So at this point, we feel good about where we are from a rate perspective for 2023. The collaboration with our state partners remains strong. Shifts in acuity are now our standard input into the rate setting process. So we’ve been very much pleased with how that’s going with our state partners. And we will continue to work very strongly to make sure that individuals who are truly eligible for Medicaid continue to have access to coverage. And those who aren’t, that they are able to have coverage through one of our exchange or commercial based products. So thank you for the question.
Gail Boudreaux: Yeah. So Michael, as you heard from Felicia, there’s a lot there and there’s incredible work across our enterprise going into this. But overall, it’s aligned very closely with the expectations we set. So thank you for the question.
Operator: Next, we’ll go to the line of Josh Raskin from Nephron Research. Please go ahead.
Josh Raskin: Hi. Thanks. Good morning. The margin pressure in Carelon year-over-year I saw on the press release was attributed to higher medical cost trends and the non-recurrence of an out-of-period favorable adjustment last year. Could you just explain the higher medical cost and maybe what specific line items that is, if that’s behavioral or Rx or something?
Peter Haytaian: Yeah, thanks for the question, Josh. It’s Pete Haytaian here. First of all, in terms of Carelon’s overall — the Carelon Services overall performance from an operating perspective, we’re very pleased. Op gains saw a nice improvement year-over-year. And just to be clear, as it relates to our margin profile for the year, we’re very confident in achieving the 25 basis points to 50 basis points guidance that we gave in terms of margin improvement over the year. In terms of the variation there, a lot of this has to do with seasonality and as seasonality continues to evolve, we are sort of seeing differences there. This year, what’s different than previous years is we’re driving a lot more business through the government business.
So as I talked about in my earlier comments, in terms of the post-acute care initiative with our Medicare teams, as well as the durable medical equipment opportunity, these are examples of things where we’re driving a lot more business through the government business and that’s translating into earnings really being weighted to the back half of the year. So that’s where the difference is. In terms of the one-time issue, I think you’re probably referencing pharmacy. And in the case of pharmacy again to speak about how we’re performing there, we’re very pleased overall with how that’s going in terms of our margin performance. The 6% to 6.5% range in terms of margin performance for the year and guidance that we gave, we still feel very comfortable with that.
The one-time issue that occurred in terms of the year-over-year difference, Q2 ‘22 versus this year, was a one-time favorable positive impact that we experienced in pharmacy last year that we’re not seeing this year. But overall, pharmacy is performing very, very well. And we feel very comfortable with the 6% to 6.5% guidance for the year.
Gail Boudreaux: Next question, please. Thank you.
Operator: Next, we’ll go to the line of George Hill from Deutsche Bank. Please go ahead.
George Hill: Yeah. Good morning, guys. As it relates to Medicare Advantage, I’m wondering if we can kind of revisit an old topic, which is the changes to the risk model that CMS announced at the beginning of April. I guess as you guys have had more time to kind of digest the proposed risk model changes, can you talk a little bit about how it makes you guys think about ’24 just as some of your peers have kind of talked about the risk model kind of driving meaningful changes to kind of both benefit design and the bid process? We would love any update you could provide around that.
