Susan Diamond: Yes, Nathan, in terms of the first quarter and utilization seasonality, I would say, common, this is leap year. So all of things being equal, you would have had a higher trend in February because of leap year. But then there was other workday seasonality over the quarter such that we would say, in total, there’s really not a seasonality impact and relatively consistent with the prior year. And those are all things we would have anticipated in our initial plan and then the guidance we gave for the first quarter. . In terms of acuity, I would say aside from just again, the impact of the utilization management changes, where we always anticipated that effectively lower severity short-stay events would end up moving into the inpatient cost category versus the previous observation, which we reported ER.
So that, we certainly are seeing, as I said, we need some additional time to see how the unit cost ultimately develops. Some of the early indicators do suggest those are on average lower unit cost, which makes sense, but we need, again, because of the change disruption, just some more time to fully evaluate that. But aside from that, I would say, again, limited visibility because of some of the disruption to the more recent periods in terms of claims submissions. But with what we do have, I’d say nothing that has caused us any concern from an acuity standpoint. In terms of EPS seasonality, I would say the biggest driver of the differences you see every year and the disproportionate first half proportion is going to be just, in general, the lower proportionate contribution of the MA insurance business to the total than prior years.
And so you’re going to have PPD, which is disproportionately first half of the year, obviously impacting the first quarter, investment income and all those other things that are developing as they would in normal course, are just going to result in more earnings in the first half of the year just because MA proportionally is much lower, obviously, given the overall EPS and earnings expectation for the year. Admin certainly has some seasonality to it, but I would say nothing unusual as we think about the year. The only thing that we did see because of the lower enrollment this year, you do see some positive impact in commissions. That is partly what we’re seeing in the first quarter. And so that, based on the level of growth we would expect could develop a little bit differently.
Again, those are things we will plan for. But aside from that, I see nothing in particular to call out in terms of admin seasonality relative to typical.
Operator: Our next question will come from the line of Andrew Mok with Barclays.
Andrew Mok: You revised your individual MA membership growth target up 50,000 versus your initial expectations of growth for 100,000. Hoping you could elaborate on the drivers of that. Was that just conservatism on your end? Or did you see any unexpected changes in the distribution channel during the open enrollment period that resulted in higher membership.
Bruce Broussard: I would say the main difference is just how we performed in OEP. And I think that’s a combination of a few things. I think it’s some of our competitors having challenges in servicing their growth has been a benefit to us, and we’ve seen some recovery from that. And the second thing is the actual performance that we’ve had in the nonduals area and the ability for us to continue to grow in markets that we have — that are both competitive. The third thing I would say is that what we’ve seen even in times that we are less competitive in the marketplace that our brand stands out and the stability of our brand, both from our service point of view and from our quality point of view, overcomes a lot of the benefit differences that we have in the marketplace. And I think in the OEP side, we saw that.
Susan Diamond: Yes. And just to add to what Bruce said, the increase was largely attributable to non-D-SNP sales, retention in total was largely in line. We saw in the OEP higher volume than we had expected, both in agents and switchers from other MA. And so as we think about the rest of the year, some of that agent favorability drove the increase. The switcher is obviously less so once the OEP ends. . And then as we’ve said, the progression from current to the year-end is also impacted by the redeterminations that will continue throughout the rest of the year. There’s a little bit of less visibility into that because of the changed healthcare issue where we rely on them for dual eligible status verification. So we’ll continue to see how that develops. But that’s why you can see the full OEP, not fully run rating through the end of your estimate.
Operator: Our next question will come from the line of Lance Wilkes with Bernstein.
Lance Wilkes: Could you talk a little bit with the CEO transition as to Jim, what your impressions of the opportunities are? Are there any value creation opportunities that maybe are more structural or larger in scale, like outsourcing PBM or things like that? And have you guys made any sorts of operational changes in leadership or structure, again, contemplating both the market dynamics and the CEO transition?
James Rechtin: Thanks for the question. This is Jim. No, there are not any changes to the team. So let me hit that one real quick. Second, are there opportunities? We’re still in the process of evaluating opportunities. We certainly believe that there will be a continued need to drive efficiency. That’s both on the operating side as well as continuing to get stronger in how we do medical cost management over time. We’re still evaluating those opportunities. And the expectation is that by the end of the year, we would have more to say about where exactly the opportunities are and how we intend to go after them over time.
Operator: Our next question will come from the line of Lisa Gill with JPMorgan.
Lisa Gill: Susan, I want to go back to your comments around the PDP and the IRA for 2025. Can you talk about what you’ve seen for conversion over to MA in ’24? And then how are you thinking about stand-alone PDP in 2025? Will that become unprofitable on a stand-alone basis? And then just secondly, I just want to understand, when you talk about the update for the bid strategy, will it be a separate press release? Or are we waiting for Q2 to get that update?
