA product margin expansion in 2025.

Jim Rechtin: product to a margin expansion of 2025. However, similar to our strategy for the rest of 2024, we will be balancing near term earnings progression with investment in the business. And when we say investment in the business, certainly that is STARS, but it's also looking at investment opportunities and growth, admin cost efficiency and medical. We understand that investors would like more clarity on the multi-year outlook of the business.

Speaker Change: However, similar to our strategy for the rest of 2024, we will be balancing near term earnings progression with investment in the business.

Speaker Change: When we say investment in the business <unk>.

Certainly that is stars, but it's also looking at investment opportunities in growth admin cost efficiency and medical cost management.

Speaker Change: We understand that investors would like more clarity on the multi year outlook of the business and to address this we are targeting an investor day in may of 2025.

Jim Rechtin: And to address this, we are targeting an investor day in May of 2020. So let me turn to the four basic drivers for a moment. So right now, if I start with product and experience that we're delivering through our Medicare product, we're feeling pretty good about what we're delivering. And let me point out a couple of things. Our individual MA membership growth continues to outpace our expectations for the year. We anticipate at this point, full year growth, year-over-year growth of around 5%. The year started slowly in AP last autumn, but we've made pretty significant gains over the course of 2024.

Speaker Change: So let me turn to the four basic drivers for a moment. So right now if I start with product and experience. We are that we are delivering through our Medicare products.

Speaker Change: Pretty good about what we're delivering and let me point out a couple of things our individual MA membership growth continues to outpace our expectations for the year.

Speaker Change: We anticipate at this point full year growth year over year growth of around 5%.

Speaker Change: The year started slowly in AEP last autumn, but we've made pretty significant gains over the course of 2024, when we look at it. We believe that this is a reflection of disciplined product pricing that has allowed us to continue to emphasize growth at a time when others in the market it pulled back.

Jim Rechtin: When we look at it, we believe that this is a reflection of disciplined product pricing that has allowed us to continue to emphasize growth at a time when others in the market have pulled back. And we also attribute some of the growth to incremental marketing investments that we've made in our internal sales channel. This is a channel that we believe is increasingly important for us and that and those investments have been paying off. We continue to deliver best in class service. Recently, we were ranked the number one health insurer for customer experience by Forrester. This is now four years in a row of being ranked number one by Forrester.

Speaker Change: And we also attribute some of the growth to incremental marketing investments that we've made in our internal sales channel.

This is a channel that we believe is increasingly important for us in that and those investments have been paying off.

Speaker Change: We continue to deliver best in class service recently, we were ranked the number one health insurer for customer experience by Forrester. This is now four years in a row being ranked number one by Forrester.

Jim Rechtin: And finally, while it's early in this year's AEP cycle, from what we can tell, sales appear to be generally on track with expectations.

Speaker Change: And finally, while it is early in this year's AEP cycle from what we can tell sales appear to be generally on track with expectations.

Jim Rechtin: Turning to the second driver, clinical excellence, let me start with STARS. You know, we've acknowledged now that we've got work to do to get back to the results that we expect of ourselves and that we expect for our members and our patients and our investors. We've been moving quickly to make investments and to align incentives in our provider and pharmacy networks to close more gaps in care. We've also redirected care management and call center capacity to increase member outreach, and that is also related to gaps in care. Just last week, those efforts resulted in about 5,000 incremental primary care appointments.

Speaker Change: Turning to the second driver clinical excellence, let me start with stars. We've acknowledged now that we've got work to do to get back to the results that we expect of ourselves and that we expect for our members and our patients and our investors.

Speaker Change: We have been moving quickly to make investments into align incentives and our provider and pharmacy networks to close more gaps in care.

Speaker Change: We've also redirected care management and call center capacity to increase member outreach and that is also related to gaps in care.

Speaker Change: Just last week those efforts resulted in about 5000 incremental primary care appointments.

Jim Rechtin: And I learned last night that we've got about another 3,000 to start this week, 3,000 primary care appointments scheduled. We're also making technology investments. This includes improvements to our plan finder capability. and really the way I'd characterize it, we're on a sprint to take ground and to impact 2027 and I simultaneously feel good about the team's focus and the effort and the impact that we're making and so frankly frustrated that we have allowed ourselves a shorter runway than we would like to make up that ground. Clinical excellence also translates to lower cost when we deliver better care, and so in Q3, medical costs are largely in line with our expectations.

Speaker Change: And I learned last night that we've got about another 3000 to start this week 3000 primary care appointment scheduled.

Speaker Change: We're also making technology investments. This includes improvements to our planned find their capability.

Speaker Change: And.

Really the way I would characterize that we are on a sprint to take ground and to impact 2027.

Speaker Change: And simultaneously feel good about the team's focus and the effort and the impact that we're making and frankly frustrated that we've allowed ourselves a shorter runway than we would like to make up that ground.

Speaker Change: Clinical excellence also translates to lower cost when we deliver better care and so in Q3 medical costs are largely in line with our expectations as obviously, some give and take across categories.

Jim Rechtin: There's obviously some give and take across categories. The environment is still dynamic, and we will be careful with our expectations around medical cost trends. However, right now we are seeing some success in a number of our cost control efforts. The example I'll give is we've been extending value-based care contracts beyond primary care into areas like kidney disease and oncology care management, and we're seeing good results from that effort.

Speaker Change: The environment is still dynamic and we will be careful with our expectations around medical cost trend.

Speaker Change: However, right now we are seeing some success in a number of our cost control efforts. The example, I'll give is we have been extending value based care contracts beyond primary care into areas like kidney disease, and oncology care management and we're seeing good results from that effort.

Jim Rechtin: Shifting to the third driver, highly efficient back office. We do continue to make progress in this area. We're expecting a 30 basis point decrease in our adjusted operating cost ratio for the year. And just to give one example of the type of work that is helping to drive this, we're implementing more and more uses, use cases for AI. We recently launched a generative AI solution that allows our care management team to spend about half as much time on post-call documentation. They are still doing all the same human oversight for any clinical decision making, but they're spending less time on documentation.

Speaker Change: Shifting to the third driver highly efficient back office, we do continue to make progress in this area. We're expecting a 30 basis point decrease in our adjusted operating cost ratio for the year.

Speaker Change: And just to give one example of the type of work that is helping to drive. This we're implementing more and more users use cases for AI. The recent lot recently launched degenerative AI solution that allows our care management team to spend about half as much time on post call documentation.

Speaker Change: They are still doing all the same human oversight for any clinical decision, making but they're spending less time on documentation.

Jim Rechtin: That brings us to our final driver, deploying growth capital to drive efficient growth. I would argue that we're quietly building the leading senior oriented primary care organization in the nation. Our primary care clinics are hitting their clinical and their financial targets. They're on track to mitigate B28. We recently released a study in collaboration with a leading researcher and professor from Harvard that demonstrates both the clinical and economic value the clinics create. It found that our members have a better experience when they are part of a senior focused primary care clinic. We expect to add another roughly 40 clinics this year.

Speaker Change: That brings us to our final driver deploying growth capital to drive efficient growth.

Speaker Change: I would argue that we are quietly building the leading senior oriented primary care organization in the nation. Our primary care clinics are hitting their clinical and their financial targets. They are on track to mitigate the 28. We recently released a study in collaboration with a leading researcher professor from Harvard that demonstrates both the clinical and economic value of the clinics the eight.

Speaker Change: It found that our members have a better experience when they are part of a senior focused primary care clinic.

Speaker Change: We expect to add another roughly 40 clinics. This year often this is through the acquisition of underperforming clinics that we've demonstrated we can pretty rapidly turnaround in.

Jim Rechtin: Often, this is through acquisition of underperforming clinics that we've demonstrated we can pretty rapidly turn around. and our patient growth continues to outpace X. I'm encouraged by our recent performance trajectory and growth, absent our stars' performance in BY26. and at the same time recognize that these continue to be dynamic times for the industry and I believe it's critical that we continue to strengthen the organization by making investments to drive long-term shareholder value. This is obviously a balance with how we think about short-term earnings progression.

Speaker Change: And our patient growth continues to outpace expectations.

Speaker Change: Im encouraged by our recent performance trajectory and growth absent our stars performance and <unk> 26.

Speaker Change: And at the same time recognize that these continue to be dynamic times for the industry and I believe it's critical that we continue to strengthen the organization by making investments to drive long term shareholder value. This is obviously a balance with how we think about short term earnings progression.

Jim Rechtin: We look forward to providing formal 2025 guidance on our fourth quarter call, and we will also look forward to providing a more fulsome update on our strategic initiatives and their expected impact at Investor Day, which again, we're targeting in May of 2025. Finally, I'd just say, look, our conviction remains high regarding the positive outlook for MA and for value-based care, and with that, we will turn to Q&A.

Speaker Change: We look forward to providing formal 2025 guidance on our fourth quarter call.

Speaker Change: <unk>.

Speaker Change: We will also look forward.

Speaker Change: Providing a more fulsome update on our strategic initiatives and their expected impact at Investor Day, which again, we're targeting in may of 2025.

