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Radar On Market Access: Centene Talks ACA's Future, Medicaid Rates in 3Q Earnings Call

Posted by Leslie Small on Nov 3, 2020


During their third-quarter 2020 earnings conference call, Centene Corp. executives made the case that despite all the challenges related to the pandemic and politics, there are plenty of reasons to believe the company is well-equipped to weather the storm, AIS Health reported.

As has come to be a habit for Neidorff during earnings calls, Centene's leader directly addressed the latest threat to the viability of the Affordable Care Act — a case challenging the law's constitutionality that the Supreme Court is scheduled to hear just one week after the Nov. 3 general election. "I don't believe when push comes to shove, they really want to put all these people during the height of a pandemic on the street with no insurance," Neidorff said. Thus, he says he expects the court will uphold the ACA even though it has just become more conservative with the addition of Justice Amy Coney Barrett.

Centene also offered reasons for optimism regarding a challenge that it and other Medicaid managed care organizations are facing: cash-strapped states that are moving to claw back funds from MCOs that have benefitted from reduced care utilization amid the COVID-19 pandemic.

"Centene expects a smaller headwind in 2021 from Medicaid rate actions and risk corridors than it will absorb in 2020," Leerink analyst Stephen Tanal pointed out in an Oct. 27 note to investors. While the insurer is on track to absorb a $500 million headwind related to Medicaid rate cuts this year, "some of the programs driving the impact in 2020 will expire" next year, Tanal noted.

Meanwhile, Centene's Medicaid and health insurance exchange membership has increased by 1.3 million from the first through third quarters of 2020, Jefferies analyst David Windley wrote in an Oct. 27 note. And Centene executives confirmed during the earnings call that the insurer remains on track to reach a peak of 1.4 million new members in November.

For the quarter ending on Sept. 30, Centene reported that its adjusted diluted earnings per share (EPS) was $1.26, up from $0.96 last year. But that number drops down to $0.97 when excluding Centene's share of the settlement from the recent Supreme Court risk corridors decision, a charitable contribution to its foundation, and an unrelated tax benefit.

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Topics: Industry Trends, Data & Analytics, Payer