Steve Sell: So maybe I’ll take the second one first. So I think that — we think we’re going to be really strong with this class of ’24 next year and above that $60 PMPM range. And our implementation has gone extremely well around that. It’s part of our investments in technology, it’s part of a faster sales cycle. So there’s a longer implementation period. So that’s on the MA side. On the REACH side, we believe our performance is going to carry forward for us. It’s always in relation to sort of the net or the macro utilization across the entire Medicare book overall. But every year, we’ve been positive relative to that, anywhere from 100 to 300 plus basis points. So I think we would expect for all the reasons we talked about earlier that that would continue for us on a go-forward basis.
Tim Bensley: Yes. And just to follow on then back to the beginning of the question, just to follow on the REACH question. One of the things that we’ve talked about is, of course, REACH, the revenue benchmark, what we’re going to get paid basically moderates within the year based on utilization. So as long as we continue to do a good job, which we have been doing of outperforming the Medicare fee-for-service benchmark performance, then we’ll continue to drive really good performance on REACH. And as I said this year, we’re outperforming that fee-for-service population with our population by over 300 basis points. So our model is really having a very positive impact. You really see the power of the model on that. It was previously largely unmanaged population.
In terms of the guidance that we put out for medical expense in the fourth quarter, we basically — just to reiterate what I said before, looked at it and said, hey, let’s kind of take a viewpoint that the spike up in May that moderated down somewhat in June and July is not going to moderate down further. And based on that, we’re putting a full another $30 million into our medical expense forecast and therefore, medical margin forecast for the fourth quarter. We think that that puts us in a good position to meet one of our key objectives, which is let’s be appropriately reserved to not have any prior period development bleed over into 2024. So I don’t really want to divide it into categories as much as to say, we’ve looked at the expense trend and tried to be appropriately conservative to try to make sure that we’re preventing or at least minimizing the possibility of that happening again next year.
Operator: Thank you, Jamie. We will now take our next question from Elizabeth Anderson from Evercore ISI. Elizabeth, your line is now open. Please go ahead.
Elizabeth Anderson: Hi, guys. Thanks so much for the question this evening. One, I was hoping you could speak sort of qualitatively on — I know you’ve talked about how you’re doing like additional reserving and et cetera to help sort of manage the utilization as we go into 2024. I think you also mentioned in your prepared remarks that you’re also making some qualitative changes on that. So just wondering how you’re sort of thinking about that in terms of the claim management. And then secondarily, I was just wondering if you could comment a little bit further on the change in trajectory of geographic entry costs and how that has sort of trended versus your initial expectations given the large size of the class. Thank you.
Steve Sell: So I think Elizabeth on your first one, Tim walked through the math on the reserves. I think maybe what you’re speaking to is we have added an SVP of Data Solutions and we are working much more closely with payer partners to make sure that we’re getting data in a consistent and more ready fashion around that. So we’re making progress on that. Do you want to talk about geo entry costs?
Tim Bensley: Yes. And I was just going to say to add to that, I wasn’t quite — sorry, Elizabeth, I wasn’t quite sure what the premise of the first question, but if it’s along those lines. The other thing I would say is on prior period development is, obviously, we did have some key partner market prior period development in this quarter that we just reported. But the good news is I think we have made a lot of progress across our broad payer platform with improving the quality and the timeliness of information we’re getting from them. And if there’s a silver lining in this quarter, it was really a very specific limited issue with one payer. So hopefully, the investments we’re making there, the investments and more expertise that we brought in is going to really pay some dividends going forward.
So we’re feeling better about that. On geographic entry costs, we were a little bit better in the quarter than what we had forecast. We’re trying to make sure that we’re — since that’s a new way that we’re essentially reporting our adjusted EBITDA this year that we’re a little bit conservative in that number, but we were a little bit better. But I think overall going forward, our all-in geographic entry costs we still expect to be in the $400 to $600 range per new member that we’re implementing for the next year. So I don’t think we’re going to see a lot of movement and we’ll probably continue to stay within that range.
Elizabeth Anderson: Thanks so much.
Operator: Thank you, Elizabeth. Our next question comes from Sean Dodge from RBC Capital Markets. Sean, your line is now open. Please go ahead.
Thomas Kelliher: Hi. Good afternoon. This is Thomas Kelliher on for Sean. Thanks for taking the question. Just one on the higher acuity clinical programs you’ll have. With your capabilities already fully implemented across your — the older cohorts 2018, 2019, I guess during ’22. And so I guess what I’m looking to understand is kind of your latest thoughts on the upside from the rollout of these capabilities for those cohorts that are already generating medical margin PMPMs kind of north of 200. Thanks.
Steve Sell: Yes. Thanks for the question. I think one of the distinctive parts of our model is that we’ve got these programs around renal, around palliative, around high risk management that are part of the care team around that PCP. We get much better enrollment rates and much better impact. That’s how we’re able to drive things like negative in-patient trends. To date, we’re about 60% implemented across all of our markets. Our earliest markets do have those rolled out. By the end of ’24, we will have them across all markets, including the ’24 markets. So I think we do believe that there’s upside from these clinical programs as we get them more fully rolled out.
Thomas Kelliher: Okay. Thanks. I appreciate that.
Operator: Thank you, Sean. Our next question is from Jack Wallace from Guggenheim. Jack, your line is now open. Please go ahead.
Jack Wallace: Hi. Thanks for taking my question. Just wanted to follow up on the cash flow question from earlier and just given the moving pieces this year, so Hawaii larger than normal, new class for next year, the incremental reserves. You do think that it’s reasonable to expect the free cash flow positive next year or is that maybe more realistic for ’25 timeline?
Tim Bensley: Yes, we’re still — and one of the things I said before is we had a very big class coming this year. Actually, that class is performing really well. I think that 2024 is going to be even a stronger performing class, but we’re really pleased with the large class that we brought in this year and where they’re performing. As all of the incremental EBITDA that we’re generating this year kind of flows into next year, that’s going to be a big supporter of our ability to generate positive free cash flow this year. So for now, we’re still on track to do that. Obviously, we’ll keep you updated as things move through next year. But we’re — at this point we’re still feeling pretty good about next year being kind of a transition year into positive free cash flow.