Speaker Change: Finally, I would just say look our conviction remains high regarding the positive outlook for M&A and for value based care and with that we will turn to Q&A.

Operator: As a reminder, to ask a question, please press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again. Please stand by while we compile the Q&A.

Speaker Change: As a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.

Speaker Change: Please standby, while we compile the Q&A roster.

Justin Lake: Our first question comes from Justin Lake with Wolf Research.

Speaker Change: Our first question comes from Justin Lake with Wolfe Research.

Justin Lake: Thanks.

Jim Rechtin: Good morning. I wanted to ask about your comments on 2025 and specifically your comments on investment spending. Prior to this call, you talked to a margin improvement in MA next year. And combined with top line growth, I think the expectation in the market was for $2 to $4 of improved earnings year over year. You know, given that you're talking about now, you know, more flattish, that would seem to put that investment income spending, or investment spending, I should say, at $500 million, give or take. Is that a reasonable ballpark, number one? Number two, can you give us some more color in terms of what you're spending that on, given you had just, you know, cut admin spending pretty dramatically over the last two to three years?

Justin Lake: Thanks, Good morning wanted to ask about your comments on 2025, and specifically your comments on investment spending prior to this call you talked to a margin improvement in MA next year.

Justin Lake: And combined with top line growth I think the expectation of the market was for two to $4 of improved earnings year over year.

Justin Lake: Given that you are talking about now more flattish that would seem to put that investment income spending or investment spending I should say that $500 million give or take is that a reasonable ballpark number one number two can you give us some more color in terms of what you're spending that on given you would just cut admin admin.

Justin Lake: Spending pretty dramatically over the last two to three years is there stuff that you over current you have to bring back and then how should we think about that rolling forward is there going to be return there were kind of nets to zero, because youre going to get improved.

Jim Rechtin: Is there stuff that you overcut and you have to bring back? And then how should we think about that rolling forward? Is there going to be a return there where, you know, it kind of nets to zero because you're going to, you know, get improved stars or what have you? And over what timeframe does that happen?

Justin Lake: Starz or what have you and over what timeframe does that happen. Thanks.

Jim Rechtin: Thanks. So, Justin, thank you for our first four questions. This is Jim. I'll start and then I'll let Susan jump in. So. Let me just start with 2025, and I recognize that we're not going to be able to answer everything people would like. Obviously, we're going to give guidance here in a few months, but I'm going to try to be as clear as I can what we are saying and what we aren't saying about 2025 right now. The first thing I'd just reemphasize is we told everybody we felt good about our bid, meaning both our pricing and our plan exits.

Speaker Change: So Justin Thank you for our first four questions.

Speaker Change: This is Jim I'll start and then I'll, let Susan jump in.

Speaker Change: So.

Jim: Let me just start with 2025 and I recognize that we're not going to be able to answer everything people would like obviously, we're going to give guidance here in a few months.

Jim: But im going to try to be as clear as I can again, what we are saying and what we arent, saying about 2025 right now.

Jim: <unk>.

Jim: The first thing I would just reemphasize as we told everybody we felt good about our bid, meaning both our pricing and our planned exits.

Jim Rechtin: And what we're essentially saying is, hey, we're reaffirming that even after you incorporate the things that we've learned since the bid season, we still feel good about where we're at with our product. The result of that is that, look, at a minimum, we see a 2024 performance floor, we see 2024 performance as a floor as we head into 2025. So, in other words, we have room for EPS progression. What we're also saying is we do need to see some things unfold over the next few months to establish how much room is in there. And so whether you think about AP results, both the the final member count and member mix, as well as thinking about continued monitoring of medical cost trend.

Jim: And what we're essentially saying is hey, we're reaffirming that even after you incorporate the things that we've learned since the bid season, we still feel good about where we're at with our product.

Jim: Result of that is that look at a minimum we see a 2024 performance floor.

Jim: We see 2020 for performance as a floor as we head into 2025 so.

Jim: Other words, we have room for EPS progression.

Jim: What we're also saying is we do need to see some things unfold over the next few months to establish how much room is in there and so whether you think about AEP results both the the.

Jim: Final member count and member mix as well as.

Jim: Thinking about continued monitoring of medical cost trend.

Jim Rechtin: The better visibility that we have into those things, the more confident and precise we can be in where we think we'll be next year. We also are telling you, in fact, that that just as importantly, we're going to be approaching 2025 with a similar posture to how we've approached the last quarter or two. Where we can make good investments to put ourselves on better footing in 2027, we're going to do that, and we're going to prioritize leaning into that long-term earnings potential over near-term EPS progression where we have good investments to make, but we're going to do that with a floor.

Jim: The better visibility that we have into those things the more.

Jim: Confident in precise we can be and where we think will be next year.

Jim: We also are telling you in fact that.

Jim: That just as importantly, we're going to be approaching 2025 with a similar posture to how we've approached the last quarter or two.

Jim: Where we can make good investments to put ourselves on better footing in 2027, we're going to do that and we're going to prioritize leaning into.

Jim: <unk> long term earnings potential over near term EPS progression, where.

Jim: Where we have good investments to make but we're going to do that with a floor I would love to tell you that we've got precise numbers on all of those choices and decisions. We don't some of that is still in flux.

Susan Diamond: I would love to tell you that we've got precise numbers on all of those choices and decisions. We don't. Some of that is still in flux. And, and in some cases, we're actually making smaller investments. And as we see those , and so we don't have a precise number today. What we're making sure is that we're creating room to make the right decisions for 2027 in the long term, but we're telling you we can do that while establishing So, again, I recognize everybody would like more clarity. I really do. And I want to reiterate that we're kind of trying to balance or focus on two things.

Jim: And.

Jim: And in some cases, we're actually making smaller investments in as we see those <unk>.

Jim: General returns, we're doubling down on and so.

Jim: We don't have a precise number today, what we're making sure is that we're creating room to make the right decisions for 2027 and the long term, but we're telling you we can do that while establishing floor.

Jim: So again I recognize everybody would like more clarity I really do and im.

I want to reiterate that we're kind of trying to balance our focus on two things given the dynamic in the market.

Susan Diamond: Given the dynamic in the market, We want to be appropriately prudent and make sure that we're doing the right things to establish targets, hit those targets, build credibility over time. And we are trying to establish the best way to navigate through the next 24 months. I mean, that's really the two things that we're trying to balance here as we as we try to give set expectations the best.

Jim: We want to be appropriately prudent and.

Jim: And make sure that we're doing the right things to establish targets hit those targets build credibility over time.

Jim: And we are trying to establish the best way to navigate through the next 24 months I mean, thats really the two things that we're trying to balance here.

Jim: As we.

As we try to give set expectations. The best we can Susan what would you add to that yes, and I think that says it well the only thing I might add just in that as we began to talk about the reinvestments that you believe are needed. Both for starts but also increased core operating performance given kind of the benchmarking work that we've done we got some questions and concern.

Susan Diamond: Susan, what would you add to that?

Susan Diamond: Yeah, no, I think that says it all.

Ann Hynes: The only thing I might add is, Justin, that, you know, as we've begun to talk about some of the investments that we believe are needed, both for stars, but also to improve for operating performance, given some of the benchmarking work that we've done, we got some questions and concern, well, gosh, could the level of investments cause you to go backwards year over year? So I think that was one of the reasons that we wanted to introduce the floor for 25, just to make sure that it was, so we're prepared to give formal guidance that we made it clear that we felt like with the pricing action we did take in the 25 bids that did give us the room and flexibility to make these needed investments while not creating a situation where we might go back.

Jim: As to the level of electric cars to go backwards year over year. So I think that was one of the reasons that you want to introduce that floor for 25, just to make sure that we are.

Jim: Preparing to give formal guidance that we made it clear that we felt like with the pricing actually been taken in 25 days that did give us the range reflects annuity to making an investment while not creating a situation room I go backwards.

Speaker Change: Our next question.

Ann Hynes: Our next question comes from the line of Ann Hynes with Miss... Hi, good morning. So your MLR results imply trends were relatively stable sequentially. Is that a good characterization? And if so, what does this mean for your 2025 bids? Are they tracking in line or better than your expectations? Thanks. Yeah, Ann. So as we saw the results develop for the third quarter, as we said in our post and commentary, current year claims did develop as expected in total for the MA business. There were some geography differences in terms of seeing some improvement on the inpatient side, some slight deterioration on the non-inpatient, but in total, in line with expected in terms of claims development through the third quarter.

Speaker Change: Yes.

Comes from the line of Ann Hynes with Mizuho.

Ann Hynes: Hi, good morning, So your MLR results imply trends were relatively stable sequentially is that a good characterization and if so what does this mean for your 2025 beds.

Ann Hynes: Are they tracking in line or better than your expectations. Thanks.

Speaker Change: Yeah, and so as we saw the result develops in that third quarter as we said in our testing commentary on current aircraft will develop as expected in total for the M&A business or some geography differences in terms of seeing some increasing our own personal time, Mike Amburgey Reis on the non inpatient but in total in line with expected in <unk>.

