Good day, and thank you for standing by. Welcome to the Humana Incorporated Quarterly Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one on your telephone keypad. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to your speaker today, Ms. Lisa Stoner, Vice President of Investor Relations. Please go ahead. Thank you and good morning. In a moment, Bruce Broussard, Humana's President and Chief Executive Officer, and Susan Diamond, Chief Financial Officer, will discuss our third quarter 2021 results and our updated financial outlook for 2021. Following these prepared remarks, we will open up the lines for a question-and-answer session with industry analysts. Joe Ventura, our Chief Legal Officer, will also be joining Bruce and Susan for the Q&A session. We encourage the investing public and media to listen to both management's prepared remarks and the related Q&A with analysts. 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. 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 and other filings with the Securities and Exchange Commission and our third quarter 2021 earnings press release as they relate to forward-looking statements, and to note, in particular, that these forward-looking statements could be impacted by risks related to the spread of, and in response to, the COVID-19 pandemic. Our forward-looking statements should therefore be considered in light of these additional uncertainties and risks, 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. Today's press release, our historical financial news releases, and our filings with the SEC are all also available on our investor relations website. 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. Finally, any references to earnings per share or EPS made during this conference call refer to diluted earnings per common share. With that, I'll turn the call over to Bruce Broussard. Thank you, Lisa, and good morning and thank you for joining us. Today, we reported adjusted earnings per share of $4.83 for the third quarter of 2021, slightly above consensus estimates. Our year-to-date results reflect the strength of our core operations as we continue to see strong underlying fundamentals across all lines of business and have remained focused on ensuring our members receive the right care at the right time, despite the continued disruption caused by the pandemic. While our underlying fundamentals are strong, 2021 financial results have been impacted by the ongoing pandemic, which has resulted in an adjustment to our full-year adjusted EPS guidance. As detailed in our earnings press release, we have updated our guidance to approximately $20.50 from our previous guidance of $21.25-$21.75. As Susan will share in more detail, this reduction of approximately $1 in adjusted EPS is a direct result of COVID and corresponds to our current expectation that the total Medicare Advantage utilization, inclusive of COVID costs, will run 1% below baseline in the fourth quarter, which is 150 basis points less than our previous assumption of 2.5% below baseline. This update reflects a more conservative posture going into the final months of the year, and notably, 2021 remains the baseline of which to grow for 2022. As a reminder, prior to this guidance update, we had not recognized a COVID headwind in our 2021 guidance as many of our peers did. Our adjusted EPS guidance has been above our long-term growth target at the midpoint throughout the year at 16% growth. This update results in an expected adjusted EPS growth at the lower end of our long-term range and importantly, is not reflective of any concerns with our core operations. I will now turn to our operational and strategic update. Our Medicare Advantage individual above-market growth in 2021 of 11% can be in part attributed to our industry-leading quality and consumer satisfaction scores. We are pleased to be recognized by CMS for having 97% of our members in four-star or higher-rated contracts for 2022. We also increased the number of contracts that received a five-star rating from one contract in 2021 to four contracts in 2022, the most in our history. Well, welcome back, sorry for the technical glitch here. Let me just go back to our guidance update here and ensure that the investors understand the guidance and in addition, how it reflects as we look at the future here. First, the guidance reflects a much more conservative posture going into the final months of the year. Notably, $21.50 remains the baseline of which to grow for 2022. As a reminder, prior to the guidance update, we had not recognized a COVID headwind in our 2021 guidance as many of our peers did. Our adjusted EPS guidance has been above our long-term growth target at the midpoint throughout the year at 16% growth. This update results in expected adjusted EPS growth at the lower end of our long-term range and is importantly does not reflect any concern with our core operations. I will now turn to our operational and strategic update. Our Medicare Advantage individual above-market growth in 2021 of 11% can be in part attributed to our industry-leading quality and consumer satisfaction scores. We are pleased to be recognized by CMS for having 97% of our members in four-star or higher contract for 2022. We also increased the number of contracts that received a five-star rating from one contract in 2021 to four contracts in 2022, the most in our history. While CMS did make adjustments to the 2022 star ratings due to the possible impact of the COVID-19 pandemic, these adjustments had minimal impact on our star ratings. This further demonstrates our enterprise-wide focus on quality, clinical outcomes, and best-in-class customer service, which has been recognized from notable organizations such as Forrester, J.D. Power, and USAA. Importantly, the STARS bonus allows us to maintain a strong value proposition for our members and provided valuable supplemental benefits that address social determinants of health and other barriers not addressed by fee-for-service Medicare. Looking ahead to 2022, we are pleased to be able to provide stable or enhanced benefits for the majority of our Medicare Advantage members, offering plans that support members' whole health needs while continuing to deliver the Humana care our members have come to expect from us. Our strong clinical and quality programs drive improved clinical outcomes and cost savings that allow our Medicare Advantage plans to continue to expand member benefits beyond those covered by fee-for-service Medicare. Our plans include highly valuable extra benefits, including dental, vision, hearing, an over-the-counter medication allowance, transportation support, fitness program memberships, and home-delivered meals following an inpatient hospital stay. Over the last few years, we've made great progress in addressing social determinants of health and health equity by expanding our Medicare Advantage benefits. Examples of those impactful areas include respite care, distributing 1.5 million meals during COVID, sending fans to seniors with COPD during a heatwave, and providing support for financial need impacting a senior's health and well-being. Given the increasing demand for health equity across America, we have aggressively expanded our efforts to address it. We continue to advance our consumer segmentation efforts, developing plans that are tailored to the unique needs of specific member populations. This has allowed us to provide benefits that enhance and complement an individual's existing coverage through programs like Medicaid or entities such as Veterans Affairs. This approach leads to disproportionate growth. As you've seen in our D-SNP plans designed for dual-eligible members, where we have grown our membership approximately 40% in both 2022 and 2021. We've expanded our D-SNP offerings for 2022 to cover nearly 65% of the dual-eligible population nationally. To reduce food insecurity, 97% of our members enrolled in our D-SNP plans and will have a Healthy Foods Card, which provides a monthly allowance to purchase approved food and beverages at various national chains. New for 2022, many of our D-SNP members will have reduced Part D drug copays as a result of the D-SNP prescription drug savings benefit, which will help address the financial barriers some members face when accessing needed prescriptions, leading to better medication adherence, an important driver of members' health, overall health outcomes. As previously shared, we took a more conservative approach to our 2022 bids, recognizing the continued uncertainty associated with COVID-19 and potential impacts to premium and claims assumption, allowing us to prioritize long-term benefit stability for our members. While it is early in the selling season, we believe we've struck the right balance and are competitively positioned for our continued growth in Medicare Advantage. Our brand promise to deliver human care resonates with seniors, given our comprehensive set of offerings and focus on providing a patient-centered experience based on their specific needs. Susan will provide more detailed 2022 commentary in her remarks, including high-level EPS and membership guidance. I now would like to highlight the continued progress of our strategy through the build-out of our healthcare service platform, starting with primary care business and