Joshua Raskin: Hi, thanks. Good morning. Just a clarification first. I think I heard 20% now maybe going to 25% of redeterminations are coming back. I’m assuming those were Centene lives coming back to Centene plans. And I think you said 10%-ish or so are moving to exchanges. I’m curious about are you taking share from other plans when they’re seeing redeterminations and you’re getting their members into your exchanges? And then you mentioned through the big growth in PDP. I guess just a question on sort of strategy, it seems like a little de-emphasis in terms of network or catchment points to the Medicare Advantage program, switching the PBM already. So I’m just curious on what the idea is around the low-priced products for the PDP next year?
Sarah M. London: Yes. So thanks, Josh. Let me hit those clarification points, and then I’ll turn it over to Drew. So what we are seeing on average across the April to August cohort is a 25% rejoiner rate on average. So those again have sort of filled up from what had been a Pareto — decreasing Pareto to a pretty consistent 25% rejoining rate. And then our expectations, again, just mathematically, we’re about that 10% to 15% recapture, which leaves the 200,000 to 300,000 member expectation that we’re still tracking in line with. We are pulling share from other players and trying to track pretty closely, obviously, members that are coming from our plans. And then to the extent we can identify specifically those members that are coming from other Medicaid programs.
Drew Asher: Yes, Josh. And then on PDP, and you’ll remember this business going back 10 years, which was a legacy WellCare asset and business. The strategy there is as much about corralling and managing pharmacy spend and having a future feeder for MAPD than it is about generating earnings on what’s this year, $2.5 billion of revenue. So I think it was fortuitous that our change and improvement in cost structure or change to a new PBM and a meaningful improvement in cost structure occurred right when there are a number of rule changes impacting PDP like no pharmacy DIR elimination of the member cost share in the catastrophic phase, the cap on insulin. And so we are able to leverage that cost structure and make it affordable for our members while the direct subsidy went up meaningfully.
And so we’ll be getting paid that direct subsidy by the government. So it was actually a good alignment of opportunities for us to continue to leverage that business to actually help our other businesses in the terms of pharmacy cost structure.
Operator: Thank you. And our next question today comes from Justin Lake with Wolfe Research. Please go ahead.
Justin Lake: Thanks, good morning. A quick question and a follow-up. So the questions on the exchange business. Just can you give us some color in terms of how that membership growth was pretty exceptional in the third quarter. How did that look versus your expectations and how does that kind of educate 2024? And then specifically on 2024 with the margins there, my kind of back of the envelope, Drew, is that your kind of guidance for next year assumes margins towards the higher end of that 5% to 7.5% target range, is that right? And then just a follow-up on the retro, can you give us any more color in terms of the — why you think that was incomplete that just sounds something — I’ve never heard the word incomplete on a rate update and what gives you the confidence that they’re going to reverse that, is there any kind of color from the state that you could share with us on the confidence and the timing? Thanks.
Drew Asher: Alright, first on the growth in the quarter and marketplace, you’re right, that was outstanding growth. Now you may remember, we said that we expected to get to 3.6 million members this year, and we’re just above 3.6 million this quarter. So most of that was sort of embedded in our forecast as we saw the momentum from Q2. But you’re right, it is a good indicator and sort of momentum builder for 2024. On margin, we are still just this year. We are in marketplace. We’re still just below our target range of 5 to 7.5 and that’s not because of HBR, it’s actually because of all the growth and the year one commission that comes along with that. So it’s a real good reason to be just below your target range, which means there is capacity as expected and as we have forecasted into 2024 to expand margin into that 5 to 7.5 zone.
And so I’ll just leave it at that. We expect to pierce zone and be well into that range for 2024 and we — our forecasts are on track for that. We price for that, and that’s what we expect. Regarding — probably not going to get too much into a single state call it, negotiation but yes, that was a 40 basis point push in the quarter that pushed our HBR up a little bit higher in Medicaid. And just based upon the back and forth and the construction of that incomplete and maybe rushed retro rate, we expect a favorable future outcome maybe in Q4, but it could drag into 2024.
Operator: Thank you. And our next question today comes from A.J. Rice at UBS. Please go ahead.
A.J. Rice: Thanks. Hi, everybody. Two quick areas question. On the marketplace comments, I know traditionally that product, you hit a deductible potentially in the fourth quarter and your utilization rate upticks. Are you expecting that, do you think you have a good visibility on all these new members and how they might act in the fourth quarter, and maybe to what degree have you reflected that? And then as you think about that population, we sort of talked around it with a couple of the other questions, moving into next year you mentioned the commission dynamic, potentially better risk scoring and so forth. How much of a margin tailwind will this population represent for you as you look into next year, I know the churn rates in that population were high by historically, but I think they’ve come down and I don’t know if that’s the same for you, but maybe any comment along those lines as well?
Sarah M. London: Yes, A.J., you’re right that particularly in that SEP membership, we’re seeing more retention industry-wide, which is, I think, logical just given the insulation and the extension of the enhanced APTCs and the increased affordability of the product. And as you said, the sophomore effect of that membership, in particular, the fact that we’ll have a full year of risk adjustment, and we’ll have moved through any sort of early utilization, we think, provides a tailwind the retained part of that SEP population. And as Drew said, our focus going into 2024 is really retaining the tremendous growth that we’ve had in 2023 and then continuing our progress on pricing discipline in order to expand margin and pierce into that 5 — sorry, 5% to 7.5% range.
Drew Asher: Yes. And on your Q4 comment, you’re absolutely right, sort of — if you look at the slope lines of the deductible wear off throughout the year, we do expect a healthy tick up in HBR. We planned for that in our commercial, including marketplace businesses and also in Medicare, normally a step-up in HBR, but then you add the PDR on top of that. So those are some of the things to think about for Q4 as well as heavy SG&A as expected, as typical in Q4, which is as you’re calibrating your models for 2023 to finish out the year.