Speaker Change: The claims development and data third quarter.

Susan Diamond: As Jim mentioned, as we continue to evaluate emerging trends versus what we expected at the time of bids, we continue to feel confident in how we've approached the trend assumptions within our pricing. Again, some geography differences, both across claims and risk adjustment, as we've talked to you guys in prior quarters, but in the aggregate, continue to feel good about the MLR that we would have been targeting inherently within our bids.

Speaker Change: Jim mentioned as we continue to evaluate and laser triangle versus what we expected at the time of beds. We continue to feel confident in how we've approached the trend assumptions within our pricing again, some geography differences both across claims and risk adjustment as we've talked to you guys in prior quarter, but in the aggregate continue to feel good about the MLR that we would have been targeting.

Susan Diamond: And as we also mentioned, at least based on the early information we have access to, continue to feel like our assumptions around membership for next year, meaning the loss of a few hundred thousand members, continues to feel like a reasonable assumption.

Speaker Change: Our within our band and as you also mentioned at least based on the early information and access to continue to feel like our in terms of the analysts yet for next year, meaning the loss of a few hundred thousand member portal.

Speaker Change: I feel like everything with us.

Andrew Mok: Our next question comes from the line of Andrew Mok with BART.

Speaker Change: Our next question comes from the line of Andrew Mok with Barclays.

Andrew Mok: Hi, I wanted to follow up on the 2027 margin target and how you're thinking about the STARS recovery in the context of that 3% target. One, is that a realistic goal with the elevated investment spend and where your STARS scores fit today? And is there a minimum bonus level that you have in mind to deliver on that target?

Andrew Mok: Hi, I wanted to follow up on the 2027 margin target and how Youre thinking about the stars recovery in the context of that 3% target. One is that a realistic goal with the elevated investment spend and where your star scores fit today and is there a minimum bonus level that you have in mind to deliver on that target.

Jim Rechtin: Thanks. So I want to make sure I capture the question. So let me just play this back real quick. I think what you said is focus on 2027, is the 3% margin target a realistic target at this point? And then what does that assume around stars progression, basically, right? Right, is there a minimum level you need to recover in order to deliver on that target? Yeah, so 3%, look, I'm going to talk a little bit out of both sides of my mouth on this, 3% is realistic, and there is risk to that number. And so we just want to be super clear, we're going after it, we're doing everything we possibly can to get to that point.

Andrew Mok: Sure.

Andrew Mok: <unk>.

Speaker Change: So I want to make sure I captured the question. So just latest back real quick I think what you said is <unk>.

Speaker Change: Focus on 2027 is that 3% margin target a realistic target at this point and then what does that assume around stars progression basically right right is there a minimum level you need to recover to in order to deliver on that target.

Speaker Change: Yeah. So.

Speaker Change: 3%.

Speaker Change: We're going to talk a little bit out of both sides of my mouth. On this 3% is realistic and there is risk to that number and so we just want to be super clear, we're going after it we're doing everything we possibly can to get to that point.

Jim Rechtin: And in light of stars, you know, yes, there is risk to whether we will get all the way there in 2027 or not. We have to make meaningful stars progression is the way that I would describe it. We're not putting a specific number on it, there are too many puts and takes across different variables in the business to try to put a specific number on it. But yes, you're going to have to make some meaningful progression in stars to get there.

Speaker Change: In light of Starz.

Speaker Change: Yes, there is risk to whether we will get all the way there in 2027 or not.

Speaker Change: We have to make meaningful stars progression is the way that I would describe it.

Speaker Change: We're not putting a specific number on it there are too many puts and takes across different variables in the business to try to put a specific number on it but yes, youre going to have to make some meaningful progression and stars to get there Susan what would you add yes, I agree that and then the other thing Andrew that obviously the rate environment the competitive environment those are all.

Susan Diamond: Susan, what would you add? Yeah, I agree that. And then the other thing, Andrew, that, you know, obviously, the right environment, the competitive environment, those are all things that, as we say, every year will also be important. As you know, 2027 is the year where we'll have V-28 behind us, hopefully IRA will then at that point be a very good guy versus a headwind. And so there are, there's an environment, hopefully, where you do have the room to take some additional margin, which we've talked about, but those will be variables that we'll have to consider.

Speaker Change: All things that as we say every year will also be important as you know 2017, a year, where we will have eight behind us hopefully IRA will then at that point me at area.

Speaker Change: Very good guy versus the headwind and so there are there is an environment hopefully where we do have the room to take some additional margin, which we've talked about but there was one of the variables that will have to consider and then I would just say some of these investments that we've been discussing now can pay off in terms of returns over that timeframe that also support that continued market recovery.

Susan Diamond: And then I would just say some of these investments that we've been discussing now should pay off in terms of returns over that timeframe that also support that continued margin, margin recovery.

Ben Hendrix: Our next question comes from the line of Ben Hendrix with RBC Capital News.

Speaker Change: Our next question comes from the line of Ben Hendrix with RBC capital markets.

Ben Hendrix: Thank you very much. You flagged higher specialty drug costs within the non-inpatient utilization for the quarter. One of your peers noted a pull forward of some specialty drug utilization ahead of Part D changes next year.

Ben Hendrix: Thank you very much.

Ben Hendrix: You flagged higher specialty drug costs within the non inpatient utilization.

Ben Hendrix: For the quarter one of your peers noted a pull forward of some specialty drug utilization ahead of part D. Changes next year is that something you would expect would be priced for as we head into 2025 or is there a component there that we should assume as a headwind.

Ben Hendrix: Is that something you would expect would be priced for as we head into 2025, or is there a component there that we should assume is a headwind for MCR modeling? I did, yes. As you said, we did see some higher oncology costs in particular. I did call that out as something we were seeing at a conference I was at in early September, so we have been seeing it for a bit. We would say that our view is that it is not really largely attributable to IRA changes. They were relatively minimal in 24 in terms of sort of member out-of-pocket exposure.

Ben Hendrix: For MCR modeling thanks.

Speaker Change: Hi, Dan Yes.

Speaker Change: We did see some higher oncology costs in particular.

Speaker Change: We call that out.

Speaker Change: During our conference I was out in early September so we haven't seen for a bit.

Speaker Change: Would say that our view is that it is not really largely stability IRI changes they were relatively minimal in 2004 in terms of sort of member out of pocket exposure.

Ben Hendrix: And so what we have seen so far is that we believe it's mostly attributable to either new treatments that have come to market or label expansions around existing treatments. And what we're seeing is, in some cases, these new treatments are being added to existing therapies, resulting in that higher unit costs than we've seen historically and higher than we had anticipated as we evaluated the pipeline. We do anticipate that we will see some further uptick in trends next year, just given the IRA changes and the introduction of the much lower maximum out-of-pocket. And so we have built in induced utilization assumptions into our 25 thinking, as well as just, again, continued sort of expectations around the emergence and uptake of some of these new therapies.

Speaker Change: So what we have seen so far is that we believe it is mostly attributable to new treatments that have come to market or label expansion around existing treatments and what we're seeing is in some cases.

Speaker Change: Treatments are being added to existing therapy without being net higher unit cost than they've been historically and higher than we had anticipated as we are either in the pipeline.

Speaker Change: We do anticipate that we will see some further uptick in China next year, just given the IRS changes and the introduction of the much lower maximum out of pocket because we haven't built in interest utilization assumption into our 25 thinking as well as just again continuing sort of expectations around.

Speaker Change: Emergence and uptake of <unk> therapy. So we have considered that obviously with IRI, there's more exposure on the plane signing 25, which is why we have been and you can expect that we'll start we'll take a more thoughtful approach in terms of our early guidance around as many things that we can see how the trends emerge relative to your expectations in light of Iraq.

Ben Hendrix: So, we have considered that.

Ben Hendrix: Obviously, with IRA, there is more exposure on the plain side in 25, which is why we said, you know, you can expect that we'll start, you know, we'll take a more thoughtful approach in terms of our early guidance around some of these things that we can see how the trends emerge relative to our expectations in light of IRA.

Sarah James: Our next question comes from Sarah James with Kansas Historical Society.

Speaker Change: Our next question comes from Sarah James with Cantor Fitzgerald.

Sarah James: Thank you.

Sarah James: I was wondering, if stars stay where they are, how much crosswalk is possible in 2026, given how you think about geographic overlap and plan readings?

Sarah James: Thank you.

Sarah James: I was wondering if first day.

Sarah James: They are how much cross lock is possible in 2026 given.

Sarah James: How do you think about geographic overlap.

Susan Diamond: And then if you could clarify on your 25 guidance, what MA margin is implied in that?

Sarah James: Plan ratings and then if you could clarify on your 25 guidance what margin is implied on that thanks.

George Renaudin: Yes, so George, do you want to take the STARS question, then I can take the MA Margin question?

Yeah I'll take the first question and then I don't think that any margin question sure hi, Thanks for the question Sarah So as we think about the crosswalk possibility, we'll be evaluating that.

