Some Medicaid challenges ease for Centene: 5 things to know

On Oct 25, the company reported third-quarter earnings of $713 million, up 52% since the same period last year.

Centene and other major insurers have reported pressure on their Medicaid margins in 2024. In 2023, states began redetermining eligibility for Medicaid members for the first time since 2020. Regulations to keep people insured during the COVID-19 pandemic prevented states from disenrolling Medicaid during the public health emergency. Enrollees remaining in the program tend to have higher health needs, resulting in higher spending. 

Centene CEO Sarah London told investors on an Oct. 25 call that work remains to be done to get adequate payment rates from states, but all of the 30 states Centene operates in have taken some action to adjust rates. 

“All of our states have acknowledged the need to match rates with acuity, and all of our states have now taken action with respect to acuity adjustment in some form,” Ms. London said.   

Here are five things to know:

1. Centene had 13.1 million Medicaid members as of Sept. 30, down from 15.2 million during the same period last year.
2. The company’s medical loss ratio was 89.2% in the third quarter, up from 87% in the third quarter of 2023.
3. Ms. London informed investors states had raised Medicaid reimbursement rates by 4% to 5% across the board.

   “Bringing data forward, leveraging the strong relationships we have at the state level and being able to push those productive relationships to drive results is what we stand on,” Ms. London said. 

4. Other payers have not been as optimistic about Medicaid rates. Elevance Health cut its earnings guidance for 2024, mainly due to slimmer Medicaid margins. Executives told investors on an Oct. 17 call that Medical costs in Medicaid are three to five times higher than historical averages.

   “Our state partners are working constructively with us on rate renewals,” CEO Gail Boudreaux said. “We’re confident that rates will ultimately reflect the underlying acuity of our members, albeit on a lag, as states often use data that’s more than a year old when setting rates,” she added.

5. Centene’s shares rose 11% after its earnings report, according to The Wall Street Journal.