then moving to our growing home solutions offerings. We have the largest senior-focused, value-based primary care organization in the country, which by year-end will include approximately 200 clinics serving 300,000 patients across 24 markets in nine states. We are accelerating organic and inorganic growth nationally and plan to open a total of 30 de novo senior-focused centers in 2022, up from 24 in 2021. This will include launching in two new major metropolitan areas, Dallas and Phoenix, next year. This faster pace expansion comes as we continue to gain conviction in our de novo center model, with panel growth and centers launched in 2020 and 2021 exceeding plan, and clinical performance in our more mature markets continuing to improve. In our more mature centers, hospitalizations and ER visits are down 12% year to date versus 2019 pre-COVID levels, with STARS performance tracking to 4.5 stars, an NPS score of 90. We will also continue to expand through inorganic growth, completing seven acquisitions through the third quarter of this year, bringing 21 newly wholly owned centers to our portfolio. We plan to continue this pace of acquisitions, focused on the markets where we have established presence to provide more access and high-quality care to our patients. Turning to the home, we completed the acquisition of Kindred at Home in the third quarter and now are the largest home health and hospice organization in the nation. As previously shared, we will be migrating Kindred at Home to Humana's payer-agnostic healthcare service brand, CenterWell. Our efforts to transform home health to a value-based model come at a pivotal time for the industry. As seniors increasingly choose Medicare Advantage, there is a meaningful opportunity for home health organizations to engage differently with patients and Medicare Advantage payers to more holistically address patient needs and improve health outcomes, reduce the total cost of care for health plans, and share appropriately in this value creation. We've made substantial progress towards our goal of scaling and maturing a risk-bearing, value-based model that manages the provision of home health, durable medical equipment, and home infusion services. With the acquisition of onehome earlier in 2021, a delegated post-acute management services organization for the home, we have the capabilities to be a value-based convener, providing risk-based contracting and referral management, and continue to develop technology enabling us to coordinate with other adjacent services. These services include gap in care, closure, primary or emergent care in the home, as well as coordination of meals, transportation, and other services to positively support social determinants of health. We currently care for approximately 270,000 Humana members under value-based home care models in South Florida and Southeast Texas, where we have seen improved outcomes, including emergency room usage being 100 basis points better than Humana's national average. We now are focused on expanding to select markets in North Carolina and Virginia, which we've chosen based on multiple criteria, including market density, opportunity to significantly reduce home care expense, and a robust Kindred at Home footprint. We expect to begin the rollout in the second quarter of 2022, with the goal of covering nearly 50% of Humana Medicare Advantage members under this value-based home health model within the next five years. We are excited about the continued progress of our strategy in the home, but consistent with our home health peers, we recognize that the national nursing labor shortage poses a significant risk to the industry, and we are taking proactive steps to address it as part of our well-developed integration process with Kindred at Home. In some markets, the nursing shortage is resulting in adequate capacity to meet demand, negatively impacting our ability to grow the top line. We believe the Humana CenterWell brand, supported by our patient-centric culture, will bolster recruiting and retention efforts for nurses. We've seen increased nurse satisfaction and engagement in pilot markets where we have deployed value-based concepts with voluntary nursing turnover improving nearly 10% among home health nurses in 2021. In addition, to unlock sufficient capacity to meet our growth goals, we are implementing broader operational improvements and benefit enhancements, while also making targeted investments in capacity-constrained areas to enhance nurse recruiting and retention. With respect to hospice, our intent remains to ultimately divest the majority interest in this portion of the asset. As our experience has demonstrated, we can deliver desired experiences and outcomes for patients transitioning from restorative care to hospice through partnership models. Since we closed the transaction in August, we have continued to explore alternatives for the long-term ownership structure for the business and have initiated steps to reorganize the hospice business for standalone operations, while also ensuring business continuity and monitoring underlying trends. We do not have a further update on the specific transaction structure or expected transaction timing, but we will provide additional updates as appropriate moving forward. Given the continued expansion of an interest in our healthcare service platform, we are committed to providing additional disclosure to give further transparency into the performance of these businesses, beginning with our first quarter 2022 reporting. Before closing, I want to touch on the current regulatory and legislative landscape. As you know, last week, the White House and congressional leaders released their plan known as Build Back Better, which includes several proposed changes to the Medicare program, including establishing a hearing benefit starting in calendar year 2024, which will be included in the Medicare Advantage benchmark. Given that today more than 40% of Medicare beneficiaries, over 27 million seniors, and those with disabilities are enrolled in Medicare Advantage, we were encouraged to see that the package did not include any payment reductions to the program. As this legislation continues to advance and likely be modified, and as we look ahead to the annual CMS call letter and rate notice period, we will continue to work with policymakers and the Biden administration to further improve Medicare Advantage, building on the program's innovation and significant progress in areas like value-based care, social determinants of health, affordability, and financial protection for beneficiaries, as well as reducing the total cost of care. These attributes, along with the deep consumer popularity of Medicare Advantage, are what have enabled it to have a strong bipartisan support with hundreds of members of Congress on record supporting the program. With Medicare Advantage serving as a leading example of a successful private-public partnership, I am optimistic we can continue to lead on important healthcare issues facing both individuals and society, including addressing health inequities, improving health outcomes, and expanding value-based care. With that, I'll turn the call over to Susan. Thank you, Bruce, and good morning, everyone. Today, we reported adjusted EPS of $4.83 for the third quarter and updated full year 2021 adjusted EPS guidance to approximately $20.50 to reflect a net unmitigated COVID headwind resulting from our current view of utilization levels for the balance of the year. Before beginning, I would point you to page four of our earnings press release for detail of our previous assumptions for Medicare Advantage utilization in the second half of the year, actual third quarter utilization results, as well as current projections for the fourth quarter. I will now walk you through this detail, starting with a reminder of our previous commentary. As of our second quarter call, full year guidance assumed non-COVID Medicare Advantage utilization would run 2.5% below baseline in the second half of the year, with the further assumption of minimal COVID testing and treatment costs for the same period. In September 2021, as a result of the surge in COVID cases due to the Delta variant, we updated our commentary on full year guidance to indicate we expected non-COVID Medicare Advantage utilization to be 5.5% below baseline in the back half of the year, while being partially offset by 3% of COVID costs, therefore again assuming total utilization would be 2.5% below baseline in the back half of 2021. What we've seen develop for the third quarter is that total utilization is running 1% below baseline versus the previously anticipated 2.5%. COVID costs have been higher than initially anticipated as the Delta variant resulted in hospitalization levels on par with what we experienced in January 2021 and were overwhelmingly driven by the 20% of our Medicare Advantage members believed to be unvaccinated. These higher than expected COVID costs were fully offset by depressed non-COVID utilization in the quarter. As COVID hospitalizations increase or decrease, we continue to see an approximate one-to-one offset in non-COVID hospitalization levels. We also continue to see significantly reduced non-inpatient utilization when surges occur, offsetting the higher average cost of a COVID