Josh Raskin: Hi. Thanks. Can you describe the competitive environment for Medicare Advantage? And I’m specifically thinking about how you’ve adjusted benefits in 2024 as part of a three-year process? I don’t want to put words in your mouth, but it sounds like you’re trying to adjust for the majority of the risk model changes in one fell swoop. And I’m curious how you think that plays out and positions you not just for ‘24, but then for ‘25 and ‘26 as well?
Andrew Witty: Hey, Josh, thank you so much. Before I ask Tim Noel to give you more detail on your question, I mean, listen, I think the way we’ve looked at the shift in the rate notice is, it is a three-year set of adjustments, and that’s why we’ve been very thoughtful about how we’ve planned, not just, frankly benefit design, but how we continue to accelerate our management of OpEx through the organization, how we continue to focus on eliminating unnecessary care and waste within the system through our various medical management capabilities. So it’s really a three-pronged set of agendas, which we’re going to be focused on over the next three years. And we’ve been very thoughtful about making sure that we are setting those tables in a way which we can be sustainable on through this cycle, so that we’re not taking sharp left turns or right turns halfway through the period.
With that kind of overall perspective, maybe I ask Tim to give you a little bit more deep dive on the competitive environment and how he is very specifically planning for this.
Tim Noel: Yes. Thanks, Josh, for the question. So I agree with Andrew’s comments and a couple of things to start with is, there’s been a number of changes to the Medicare Advantage and Part D programs, over the last 18-months to two years that are really phasing in over multiple years. And as we plan for 2024, we once again took a very rational view to the environment and also a long-term view with always our overarching goal being benefit stability for our members. As we stepped into — as we step into benefit planning in future years, we really feel like we have got a very thoughtful way to respond to all of those changes that will be encountered by the Medicare Advantage and Part D programs into 2025 and beyond. And certainly as we look forward, we don’t believe that we have any material pricing catch up to do in future periods and feel like we’ve got a very thoughtful response to the changes that will be encountered by the program into 2025 and 2026.
So we think the forward view of our competitive outlook is quite solid and quite strong as we think about growth over the long-term.
Andrew Witty: Thank you very much. Next question, please operator.
Operator: We’ll go next to A.J. Rice with UBS.
A.J. Rice: Hi, everybody. Just, I apologize, it’s sort of granular, but we’re getting asked a lot of questions about it. The two metrics, days claims payable down a couple of days year-to-year sequentially, some from third quarter. And then the prior period development being down $100 million, maybe accounts for some of the variance on MLR, I’m guessing. I don’t know if that’s what you were guiding for when you updated — last updated your outlook, but any comment on that as well?
Andrew Witty: Let me ask John to address that A.J., thank you.
John Rex: Yes. Good morning, A.J. So first on the days claims payable, so 2.8 day sequential decline, two days year-over-year. So primarily the single largest factor would be exactly what you pointed to, the change in prior period development. So that has a significant impact, if you look about the year ago where we were in prior period development and where we were even the 3Q. So the significant impact on that part, that’d be the main factor. In terms of other contributing factors that we saw, we did see in the fourth quarter some modest acceleration in provider claim submission timing. So just speed up in terms of those submissions, how quickly we’re receiving them from data service in terms of receipt. We also noted that as it related to the fourth quarter some higher claims intensity in the first part of the quarter, particularly October.
So that’s a factor that impacts the denominator, Medex per day in the day’s claims payable metric. And that was a piece that was in that also. As it relates to the $100 million of unfavorable medical development in the quarter, put that mostly, the items that we were talking about in my response to Justin’s question. So the respiratory-related activity that we saw in there, the modestly higher cost per case for inpatient, COVID admits, really kind of those were the main factors that we had in there in terms of contributing to the unfavorable development. Thank you.
Andrew Witty: It’s a good question, A.J. And as John just said, even back in the sort of second-half of Q3, we saw — we’ve seen subsequently that this RSV pickup and this phenomena of more services being delivered around the vaccination was already starting as we were rolling out through Q3, which is really what explains that. So in many ways, this kind of Q3 issue, kind of, Q3 issue of negative development and then this slight pressure at the end of the year, it’s kind of the same story, and which is why we don’t feel it has any real direct relevance in terms of thinking through 2024. Thanks for the question, though. I appreciate that. Next question, please operator.
Operator: We’ll go next to Lisa Gill with J.P. Morgan.
Lisa Gill: Thanks very much. Good morning. I want to go to Optum Health and just maybe talk about the medical cost trend there. John, just going specifically to the comments that you made, did you see something similar in Optum Health or we see anything different there? And then also, I just want to understand the claim lag there. We’ve heard from some others that there can be a pretty big claim lag when we think about the providers versus the payers?
