All right, great. I'm Steven Valiquette, the healthcare services analyst here at Barclays. Welcome to our next session with Centene. With us from the company, we have Sarah London, company's CEO, and also Drew Asher, CFO as well, and Jennifer Gilligan from IR is in the audience here. This will be a fireside chat. I guess with that, we'll just kick right off here. Welcome, first of all. Thank you. All right, great. I guess just starting around the redeterminations, obviously, that's going to be top of mind for a lot of investors right now. Also I think some debate around the overall MLR impact related to redeterminations. You know, I think on the one hand, yes, the members enrolled in commercial and exchange plans typically generate higher PMPM than Medicaid members. There's also some debate regarding the potential higher acuity risk on the pool remaining within Medicaid. A lot to unpack within that on the first question, but maybe we'll just start with that and just give your current view on those variables as we're evolving further into 2023. Yeah, happy to. I'll let Drew talk a little bit about the buffer that we have built in, as we think about the potential shifting of the risk pool, but maybe sort of taking a step back because we are, you know, redeterminations are upon us. They are about to begin, and we've been doing a lot of work over now almost 18 months to prepare for this. We only have three states that are gonna start redeterminations on April 1, the rest of our states are actually pretty evenly distributed in May, June, and July time frames. We're also seeing, we've talked a bunch about, the sort of 9-14 months time frame. We are seeing our states fall into about a 50/50 split between an anniversary date approach versus a population-based approach. Even those states like Florida, that's taking more of a population-based approach, are thinking about how to stage those populations over the course of the 12 months so that the overall process is more manageable. we think about the question of what the impact may be to the risk pool, it's really I think the question that you should be asking is, are we prepared in the conversations with the states? Are we being proactive? Are we gathering the data? Do we have a really good ground game around that? Have we already teed up those conversations with our state partners? It's really about the event in which there may be a dislocation between the risk pool impact and a rate adjustment in some of those states where we're not into risk corridors. I think the answer to that across the board is yes. Maybe you can talk a little bit about the buffer we have. Yeah, you're absolutely right. The, you know, the game plan is for us to minimize any breakage, any temporary timing difference between shifting and risk pool, if there is, I suspect there won't be in every state, but in some states there may be, and then the timing of having rates calibrate to that. Sarah's right. That's exactly what we've been working with state representatives on, the administrations of the states, the Medicaid departments, their actuaries, our actuaries, and going through scenarios, and it varies by state on what could happen and getting some receptivity to an acknowledgement that, okay, you know, let's see how this plays out, we may need to do a mid-cycle rate increase, or we may need to sort of address this in your next rate cycle. All the states, they're interested as we are in the actual data. We'll start getting that, a little bit of it in April. As Sarah said, with that staged call four-month initiation period, it'll take some time to get that data and see where we might need some quicker rate action than others. Okay. Yeah. Let's repeat the question so that the viewers- Yeah. I'm not sure I could even hear the question, actually. 2024. I mean. For 2024. Whether or not we're gonna see any what? For, yeah, for 24- Sorry. your Medicare book, is that the biggest swing factor in terms of any earnings growth for that year? I'm not asking for guidance, just your. Any earnings growth. As we said on the Q4 call, based upon the initial rates that we saw from CMS, we would expect to underwrite that at a loss, as well as shrink to some degree. We still gotta see what the final outcome is from CMS. We're pushing on that as an industry. Quite frankly, there are some surprising elements of the risk model change, including some pretty punitive elements for partial duals, which arguably are more vulnerable than duals. Partial duals don't have the 100% cost share protection like duals do, and duals are also harmed in the new risk model. The industry is, you know, got a bunch of questions into CMS. Obviously, the final rate will help dictate how we set the bids. You're right. you know, Medicare for us, as we've indicated on the Q4 call, in 2024 will be under construction. Then we'll come out of 2024, and we'll have a little bit smaller Medicare business, but one that then we can expand margin and grow off of. Meanwhile, with a great marketplace chassis that's seen some excellent growth this year and continued ability to sort of generate margin there, that's a nice complement to a business that we've got to do some things to fix, including Stars, but that will be sort of a back half of the decade, grower. Okay, great. Yeah, I think overall we'll save the audience questions for towards the end of the session if we have some time at the end. Let me just toggle back to Medicaid for a few more minutes here, then we'll hit on some of those Medicare questions as well. Just, you know, back on Medicaid, you know, I think, you know, it's funny, if you read some of the trade articles, you know, there's been kind of mixed articles out there on just the level that the industry is able to kind of do outreach initiatives around some of the Medicaid members, you know, as far as retention or, you know, steering them to your own exchange books, et cetera. Maybe just give us your insights, you know, latest, traction on that as far as outreach initiatives on your members, and, you know, and that strategy to help just have better retention. Let's tackle that for a moment. Yeah. It absolutely varies state by