admission. However, for the third quarter, in total, we saw 1% incremental reduction in utilization beyond the level needed to offset COVID costs versus the 2.5% contemplated in our previous guide. As a result, we have adjusted our full year guide to now reflect the fourth quarter running similarly with total Medicare Advantage utilization running 1% below baseline, inclusive of estimated COVID costs, consistent with what we experienced in the third quarter. We realized higher than expected positive current period claims development in Medicare Advantage in the third quarter, as well as other operating outperformance, largely mitigating the lower than anticipated depressed Medicare Advantage utilization, allowing us to report results that were slightly favorable to the Street estimates. Our revised guidance does not assume that the higher levels of favorable current period development seen in the third quarter will continue. Taken together, our updated full year 2021 adjusted EPS guidance takes a more conservative posture going into the final months of 2021. It's important to note, as we've consistently shared throughout the year, the midpoint of our original guidance range of $21.50 remains the correct baseline for 2022, given our approach to pricing. I will now briefly touch on operating results across our segments before sharing early thoughts on 2022 performance. Our Medicare Advantage growth remains on track and consistent with previous expectations. We have refined our full year individual Medicare Advantage membership guidance to up approximately 450,000 members, consistent with the midpoint of our previous guidance of up 425,000-475,000 members. This outlook represents above-market growth with an increase of 11.4% year-over-year. Our Medicaid results continue to exceed initial expectations due to higher than anticipated membership increases, largely attributable to the extension of the public health emergency. We now expect to add 125,000-150,000 Medicaid members in 2021, up from our previous expectation of up 100,000-125,000 members. Utilization trends continue to be favorable to initial expectations, and the Medicaid team is working diligently toward a successful implementation in Ohio with go live anticipated in July. In our Group and Specialty segment, fully insured medical results were impacted by higher than expected COVID costs in the quarter, while our specialty business results continued to exceed expectations as utilization, particularly for dental services, remained lower than previously anticipated. Recall that our guidance as of second quarter did not contemplate significant COVID costs in the back half of the year, and the commercial business is not seeing the same level of utilization offset experienced in Medicare Advantage. From a membership perspective, we have increased our expected group medical membership losses from 100,000 to 125,000, reflecting the expectation of additional losses in the fourth quarter as a result of rating actions taken to account for the expected impact of COVID in 2022. Finally, within our healthcare services operations, the pharmacy and provider businesses continue to perform slightly better than expected, with pharmacy benefiting from increased mail order penetration as a result of customer experience improvements and marketing campaigns, and the provider business seeing continued operating improvement in our more mature centers, which are now aligned under the same leadership as our de novo centers. As Bruce mentioned in his remarks, we are actively integrating the Kindred at Home operations, and results post-integration have largely been in line with expectations. Similar to home health and hospice peers, the business is being impacted by COVID and labor shortages. For the third quarter, home health admissions grew low single digits year-over-year, while hospice experienced a low single-digit decline year-over-year. We will continue to closely monitor trends as we make targeted investments to sustainably improve the recruitment and retention of nurses. Now, let me take a few moments to share an early outlook for 2022, starting with membership. As you're aware, the overall PDP market continues to decline as more and more beneficiaries, including dual eligibles, choose Medicare Advantage. In addition, as we have discussed previously, PDP plans have become a commodity, with the low price leader capturing disproportionate growth. Consistent with 2021, the Walmart Value Plan will offer competitive benefits but will not be the low premium leader in 2022. As a result, we expect a net decline in PDP membership of a few hundred thousand members in 2022. We continue to focus on creating enterprise value for our PDP plans by driving increased mail order penetration and conversions to Medicare Advantage. With respect to group Medicare Advantage, we expect membership to be generally flat for 2022, as we do not anticipate any large accounts will be gained or lost as we continue to maintain pricing discipline in a highly competitive market. Moving to individual Medicare Advantage. As previously shared, we took a more conservative approach to our 2022 bids, reflecting the continued uncertainty associated with the pandemic. We expect to grow our individual Medicare Advantage membership in a range of 325,000-375,000 members in 2022 or approximately 8% year-over-year, reflective of our prudent approach we took to pricing for 2022 and the competitive nature of the market. It is early in the AEP selling season, and the outlook we are providing today could change depending on how sales and voluntary disenrollments ultimately come in. Consistent with prior years, we have very little member disenrollment data at this point in the AEP cycle. I will now turn to our expected 2022 financial performance. As previously mentioned, I want to reiterate that the $21.50 midpoint of our original 2021 guide continues to be the appropriate jumping off point for 2022 adjusted EPS growth, given our approach to pricing. In addition, we feel comfortable that the risk adjustment assumptions in our 2022 pricing are appropriate, as providers have been actively engaging with our members to ensure their conditions are fully documented and that care plans are established to address gaps in care. Provider interactions and documentation of clinical diagnoses that we anticipate will impact 2022 revenue are approximately 92% complete to date, in line with both our expectations for 2021 as well as the estimated completion rate for the same time period in 2019. We also assumed medical costs would return to baseline levels reflective of pre-COVID historical trending. From an earnings perspective, we believe the conservative approach we took to 2022 pricing struck the appropriate balance between membership and earnings growth. Given the ongoing uncertainty surrounding the COVID-19 pandemic, we expect to enter the year with an appropriately conservative view of our initial 2022 financial outlook. Accordingly, we anticipate that our initial EPS guidance will target the low end of our long-term growth range of 11%-15%. We expect that COVID will be net neutral to the Medicare business in 2022, as we do not anticipate a risk adjustment headwind and expect COVID utilization to be offset by a reduction in non-COVID utilization. However, our initial guide will allow for an explicit COVID-related headwind that we can tolerate should it emerge, similar to the approach some of our peers took in 2021. We believe entering the year with this more conservative approach is prudent in the current environment and sets the company up for success in 2022. We look forward to providing more specific guidance on our fourth quarter earnings call in early February. With that, we will open the lines up for your questions. In fairness to those waiting in the queue, we ask that you limit yourself to one question. Operator, please introduce the first caller. Thank you. Again, participants, if you would like to ask the question, you will need to press star one on your telephone keypad. Your first question comes from the line of Kevin Fischbeck from Bank of America. Your line is now open. All right, great. Thank you. I appreciate all the color on the 2022 guidance. I guess, I think a lot of people are just, you know, wondering, you know, the company's had a hard time forecasting where costs are gonna be, you know, on the upcoming quarter for the last few quarters, obviously to some degree understandable during a pandemic. But just wanted to see how you felt about your visibility into costs and how good of a handle you feel like that cost trend as you developed your pricing for next year, you know, has come in. I guess, you know, how do you think about that visibility into the cost as you thought about next year? Sure, Kevin, happy to take that one. To your point, you know, estimating the impact of COVID has proven to be more challenging, particularly given the environment, you know, that we were in in 2020 is quite different than what we're experiencing obviously in 2021. You know, in 2020, we, you know, no one was vaccinated, you know, various states have locked down throughout the year. As we acknowledged in our Q2 call, anticipating how behavior might emerge in an environment where, you know, largely people were back to normal and a