The payer forecasts that its star ratings in the private program could suffer further after a difficult 2022.
Centene could soon be without any four-star Medicare Advantage (MA) contracts, CEO Sarah London told investors in the company's second-quarter earnings call.
After sharing that the payer expected "minimal progress" in adding four-star plans in the first-quarter call, London's most recent update warned that the insurer may lose its current lone four-star contract which represents 2.7% of its members.
MA plans with star ratings of at least four out of five qualify for bonus payments that are used to offer supplemental benefits to enrollees.
Due to CMS adjusting its methodology to account for the COVID-19 pandemic no longer being at the height it was in recent years, the average star rating and number of five-star MA contracts declined for 2023.
Centene in particular felt the drop among its 55 plans—the second-most to receive a star rating. According to CMS data, the payer represented all four two-star plans and had 20 policies receive 2.5 stars.
While the insurer is bracing to lose its only four-star plan, London stated on the call that "improvements in admin and ops and pharmacy measures" should result in progression among its other star rating contracts.
"While this is disappointing, we do expect to see meaningful movement in our three- and 3.5-star plans in October, and roughly two-thirds of our members are in plans showing year-over-year improvement," London said. "Pulling up these underperforming contracts represents tangible progress in delivering economic value to Medicare as we look to 2025 and beyond."
As a whole, Centene reported a strong second quarter, consisting of $1.1 billion in net earnings—a significant increase from $172 million in net loss year-over-year.
"Our balanced portfolio of core businesses delivered strong second quarter financials, with Marketplace growth and Medicaid performance both running slightly ahead of expectation," London said on the call.
Marketplace membership grew to 3,295,200, up from 2,033,300 over the same period in 2022, while the Medicaid business swelled to 16,059,600, compared to 15,446,000 year-over-year.
With the Medicaid redeterminations under way, London stated that the insurer is handling the process as expected so far.
Jay Asser is the contributing editor for strategy at HealthLeaders.
KEY TAKEAWAYS
On a second-quarter earnings call with investors, Centene CEO Sarah London said the company is anticipating it will lose its only four-star Medicare Advantage contract.
The insurer experienced declines across its star rating plans for 2023, but expects to see progression in its three- and 3.5-star plans in October.
Meanwhile, marketplace membership growth and steady Medicaid performance amid the redetermination process led to the payer netting $1.1 billion in earnings for the second quarter.