state. And that is part of why we've been working with states for the last 12 months to figure out what their approach is gonna be. We have seen increasing appetite and interest in the states partnering not only with us, but with providers, with other community-based organizations to get outreach out to members to get awareness out there. You're starting to see over the last month or two ads on TV to help people understand that this is coming, and again, willingness to rely on MCOs to educate our members about the process. That is true in almost every state. We are also in many states now able to reach out, and we have designed a program to do so, and in some cases are already doing that in an omni-channel approach. Whether we're calling, whether we're emailing, obviously, the FCC guidance recently about being able to text members is a watershed moment, I think not just for this process, but overall for the Medicaid program. CMS shares that view as well. There's a belief that, you know, the more that we can meet members where they are, we're leveraging a lot of data that we have internally. We built a predictive model around members who are likely to redetermine off so that we can focus on them as priority in the communications. In some states, we're able to educate them not just about the redeterminations process, but about other options that are available to them, whether they're other state-based options or whether there are subsidized marketplace products. We have some states that have set that transition process up to be as seamless as possible. They'll even sort of automatically enroll you in a subsidized plan that the, that your Medicaid MCO sponsors, which is probably the most sort of progressive version of it. This has been sort of the major operational focus of our Medicaid team for the last six months is gearing up for the contact and the outreach that's already started. Okay, great. All right. Sticking with Medicaid and maybe kind of moving away from redeterminations for a moment. The, you know, as far as the RFP awards over the last, six, 12 months or so, I think it's been a little more of a kind of a mixed bag of results for Centene. Maybe just give us, you know, any additional color you have on the RFP pipeline for 2023, in which upcoming awards you think, you see the greatest opportunity for Centene. Yeah. Certainly starting with a look back into 2022, we had a really strong set of RFP results, but we also had things that didn't go our way. While we won the direct contracts in California, we did lose market share in L.A. County. I think the recent Indiana LTSS result was certainly not what we were hoping for. I will say that the organization across all of our lines of business, I think has an increased discipline around looking at where things don't always go the way we want them to, and you know, pulling out valuable lessons learned, asking how we can show up, in the best way possible for each one of these processes. There is a continuous improvement muscle in the organization that I think is important to call out, especially as we look ahead to Florida, which should drop this, you know, shortly, sort of imminently. We're expecting Georgia as well later this year. Given the RFI that went out, we're hopeful that they will include the ABD population in that. Recently, many of you probably saw that North Carolina announced that they are gonna move forward with Medicaid expansion, that that will pass with the budget over the summer. We obviously have two health plans in North Carolina, so that's a nice pickup for us. Also looking at some potential additional programs in North Carolina that may come up for discussion in the back half of the year. You mentioned, the Medi-Cal RFP now finalized after the appeals process. I mean, you know, it's kind of a done deal now. Maybe just walk us through just, you know, the feedback from the state kind of in the final decision on t he changes during the appeal. What were the deciding factors for them, as far as giving part of L.A. County back, but also losing San Diego is probably unexpected. I was just curious, in the aftermath of all that, you know, just any more color around that. I can't remember now, but I think it's a done deal, right? You're not going to appeal the appeal. We're basically done now the way it's answered. California threw out the RFP. The appeal process doesn't hold, and they moved to this direct contracting method that they had available to them through recent legislation. You know, if we step back from that process overall, I think what the state was ultimately trying to do with the RFP process was to drive innovation in Medi-Cal. They had started to do that through the CalAIM program, the RFP was meant to help sort of structurally adjust to accelerate that program. I think what became clear through the process of the RFP was the level of administrative disruption that the results were gonna create to millions of Medi-Cal members, and that that was probably more at sort of crossways in terms of purpose to the innovation program that they wanted to roll forward. I think what they came to actually was a fairly elegant solution in term of having strong partners in each region that could carry forward their program goals. We've obviously Health Net's been in L.A. County for decades, had invested a lot in the community, a lot with provider partners in terms of accelerating, electronic, you know, submission of data and some of these more modern program tenants. Just allowing that to continue to move forward without the abrasion that the process was going to create, felt to me like a big deciding factor in how they changed course in the overall process. I would say from our perspective, the process of working with the state of California to resolution on that procurement was actually a really solid partnership, and I think something that bodes very well for Centene in the long term in California. Okay, great. All right. I think now if we shift gears to Medicare. You know, I think obviously, I think for investors, this is pretty topical right now, especially around 2024. I think, you know, part of it was your comments on the last