large percentage of our Medicare population were vaccinated. We just recognized that it was, you know, difficult to anticipate whether we'd see the same level of offset through the surge. The good news is, as we saw the surge emerge in the third quarter, despite it being, you know, just as high as what we experienced the last time, we did continue to see a full offset. The hospitalization offsets have been pretty consistent throughout 2020 and 2021. It's on the non-inpatient side where we tend to see more variation. As we explained in the second quarter, that claims service category is one where we don't have the same level of near-term visibility. Having said that, we've studied all of the historical patterns, based on what we saw in the third quarter, and our estimates of the continued, you know, decline in the COVID curve in the fourth quarter. We feel very comfortable with the assumptions that are underlying our revised guide and feel like we have sufficient visibility to feel confident we can deliver against that. Your question about 2022 is a good one. As we've explained in all of our calls, you know, given this late surge in 2021, you know, getting visibility into where baseline trend is actually running, obviously will be more challenging. However, given how we approach the pricing for 2022, meaning that we started with pre-COVID, you know, historical levels and assumed historical trending factors, not anticipating any ongoing depressed utilization into 2022. We feel confident that that's an appropriate baseline expectation. We'll continue to watch it, and certainly if we see something different emerge, if any of the recession continues, that would be positive for us, but we are not contemplating it, which is what gives us confidence about our approach to 2022. Great. Thanks. Your next question comes from the line of Matt Borsch from BMO Capital Markets. Your line is now open. Yes, I was just hoping that you could maybe comment on the competition in Medicare Advantage. I know, you know, you said it's competitive, but just, you know, relatively speaking, we've seen geographic expansions by, you know, really almost all of the major public companies over the last few years and a number of new entrants. Yet, you know, it doesn't seem like it's had a noticeable impact in profit margins. I guess I'm just wondering how you see the dynamic. Is the greater availability of products actually, you know, in essence, expanding the Medicare Advantage market more than it's necessarily leading to competition that would push down margins? Thank you. Yeah, Matt, maybe I'll take that. What we see is a few things. I mean, first, we do see more and more intensity in the local markets, you know. Similar to in the past, we see some players being more aggressive to try to gain market share, while others are a little more aligned with the pricing that and a little more stability in the marketplace. So we do see a bell curve in just how people are approaching it as their strategic plan is pushing them to make those decisions. We are seeing more awareness in the marketplace as a result of the amount of education that's going on through marketing and through the tele sales efforts that are going on. I think that is a positive for the industry because it really brings to life all the benefits that members receive. It creates more competitive nature for that, for those members, but it does create, I think, more growth industry-wide. For us as an organization, you know, we were one of the early adopters of the tele market, the telesales area, and we have benefited from that, I think, in multiple different ways, benefited from it in the way of both our market growth and in addition, our ability to reach a population that we haven't been able to reach in the past. I do think it's a benefit for us. But to answer your question, more competitive in the local market, more awareness that is in the industry. That is a good thing in the industry, and I feel that we have been a beneficiary of that. Thank you. Matthew, one thing I would add to that as well is I think our focus on, as Bruce mentioned in his comments, are consumer segmentation efforts. By designing products that more specifically address unique consumer needs, you've seen in our dual offerings as well as our veteran offerings, that we can drive disproportionate growth. We do think that's a differentiator and something you'll see us continue to focus on. Thank you. Your next question comes from the line of Stephen Baxter of Wells Fargo. Your line is now open. Yeah. Hi. Thanks for the question. I was hoping to come back to the commentary on assuming baseline utilization in 2022. Just to clarify, it seems pretty clear that there will be some level of ongoing COVID costs into 2022. Does that mean you're continuing to assume non-COVID costs will be below baseline in 2022? Any color or context you can provide on the magnitude of this EPS hedge that you're talking about in relation to baseline would be appreciated. Thanks. Sure. Great question. Just to be clear, what we have right now, you know, based on all of our experience, we would expect that to the degree we experience additional COVID costs in 2022, that we would see an offsetting depression in non-COVID utilization. The net of that would be neutral, right? We're not expecting net favorability like we've seen this year, you know, that 1% we're projecting for the fourth quarter consistent with what we saw in the third quarter. What we would say is we are expecting that if we have COVID costs, they'll be offset, but that we would still be at baseline. As I mentioned in my comments, you know, what we intend to do with our initial guide, though, is despite the belief that that's a reasonable assumption, we will allow for an explicit net COVID headwind should it emerge, such that if it did, you know, we would run actually above baseline levels. Should that emerge in our guide, we'll contemplate and allow for some of that if it should emerge. We, while not giving a specific amount, obviously today, when we do give specific guidance on our fourth quarter call, we will be explicit about how much of a COVID headwind we can tolerate within the guide. We will be explicit about that at that time. Your next question comes from the line of Ricky Goldwasser of Morgan Stanley. Your line is now open. Yeah. Hi, good morning. One follow-up and then long-term question. Just to understand, Susan, if we think about 80% of your MA members are vaccinated based on your estimate. Just kind of like trying to reconcile what you're saying versus what some of your peers are saying. What do you think happened that drove COVID hospitalization to levels experienced back in January? Was that sort of a specific geography or anything else that can explain it? The longer term question is really around sort of virtual. Many of your peers launch a virtual first offering on the commercial side for 2022. Do you see room for some sort of virtual first type offering in the Medicare population, especially when you consider sort of the Kindred capabilities? Okay, great. To take your question, so with respect to the high COVID levels, you're right, and honestly, this was something that was a bit surprising to us as well, that we did see levels on par with what we experienced in the last surge despite the high vaccination rate. What we learned is, to your point, some of that was a reflection of our geographic mix. States like Florida and Texas and Louisiana did see higher levels than even the previous surge. It represented a new all-time high, and we have disproportionate share there. That was part of it. The main driver is that as we looked at the hospitalization rate between vaccinated and unvaccinated, the unvaccinated fairly consistently saw a hospitalization rate that was 10 or more times the vaccinated population. That, again, as I mentioned in my comments, was the overwhelming driver. Because of the spread of the Delta variant through that unvaccinated population and that much higher hospitalization rate, that is what drove the levels on par with what we saw historically. To your second question about virtual first and Medicare, you know, we were pleased through the COVID-19 pandemic to see that primary care providers and specialists really did take, you know, adopt telemedicine at a higher rate to ensure that they could continue to support their patients and their preventative needs. I think as a result of that, frankly, providers gained a better appreciation of the range of care and the quality of care that they could provide through virtual, which frankly, pre-pandemic, they really didn't appreciate and weren't adopting. I think we will see some continued use of virtual technology to, you know, enhance the operating model and allow for more touch points with their patients than we did pre-pandemic. Your question about home health is definitely a good one and something we're looking at, particularly with the, you know, challenges we have in terms of nursing labor shortages. Virtual is one strategy we're looking at to see how it can be leveraged to, again, create more touch points with the patient and improve the efficiency of the operating model to just create more overall capacity. We'll be testing with Kindred, you know, appropriate uses of that, and where we