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Amid the lingering effects of the Medicaid unwinding, insurance companies are posting bleak Q3 earnings reports—except, that is, for Centene Corporation, the nation’s largest Medicaid provider.
The company’s Q3 performance beat previous expectations with $1.62 earnings per share (EPS), CFO Drew Asher said in an October 25 earnings call. This is above the $1.41 average that Wall Street analysts had estimated, Bloomberg reported.
Other Medicaid providers have been hit hard after the unwinding removed millions of members from the rolls. But Centene weathered the crisis, buffered by its other plans.
Even as it saw Medicaid enrollment shrink from more than 15 million in September 2023 to around 13 million in September 2024 in the 30 states it operates in, Centene’s Medicare Part D enrollment grew by more than 2 million and commercial marketplace enrollment grew by more than 1 million, according to an October 25 press release.
“The team’s diversified portfolio continues to allow us to navigate unprecedented landscape challenges,” CEO Sarah London said during the earnings call.
State rate squabbles. Still, the provider said it still has to contend with challenges like low state payment rates relative to enrollees’ acuity.
Payers like UnitedHealth Group have said in previous earnings calls that the remaining beneficiaries after the Medicaid unwinding are typically sicker, Healthcare Brew previously reported. State rates are largely based on beneficiary data from before the unwinding and don’t totally reflect that, though, which means Medicaid plans are now often being paid less compared with the care they provide.
Earlier this month, UnitedHealth Group projected 2025 performance about $1 per share below Wall Street expectations in its Q3 call, and Elevance cut its projected 2024 forecast to $33 a share after projecting at least $37.20 in July.
Though state rates still aren’t where Centene wants them, London said, there has been progress.
Centene leaders were proactive about pushing hard for rate increases and collecting data to back up its points, London said during the earnings call.
“All of our states have acknowledged the need to match rates with acuity, and all of our states have now taken action,” London said.
Centene’s profit was also aided by a marketplace premium tax benefit that was originally expected in Q4, according to the company’s Q3 report. The tax benefit added a net 10 cents EPS.
And the payer increased its performance in the Centers for Medicare and Medicaid Services’s (CMS) 2025 Medicare Advantage star ratings.
Centene has approximately 46% of its Medicare Advantage membership enrolled in plans rated 3.5 stars or higher, compared to about 23% the year prior, according to the release.
That number may soon be even bigger: The company is suing the federal government, alleging CMS penalized its quality score because of a “single failed” call, Reuters reported on October 22.
UnitedHealth Group and Humana have also filed suits against the US Department of Health and Human Services over CMS star ratings.