It starts out high and improved throughout the year. As I said, the MCRs in the last few quarters are 90 basis points better than the first and we’re still on target to hit 89% in our full-year guidance on Medicaid, which is at the top end of our long-term target range. Mark?
Mark Keim : Stephen, I’d just add to that. A year ago, our Medicaid MCR was 88.4% — this quarter, the legacy NCR was very close to that. So as Joe mentioned, coming out at 89.7% is a function of that new store which comes in hot — and recall, we said that this year, margins and earnings were a little bit back-end loaded consistent with our expectations. We came out really right where we expected. On the deal pipeline, I wouldn’t say it slowed down. It’s always fits and starts. What’s most important to Joe and I is we constantly have a pipeline of advanced-stage discussions. Sometimes they’re banker processes, but just as often, they’re one-off bespoke discussions, relationship development where we’re out selling the Molina story, which is very appealing to many not-for-profits.
So, we’ve got a good pipeline of both if we could waive our wand and time them exactly where we want it, you might have seen 1 this quarter. But look, we are always hopeful that the pipeline is developing. We like what we see. So, stay tuned on that.
Operator: The next question comes from Kevin Fischbeck with Bank of America.
Kevin Fischbeck : Can you talk a little bit about how redeterminations are going, both from the Medicaid and the exchange side of things? It sounds like you’re 90% done, but you still expect strong growth on the exchanges. I guess when should that tailwind kind of be fully into the numbers? And then on the Medicaid side, you talked about a 30% recapture rate. Just trying to see any details about the acuity of that population. Thanks.
Joe Zubretsky: I’ll start off and then I’ll kick it to Mark, but just to recap the entire redetermination process from start to finish. We estimate that at the high of the PHE, we have grown 1 million members due to the pause in the redetermination process. We are now projecting to lose 600,000 of those, 550,000 [indiscernible] to date, another 50,000 in the second quarter. we have been experiencing a 30% reconnect rate. And once the redetermination process stops, that reconnect rate will continue on into the late spring and perhaps even into the summer. We are seeing a significant increase in our special enrollment in marketplace. Now whether you’re coming in from Medicaid or not is a self-reporting feature. So, we don’t have exact statistics on how many are coming from other companies’ Medicaid roles.
But we’ve been averaging 12,000 to 15,000 SEP members in prior quarters, and that’s double — it’s up to 30,000 hours, which is obviously being heavily influenced by members coming off of Medicaid into marketplace. Mark, anything to add?
Mark Keim: Yes. If you look at our marketplace, we reported 346,000 members in the first quarter. We’ll go to 370,000 per our original guidance. That’s unchanged — and that’s on the continued strength of folks coming in from redeterminations, which is obviously an anomaly this year. Remember, Marketplace always had normal lapses through the year. So typically, marketplace volumes declined through the year. in this case, will increase through the year to our guidance of 370,000. I think you asked about the reconnect rate. We’re still seeing 30% on reconnects coming back in. And both the folks coming in to marketplace as well as the reconnects, we’re not seeing an anomaly on the MORs that would really change our outlook for the year. So pretty much right on track, Kevin, right where we want to be.
Operator: And the next question comes from A.J Rice with UBS.
A.J. Rice : Thanks. Hi, everybody. Maybe just to follow on that last train of thought, but a little different focus. Obviously, as we move into next year, you’ll have given the redeterminations will subside as we get through the summer. you’ll have the full impact of whatever change on the acuity risk pool there is, for legacy, people to stay on the Medicaid. When you sort of look at that at this early date, you got — you signaled that you got these decent rate increases proactively in 17 states this year. Do you need a second year, do you think, of above-average rate increases when that acuity is fully reflected in the run rate for all of next year? And what is the timing on knowing whether you’re getting adequate rate increases for next year?
Joe Zubretsky: Let me recap where we are in the rate environment, and then I’ll kick it to Mark for some more color. We couldn’t be more pleased with the way our state customers have responded to having rates be commensurate with normal cost trends and trends that have been influenced by the acuity shift. We received acuity-related adjustments in 19 states, representing 95% of our revenue — we had 5 retroactive rate adjustments, and we’re actually anticipating perhaps 4 more. So, the states have been very responsive and rates have been actual really sound. Look, we’re guiding to the top end of our MCR rate for the entire year at 89%, and that’s with two very unprecedented phenomenon going on in the book of business. One is the unprecedented shift in the national [indiscernible] due to the redetermination process, and the other is bringing on 800,000 new members that committed higher MCRs. With those 2 found on influencing how medical costs emerge, producing an MCR at the high end of our long-term range is something we’re very, very pleased with.
The answer is no. We expect rates next year to be actually sound, we expect them to be commensurate with the medical cost trends we’re experiencing, fee schedule increases, benefits carved in and out, that’s the normal process, and we have every reason to believe that rates will be actually sound going into next year. Mark, anything to add?
Mark Keim: You mentioned the rate increase is kind of proactive, there probably more reactive, right, as so many of the states react to observe trends as opposed to proactively put it in. I wish they did. But as Joe mentioned, we’re okay with the rate increases for this year. The rate increases we’ve seen look like they match the trend we’re expecting. In we saw the acuity impact on trend really level off. And I think that’s commensurate with the volume. So far, we’ve had 550,000 members leave only 50,000 were in this last quarter. So, it’s really leveled off. And we’ve seen a similar impact with the — redebt acuity impact here. So right now, I’d say rates look okay for the year. If they’re not, the good news is 50% of our revenue comes up for new rates every January 1 which means if there’s back-half pressure this year, it’s time really well for January 1 on the next rate cycle.