can implement it and still see the high-quality outcomes that we would expect. We'll be testing that, and the hope would be that you'll see expansion of that in the future. There are just a few other comments to that. We did a launch a few years ago, a virtual first with Doctor On Demand product, and that was a success for us on the commercial side. But in the Medicare side, what we find is that there's a great opportunity to see the patient, both to understand the patient in a physical setting. Unlike more episodic care versus a chronic care management, there is an importance of being able to have a physical and encouraging a physical interaction. We see the telehealth as being an opportunity to have a complementary and more interaction. I don't know if it would be a replacement or we would want to motivate highly chronic members to have a virtual first interaction for a whole host of reasons, both from a care point of view and from the ability for us to establish the proper care plan. Okay, next question. Thank you. Your next question comes from the line of Josh Raskin from Nephron Research. Your line is now open. Yeah, thanks. Good morning. Wanted to ask about sort of the shorter short term. Just the assumption that non-COVID utilization will be down in Q4. I'm just curious, are you seeing script trends, pre-authorizations, or anything that would indicate sort of, you know, that level of decline just in light of what seems to be an abatement in COVID cases currently? Then specifically, are you seeing any different trends with members that are in your centers or with other value-based providers, you know, are the underlying trends underneath that capitation any different? Just in the very, very short term, my question is, you know, why are you assuming that non-COVID utilization will be down as much as 4% in the fourth quarter, you know, especially in light of what we're seeing in terms of the big reduction in COVID, direct COVID cases in the fourth quarter. You know, is there script trends? Is there pre-authorizations? Is there something that would indicate that level of decline that you're seeing today? Or sort of adjacent to that, are you seeing different trends with members that are in your centers or even with other value-based providers, sort of the underlying trends underneath the capitation? Sure. Hi, Josh. To your question. With respect to the fourth quarter, you know, as we've said before, we have really analyzed all of the prior surges to understand the patterns coming out of a surge. You might recall from our previous commentary, what you typically see is a tail of depressed utilization anytime you come off a curve, which is what allows you to sort of fully recapture the cost of that COVID peak. We've with this surge in particular, what's kind of interesting is different states, as I mentioned before, are seeing different levels of utilization relative to previous surges. Texas, Florida were examples where we saw a very high peak and a very rapid decline. There are some other states, like New York and Michigan, where we're actually seeing a much more moderate and sort of gradual increase, without sort of the same, seeing the same sharp peak and decline. As we've seen that in total, then on a national basis, what we're seeing is the slope of the downturn from coming off the peak isn't quite as sharp as what we've seen historically. We've drilled into each of those states, and are consistently seeing irrespective of that difference in peak level, we are still seeing that one-to-one offset, regardless. To some degree, we think there's just an overall capacity constraint, particularly on the inpatient side that's comes into play, and the rest is just, you know, that behavior change in, you know, in terms of providers and patients as they manage through it. Based on what we've seen emerge, you know, and particularly in the third quarter with that 1% offset, everything we've seen suggests that assuming the same level of offset as we continue to come off that third quarter peak is reasonable. To your point about early indicators, we do, as we've said before, have very good real-time information on inpatient activity. That continues to hold, whereas the COVID utilization comes down, we'll see a bounce back on a one-to-one offset in the non-COVID hospitalizations. That has been very consistent. We'll continue to watch, you know, the non-inpatient, but again, based on everything we've seen, we believe that's a reasonable assumption. In terms of your question about value-based providers, interestingly enough, most of our, both our own centers and some of our high-performing partners, they have indicated that they are not seeing the same sort of neutrality or even benefit from a COVID event that we do. The theory there is that, in general, they manage sort of the unnecessary hospitalization events, those lower value, out of the system more routinely. When you do see a surge, there's not as much, you know, utilization to manage to be depressed because they have already managed it out on a more run rate basis. We're still, frankly, trying to assess and do some analytics on that. I think, you know, they may take a little bit more time for their claims to fully develop and have a full view of that. Their belief is that they don't see the same level of net benefit that we do on the health plan side generally. Got it. They see the COVID cost, but not the offset, you're saying? Correct. Now, on the flip side of that, though, they tend to do better on a revenue basis than our non-risk bearers, and they were much better about making sure they got their patients in in 2020, got their conditions documented. So on the revenue side, I'd say they would make some of that up. But on the utilization side, they typically are saying they're not seeing a benefit. Your next question comes from the line of Kevin Caliendo of UBS. Your line is now open. Thanks, and thanks for taking my call. In thinking about 2022, appreciate all the color, but it was just wanting to know if there was any other sort of one-time things we should be thinking about, any other headwinds or tailwinds, whether it comes to investments or benefits that you might be making that could impact the sort of EPS growth for the year. I would say, you know, obviously, as we mentioned, COVID is the main one that we continue to evaluate. You know, we've been clear that, you know, based on history, we think it would be an offset, but we will take a more conservative initial approach and allow for a headwind should it emerge. That, you know, really is reflective of the fact that, again, the environment continues to shift. The level of vaccination hopefully will continue to increase. Now there's the introduction of the need for boosters, and so will people be as compliant with boosters as they were the initial vaccine? You know, the emergence of variants and all of those things we'll continue to monitor, as well as the ability for, you know, people to have reinfection breakthrough cases. That's the main one. I would say obviously with, you know, what comes out of, you know, the administration's priorities, you know, certainly the tax, you know, taxes are one that we continue to watch. It's not obviously an investment, but something that we'll have to watch if there's any 2022 impact. Otherwise, as we've said before, and Bruce mentioned in his remarks, we continue to support our primary care business. We certainly will continue to look for capital-efficient ways to support that business. I would say we aren't expecting anything in 2022 that we couldn't, you know, withstand within our guide. I would say right now there's nothing that I would point to, that's a looming concern that we have that gives us any concern that we can't manage through in our, whatever we go out with in terms of our initial guide. Can I just maybe follow up? Is the guidance inclusive or exclusive of the incremental headwind that you're discussing here? Meaning, like, is the sort of low end or 11% net of the headwind, or not? I'm a little confused on how I should think about that. Yes. With what we go out in our initial guide, it will explicitly contemplate a net headwind should it emerge. It would create no net impact then beyond our guide. It is inclusive of that. If it does not emerge, then you would see that conservatism released throughout the year. It will contemplate a potential headwind within the guide. Got it. That's really helpful. Thanks so much. You're welcome. Your next question comes from the line of Scott Fidel from Stephens. Your line is now open. Hi. Good morning. Just wanted to ask another question just on the Medicare Advantage annual enrollment period, and I know you already talked about the competitive dynamics. Just interested in terms of what you're seeing on the consumer behaviors side, and in particular, just whether you're seeing any types of shifts in distribution channels, in terms of, you know, where more of the sales are occurring or not. You know, just thinking about obviously 2021 was an unusual year for the AEP as it was playing out amidst COVID. Interested in whether you're seeing more of a continuation of that 2021 type dynamic in terms of consumer buying practices or whether we're seeing, I guess, more of a blended, you know, sort of post-pandemic and pre-pandemic