agilon health, inc. (NYSE:AGL) Q4 2022 Earnings Call Transcript

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So we’re bullish on direct contracting and now with 2 years of visibility and experience and better transparency and almost a full runout on 2022. You can see in our results that there was some upside within that, which is encouraging for us as we go forward, although we are being cautious. Yes , anything to add?

Tim Bensley: Yes. Before we move on to the advanced rate notice question, I’d just say that obviously, we’re pretty pleased with the overall performance so far after contracting now transition to ACO reach. I mean the name of the game is drive costs out, be cost benchmark and have high quality, and we’re basically doing both those or continue to beat the cost benchmarks and we’ve got 100% quality score, and that really helped drive that a little bit higher performance than we expect than we had previously expected for DC in 2022. We did mention that for 2023, we’re being — trying to be very prudent. We’ve got both the combination of the step down and the global — or the step-up, I guess, in the global discount and just trying to be a little bit prudent we’re saying that we would expect it ACO reach in 2023 will probably contribute a little bit less than that in the $5 million to $10 million range.

Steve Sell: And then, Justin, on your second question about the 24% rate notice and the recalibration of the risk adjustment model within the context of that We, like everyone has — we’ve done our preliminary work. We’ve gone through this on a market-by-market basis, look at the HCCs and kind of the proposed changes. And I think the headline for you is we feel like it’s very manageable for us. The composite is probably in line with that 3% impact that’s been called out nationally. And if you think about what we do in the markets we go to and the populations we serve, that really makes sense. We are going to markets that are 100% fee-for-service. They’re really early in their life cycle. 44% of our membership is in year 1 or year 2 markets.

We are working on taking out variability on cost and quality, but also on risk adjustment. And so when we look at some of our prevalence numbers relative to — or when we look at regional prevalence numbers relative to our capture, we can be below those. So I think there’s opportunity and therefore, the impact of this is not nearly as great as you might find it a clinic model that’s very concentrated with more complex patients such as duals. I think we are — when I talked about how confident I am in ’24 and beyond as well as ’23, it’s really about the levers that we’re exercising today, and we continue to exercise that are going to give us a nice lift in ’24. We’re getting members on the platform earlier. Think about what I said, we are going to double our membership in MA from what we just reported to you today for the close of ’22 and what we’re seeing out in ’24, which is just significant, 2 classes of at least 130,000 with the opportunity for ’24 to be larger than that.

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