Centene reported a $12 million loss during its fourth-quarter in 2020, with higher than expected costs related to the COVID-19 pandemic and an extra $200 million state Medicaid risk-corridor expense cutting into its bottom-line.
During the same period in 2019, the St. Louis-based insurer booked $209 million in profits.
Additionally, CEO Michael Neidorff said Centene will eliminate 1,500 people from its workforce or about 6% of the company. He said the restructuring plan was announced in December and was primarily due to employee overlap, thanks to the company's recent acquisitions.
"Early in 2020, we told you the year would be choppy, and it was," Neidorff said during the company's earnings call.
Centene's total revenue reached $28.3 billion during the three months ended Dec. 31, up 50% from $18.9 billion in 2019. Total revenues for the year climbed to $111.1 billion, up 49% year-over-year. Profits also increased to $1.8 billion in 2020, up 36% from $1.3 billion the year before. The company attributed the year-over-year increases to its $18 billion acquisition of WellCare Health Plans, which closed in early 2020 and added a significant number of Medicaid enrollees to the payer's rolls.
By the end of the year, Centene counted 13.6 million Medicaid members as part of its network, up 57% year-over-year. The company's total membership rose to 25.5 million.
In addition to the WellCare acquisition driving gains, Neidorff said the company benefited from the public emergency pausing Medicaid redeterminations in many states. He sees the Biden administration as positive for the company's future—Neidorff said the upcoming special enrollment period for the exchange would likely boost Centene's Medicaid business since a good portion of the 15 million people who currently lack insurance would be eligible for Medicaid. He also hoped legislators would heed calls to increase investment in the Federal Medical Assistance Percentages, or FMAP, the 6.2% bump in federal support to state's Medicaid programs that started at the beginning of the pandemic. If FMAP were increased, he said it could dissuade states from seeking Medicaid clawbacks.
"I think it will minimize the need to try and pull back rates," Neidorff said.
The company reported $1 billion in Medicaid risk-corridor requests from states for the full year, up from the $750 million the company had expected to pay. Neidorff attributed the increased expenses to consumers deferring care and state budget uncertainty caused by the pandemic. Despite the unexpected payments, the company's medical loss ratio reached 86.2% in 2020, meaning nearly 86 cents of every premium dollar was spent on customers' medical care. Neidorff said Centene paid $3.6 billion in coronavirus-related claims in 2020, above its initial $2 billion projection.
"When we hear the states are adjusting risk corridors, or they're trying to pull money back, it's because they see the utilization's down," Neidorff said. "They see that as a reason to do it and to offset it. There's a balance there."