dynamic more for 2022. Thanks. Yeah. Scott, thanks for the question. We are continuing to see increasing use of the telephonic channel, our external partners. As you know, Matt had asked about just on the competitive side, their marketing and their aggressiveness in the marketing, I think is bringing more individuals to that channel. As I mentioned also, it's also how we feel it's a benefit for the industry because the industry is, you know, getting significant awareness and education from that. What we're seeing is a continuation of that trend even pre-2021 AEP. It was also happening in the 2020 AEP. Thank you. Next question, please. Your next question comes from the line of Ralph Giacobbe from Citi. Your line is now open. Thanks. Good morning. Sorry to come back to this, but I guess what does the $21.50 baseline incorporate at this time? Is it what you would have earned with normal utilization and no COVID in it? Is it some level of COVID but lower than normal core? I guess I'm really just trying to understand what the $21.50 represents. Thanks. Yeah. The $21.50 is probably the midpoint of our original guide. If you remember, the way we approached our initial guide was a bit different than many of our peers in the sense that we did not contemplate a net COVID headwind. That initial guide at the midpoint was actually above our more typical long-term growth range, recognizing some of the, you know, tailwinds that supported our pricing in 2021. By reaffirming that that is the appropriate baseline, really just reinforces that the way we approached our 2022 pricing acknowledged that despite however the results emerged in 2021, that our revenue assumptions would assume that Medicare risk adjustment returned to more normalized levels for 2022, and that claims also returned to more normalized levels as if COVID had not occurred. Again, for claims, we started with pre-pandemic levels in 2019 and using historical trend factors trended that forward. That's why we continue to reinforce, given that approach, 21.50 is the appropriate jumping off point from which we would grow and expect to be in our long-term range. In 2022, recognizing, however, from an initial guide perspective, we do intend to take a more conservative approach to ensure we're set up for success and target the lower end of that range. Okay. All right. Fair enough. Your next- Thank you. Your next question comes from the line of Justin Lake of Wolfe Research. Your line is now open. Thanks. First, I had a quick numbers question. We're kind of looking to next year Medicare Advantage yields probably being in the high single digits in the individual business, just given the strong rates and the bounce back and risk scores offset, I guess, by a bit of sequestration. Is that a reasonable number? Bruce, can you tell us how to think about, you know, where you think the growth opportunity is within your physician management kind of center business? I know you said you're adding 30. I know also that your Welsh Carson deal is up in the end of 2022, and you have to think about how to finance those again going forward. How many do you think you can add post 2022, and how do you think you finance these things going forward post that Welsh Carson deal expiring? Thanks. Sure. I'll take the first one on premium yield, and then Bruce can take the second. We obviously haven't given specific detailed guidance points for 2022 yet, so I can't comment specifically. Certainly as you think about the premium yield in 2022, there are some tailwinds, as you mentioned. There's the favorable rate notice, as well as the, as I said, expectation that risk adjustment will return to more normal levels and then the typical sort of dynamics from just, you know, member growth. To your point, all of those should produce tailwinds, but at this point, we haven't given specific guidance obviously on premium. On the primary care, I'll answer the two questions on the growth side. I think first, obviously adding the number of organic units in the earlier years creates a drag as they mature, and we're seeing some great maturation in the cohorts that have been open a year or two, both in a membership side from a point of view of revenue and in addition on the cost side. We feel very confident, and that's one of the reasons why we increased the number of cohorts this year, as a result of our confidence and conviction in the business outcome. What we see over a longer period of time is, as we call it, the J curve will start to become into profitability of the ones that we opened in the earlier years, and that will start to give us growth. If you were to shut off the development, you actually would see a pretty quick growth rate within the existing business. We are accenting that by two other opportunities for growth. One is the existing operations of the businesses that have been open for a while, the mature centers, and we're seeing some really great same store growth in that area. They have done a great turnaround over the last few years in being able to improve that and although it doesn't show up in the profitability because the J curve override did a lot, we are seeing some really great improvement there, both operationally and then also from a quality and experience point of view. The third area of growth for us as an organization is really in the inorganic area. As many of you know, we do have a relationship with a number of providers, especially in our more mature markets, that we have the right of first refusal. That offers us an advantage of being able to continue to densify markets that we're in and add additional sites, and we did that in 2021, and we anticipate doing that in 2022. Those are very synergistic inorganic opportunities from the standpoint that we're able to evolve the management of it into our existing management team. We're able to, in addition, bring some of our operating capabilities to those centers. Really three, the continued advancement of our J curve and what we see there, the more mature centers continuing to improve that, and then the third, the inorganic growth and being able to leverage in some of the markets we have. I think over a period of time, you know, you're going to see, you know, at a five-seven period of time, I think you're gonna see a fairly sizable business come out of this as a result of the investments we're making today, both in the organic and inorganic area. Really, today it's the leading size clinic or clinics oriented to senior business. I think we'll continue to maintain that leadership long term. Relative to financing, we don't have. We haven't come to the structure yet. Justin, I think that will be an active conversation with the investors in probably the second quarter of 2022. We will come back to the investors and discuss how we will finance another cohort or a number of clinics for the foreseeable future. We today have enough of the capital to invest from our off-balance sheet financing and Welsh Carson to get us through to the 2022 openings. This doesn't cause any slowdown into our openings. We do and are looking at all the different alternatives for financing and the most cost-effective for our shareholders as we think about the future. Next question, please. Your next question comes from the line of Steven Valiquette from Barclays. Your line is now open. Great. Thanks. Good morning. A lot of questions already on Medicare Advantage. Just to maybe throw another one out there. Just curious to hear more about the pace of your county expansion. Obviously, you're in more counties than anybody else already. Even some of your larger peers seem to be, you know, growing their county footprint by double digits for 2022. I think you guys are somewhere around mid-single digits based on we calculate. Just curious to hear more about your thoughts of, you know, pace of county expansion for, you know, for next year, maybe just in general, kind of your strategy and thoughts around that. Thanks. Sure. I'll take that. As you mentioned, Humana really was ahead of many of our peers in terms of the rate of expansion we had a number of years ago. You don't see from a county perspective the same level of growth for us as you might see for some others, particularly those who have, you know, focused on Medicare Advantage in the last couple of years. What you'll typically instead see from us is product expansion within our existing geographies. That could be, you know, a couple of years ago, we really focused on our $0 premium LPPO product as an example. You see us continue to expand our dual eligible SNP footprint, and you will see county expansion there in 2022, as well as our veteran offering. Both the duals and the veterans, as we said before, are great examples of where we focus on product and consumer segmentation and designing product that, you know, uniquely meets the needs of those consumers. When we do that well, you see an opportunity for disproportionate growth. We'll continue to evaluate opportunities to do that. Again, I think you'll see more product expansion from Humana versus county expansion just because to your point, we've already got, you know, pretty broad coverage, with some products. Got it. Thank you. Next question, please. Okay. All right. Thanks. Your next question comes from the line of A.J. Rice from Credit Suisse. Your line