George Renaudin: Sure. Hi, thank you for the question, Sarah. So as we think about the crosswalk possibility, we'll be evaluating that in line with lots of other things.

Sarah James: In line with lots of other things. So we certainly want to de risk the amount of members that we have concentrated certain contracts will be thinking through that as we go into the next bid cycle.

George Renaudin: So we certainly want to de-risk the amount of members that we have concentrated in certain contracts, and we'll be thinking through that as we go into the next bid cycle. And one of the considerations will, of course, be how much progress we're making in the current STARS work that we're doing, as well as thinking about the opportunities that we have for crosswalk, the opportunities that we've talked about before with regard to our group contracts. So there are a number of considerations we'll be taking into hand when we do that, as well as what our 25 membership looks like and membership mix, and the progress that we're seeing in medical cost management, some other items. So it is certainly one of the levers we'll be exploring, but I don't think that it is the sole by any means.

Sarah James: One of the considerations, we will of course be how much progress we're making in the current stars work that we're doing as well as thinking about.

Sarah James: The opportunities that we have for crosswalk the opportunities that we've talked about before with regard to our group contracts. So there are a number of considerations will be taking into into and when we do that as well as what our 25 membership looks like and the membership mix and the progress that we're seeing in medical cost management. Some other items. So it is certainly one.

Sarah James: The levers we will be exploring but I don't think that it is the sole by any means there are a number of issues that we'll be thinking about as we go through thinking about our stars mitts.

George Renaudin: There are a number of issues we'll be thinking about as we go through thinking about our STARS mitigation efforts as we go into next year.

Sarah James: Mitigation efforts as we go into next year.

Susan Diamond: Yeah, and then, Sarah, as far as 25 MA margins, obviously, you know, we haven't given any specific guidance yet. Jim provided some commentary, so I'll just remind you, as we previously have talked about our 25 margin expectations on the MA side, you know, we acknowledge that because of the pressures that we were absorbing within 25, including the higher trend that emerged after filing of our 24 bids, V28, IRA, et cetera, and given the TBC thresholds, there was limited ability to take true margin expansion within the pricing because the TBC would offset all of that.

Speaker Change: Yes, Sara as far as 25 any margins, obviously, we haven't given a specific guidance yet Jim provided some commentary. So I'll just remind you as we previously talked about our 25 margin expectations on the MH side, we acknowledged that then because.

Speaker Change: Because of the pressures that we were absorbing within 25, including the higher trend that emerged after filing of our 20 per bed <unk>, IRA et cetera, and given the TDK thresholds women inability to take three margin expansion within the pricing because of the PTC wind offset all of those headwinds I just mentioned.

Susan Diamond: So, we had mentioned the majority of the margin progression we would be achieving would largely come from the plan exits, where we had exited plans that were historically performing unprofitably, and we didn't feel like we had a reasonable pathway to getting them to profitable or contributing performance levels. That continues to be the case. Again, all of the emerging trend that we've seen, we continue to still feel good about those pricing decisions and how we thought about trend in the aggregate.

Speaker Change: Ed mentioned the majority of the margin progression, we would be achieving with largely come from the planned exits where we had exited plans that were historically performing and profitably and we didn't feel like we had a reasonable pathway to getting them to profitable or contributing performance level that continues to be the case again all of the emerging trend that we've seen we continue to feel good about those pricing decision.

Susan Diamond: As Jim mentioned this morning, though, you know, we are now contemplating, though, some additional investments. The pricing action we took allowed us some flexibility to do that, and so, you know, as we've established the notion of at least a floor, obviously, if we end up closer to flat, the margin would be relatively comparable, but ultimately, we'll have to evaluate, again, how membership growth comes in, what level of investments we do choose to make, and a variety of other things as we set guidance, and certainly, when we do, can talk more about the inherent margin within our plan.

Speaker Change: And then how we thought about trend in the aggregate as Jim mentioned. This morning, we are now contemplating those some additional investments the pricing action, we took allowed us some flexibility to do that and so as we've established the notion of at least the floor. Obviously, if we end up closer to flat the margin will be relatively comparable but ultimately we'll have to evaluate again our membership growth.

And then what level of investments we choose to make.

Variety of other things as we set guidance and certainly media can can talk more about the inherent margin within our dad.

Joshua Raskin: Our next question comes from Joshua Raskin with Nefron. Hi, thanks. Good morning.

Speaker Change: Our next question comes from Joshua Raskin with Nephron research.

Joshua Raskin: Do you have a view on MA market growth in total for 2025? And then where do you think the lives that you're losing from those exits are going? Is that sort of one or two larger plans? You think smaller plans or are people going, you know, seniors going back to fee-for-service?

Joshua Raskin: Hi, Thanks. Good morning, do you have a view on MA market growth and total for 2025, and then where do you think the lives that you're losing from those exits are going is that sort of one or two larger plans using smaller plans or are people going to seniors going back to fee for service and I think you just answered this susan but we should assume that those <unk>.

Joshua Raskin: And I think you just answered this, Susan, but we should assume that those lost lives have lower margins, but does that mean they have lower benefit levels, less rebates?

Joshua Raskin: <unk> lives had lower margins, but does that mean, they had lower benefit levels less rebates and then lastly, how are you thinking about retention outside of the market exits.

Joshua Raskin: And then lastly, how are you thinking about retention outside of the market?

George Renaudin: Hi, Josh. So it's George Renaudin.

Joshua Raskin: Hi, Josh So George Renard.

George Renaudin: I'll take the question. So on the overall industry growth, we're thinking five to five and a half percent in this coming year, versus the roughly six percent the industry saw this year in our five percent performance that we are expecting as we finish out the year. So we feel pretty good about where that growth is going to come from. And if we think about our competitive positioning, it is very much aligned with our thinking at time of bids. We continue to anticipate, as Susan said, a few hundred thousand members in twenty five down. So we feel pretty good about that.

Speaker Change: The question so on.

On the overall industry growth.

Speaker Change: Thinking five to five 5% in this coming year.

Speaker Change: Versus the roughly 6% of the industry saw this year in our 5% performance that we are expecting as we finish out the year. So we feel pretty good about where that growth is going to come from and.

Speaker Change: If we think about our competitive positioning it is very much aligned with our thinking at time of bids. We continue to anticipate as Susan said, a few hundred thousand members.

Speaker Change: In 'twenty five.

Speaker Change: Down so we feel pretty good about that from a standpoint of retention. There is a lot of work that we're doing to focus on that we're helping our brokers as you think about the counting and planned exits of.

George Renaudin: From a standpoint of retention, there's a lot of work that we're doing to focus on that. We're helping our brokers. As you think about the county and plan exits, there's, of course, going to be a lot of shopping. And so we have put in place lots of tools to help those the sales teams, both our internal sales and outside brokers, work through the shopping experience to make sure it's a better consumer experience for our customers. And so we put in place things that allow them more real time access to benefits, help them with a best fit tool so they can choose a plan that fits their needs better.

Speaker Change: Of course going to be a lot of shopping and so we have put in place lots of tools to help those.

Speaker Change: The sales teams, both our internal sales and outside brokers work through.

Speaker Change: Shopping experience to make sure it's a better consumer experience for our customers and so we've put in place things that allow the more real time access to benefits help them with a best fit tool. So they can choose a plan that fits their needs better and we've also put in place with our internal team capabilities, including AI.

George Renaudin: And we've also put in place with our internal team capabilities, including a to help them with helping those members make better decisions into the needs.

Speaker Change: To help them with <unk>.

Speaker Change: Helping those members make better decisions into the needs of it.

George Renaudin: I would just say that on another item in retention that we're seeing very positive results from. And I think in the opening comments, Jim made a comment about this and that that we are getting a better focus into our digital sales. And our new digital sales tool also is allowing us to handle members who are trying to find out as we did do some of those exits. Because keep in mind, 98 percent of our members in those exit areas have another plan choice. And so the digital tools helping them make those choices easily. And we're seeing a very significant increase in the amount of digital sales we're having as a result.

Speaker Change: I would just say that on another item in retention there, we're seeing very positive results from them I think.

Speaker Change: In the opening comments, Jim made a comment about this and that that we are getting a better focus into our digital sales in our new digital sales tool also is allowing us to handle members who were trying to find out is we did do the sum of those exits because keep in mind, 98% of our members in those exit areas have another plan choice.

Speaker Change: So the digital tools, helping them make those choices easily and we're seeing a very significant increase in the amount of digital sales were happening as a result, all of that will lead to increased retention.

George Renaudin: All that will lead to increased retention.

Susan Diamond: And then, Josh, one thing I'd add to George's comments on growth, one thing to keep in mind is we do believe that 25 growth for the industry will still have some impact from the ongoing redetermination process on the MA side. We think it's probably worth about 80 basis points, where given the deeming period, we will continue to see some attrition in the duals in particular as they lose eligibility. In terms of your question about how to think about the contribution of lost lives, I would say it depends. As we've always said, for the members impacted by plan exits, those are unprofitable, so to the degree we don't retain them, that is positive.