quarterly call about the margins, you know, could potentially be negative in 2024, you know, just given the softer preliminary rate notice and also kinda your Stars scores as well. Maybe just walk us through now how you're balancing, you know, pricing versus Stars impact. I know it's kinda early. We're not talking about benefit design too at this stage for 2024, but, you know, anything you could share just around to kinda build on those comments you made in the last quarterly call around that margin outlook. Yeah, you hit on the right word, balance. There's a lot of things we've got to balance thinking about not just 2024, but 2025 and beyond. With the Stars pressure, you know, once again, based upon some poor decisions that were made in 2020 that we've got to live with and then fix going forward, there's gonna be pressure there. Then the disappointing advance notice rate, disappointing not just for us, but for the industry, quite frankly, for providers also, the advanced providers, the value-based providers that are taking risk, especially in places like Florida and California, Texas, Louisiana, Illinois. I mean, there's some impacts from that advance notice that hopefully get partially rectified. Nonetheless, that creates a pressure point for the attractiveness of the benefit package as well. We're going to be balancing those things, thinking about the long run, not just what to do for 2024, but we wanna make decisions like what's best for Centene for the back half of the decade, which then leads us to being in a position where we expect to be underwriting at a loss. I mean, we need to see the final rates, as this gentleman was asking about. Those are the things we've got to think about, balance the run rate, what levers we can pull. It's our job to create levers in managed care, clinical initiatives. We've got to, you know, keep on pushing on SG&A. All these things go into the bid process. That will culminate in the first Monday of June, and we're still going through that, but we have some open questions, especially with the advance notice and exactly what actions we will or won't take for 2024. Believe me, we'll be thinking about what's best for that block of business and serving the members in Medicare Advantage for the back half of the decade, regardless of 2024. Maybe I could just add operationally, 'cause Drew referred to the fact that we think of Medicare sort of under construction. I think it's worth noting that, you know, it takes time, but we know what to do, and we have folks in the organization who are very experienced at this and have done it before. If you think about, Jim Murray referenced this on the Q4 call, it's sort of a 5-point plan around Stars, not Stars, Medicare, we're not starting now, right? First one is Stars. We started doing that work 18 months ago, because of what we saw coming relative to legacy decisions that have been made in 2020. The second one is the distribution channels, and you saw us start to recalibrate that in the most recent annual enrollment period. The third one is around member experience. Again, you heard on the Q4 call, we spent a lot of time focused on that in 2022, and we're starting to see the fruits of that labor relative to reduced CTMs, as well as increased service levels in the call centers for both members and providers. The fourth is duals, which again, we started to refocus on in the AEP. We'll continue to do so. The last is around value-based contracting, making sure that we have the right networks, the right innovative partnerships, that we're bringing data and provider enablement into that space. We just recently brought in a new leader in that area under Jim Murray, who we're really excited about to sort of harness and accelerate the good work that's already been going on in the organization. Again, it takes time, but it's important to note that we're not starting on that now, right? This is a journey that we've been on for, in some cases 18 months, and we'll continue to power through over the next 2 years. You always want a part of your portfolio to be an opportunity going forward. We wouldn't wish the position we're on in Medicare for 2024, but if we can achieve our goals, and we're still gonna press, I know you're gonna ask about, are we still gonna press for 7.15? Yes, we're gonna press for 7.15. Is that a guarantee? No. There's a bunch of, you know, moving parts, but we are gonna press for that. If we can achieve that with a business that is losing money, but a really good business for the long haul, what a great expansion opportunity that becomes for the back half of the decade. You know, we're dealing with the cards we're dealt, but Medicare's gonna be a good business in the back half of the decade. We just need to improve Stars and sort of execute on that five-point plan that Sarah laid out. Okay, great. I know we talked about the, you know, the 2024 preliminary rate. I think based on history, when you think about the proposed rate versus the final rate for MA, it hasn't really deviated much more than 100 basis points in either direction, you know, at least of the last maybe, you know, 5, 10 years or so. Yeah, just wondering if there's any scuttle from either, you know, trade organizations that maybe there, you know, could be a chance for a larger revision between proposed versus final for this year. I don't know if you guys have any expectations for that, but maybe just any insights on, you know, whether you're expecting any, you know, material move, let's call it, you know, on final rate versus, proposed rate based on history. I would say there's a lot of. I do touch on this. There's a lot of concern across the industry about the disproportionate impact that the rates would have on partial duals, and on the momentum around value-based care because of the impact to providers and, quite frankly, on really good progress on health equity and access initiatives. You know, it's not clear where CMS will land on that. I think the other thing that's worth calling out is, as you unpack the risk model, the complexity in there and sort of the maybe greater than first blush impact for the industry, baked into that and what they do in