is now open. Thanks. Hi, everybody. Two more. One on perspective and one more on just clarifying what you're saying about 2022. I guess I'm trying to understand. Is it fair to say that the MA bids were due early in the summer? Obviously, from your perspective, at least the way it's coming across to us, there's been a lot of developments in the back half of 2021 that maybe were different than what you would have said when those bids were due. Is the right way to interpret what you're saying today that you were so conservative when you constructed those bids that even though the second half has turned out worse, you're still comfortable with the outlook? Is that the way to interpret what you're saying? Would you give us something on that Kindred? I had assumed, I think, that that was gonna be an incremental tailwind for next year. Obviously, home health business seems to have deteriorated a bit. Is that still a tailwind in your mind for next year? Any way to size how much that might help you? Sure, A.J., I can take that. For your first question on 2022, you know, recall that in 2021, you know, when we came out with our second quarter commentary, we acknowledged that we had a net COVID headwind that had emerged. As I mentioned a few minutes ago, we did not contemplate that explicitly in our original guidance for 2021. As we saw that emerge, as we explained in the second quarter, we were able to mitigate a fair amount of that through other business outperformance, some favorable prior period development and other items. In order to achieve our guide, it did require that utilization continued to run below baseline throughout the year. That is not what we're considering in our 2022 pricing. We assume that it would bounce back. It's really just reflecting the challenges in 2021 are just acknowledging that while we are seeing net utilization below baseline levels, it's running less than we had previously anticipated or needed in order to achieve the guide and overcome that net COVID headwind that we discussed at the second quarter. Given the way we approach 2022 pricing, while our pricing didn't explicitly contemplate COVID costs beyond just sort of vaccination and testing, as we've consistently said, we did take a more overall conservative approach to pricing, recognizing there would be uncertainty that we would need to be able to navigate through, and also recognizing that, you know, it was a favorable rate environment. We had the MRA headwinds. We wanted to make sure that we could maintain long-term benefit stability for our members, and contemplated there may be, you know, a less favorable rate environment in 2023. Again, those are all the reasons that we approached pricing the way we did and the reason we continue to have confidence, because we did not anticipate any ongoing net benefit, as it relates to price utilization into 2022. On Kindred, we've had this question a couple times, and I think we've addressed it both in the second quarter call and again maybe at Morgan Stanley, is that, you know, that was one of the items that helped us address the net COVID headwind in 2021, the contribution from the full integration. We knew at the time of bids that we would be integrating Kindred, and so that was something we were able to consider as we aligned around our targets, and our bid pricing for 2022. We've always said that capital deployment is one of the levers we have available and will use to sustainably deliver our long-term growth target of 11%-15%. That was something we specifically contemplated in pricing, so wouldn't represent an incremental tailwind for 2022, but certainly expect, you know, the value that we expect to create from that value-based model and the continued growth of Kindred will certainly continue to contribute in the future to our sustainable ability to deliver against our long-term target. Okay. Thanks a lot. Thanks, A.J. Next question, please. Thank you. Your next question comes from the line of Lisa Gill from JP Morgan. Your line is now open. Susan, I just wanna go back to your comment around PDP shift to MA. Can you talk about your ability to retain any of those members and bring them over to MA? I think you talked about losing 200,000 lives. Secondly, I know it's still fluid as to what's going on down in D.C. around transparency and direct negotiation on the drug pricing side, but just curious if that will have any impact or you anticipate any impact around your PBM business. Sure, Lisa. I'll take the first one. PDP to MA. That is something that we have been focused on for many years. And what we see is, you know, we actively work to educate our PDP members about the value proposition of Medicare Advantage. In recent years, as we've expanded our dual-eligible SNP offerings, that increased our ability to drive those conversions because a large percentage of our PDP members are low-income dual-eligible members. What we consistently see is that we will be able to generate a disproportionate share of our PDP members who ultimately choose Medicare Advantage. We will disproportionately capture share within a Humana plan relative to what you would see our share capture in just overall Medicare Advantage. Really pleased with that. Having said that, you know, some of our members do choose other competitor MA plans, and so we continue to focus on identifying if there are opportunities to enhance the product to attract more PDP members who ultimately are likely to migrate to MA. Are there things we can do to enhance the marketing, product segmentation, all of those things we've talked about, to continue to drive increased share capture for those PDP members who ultimately determine that MA provides a better value proposition for them. On your second question, around, you know, some of the recent, you know, texts that's come out, we certainly are watching it closely. We'd say, you know, it really represents a framework at this point. We'll have to see some of the detailed text that ultimately comes through and what the final proposals are, and certainly are, you know, certainly supportive of anything that can be done to reduce the cost of prescription drugs for our members, and it's something we would certainly contemplate and take into consideration in our pricing each year. But I think at this point it's too early and we'll need to see what comes out of the final text. Just on that, from our vantage point, we continue to put rebates back into our pricing, so it goes back directly to the customer. We do not retain those rebates. Any kind of opportunity to lower the cost of the drugs will directly benefit our members and not have an impact on us as a result of just we pass it through. Great. Thank you. Your next question comes from the line of Lance Wilkes from Bernstein. Your line is now open. Great. Thanks. Could you provide a little more color on the primary care centers? What I was interested in is looking at the centers and the patients served. Can you describe a little bit about the composition of patients, you know, what% are MA versus Medicare fee-for-service, and then how many of them are employer or other? You know, what% of those are in full risk contracts versus maybe stages of that? Then how much of the membership or how much of the patient base is Humana membership as opposed to with other payers? Thanks. Okay. A few things there. There's a lot in that question, so let me try to provide as much as I can here. They are built really for full risk Medicare Advantage members. That's what they're built for. That's how the staffing is constructed, that's how the recruiting of the physicians, that's how the business model is built. That sort of leads you to the conclusion the majority of them are going to be MA members. Now, we have some Medicare fee-for-service side members in there. They are really oriented to how, over time, they can evolve to be a longer-term member for us through a Medicare Advantage relationship. They are agnostic platforms, and there's a good composition of Humana members as well as other payers in the clinic. That's why it's really called CenterWell. It's to reinforce that agnostic nature, and we are very oriented to that being agnostic. In a number of our sites, there's probably more non-Humana members than there are Humana members on there. You do see us oriented to a much broader opportunity in Medicare Advantage. In addition, in a few of the sites, we do have direct contracting members as a result of that. We are in the opportunity to take Medicare fee-for-service relationships that are more oriented to value-based. Your last part of your question just was the relationship. Over time, they will take full risk. Now, there might be an earlier part of the opening that they will take a path to risk orientation, where they'll have some upside and downside limits but they will over time convert to a full risk model. That's really just as the panel size gets bigger and bigger, the ability to manage the risk is much easier because of the diversification of the panel size. Great. What's the time to break even in those de novo sites for you guys? Break even is between three-five years. Lance Wilkes, I say the earlier years, probably three years is more around profitability and contribution margin. The fifth year is more around return on capital, obtaining the return