It is something we continue to look at, and we’ve been asked about over the course of the year, whether there’s more we — patient, say surgical as an example. And we do continue to take ground to improve the level of authorization data we get for some of those things as well. It’s just not sufficiently high to be credible for purposes of booking claims and estimating that at this time. But I think certainly in light of what we’ve experienced this year, we’re doing a lot of work to assess where there might be opportunities to improve analytic and forecasting models, whether we can leverage interoperability to get some greater visibility into provider utilization, and a number of other things that we will continue to prioritize to make sure that we can continue to improve all of our forecasting work, recognizing it’s inherently difficult given the nature of the program.
Operator: Our next question comes from the line of Whit Mayo with Leerink Partners.
Whit Mayo: Hey, can you hear me?
Susan Diamond: Yes, Hi Whit.
Whit Mayo: Yes sorry, it went blank for a second. Thanks for the time, Bruce. I’m just curious, looking at your partnerships with the various capitated medical groups that I think you said cover a third of your book know. Obviously we’re seeing a lot of challenges in that market. They’re feeling this utilization pain. What are the conversations like that you’re having there? Any desire that they have in trying to carve out some of the risks they’re taking on certain benefits. OTC, Flex cards. Is there any risk that you see that maybe you bring more of that back on your P&L at some point? That could be a headwind. And my other question is I’m just wondering, now that you’ve shut down the commercial business, is it possible that that’s having any impact on your network or rates that could impact your unit costs going forward? Thanks.
Bruce Broussard: Yes, the latter question I’ll answer the majority of our rates are predicated on Medicare rates and therefore it’s not that much of a negotiation. There might be a market here or there, that we negotiate rates on in some way, but I would say that Medicare rate really determines our payment mechanism there in the commercial book of business and we were very thoughtful on analyzing that and understanding that and it had no impact relative to our relationships with our providers. And our providers that are taking risk. We do see a number of them having challenges as a result of this. And to be honest with you, we’re going to probably see more. We have seen these challenges over the years. We don’t feel that’s a headwind for us because we’ll adjust the benefits and that will flow to them in a positive fashion.
And we are seeing a number of our better performing providers really taking v28 and we’re assisting them in what they can do to manage through v28 and taking our learnings through the center well and offering that. But I wouldn’t consider that to be a headwind for us going forward. But I do feel as we look forward that there will be some challenging times for the less sophisticated ones and that could be an opportunity for us as we think about center well.
Susan Diamond: And what I would say as well, and I had been saying this early in the year and more so now. I do think that as risk providers fully absorb the impact of v28 as well as this higher trend, I imagine that there will be increased discussions and pressure for the industry to appropriately reflect those trends in the benefits. As we said, we cut benefits more than anyone. So I think there may be some other payers having discussions with providers around some frustration over the level of benefit investment. Our primary care organization is having some of those very same conversations and I do think there’ll be a push from the provider community as well for discipline and balance given that we have further implementation yet to go with respect to v28. And so I think that will be a positive and hopefully bring the pricing discipline that we’re all looking for.
Bruce Broussard: And I think, just building on Susan’s comment there, what we do see is in some of the higher risk areas, like Florida for example, we see the value that is offered to be much greater to the member than it is in other areas. And therefore we feel that the adjustment for the particular benefits in those marketplace has much more room than say in the middle part of the country. And so we do see benefit adjustments needed in that marketplace and there is opportunity as we look at the value proposition from a member’s point of view.
Whit Mayo: Okay, thanks.
Operator: Our next question comes from the line of Gary Taylor with Cowen.
Gary Taylor: Hi, good morning. I wanted to go back to 2025 just for a moment, to make sure I’m understanding, it looks like the earnings pickup is implying insurance segment margins would improve 100 basis points, maybe a little bit more. And I know the street simplistically assumes you can always just cut benefits to hit your target margin, but the CMS, TBC change thresholds do handcuff you to some degree. So is the right way to think about 2025 is right now you’re assuming a negative rate update. I’m sure you’re probably assuming some positive cost trend growth in 2025. You’ll need to use a portion of your TBC threshold just to solve for that math. And then the 100 basis points implied margin improvement, earnings improvement is really what’s left to be recovered after that math.
Is that a good way to think about, with due respect for your capitated arrangements as well, is that a right way to think about kind of how much you’re delivering to shareholders in terms of margin EPS for 2025?
Susan Diamond: Yes, Gary, so you’re thinking about the math, right? And as I said earlier, we are anticipating that the rate notice in 2025 will look similar in terms of impact to 2024 as an initial assumption. If you remember, we cut about on average something close to $13 on average PMPM [ph] in that environment. And so that you can think of as your baseline in terms of just from the rate notice, then what we’ve committed to from the earnings appreciation. If all of that really came from individual MA, then you can do the math in terms of what the average benefit cut is, which would be incremental to that rate notice. Once you account for risk, Mace, you are really bumping up against that upper bound of what’s possible. And that’s why it’s also important to remember that range also contemplates some level of membership impact as a result of those cuts and that is a huge input as well that we’ll continue to refine once you have a better understanding.
