The continued pause on Medicaid redeterminations and the marketplace special enrollment period helped push Centene Corp.'s profits to $699 million for the first quarter of 2021, although investors were expecting more. Centene's stock price fell 7%.
CEO Michael Neidorff said the push-and-pull between these two business lines represents a key growth area for the St. Louis-based insurer going forward. "People who lose Medicaid coverage could pick up marketplace," Neidorff said during the company's first-quarter earnings call on Tuesday.
Centene reported revenue of $29.9 billion, up 15.2% from $26 billion during the same period last year. Net earnings in the quarter came in at $699 million, up from the $46 million reported in 2020.
Here are five takeaways from Centene's first-quarter 2021 results:
1. Medicaid membership grew 16%. Centene counted 13.8 million Medicaid members at the end of the first quarter, up 16.4% from the 11.8 million enrollees it reported during the same time in 2020. Neidorff credited growth in the company's Medicaid membership to a pause on eligibility redeterminations, making it easy for individuals to stay on these rolls, and which the company expects to last until Aug. 1. A few recent wins will drive this business up, he added. A Centene affiliate recently extended its Medicaid managed-care contract with Hawaii, and new agreements with North Carolina and Oklahoma are set to go live during the second half of the year.
2. Medicare, commercial and Obamacare membership slid. At the end of the first quarter, Centene counted 5.2 million Medicare members, down slightly from the 5.3 million reported during this time last year. The company's commercial enrollees also fell 5% year-over-year to 2.3 million. Membership in Affordable Care Act plans slid 13.5% to 1.9 million compared with nearly 2.2 million beneficiaries this time last year.
3. The special enrollment period helped soften enrollee decline. Since the start of the year, the company has enrolled more than 320,000 new members in its ACA plans. In January, Centene expanded Ambetter, its marketplace product, in nearly 400 new counties across 13 states. Neidorff said its marketplace strategy hinges on avoiding narrow networks, saying research shows tight provider constraints drive healthcare costs up by increasing out-of-network visits.
4. Risk corridors will cost the company more than half a billion dollars. As the company's 25.1 million members continue to defer care, Centene expects to spend $550 million in risk-corridor expenses for 2021. During the first quarter, the insurer received a surprise clawback expense from the state of New York, Neidorff said. So far, its enrollees have not experienced a higher level of acuity than normal.
5. Centene will lose a PBM contract with California. In July, the state of California will end its contract with Centene's pharmacy benefit manager in favor of carving out the PBM and switching its Medicaid managed-care plans to a fee-for-service contract. The move comes after Ohio and Mississippi accused Centene's PBMs of overcharging their Medicaid departments for drugs.