on capital side. Great. Thanks so much. Thanks, Lance. Your next question comes from the line of George Hill from Deutsche Bank. Your line is now open. Good morning, guys, and thanks for squeezing me in. Susan, I was just wondering if you'd be willing to provide a little bit more color on how you're thinking about medical cost trend as it relates to 2022. I guess to provide some granularity about how I'm thinking about the question is 2019 kind of the right baseline number from an MLR perspective, plus then adjustments for mix because we've seen so much growth in virtual and retail care clinics? You know, you've included some, you know, what I'll call some excess COVID headwind, but if we see a continued reversion of utilization, like could we see a number that looks like greater than 100% of that 2019 baseline from an MLR perspective? Are you thinking about utilization being higher offset by changing cost mix? Not asking for the hard number, but just would love how you're thinking about the moving pieces as it relates to the growth in medical costs. That'd be great. Sure. You asked for a lot of specificity, so I'll try to answer this, as much as I can, maybe a little bit more generally. As we said before, right now in our 2022 pricing, our approach to baseline trend was to go back to pre-COVID levels, use historical trend factors, and roll that forward. Now we certainly, you know, our models have a lot of, you know, granularity to them, and so certainly they would take into account any site of service shifts, that we may be seeing and then our estimate of what those might do going forward. They'd also look at, you know, what we refer to as healthcare pipeline technology, so anything else that we expect that may be coming to market that would impact trends differently than what we've seen historically. That's just part of our consistent process. All of that work was done to support our 2022 pricing. We have not changed our view of that currently, although, as you can imagine, there is a lot of work being done across the enterprise to study as best we can what has emerged over the course of 2020 and 2021, you know, how we can decipher COVID impacted utilization, depression, versus what might be just, you know, lower baseline trend. I think, you know, our view and, you know, as you've seen us consistently be able to meet and beat earnings historically would imply that, you know, our core sort of trend forecasting models may have a little bit of a conservatism in that. We've not assumed that going forward. You know, trending off 2019 is, you know, certainly more years of trending than we would typically like. That's why we're going to do a lot more analysis between now and issuing our final guidance points for 2022 to see if there's any additional information that would inform our perspective on 2022 baselines. What we're considering now, we think is an appropriately conservative view. To your point, if the COVID headwind that we will contemplate in that guide does emerge, then we would, you know, be seeing baseline, you know, utilization above baseline levels. I'm sorry, I said that backwards. Yeah. That we would be able to tolerate it running above baseline even though we don't expect that to occur. If it does not occur, then that would obviously represent additional tailwind for us that you should see unwind over the course of the year. Okay. If I could just go with a quick follow-up. Thank you. It does. I guess my quick follow-up is that just, where do you feel like the flexibility is for your ability to pull levers on the cost side should costs on the medical side run ahead so that you guys can deliver your earnings targets? You know, in general, I would say we continue to work on our trend initiatives and various, you know, utilization management and other strategies, you know, no different than any other year to continue to work to reduce total cost of care. Some of the work that we're doing with our value-based home health model, as well as the use of our broader home set of capabilities or other examples of how we continue to work to see how we can use those capabilities to focus on patients who are disproportionately likely to see potentially avoidable hospitalization events and use those capabilities to, you know, redirect to an alternative site of service like the home or an outpatient setting. We'll continue to do all of those things in support of not only 2022 trend mitigation, but then also longer term to support, you know, our value proposition in Medicare Advantage broadly. Just, you had asked a question about administrative management. We constantly are managing the investments we make and our cost trends within the administrative side to ensure that they provide the adequate cushion for us as we think about earnings being set. Thank you. Your next question comes from the line of Whit Mayo from SVB Leerink. Your line is now open. Thanks for getting me in. I hope I'm the last one. I had just a quick clarification question. Susan, I think you said that you would expect that reserve development in the fourth quarter would come in less favorably than you experienced in the third quarter. I just wanted to make sure that I heard that right. Of the membership growth that you expect in 2022, I think 350 at the midpoint, how much of that is coming from special needs plans, duals, etc.? Thanks. Sure. To your first question on current period development, yes, you heard correctly that while we did see positive current period development in the third quarter, our guide does not assume that we continue to see those elevated levels. Our guide would always assume some level of normal course CPD in any given quarter. You can see that would typically decline through the year. We are not assuming currently that that excess favorability we saw emerge in third quarter will continue. In terms of 2022 growth, we obviously haven't given detailed guidance by product. What I can tell you, though, is while it's still early in the AEP, you know, Bruce mentioned we saw, you know, 40% growth in 2020 and 2021. We do continue to see strong growth in 2022. While we're not prepared to share any specific number, so far, again, while it's early, year-to-date growth is actually coming in better than we had originally expected for 2022 so far. Okay, thanks. Your next question comes from the line of Gary Taylor from Cowen. Your line is now open. Hi, good morning. Just two quick questions I have remaining. In April, you upped your MRA headwind to $1 billion-$1.3 billion for the full year. Just wanted to make sure, is that still the right 2021 headwind, and most of that comes back next year, and that's part of how you're offsetting the return to baseline utilization? That is exactly right. Our estimate has not been changed since our previous update on the MRA headwind. As we said, we're tracking very closely the diagnosis code submissions in 2021 that will support our 2022 reimbursement, and those are in line with expectations and more similar to what we saw pre-COVID. To your exact point, that headwind we do not expect to recur and does provide mitigation from trend bouncing back to more normal levels. Just one more quick one. When you talked about, you know, as Whit was just mentioning, less development in the Q4, your third quarter prior year development was very similar to last year. I presume you were talking about intra-year, you know, development from the first half that you recognized in the Q3 that doesn't occur or you're not assuming occurs. Is that correct? Could you just give us a little color on where that came from, inpatient, outpatient? Yes, you are correct that when we refer to current period development, the development in the quarter, that would refer to how claims restated in the first half of the year. I'm not sure exactly where we dropped, but just to your last point, current period development does refer to how claims restated in the first half of the year. As we said, we did see some favorable restatement. What I can say is at a high level, you know, relative, we gave you estimates as of Q2, and what we saw develop in the third quarter is that net of the COVID, any COVID costs, that we saw a positive restatement of about 50 basis points for both the first and second quarter of 2021 develop in the third quarter. Speakers, we don't have any questions on the line. I would like to turn the call to Mr. Bruce Broussard for closing remarks. Well, first, I wanna apologize for the technical glitches here. I think we have a problem with our landline, and we will definitely work on that to ensure that the service that we subscribe to is capable of keeping a consistent connection. Second, I hope you take away from our conversation today that we have been very thoughtful and conservative as we look into the fourth quarter and as we enter into 2022. As you can see, from all the commentary, we do reflect the uncertainty of COVID and all the aspects of going into 2022. I do wanna say thank you for our 90,000 associates that make this such a successful organization and their dedication to not only our customers, but also providing our shareholders the adequate return. I want to thank you for your long-term support for us as an organization. Thank you and have a great day. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.