terms of phasing a rollout of that risk model in versus starting, you know, starting in 2024. Okay, great. You know, also, after all the build-up on RADV going into, you know, that outcome, you know, the stocks acted pretty well across managed care overall on the, you know, the day after that ruling came out. Obviously, the 2024 rate update came out the day after that kind of reversed everything. It's hard for us to gauge perfectly how comfortable investors were with the final outcome around RADV. Just to tackle that for a moment again, obviously, you know, there was, you know, a lot of discussion rooted in the, you know, concern around the rule of the fee-for-service adjuster and just lack of clarity surrounding the statistical methods that would have been used for extrapolation, beginning with that 2018 payment year. Maybe just, you know, as that has, you know, a little more time has evolved since that came out, you know, what options do you have on the table to, you know, respond to that final ruling? You know, what are you guys doing now in relation to all that? Yeah. The final rule kind of is what it is. We are certainly talking to our industry partners about what the overall response may be. You know, if the, if the impact is what CMS has guided to, I think that's manageable. Absent an understanding of what the approach is gonna be and the details around that, it's hard to say for sure. We're still evaluating. Okay, trying to think. I also have Medicare here. I mean, I guess just for 2023, you know, with, you know, the overall, you know, AEP results coming in a little bit softer than the expectations, you focused on the margin stabilization over membership growth, you know, for 2023 as well. You know, coming out of that AEP, does that give you any different thoughts on how you're gonna approach things going forward from there? I I mean, I guess what were the learnings from the 2023 AEP based on, you know, how you guys set up your strategy? Yeah, again, our focus was more on margins, but broadly on stabilizing the foundation of that business. The competitive environment overlaid onto that, I think, is largely what led to the softer than expected enrollment. Again, those are decisions that are right for the long-term reconstruction of the business. And I think, again, we'll have a positive impact on Stars and member experience in year, which creates tailwinds for Stars. We've talked a bunch about that. I don't think that changes how we look at 2023. And again, it's sort of a multi-year journey to make sure that we feel like that business is as solid for the long term as possible. Okay. Got it. Okay. Yeah, we still got a few minutes left here. Maybe we'll just jump to some questions that impact more of the, you know, the overall enterprise. You know, I don't know if you're in a position now where you can talk about utilization trends and how things are shaping up so far in 2023, but maybe you wanted to pick your brain on any insights you might be able to share on that. If you can't, I understand as well. I'm curious if you got any thoughts. I mean, we came into 2023. We ended 2022 with strong momentum, not just financially, but I would say operationally and culturally as well, and we've carried that into 2023. On the Q4 call, we raised revenue guidance by $2 billion and pointed to the top half of our EPS range of $6.25-$6.40 for the year. January and February look good. Flu seems to be subsiding early as the data was suggesting it was going to. I don't know if there's anything else you wanna add. No. Just update. Interquarter update, January, February look good. That's helpful. Yeah, one or two more questions here. You know, obviously, Centene's made a number of divestitures as part of the ongoing portfolio review, a lot of announcements around all that. Just remind us right now kind of where you are. I hate to use the, you know, sports analogy of, you know, what inning or what quarter we're in on the whole process, but maybe just if you could frame it that way too. Most of that is kind of behind us now, or is there still some more wood to chop around all that? I think we're probably in the seventh inning stretch to pick up the metaphor. We did a lot of good work in late 2021 and 2022, seven major divestitures. I think what remains in the portfolio sits in the bucket of more strategic and more complex in terms of getting to the right endpoint. There's still work underway there, and we'll obviously continue to update as we work through that. Okay. Final question. Drew, you're right. I will come back to the $7.15 number for 2024. I mean, tying a lot of the things together that we talked about today, and also since more time has passed since you announced the, you know, the PBM contract award, maybe just, you know, share with us whether or not you're still feeling, just as confident, if not more confident on those PBM savings as part of the EPS algorithm for next year. Also just, you know, again, it sounds like you're reiterating your ability to hit that $7.15 number. We just wanted to try to confirm that as well. We're certainly reiterating our desire to hit that number and constructing a plan. There's a path to get there. Obviously, it got harder with the CMS advance notice. The PBM savings are on track. That still looks good. Investment income continues to be strong. Don't underestimate or quite frankly, undervalue the marketplace franchise. That's a bigger franchise. It's heading in the direction to be a bigger franchise than our Medicare business, which is $20 billion and will take a step back. Marketplace being a strong contributor, not just to 2023, but to 2024 as well. We've got a lot of, like you said, wood to chop and execution, probably another divestiture or two as Sarah mentioned, being in the seventh inning. We have got sort of the roadmap to continue to execute, but we will be making decisions based upon the back half of the decade. what's best for this company in the long run as we still charge towards short-term targets. Okay, great. With that, I think we're out of time. I want to thank Sarah and Drew for their time today, and enjoy the rest of the conference. Thank you. Thank you.