Speaker Change: And then Josh one thing I'd add is there any comments on growth one thing to keep in mind is we do believe that 25 growth for the industry will still have some impact from the ongoing redetermination process on the MH side, we think it is.

Speaker Change: Probably worth about 80 basis points, we're getting Athena <unk> period, we will continue to see some attrition in the duals in particular as they lease eligibility.

Speaker Change: In terms of your question about how to think about the contribution of <unk> I would say it depends.

Speaker Change: As we've always said for the members impacted by plant exit those are unprofitable. So to the degree we don't retain them that is positive to the degree we do retain them is there as mentioned most of them have other plant option that is incrementally positive net planes that are available would be positively contributing.

Susan Diamond: To the degree we do retain them, as George mentioned, because most of them have other plan options, that is incrementally positive because the plans that are available would be positively contributing.

Susan Diamond: Across the rest of the book, if you remember, we did work very hard and intentionally to make sure we try to protect our higher performing plans. As we did our 25 bids, so it would have taken less benefit action in those higher performing plans, and where you'd see larger cuts is going to be those that were below our targeted margin. So our hope would be that within the attrition that we see, it is more concentrated within the lower performing plans, but obviously we'll have to see how the AP results come out. As you know, it takes longer to see the attrition information because a beneficiary has to enroll in another plan, CMS has to process it, and give it to us.

Speaker Change: Across the rest of the book if you remember we did work very hard and intentionally to make sure we try to protect our higher performing planned as we did our 25 beds that would have taken less benefit action in those higher performing plans and where you see larger accounts is going to be those that were below our target margin. So our hope would be that within the attrition that we see it is more concentrated within our lower performing plants.

Speaker Change: But obviously, we'll have to see how the AEP results come out as you know it takes longer to see returns the attrition information because the benefits you have been rolling in that airplane payments at the profit and give it to us that we have no visibility into that just yet, but something we'll be watching closely.

Susan Diamond: So we have no real visibility into that just yet, but something will be watched.

Stephen Baxter: Our next question comes from Stephen Baxter with. Hi, thanks. You mentioned that the inpatient unit cost of Medicare came in better than expected.

Our next question comes from Stephen Baxter with Wells Fargo.

Stephen Baxter: Hi, Thanks, you mentioned that the inpatient unit costs in Medicare came in better than expected can you just talk about what you saw with two midnight rule in the quarter and then just.

Stephen Baxter: Please talk about what you saw with 2 midnight rule in the quarter and then just maybe more broadly how you think about the ability of the 2025 commentary to tolerate a higher level of inpatient unit costs in 2025.

Stephen Baxter: And then maybe more broadly how you think about.

Stephen Baxter: The ability of the 2025 commentary to tolerate a higher level of inpatient unit costs in 2025. Thank you.

Stephen Baxter: Hi, Stephen. Yes, so you might recall, we've been talking about seeing lower inpatient unit costs really over the course of the year, and I'd say the team, you know, in retrospect has just been somewhat cautious and fully stepping up to that. And so we see further run out to make sure that what we were seeing was durable and would continue. And that is proving to be relatively consistent, meaning if we had fully stepped up to what we were seeing early, what we're ultimately seeing emerge continues to be consistent with that. So we feel good about what we're seeing.

Speaker Change: Hi, Steven Yes.

Speaker Change: You might recall, we've been talking about seeing lower inpatient unit costs really over the course of the year and I would say the team in retrospect has just been somewhat cautious and fully staffing up to that until we see further run out to make sure that what we're seeing with dermal and would continue and that is proving to be relatively consistent meaning if we had fully separately.

Speaker Change: We are seeing early on.

Speaker Change: So I think emerge.

Speaker Change: As we can take into that so we feel good about what we're seeing I would say within the third quarter itself and we start to see full of oil and respiratory season, AOI, which also tends to be lower average unit costs, which have been included in that as well.

Stephen Baxter: I'd say within the third quarter itself, we start to see some of the flu and respiratory seasonality, which also tends to be lower average unit costs, which would be included in that as well. In terms of 25, as we've always said, the way we've approached 25 is we've incorporated all of the impacts that got into our 24 baseline with the changes we've seen across the geographies, the lower inpatient unit costs, higher non-inpatient. That is all now embedded into our thinking is the jumping off point for 25 and then we've got the normal trend assumed for 25.

Speaker Change: In terms of 'twenty five as we've always said the way we price 25, it will incorporate all of the impact that.

Speaker Change: Got into our 24 baseline with the change I think things are going across the geographies the lower inpatient unit cost iron on a patient that is all now embedded into our thinking as the jumping off point for 25, and then we've got the normal trend I think for 'twenty five we now have final.

Stephen Baxter: We now have final rate changes from CMS for reimbursement. And so that obviously is included in our estimates and so really what we'd be exposed to is any mixed changes, but I'd say, based on what we've seen and the consistency of what we've seen, we feel good about how we're thinking about unit cost trends in this.

Speaker Change: Rate changes from CMS for reimbursement. So that obviously is included in our estimates and so really what we'd be associated any mix changes, but I'd say based on what we've seen and the consistency of what we think we feel good about how we're thinking about unit how sensitive is when you're talking about.

Joanna Gajuk: Our next question comes from Joanna Gajuk with Bank of America. Hi, good morning. Thanks so much for taking the question. I guess a similar question to Steve's question about, I guess, from different angles. So instead of talking about unit costs, can we talk about utilization trends? Because we've obviously been hearing from some of the hospital companies or the public-traded companies, you know, guiding for volume growth still above average, again in 2025 after They, you know, growing well above average this year in terms of just volumes, not not just cost. So so kind of the question for you is curious, what are you currently assuming in your 2025 outlook when it comes to utilization?

Our next question comes from Joanna <unk> with Bank of America.

Speaker Change: Hi, good morning, Thanks, so much for taking the question I guess.

Speaker Change: So my question to Steve's question about I guess from different angles. So instead of talking about unit cost can you talk about utilization trends because.

Speaker Change: We've obviously been hearing for some of the hospital companies with the publicly traded companies.

Speaker Change: Adding for volume growth.

Speaker Change: <unk> average again in 'twenty five after.

Speaker Change: Okay growing well above average.

Speaker Change: This year in terms of just volumes not just Costco so kind of a question for you. Just curious what are you currently assuming in your 2025 outlook. When it comes to utilization and then can you grow EPS in that scenario. This is happening based on that pricing assumption. Thank you.

Joanna Gajuk: And then, you know, can you grow EPS in that scenario that this is happening based based on that pricing consumption thing?

Joanna Gajuk: Hi, Joanna. Yes. So in terms of utilization, we have seen results that are very much in line from a utilization standpoint, since we updated our estimates as of the second quarter call. At that time, you might remember, we did step up our utilization assumptions and lower non-inpatient just based on what we were seeing in terms of some additional sort of site of service shift related to two midnight roll. Our utilization has been very much in line with that since. Obviously, you've got things like respiratory season, the hurricane impact, those things that we can discreetly identify, but our core utilization, we continue to feel good about.

Speaker Change: Hi, Jamie yes, so in terms of utilization.

Speaker Change: We have to.

Speaker Change: Results that are very much in line from a utilization standpoint, since we updated our estimates as of the second quarter call at that time, you might remember, we did step up our utilization assumptions and lower non impatient just based on what we're seeing in terms of some additional sort of site of service shift related to two midnight rule. Our utilization has been very much in line with that.

Speaker Change: Obviously, you've got things like respiratory season, the hurricane impact those things that we can discretely identify but our core utilization. We continue to feel good about our utilization management impacts have been very consistent coming out of really the first quarter as well. So we feel good about those trends in terms of 25, we've assumed normal sort of utilization trend on top.

Joanna Gajuk: Our utilization management impacts have been very consistent coming out of really the first quarter as well. So we feel good about those trends. In terms of 25, we have the same normal sort of utilization trend on top of that higher 24 baseline that is inherent within our bid. And so again, there's no large incremental regulatory change expected for 2025 that should create the level of uncertainty like we were dealing with for 24, so I think feel very good about the assumptions we're making in terms of secular sort of utilization.

Speaker Change: Of that 24 baseline that is inherent within our bed and so again there is no large incremental regulatory change expected for 2025 that can create that level of uncertainty like we were dealing with for 24th I think feel very good about the assumptions, we're making in terms of.

Speaker Change: Secular sort of utilization trends.

George Hill: Our next question comes from George Hill with Deutsche Bank. Yeah, good morning, a little bit of a different topic. Can you guys talk about impact inpatient claims denial rates and how these trends are over the last 12 months? I know, in the second quarter, kind of claims appeals was a topic that came up at the margin. And a lot of publicly traded hospital companies and private hospital companies have talked about an increase in claims denial rates. So I'm just trying to see if you like if there's any meaningful trend to call out there and whether or not claims denials have impacted MLR in any meaningful way.

Speaker Change: Our next question comes from George Hill with Deutsche Bank.

