Centene will gain $200 million in additional Medicare Advantage Star Ratings bonus payments next year after the Centers for Medicare and Medicaid Services revised its scores, CEO Sarah London told investors Thursday.
The updated metrics also awarded Centene its lone four-star contract for 2025. The health insurance company nevertheless continues to pursue its lawsuit challenging the CMS' administration of the quality incentive program.
Related: UnitedHealth, Centene get Medicare Advantage star ratings upgrades
Fifty-five percent of Centene's 1 million Medicare Advantage members are enrolled in plans rated at least 3.5 stars out of five for the 2025 plan year, up from 46% under the original scores and 23% during the current plan year, London said during the company’s annual investor day. Centene canceled an in-person event in New York but opted for a virtual presentation in the aftermath of UnitedHealthcare CEO Brian Thompson's murder last Wednesday.
Centene expects to lose $250 million on Medicare Advantage this year, but intends to break even by 2027 as part of a multiyear effort to restore profitability. The company aims to cut Medicare costs by 2% next year via platform consolidation, sales and marketing changes, and value-based care, London said.
“We were rebuilding our Medicare business before that became cool,” London said.
Centene, which retrenched from unfavorable geographic markets, lost 20% of its Medicare Advantage members during the annual enrollment period that ended Saturday, Chief Financial Officer Drew Asher said. The company projects its medical loss ratio, which measures the share of premiums spent on claims, will be 88.4%-89% in 2025.
The company also is looking ahead to a year from now, when enhanced subsidies for health insurance exchanges plans are set to expire unless President Donald Trump and the Republican-led Congress renew them after taking office next year.
If the larger tax credits are not extended, Centene's earnings per share would fall by as much as $1 and its marketplace membership would drop by up to 30%, London said.
Despite Trump and the GOP's longstanding antipathy to the Affordable Care Act of 2010, London believes the bigger subsidies will not disappear. “We view the full expiration of enhanced subsidies as a less likely scenario given the widely understood bipartisan support for affordable healthcare,” she said.
London also expects Trump and Congress to support expanded access to individual coverage health reimbursement arrangements, or ICHRAs, which insurers such as Centene and Oscar Health have identified as key to their exchanges strategy.
Through ICHRAs, employers offer workers vouchers they can use to purchase marketplace coverage, rather than provide health benefits. Centene has at least 6,600 ICHRA members, London said.
“We believe President-elect Trump and the incoming Republican Congress will have an interest in leveraging ICHRA to address small-group challenges,” said Jon Dinesman, executive vice president of external affairs.
Centene shares opened at $58.50 on the New York Stock Exchange on Thursday, up 2.8% from the previous day’s close.
