Susan Diamond: Hey David, yes, I’ll take that. So on the utilization, as we thought about 2024, as we said, we have assumed that these higher costs will continue throughout 2024. So think of it as your new baseline. We have then applied what you consider normal course trend on top of that in our estimates. And so this late in the year, we obviously have visibility to CMS rate changes on unit cost and a variety of other specific inputs that are specifically accounted for. You have things like leap year. So all of those things are accounted for, and then embedded in what we consider that normalized trend is an assumption that we will see incremental utilization trend in 2024 on top of this higher baseline. I would say internally that has been the biggest source of debate.
And to what degree you will see continued utilization trend on an outlier level of utilization trend in 2023. But again, we wanted to be as prudent as possible in terms of the assumptions we made and the guidance we provided today. And so that has been included in our estimates and something we will continue to watch, but I would say it’s probably the biggest source of variability. I can’t sit here today and say there’s no way it can be higher, right? I’ll just jinx us if we do so. We’ll just continue to watch it. But I will say, given the level of utilization we’ve planned for, it would be, I think, surprising to see something of that magnitude on top of what we saw in 2023. But we’ll have to continue to watch it. As respect to our 2024 pricing, we did obviously have the knowledge about the v28 changes.
There’s certainly some estimation you have to make as part of that, because you’re having to predict sort of the progression of diagnosis codes into the future. But that was all baked into our 2024 pricing assumptions. And one of the reasons you saw us make actual benefit reductions in 2024, because with that adjustment, the reimbursement was going to be insufficient to cover the annual trend. And so that is one of the reasons you saw that. In terms of duals versus non duals, with the pressure we’ve seen this year, I would say the more recent pressure – earlier in the year, I would say less on the duals D-SNPs than non. But I would say some of this inpatient pressure we are seeing more broadly and maybe even a little bit more on the D-SNPs versus non- D-SNPs. But again, there’s a lot more run-out we’ll need to see, particularly on the non-inpatient side, to ultimately do some of those both plan level and member level cohorts to understand exactly how the plans and cohorts are being impacted.
David Windley: Thank you.
Operator: Our next question will come from the line of Scott Fidel with Stephens.
Scott Fidel: Hi, thanks. Actually, first part just might be helpful to tack on to Dave’s question. Can you actually share with us what you’ve — what you’re estimating, Medicare or MA, a sort of underlying medical cost trend was in 2023 and then what you’re predicting it to be for 2024? And then sort of the other sort of question I want to ask you is just back on the competition discussion. Hopefully you can be a little transparent here and how you see how extensive this competition is right now in the market. I think there’s a lot of focus on one large competitor who’s sort of taking all the market share in the industry and 2024, wondering sort of when you think about that intense competition, how much of it is that one large competitor? Or how much more broad based is this beyond just that one competitor? Thank you.
Bruce Broussard: Scott, I’ll take the competitor side and then let Susan take your other question. Obviously, this year it’s one large competitor. As you look at our sales and where we are compared to all the competitors, we’ve finished second behind the larger competitor, but a very distant second. And as I mentioned before, Scott, and you’ve seen it over the years, we do see this behavior that there’s one that sort of stands out and takes share for the inappropriate reasons around price. There are smaller players in the marketplace that maybe impact us in one market or another. But I wouldn’t get overly upset about those. We see those come and go. We just see one this year. And we suspect that for all the reasons that we’ve discussed this morning, that player will readjust in 2025.
Susan Diamond: And then, Scott, with respect to your trend question, so we have not historically shared absolutely trend percentages. The one thing I will comment on, just because we have provided a commentary throughout the year. We said earlier in the year, as we were watching the non-inpatient and the outpatient in particular, we mentioned that we were seeing high single-digit trends throughout the year. I will say once we got to the final full year numbers, we are slightly above in the double-digit range, unfortunately. So that continued, as we said, to be high and sequentially uptick. And so that I can be a little bit more specific in the commentary. I would say in the aggregate, though, what I would say is, I would think about it.
By looking at our MLR, you can assume that the majority of our MLR variance is obviously attributed to the higher trend. And so you saw obviously in the fourth quarter, 190 basis point missed in the quarter and the translation of that to the full year. And then as you saw in our guide this morning, you can see the 200 basis point year-over-year increase in MLR, which you can use to sort of get a rough estimate of how much the trend increased as that’s the main driver of that change.
Scott Fidel: Okay, thank you.
Operator: Our next question comes from the line of George Hill with Deutsche Bank.
George Hill: Yes, good morning. Can you guys hear me okay?
Bruce Broussard: We can.
George Hill: Okay. I guess, Bruce, I kind of want to step back and ask you a couple of questions around margin. And I guess I don’t know if you guys are able to comment to the margin profile that you guys expect to price to for 2025. And then I would also ask kind of from here going forward, what do you think is the weight margin profile for the MA plan business? And how is this impacted by whether or not your competitors, you think, want to subsidize the other parts of their business where they monetize beneficiaries either in care delivery or in pharmacy versus monetizing the members at the plan level? Just to kind of be very interested in kind of how you’re thinking about plan margin versus what I would call the total value of the beneficiaries?
Bruce Broussard: Yes, just on the margin side, I don’t want to get into a specific number, maybe a little more of philosophy, but we do want to restore margins where they are profitable and contributing to our business in the proper fashion. And I would say historically that you can pick the years that you’ve seen that. But we do continue to reemphasize the enterprise earnings as an organization. And we look at the value that we provide across the organization not only to our shareholders, but also to the individuals we serve. And we do find that the growth and the scalability and the integration of CenterWell offers us that opportunity to continue to expand not only our services that we find are much more effective in clinical outcomes and satisfaction, but also the ability to continue to drive better and better value for the enterprise overall.
How those get repriced into the actual product itself, we’ll look at, but we really make two separate decisions there. One decision around is this the right, both competitive and profit profile that we look into the plan? And then in addition, we also look at is this the right value that we provide on the CenterWell side and look at that. For our competitors and their pricing and getting subsidized, I’m not seeing probably – right now I’m not seeing a significant change there. I’m seeing much more, because there’s some in-sourcing that’s going on. But I would say that the material orientation is more around market share gain and membership growth, and really using the plan for that. So, we don’t see a disadvantage in the markets that we’re competing in, that are pricing as a result of something that’s happening as a result of subsidization.