George Hill: Yes, good morning, a little bit of a different topic can you guys talk about impact in patient claims denial rates and how they've trended over the last 12 months I know in the second quarter kind of claims appeals was a topic that came up at the margin and along the publicly traded hospital companies and private hospital companies have talked about an increase in claims denial rates. So I'm just trying to see.

George Hill: If there is any meaningful trend to call out there and whether or not claims denials have impacted MLR in a meaningful way.

George Hill: Hey, George. Yeah. So with the new Human Night Rule implementation, as we've been saying, we had that result in more initial approval. So in theory, you would expect fewer denials, fewer appeals. As we mentioned throughout the year, when Human Night Rule was implemented, we did see initially higher appeal rates and higher uphold rates for those appeals than we would have expected based on historical performance. As you mentioned, we've completed audits ourselves. We've been through a CMS audit, which is validated that we believe were appropriately evaluating the clinical. Rules and what we would say is, at the time, there was a question about, was that just a pull forward and a change in seasonality of how appeals would come in and would we see fewer appeals in the future?

Speaker Change: Hey, Joe Yeah. So Whitney came in light rail implementation as we've been saying we had that resulted in more initial approval. So in theory, you would expect fewer denials peer appeals.

Speaker Change: We mentioned throughout there when came in that rule is implemented we did see initially higher appeal right.

Speaker Change: And higher uphold rate for those appeals than we would've expected based on historical performance as you've mentioned, we've completed audits ourselves, even <unk>, which has validated that we believe we're appropriately evaluating the clinical.

Speaker Change: And what we would say is at the time. There was a question about was that just a pull forward in a changing seasonality of how appeals would come in and when we see fewer appeals and it's easier because there's a reasonably long tail over which providers can appeal. We made the assumption that it will just result in overall higher appeals and ultimately a poor right.

George Hill: Because there's a reasonably long tail over which providers can appeal. We made the assumption that it would just result in overall higher appeals and ultimately uphold rates. That is what we have been seeing to date. We would just say we caught that early and incorporate it into our estimates coming out of the first quarter. I think why you may be hearing some different commentary from hospital systems is they may not have recognized that as quickly and may have seen that higher appeal rate initially and assume that the absolute appeals would still be comparable year over year.

Speaker Change: That is what we have been seeing to date, we would just say we caught that early and incorporate into our estimates coming out of the first quarter. I think why you may be hearing some different commentary from hospital systems as they may not have recognized that as quickly.

Speaker Change: <unk> seen that higher appeal rate initially and assume that the absolute appeals would still be comparable year over year and what we've just seen is those appeals have been higher which.

George Hill: And what we've just seen is those appeals have been higher, which when you think about just the magnitude of the changes, I think it's everybody just trying to understand how those new rules are being applied across the payers and then the providers. So, that's, I would say, very consistent with what we've seen since the first quarter and no meaningful variation since.

Speaker Change: When you think about just the magnitude of the changes I think as everybody is trying to understand how those new rules are being applied across payers and providers. So that I would say very consistent with what we think the since the first quarter and no meaningful variations dense and enjoys that was going to add anything yes. There is I would just add that I think youre right about the question of.

George Hill: And then George, I don't know if you want to add anything. Yes, I would just add that I think you're right about the question of testing the appeals and seeing where they aren't trying to figure out exactly how to be applied. We, as you said, feel very confident about how we're applying. Given the CMS audit, we had the very start of the year that came out positively. The other thing I would just add to that is that our clinicians continue to speak with many of the provider clinicians to talk through the issues to make sure we all have a similar way of approaching that.

Speaker Change: Testing, the appeals and seeing where they are I'm trying to figure out exactly how to midnight rule will be applied as you said feel very confident about how we're applying given the CMS audit. We have the very started the year that came out positively. The other thing I would just add to that is that our clinicians continue to speak with many of the provider clinicians to talk through the issues.

Speaker Change: To make sure we all have a similar way of approaching that everyone is clear in understanding what the two midnight rule is and is not.

George Hill: Everyone is clear and understanding what the 2 midnight rule is and is not.

Jim Rechtin: Hey, not to pile on here, but let me just try to wrap all the inpatient stuff together. Broadly, I think what we're trying to convey is that since late first quarter, early second quarter, we've seen relatively stable trends. And so there was a fair amount of noise in the first quarter. I think everybody was adapting to the regulatory change. For us, we put a lot of attention on it at that point in time, and we think we worked through all the changes in process and approach and whatnot and have gotten to a relatively stable place.

Speaker Change: Not to pile on here, but let me just try to wrap all the inpatient stuff together broadly I think what we're trying to convey is that since late first quarter early second quarter, we've seen relatively stable trends and so there was a fair amount of noise in the first.

Speaker Change: Quarter, Big everybody with adapting to regulatory change for us we put a lot of attention on it at that point in time, and we think we worked through all the changes in process and approach.

Speaker Change: Whatnot and have gone into a relatively stable place. So when we look forward.

Jim Rechtin: So when we look forward, we're feeling pretty good about the outlook and our ability to project what the inpatient cost is going to be, whether that's denial rates, utilization, unit cost, et cetera, relative to where we were back in the first quarter.

Speaker Change: We're feeling pretty good about the outlook and our ability to project what the inpatient cost is going to be whether thats denial rates utilization unit cost et cetera relative to where we were back in the first quarter.

Whit Mayo: Our next question comes from Whit Mayo with Leary.

Speaker Change: Our next question comes from Whit Mayo with Leerink partners.

Whit Mayo: Hey, good morning. Maybe just a question on S.T.A.R.S. as it relates to the lawsuit or appeal, just looking at H. Contract 5216, maybe the math is off a little bit. But it seems like you might need to flip both the Part C and D ratings on the call. to a 5 from a 4 to get back to a 4-star rating on that contract. You can do it with just improvements. One category seems like both. So is that an accurate statement? And I'm just wondering, like, how many calls ballpark are we talking about to have to overturn to see improvement?

Whit Mayo: Hey, good morning, maybe.

Whit Mayo: Maybe just a question on Starz as it relates to the lawsuit or or appeal, just looking at H contract $5 to $1 six maybe the math is off a little bit here, but it seems like you might need to flip both depart C&D ratings on the call Center two five from a four to get back to a four star rating on that contract it doesn't seem like.

You can do it with just improvement in one category. It seems like both so is that an accurate statement and I'm just wondering like how many calls a ballpark are we talking about to have to overturn to see improvement in either categories. One is multiple calls just just any color would be would be helpful. Thanks.

Whit Mayo: categories. Is it one? Is it multiple calls? Just any color would be helpful. Yeah, in total, it's three calls across both metrics.

Speaker Change: Yes in total it's three calls across both metrics and and.

Whit Mayo: And, and yes, we would need to see the three calls over I would just add into that, Jim, that in addition to the three calls, one of the other things that we're talking that we are pursuing with CMS is the need for greater visibility and transparency into how the thresholds are calculated. Yes, that is correct.

Speaker Change: And yes, we would need to see the three calls overturned.

I would just add into the gym.

Speaker Change: In addition to the three calls one of the other things that we're talking that we are pursuing with CMS as the needs for greater visibility and transparency into how the thresholds are calculated.

Yes that is correct yes.

A.J. Rice: Our next question comes from A.J. Rice with UBC. Hi, everybody. Just want to make sure I understand the early thinking on 25. If you are successful in your appeal on the stars through litigation, would that change your view on the amount of investment you need in 25? It almost sound like up to this point, the discussion around the star ratings hit has been around You know, the arbitrariness of the CMS threshold cut points and some of that. And you had a great. track record of having very high star ratings. Now all of a sudden it sounds like as you guys have looked at this you now think you need to make a lot of investment to get back on track on stars and I wonder if your appeal is successful would you not have to do that and would that change your outlook for 25 for the better?

Speaker Change: Our next question comes from AJ Rice with UBS.

Speaker Change: Hi, Ravi.

Speaker Change: Just.

AJ Rice: I want to make sure I understand.

Early thinking on 25.

AJ Rice: If you are successful in your.

AJ Rice: Appeal on the stars.

AJ Rice: Through litigation.

Speaker Change: Would that change your view on the amount of investment you need.

Speaker Change: 25, it almost sounded like up to this point the discussion around the star ratings head has been around.

The arbitrariness of the CMS grushow cut points and some of that and <unk> had a great.

Speaker Change: Our track record of having very high star ratings now all of a sudden it sounds like as you guys have looked at that as you know think you need to make a lot of investment.

Speaker Change: To get back on track on stars and I Wonder if.

Speaker Change: If youre successful would you not have to do that and would that change your outlook for 'twenty file for the better and then in the broad discussion about.

A.J. Rice: And then in the broad discussion about you know, out years. There's always the discussion about trading off enrollment for margin. And obviously, we've got a lot of focus on getting you back to 3% margin. But any philosophical commentary about how much of a enrollment hit you might And I'm taking it if the appeals unsuccessful to get back to that 3% margin over the next couple of years with a view to 27.

Speaker Change: Out years.

