Kevin Fischbeck: Not RADV, but more the proposed MA rate update and the 3% coding adjustment, the changes in code ICD-10, limiting some of the codes, that aspect of the rate update?
Mike Mikan: Yes, we’re not ready to start talking about next year. We’re focused on 2023, and we’ve offered up the bridge to get us from the restated medical cost ratio of 92% to our midpoint of 87%, which includes the rate for this year and about 100 basis points related to risk adjustment. And when you include medical cost initiatives, that’s the bridge from the 92% to the 87% at the midpoint.
Kevin Fischbeck: Okay. Thanks.
Operator: Thank you. Our next question comes from Justin Lake of Wolfe Research. Justin, your line is now open. Please go ahead.
Justin Lake: Thanks. Good morning. I wanted to follow up on your comments around the contracts on the risk side for physicians and yet you lowered the revenue number there. But maybe you could give us a little color in terms of how those contracts are being set up in terms of the upside/downside? What the path is to taking more full risk? And then the — maybe you could give us the embedded kind of medical cost managed that maybe if — once we get the full risk or full capitation on all of those lives, you would be kind of running at in terms of the top-line?
Mike Mikan: Yes. I don’t know the total number, but I know that incrementally we would have another $600 million or so of revenue had we grossed up completely, that would have been in the range — the higher end of the range that we had given previously. Justin, we can follow up with you with more of an accurate number of the total cost of care related to our risk-based contracts. But that would be the incremental difference based on our current revenue guidance on a net basis. With respect to the contracts, we are intended to have a — our contracts have essentially a targeted total cost of care, medical loss ratio, which we entered into an agreement with our partners and then we are sharing upside and downside. They’re not all consistent, but today, they’ve got collars around them around the sharing and the upside and the risk on the downside.
As we said, as we enter into a new market or a new partnership, we need to understand the book of business, the referral patterns, the network contracts and preferred networks that we’re working with, all of which we hone in on over time with our alignment model to improve results. And as we gain more knowledge of the consumer base, the referral patterns and all of those managing the care, we’re willing to take on more risk, because we know we can manage it better from a local capability perspective at the point of care than just the insurance or managed care side of the business. So that’s how those contracts work and how over time we’ll take on. We’ll loosen up that collar and eventually, we believe we can take on full risk at some point going forward.
Justin Lake: Got it. And then just a follow-up. I apologize. I only caught a piece of Kevin’s question before. Did he ask about the new risk model that CMS is out there and your view of that for 2024, and you said it was too early. Just want to make sure that’s embedded.
Mike Mikan: Yes. It’s too early to start commenting on that.
Justin Lake: Got it. Thanks.
Mike Mikan: Thanks, Justin.
Operator: Thank you. Our next question comes from Nathan Rich of Goldman Sachs. Nathan, your line is now open. Please go ahead.
Nathan Rich: Great. Good morning. Thanks for the questions. A few on the EBITDA bridge for ’23. I wonder if you could talk in a little bit more detail about your assumptions around the profitability of the ACO REACH members that you’ll be serving and what type of MLR you’re expecting from that base in ’23?
