We’ve been very clear that certain services, we see additional step function opportunities to invest in and continue to grow. Most importantly, our proven scale, specialty capabilities. The rate of spending growth and clinical complexity around that is off the charts. We have a leadership position there that will continue to grow, and we will continue to be the market leader in that space through our assets. Secondly, the need statements around behavioral health in the most comprehensive way. The market expects now a much more coordination of behavioral and physical health and we will continue to expand services that we have within our leading capabilities. And third, just to stop at three for illustration is the breadth of virtual services.
the ability to connect and coordinate and expand services as we go forward. So we agree with your point. I’ll end with agreement with your point of continuing to invest in our services capabilities to be able to support the right services but we do not believe you have to own all aspects of the care delivery equation to be able to deliver that on a go-forward basis. So hopefully, that gives you a framing. As you might expect, we’ll spend time on this at our Investor Day on the seventh because it’s an important part of our strategy today and an important part of our growth strategy going forward.
Operator: Thank you. Our next question comes from Lance Wilkes with Bernstein. You may ask your question.
Lance Wilkes: Great. Thanks. Could you talk a little bit about over in the Cigna Healthcare side of the business employer, how penetration rates are going with the specialty products in self-insured? And if there are any interesting trends as you go into 2024 here as you look at the selling season in 2025 with respect to that. And then as you’ve gone through the selling season, any changes in employer priorities? And then also just a quick clarification on if you could just explain, there’s a little drop in fees in the PBM. So that was just a clarification. The other one is a real question. Thanks.
Brian Evanko: Good morning, Lance, it’s Brian. I’ll take the majority of your question. I think there’s a number of different pieces in there. As it relates to the specialty products, and the attachment, if you will, to the medical in the Cigna Healthcare book of business, as you know, has been a long-standing part of the company’s strategy because we see the value of clinical integration being much greater when we have multiple components of relationship with an employer. So that’s been for many years, part of the company strategy. And important to bifurcate that by subsegment, certainly in the down market, we call the Select segment under 500. Most of those employers tend to buy the entirety of our offerings at once. So we have very high user work penetration rates in the under 500 and then comparatively lower when you get to the national account space where there tends to be a little bit more a la carte purchasing of the different services.
So broadly speaking, I would say those patterns haven’t changed too much over the last few years. On your question on the selling season, in particular and some of the employer preferences the 2024 selling season is largely over with the exception of the Select segment. As I mentioned earlier, that’s an area for us that continues to grow at above market rates, and we’re really pleased with. As we look forward to the 2025 selling season, we do have some national account RFPs in-house for both some existing clients and new business prospects. And directionally, RFP volumes are up a bit from prior years. Now each of these large clients, as you can appreciate, tend to have unique needs. That said, there are a few areas that I would highlight for purposes of kind of themes.
So one would be some of our larger employers are seeking to consolidate vendors or point solutions with those who can supply more integrated offerings. So we tend to call that point solution fatigue. You may hear Eric or I talk about. Secondly, a team that’s been around mental health and substance abuse benefits as these programs have become more and more important to employers from the standpoint of managing productivity, absences and overall health of their employee base. And thirdly, many of the larger employers are interested in digitally enabled care navigation capabilities to further power things like site of care optimization and consumer empowerment at the time that, that care is delivered. So we continue to see interest in those areas as well as various provider network configurations that may optimize cost quality and/or incentive alignment between the provider and the finance here.
So our Cigna Healthcare offerings are really well positioned to address these themes and the demand from large employers will simultaneously continue to grow share in the under 500 select segment. I think David wants to add a few comments here.
David Cordani: Sure. Just to amplify and add one more. The amplification is that point solution fatigue, that plays through in terms of opportunities for our Evernorth team as well as our Cigna Healthcare team. So around that, think about the ability to leverage solutions to get more value, better service, better clinical outcomes, overall value and affordability. Secondly I just wanted to reinforce a critical point when we think about penetration or cross-selling, sometimes it’s thought through and you didn’t state this, but sometimes it to through under the notion of you’re just cross-selling products. The integration of the products to deliver more value to the clients and customers is mission-critical. So that shows up in better service quality, better clinical quality, improved affordability.
And I would highlight that our sustained differentiated MLR performance is, in many cases, aided by our proven ability to integrate certain services they come together with benefit the clients that enables us to generate a high level of cross-selling and a high level of penetration. Thanks, Lance
Lance Wilkes: Thanks.
Operator: Thank you. Our next question comes from Gary Taylor with TD Cowen. You may ask your question.
Gary Taylor: Hi. Good morning. David, I was hoping to ask an action-packed question like A.J. did, but I’m afraid I’m going to be to in the weeds for that. I just want to go back to stop-loss, because it looks like a pretty substantial benefit to the 4Q and headwind. When I just look at how much your fourth quarter MLR outperformed your typical seasonal pattern, particularly in a quarter where there was broad trend acceleration? And then I try to square how much ACA enrollment and margin improvement should drive a tailwind 24 MLRs should actually decline year-over-year, but you’re guiding it up. I mean it gets me to hundreds and hundreds of basis points of variance around stop-loss. So could you quantify how much that helped 4Q and how much of a headwind that is for 24? And then the second part would just be, walk us through again why you had such favorable performance in that line?
Brian Evanko: Good morning Gary, its Brian. So, as it relates to the stop-loss book, as you know, this is a really important part of the Cigna Health care portfolio, and we finished 2023 with $6 billion of premium in that product line which to the earlier question, Lance attaches itself to our self-funded offerings in many instances. This book will naturally have some variability to it. So I wouldn’t get overly fixated on 1 quarter’s performance. There tends to be a little bit more settlement activity that transpires in the fourth quarter. So we had a little bit more of the favorability work its way through in the quarter, whereas if you smooth out over the course of the year, you don’t have quite the same dynamic, which is one of the reasons why when you do the bridge from 23% to 24%, you shouldn’t run rate the fourth quarter experience from that standpoint.
So I mentioned earlier some of the moving pieces in the year-over-year MCR reconciliation, the 90 basis points increase from where we landed at the end of 2023 to the midpoint of the 24% guide. A key component of that 90 basis points is an up-tick that were anticipated in the stop-loss product which to the point earlier, is a function of our assumption that, that will normalize back to more traditional levels of profitability on the stop-loss products. So I think that’s broadly the way I would encourage you to think about the dynamics at play here with that product line.
Operator: Thank you. Our last question comes from Dave Windley with Jefferies. You may ask your question.