Speaker Change: Theres always the discussion about trading off enrollment for margin and obviously, we've got a lot of focus on getting you back if we're interested in margin, but any philosophical commentary about.

Speaker Change: How much of the enrollment hit you might have.

Speaker Change: And uptake.

Speaker Change: Appeals are unsuccessful.

Speaker Change: To get back to that 30% margin over the next couple of years with a view to 27.

Jim Rechtin: Yeah, so let me start with the appeal and its impact on how we think about 2025. So the way to think about stars is there's two related but slightly different things. So there's the appeal related to the single or I guess two but but similar metrics that that are kind of the difference between 3.5 and 4 stars for a whole bunch of our members. That is one thing that is working its way through litigation. We're not really going to comment on that beyond what we have. But separate is the broader trend within the STARS program of cut points and thresholds getting harder.

Speaker Change: Yes.

Speaker Change: Let me start with.

Speaker Change: The appeal and its impact on how we think about 2025.

Speaker Change: So the way to think about Starz is theres two related but slightly different things. So theres the appeal related to the single or two but.

But.

Speaker Change: Similar metrics.

Speaker Change: That.

Speaker Change: That are the kind of the difference between.

Speaker Change: Three and a half from four stars for a whole bunch of our members that is one thing that is working its way through litigation, we're not really not going to comment on that beyond what we have but separate is the broader trends within the stars program of cut points and thresholds getting harder.

Jim Rechtin: and and that's across a lot of different metrics and so while there's one critical metric for BY 2026 Broadly, I think the entire industry is looking at a movement in metrics and cut points and thresholds that is causing pretty much everybody to reevaluate how far do you have to lean in to investment in this program to make sure that you can keep up with those with that metric. I don't think we're alone here. So, as we contemplate investments for next year, the appeal is not gonna have any kind of meaningful impact on how we think about it.

And and that's across a lot of different metrics and so while there is one critical metric or B why 2026 broadly I think the entire industry is looking at a movement in metrics and cut points and thresholds that is causing pretty much everybody to reevaluate how far do you have to lean in to investment in this <unk>.

Graham to make sure that you can keep up with those with that metric movement.

Speaker Change: I think we're alone in that so as we contemplate investments for next year.

Speaker Change: It is.

Speaker Change: The appeal is not going to have any kind of meaningful impact on how we think about investment.

George Renaudin: The investment. is going broadly in the program to drive better and better and better performance at a pace that exceeds what we expect. That's really what the investment is about at the end of the day.

Speaker Change: The investment.

Speaker Change: Is going broadly in the program to drive better and better and better performance at a pace that exceeds what we expected previously.

That's really what the investment is about at the end of the day George would you anything you'd add to that I would just add Jim that the other thing about the investments we're making start.

George Renaudin: George, would you, anything you can add to that? I would just add, Jim, that the other thing about the investments we're making in STARS, or in many ways, the right thing to do to improve health outcomes for our members overall. You know, the investments we're making are enhancing our provider and member performance. We're talking about incentive programs to close gaps in care, which helps our health outcomes, while also improving the customer experience. It is a good thing for us to continue to work with our vendors to improve our relations with them and to improve their performance.

George Hill: <unk> way is the right thing to do to improve health outcomes for our members overall.

George Hill: Investments, we're making are enhancing our provider and member performance, we're talking about incentive program to close gaps in care, which helps helps our health outcomes, while also improving the customer experience.

Speaker Change: It is a good thing for us to continue to work with our vendors to improve our relations with them and to improve their performance and finally, the strengthening that we're doing around technology and integration support operational excellence also nicely folded into many of the other things that Jim has talked about we need to focus on moving forward in both his opening.

George Renaudin: And finally, the strengthening that we're doing around technology and integration to support operational excellence also nicely folds into many of the other things that Jim has talked about we need to focus on moving forward in both his opening comments and in his earlier letters.

George Hill: Comments into earlier letter.

Jim Rechtin: Yeah, and then AJ, the only other thing I'd remind you is we talked about investments for 2025. Just keep in mind, STARS is one piece of it. But there are investments we're making more broadly to drive just improved operational performance across a number of areas that Jim has referred to. So STARS is just one component.

Speaker Change: Yes, and then a J the only other thing I would remind you as we've talked about investments for 2025, just keep in mind start is one piece of it but there are lessons, we're making more broadly to drive improved operational performance across a number of areas that Jim referred to so let's start with just one component and engine and the last question I don't think we touched on it just a philosophy of membership growth and margin trade off if you wanted to touch on that.

Jim Rechtin: And then Jim, the last question I don't think we touched on is just the philosophy of membership growth and margin trade off if you wanted to Yeah, and again, I think this was related to how would we react to the STARS mitigation or STARS progression. Look, the short answer is we have a lot of questions around that very thing that we're going to have to answer over the next three, four, five months. So we don't have a perfect answer. We've got to understand what does the rate environment look like? You know, how are we feeling about the progress that we're making on 2027 STARS, etc.?

Speaker Change: Yeah, and again I think this was related to how would we react to the stars mitigation or starts progressing look.

Speaker Change: Short answer is.

Speaker Change: We have a lot of questions around that very thing that we're going to have to answer over the next 345 months. So we don't have a perfect answer we've got to understand how does what does the rate environment look like.

Speaker Change: How are we feeling about the progress that we're making on 2027 stars et cetera. So there's just a bunch of factors that we don't yet have visibility into the answer that.

Jim Rechtin: So there's just a bunch of factors that we don't yet have visibility into to answer that. What I would say just generically is our intent is to balance long term earnings potential with near term earnings progression. We need to balance those. All in all, we're not going to do things that harm the business long term to work our way through a short-term issue. Now, what does that mean practically? We don't know yet. We have to sort that out.

Speaker Change: What I would say just generically is our intent is to balance long term earnings potential with near term earnings progression.

Speaker Change: We need to balance that was all in all we're not going to do things that harm the business long term.

Speaker Change: To.

Work, our way through a short term issue.

Speaker Change: Now what does that mean practically we don't know yet we have to sort that out.

Okay.

David Windley: Our next question comes from David Windley with.

Speaker Change: Our next question comes from David Windley with Jefferies.

David Windley: Hi, good morning. Thanks for taking my questions. I wondered on on two fronts. First on on channel investment, basically, you've touched on some of this already.

David Windley: Hi, good morning, Thanks for taking my questions I wondered on two fronts first on on channel investment basically you've touched on some of this already.

David Windley: I recall last year, that after AEP, the discussion was that the brokers were more consumed by helping existing members shop and therefore couldn't talk to new members as much resulting in, you know, AEP growth being relatively low. more shopping expected for 25.

David Windley: Recall last year that after AEP. The discussion was that the brokers were more consumed by helping existing member shop, and therefore couldn't talk to new members as much.

David Windley: <unk> and AEP growth being relatively low.

David Windley: More shopping expected for 'twenty five I'm wondering.

David Windley: I'm wondering, you know, what you've done to address that issue and kind of relatedly, how should we think about the cadence of of membership AEP versus entry year?

David Windley: What you've done to address that issue and kind of Relatedly, how should we think about the cadence of of membership AEP versus intra year and then lastly.

David Windley: And then lastly, I'm wondering just if you have any early thoughts or expectations about 26 rates for early, you know, early next year announcements. Yeah, so I'll start. And there are a number of, thanks for the question, David, there are a number of things that we've done in preparation for what we knew was going to be a sales year where there's going to be a dynamic change in the industry, given the industry reset that we've all talked about, we're going through with benefit changes, member disruption, as we have had planned in county exits, a number of our competitors have as well.

David Windley: I'm wondering just if you have any early thoughts or expectations about 26 rates for early.

David Windley: Early next year announcement thanks.

Speaker Change: Yes, so I'll start and there are a number of thanks for the question because there are a number of things that we've done.

David Windley: In preparation for what we knew was going to be a sale.

David Windley: Sales here, where theres going be a dynamic change in the industry given the industry reset that we've all talked about we're going through with benefit changes member disruption as we have had planned and county exited a number of our competitors have as well. So we know that thats going to be something that we have to focus on so we continue to make investments in both our <unk> and <unk>.

David Windley: So we know that that's going to be something that we have to focus on. So we continue to make investments in both our internal sales channels to include improvements in, as I mentioned before, digital self-service options. We also are making investments to help our external brokers. You also realize that we have a pretty large internal brokerage as well, and we're seeing a 70% increase in sales in that internal broker channel. So we're going at this from both improving the experience for the members to be able to self-service in digital, improving when our sales team gets those calls in person, how they can answer those questions by giving them better tools and leveraging AI.

David Windley: Sales channels to include improvements and as I mentioned before digital self service options. We also are making investments to help our external brokers. You also realize that we have a pretty large internal brokerage as well and we're seeing a 70% increase in sales in the internal brokerage channel. So we're.

David Windley: Going out because we both improving the experience for the members to be able to self service and digital improving when our sales team gets those calls in person of how they can answer those questions by giving them better tools and leveraging AI.

David Windley: We as well as are helping our external partners in providing them with more real-time data and information and helping them on best benefit choices. So there's a whole host of things we're doing across the whole marketplace that we are prepared for, knowing that this is going to be a year of pretty significant change in this AEP.

David Windley: As well as our healthy our external partners and providing them with more real time data and information and helping them on best benefit choices. So there's a whole host of things we're doing across the whole marketplace that we are prepared for knowing that this is going to be a year of a pretty significant change in this AEP.

Jim Rechtin: all right yeah and let me just You know, kind of headline that our external partners are really important to us and building and strengthening our internal channel is what we have the most direct control over. And we've been building capacity in that internal channel for that very reason. And that channel is also very important to us. And so we have built capacity to the degree that we feel like we reasonably can under the the timeframe and the circumstances, etc.

David Windley: Okay.

David Windley: Yes, and let me just.

David Windley: Kind of headline that our external partners are really important to us and building and strengthening our internal channel as well we have the most direct control over and we've been building capacity in that internal channel for that very reason and that channel is also very important to us and so we have built capacity to the degree that we feel like we.

David Windley: Reason of we can under the.

David Windley: The timeframe and the circumstances et cetera.

Jim Rechtin: And at the end of the day, we still look at the at the market and we expect five to five and a half percent growth at the end of the day, even with the need to kind of balance these capacities.

David Windley: And at the end of the day, we still look at the at the.

David Windley: Mark and we expect 5% to five 5% growth at the end of the day even with.

David Windley: The need to kind of balance these capacity constraints.

David Windley: And then I think the last question was around 2026 rates, which, David, I would just say, you know, it's hard to, like, we can't really predict what it's going to be. We would say we still have V-28 and IME to be phased in, so we know those are impacts. And the big question will be, given the trend that we have seen, will we see some positive restatement embedded within the 2026 rate, recognizing their forward-looking 25 rate had assumed some trend improvement, which obviously hasn't transpired. The ACO reach detail that's shared by CMS is one sort of indicator of the trend they may be seeing.

David Windley: And then I think the last question was around 2026th right.

David Windley: It's hard to right, we can't really predict what it can mean, we would say we still have 28 and I am going to be phasing thing or those are impact and then a question on the given the trend that we had seen when we see some positive restatement embedded within the 2000 and fixed rate. Recognizing therefore were looking 25 rate hit us seeing some trend improvement, which obviously hasnt transpired.

David Windley: The ACL range detailed thats shared by CMS as one sort of indicator of near term. They may be seeing that does suggest that they are things in the powertrains as well. So I think we're cautiously optimistic that the rate for next year will including appropriate adjustment to that the trend that we're all observing.

David Windley: That does suggest that they are seeing some of these higher trends as well. So I think we're cautiously optimistic that the rates for next year will include an appropriate adjustment for the trend that we're all absorbing.

Michael Hoffman: Our last question today will come from the line of Michael Hoffman. Hi, thank you. So just firstly, quickly to confirm, on decent redetermination, Susan, did you mention 80 bits of industry growth had been expected for next year? Is that presumably because the six-month grace period they have?

David Windley: Okay.

Speaker Change: Our last question today will come from the line of Michael <unk> with Baird.

Michael <unk>: Alright, thank you.

Michael <unk>: Lastly quickly to confirm on decent Redetermination season did you mentioned 80 bps of industry growth headwind expected for next year is that presumably because the six month Grace period to have are the bulk of those lives yet to return and re determined what percent of those lives.

Michael Hoffman: Are the bulk of those lives still yet to be determined, what percent of those lives are expected to fall off your book? And then number two, I guess, given that you're already 11 months into the measurement year, 24 for next October's release star ratings, I know caps still run through June, but based on the other, I guess, let's call it roughly 70% waiving or Actually, I guess 80% now that CAPS is being reduced. I know you're in a sprint right now, but how are you tracking on those 80% of measures? More specifically, I guess what's the realistic likelihood of being able to sort of fully snap back to 80 to 90% of members and four-star plus plans?

Speaker Change: To follow up your book and then number two I guess given that Youre already 11 months into the measurement of <unk> 24 for next October has released already.

Speaker Change: I know capital run through June, but based on the other I guess, let's call it roughly 70% weighting.

Speaker Change: Actually I guess, 80% now that capital is being reduced.

Speaker Change: And if sprint right now, but how are you tracking almost 80% of measures more specifically I guess, what's the realistic likelihood of being able to sort of fully snap back to 80% to 90% of members enforced our plus plan, what's your level of confidence conviction or is it just very unlikely given how late.

Michael Hoffman: What's your level of confidence, conviction, or is it just very unlikely given how late into 2024 it is and how late it was realizing how aggressive cut points are and just the time you have left to make incremental improvements? Thank you.

Speaker Change: 2024, it is in.

Speaker Change: Realizing how aggressive cut point orange.

Speaker Change: The timing of left to make incremental improvements. Thank you.

Susan Diamond: Sure, Michael, I'll take the first question, then hand it over to General George for the star question. On DPS, yes, you heard that correctly. We do anticipate a headwind in 25 as the re-determination process completes. There was pressure in 24 as well, slightly less than, we would say, 70 or so basis points in 24, and we think it'll be about 80 basis points of pressure in 25. Frankly, part of that is because of the changed healthcare disruption, which disrupted the ability to confirm eligibility. And so even though we've largely seen the impact on the Medicaid side, because of the deeming period, on the MA side, there is that six-month period.

Speaker Change: Sure Michael I'll take the first question and then he Natarajan resorts for the historic question I'm getting is yes, even that correctly and we do anticipate a headwind in 'twenty five as the Redetermination process quickly there was pressure in 'twenty four as well slightly lesser that would say 70 or so basis points in 'twenty four and we think it about 80 basis points of pressure in 'twenty five.

Speaker Change: Part of that is because of the change healthcare disruption, which disrupted the ability to confirm eligibility and so even though we've largely seen the impact on the Medicaid side because of the dining period on the MA side. There is that six month period and so we do expect that we will see some additional he will dis enrollment as they lose coverage some of those we would.

Susan Diamond: And so we do expect that we will see some additional dual disenrollment as they lose coverage. Some of those we would expect to recapture within our non-DSNF offerings, but some obviously are no longer eligible. So we've built that into our expectations all along for 25 in terms of the loss of a few hundred thousand members that is already contemplated. But yes, you did hear me correctly.

Speaker Change: Expect to recapture within our non D SNP offerings, but some obviously are no longer eligible. So we've built that into our expectations all along for 'twenty five in terms of the loss of a few hundred thousand members that is already contemplated but yes. You did hear me correctly, and then George I'm going to take the <unk> question, Yes, I'll just jump in on that.

George Renaudin: And then, George or Jim, do you want to take the star question?

Jim Rechtin: Yeah, I'll just jump in on that. The short answer is, at this point, one, you've just got limited visibility into even your own performance, and you've got no visibility into industry performance. And so we're not going to comment on industry performance or cut points or thresholds until they're actually out next year. On our own performance, we feel good about the progress that we are making. And, you know, there is risk, like we, you know, we're resetting expectations with four months, three and a half months to go in the year, setting those expectations higher, driving towards higher goals.

Speaker Change: The short answer is at this point.

Speaker Change: One you've just got limited visibility into even your RASM performance and you've got no visibility into industry performance and so we're not going to comment on industry performance or a couple of weeks of threshold until theyre actually out next year.

Speaker Change: On our own performance, we feel good about the progress that we're making and.

Speaker Change: There is risk like we are resetting expectations with four months three to five months to go in the year.

Speaker Change: Setting those expectations higher driving towards higher goals and while I think we all feel good that we are making progress and.

Jim Rechtin: And while I think we all feel good that we are making progress and, you know, leaning as an organization into it as heavily as we can, we still need time to understand exactly how those things are going to play out. So there's just there's not a there's not a super clear answer to the question at this point in time. But everybody is leaning into it, and that is what we need right now.

Meaning as an organization intuit as heavily as we can.

Speaker Change: We still need time to understand exactly how those things are going to play out. So there's just there's not a there's not a super clear answer to the question at this point in time.

Speaker Change: But <unk>.

Speaker Change: Everybody is leaning into it and that's that is what we need right now.

Jim Rechtin: With that and being the last question I'm just going to transition here and thank everybody for joining us this morning and thank everybody for your interest in Humana and in what we are trying to do to serve our patients and our members and I want to thank our 65,000 associates who serve those members and those patients every day. We appreciate the work that they're doing and we appreciate the support that you're giving us so thank you.

Speaker Change: With that being the last question I'm, just going to transition here and thank everybody for joining us this morning and.

Speaker Change: Thank everybody for your interest in Humana, and and what we are trying to do to serve our patients and our members and I want to thank our 65000 associates, who serve those members in those patients every day. We appreciate the work that they're doing and we appreciate the support that you're giving us. So thank you.

Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.

Speaker Change: This.

Speaker Change: Today's conference call.

Speaker Change: Thank you for participating you may now disconnect.

Operator: Thank you for watching!

Speaker Change: [music].

Speaker Change: Yeah.

Speaker Change: [music].