Brian Kane: Well, look, I appreciate the question. There’s still some questions out there. We got to see where the final rate notice obviously shakes out in terms of overall where margins can go and of course, get a real handle around where we think trend will be for 2025, be very disciplined about that. And so that will be an important calculus as we think about margin recovery. As we think about relative share, look, we believe that we have a compelling value proposition as an enterprise with all the various assets we can bring to bear for our Medicare members. We do think that our Stars coming back does on the margin, provide an advantage there. As I will reiterate again, the significant membership growth that we got in 2024 also gives us some tailwinds going into 2025.
But I will tell you, we are first and foremost on recovering margin and market share gains is a secondary consideration. Obviously, we want to grow, as I said in the prior question. We believe this is a compelling space. We believe it’s compelling for members. And we believe we have the assets to be able to manage those members and provide superior customer experience relative to the competition. As a consequence, I think we’re very well positioned to grow our business and over time take share.
Operator: The next question comes from Nathan Rich from Goldman Sachs. Nathan, please go ahead. Your line is open.
Nathan Rich: Great. Thank you. Good morning and thanks for the questions you know, it’s obviously been challenging this year for many companies to kind of get their hands around utilization. So I don’t know if you have any kind of early comments on how January played out maybe relative to the fourth quarter on both the outpatient trend, as well as supplemental benefits? And then as it relates to the 2024 MBR now, I think, being up 150 basis points. I guess at a high level, would you be able to break that increase down between utilization pressure, the impact that new members will have, the Stars headwind that you face? And is there a pressure also in there from the risk model? Or is that something that you price for, just as we think about the different components that contribute to the ’24 MBR? Thank you.
Tom Cowhey: Nate, why don’t I take the second part of your question first, and then I’ll turn it back over to Brian. So as you look at the year-over-year MBR increase, almost the entirety of it is related to the Medicare Advantage business. So there are some smaller items. So we have an improvement in our individual exchange business. And then there’s some other offsets there. But we also — as we think about our guidance, we never project prior year reserve development. And so that’s that — those two, for the most part, net. And so what you were left with is the vast majority of the increase is related to Medicare. And so about 65 basis points of that specifically relates to the $800 million Stars headwind that we have. And then the remainder is a combination of provisions for the new member mix, because we’re assuming a higher MBR there and that, that will be plus or minus breakeven and then the rest of it is really a provision for Medicare utilization pressure.
Brian Kane: And with respect to January trends, it’s really way too early to comment on that. There’s nothing that we’ve seen in our January data that gives us pause relative to the guidance that we’ve given today. Obviously, we’re going to monitor it very closely, as you can imagine. And as we get more information, we will absolutely share that with you. I would comment just on the risk model, just make a quick comment about the V28 visions, and we talked about this at our Investor Day, not every player is impacted the same way by this. And as we’ve said, we have a relatively low portion of duals and D-SNPs. It’s obviously something that we’re growing significantly this year, but we’re way over — way under-indexed to D-SNP relative to some of our competitors.
And I think that’s an important element because that’s a population that’s been impacted more by these risk model changes. We also — and we think this is ultimately an opportunity, but we also are underpenetrated when it comes to our full-risk VBC relationships. And those types of relationships also result in, I would say, bigger impact on V28 relative to a non-VBC type relationship. This is something, again, we want to expand over time, and it’s a critical strategic priority for us. But with respect to the risk model change, we’re actually benefited by the fact that we have a much lower penetration than some of our peers.
Tom Cowhey: Nate, I might just say one of the things that we spent a lot of time looking at specifically was inpatient. And there are some puts and takes there. But on the whole, that category remains consistent with our expectations. Now we did make a provision in both our bids and therefore — which is incorporated in our guidance for the changes that would happen in January from the two midnight rule. That’s fully encapsulated inside the guide, and it’s something that we’re obviously watching very closely because of — to make sure that our estimate is consistent with what we’re going to see come through the system.
Operator: The next question comes from Ann Hynes from Mizuho. Ann, your line is open, please go ahead.
Ann Hynes: Great thanks. Maybe I’ll shift away from MLR and focus on retail and just the new pricing model. I know you discussed in your comments, but can you just give us any more details on the initial feedback you’re receiving from payers. Have your discussions changed your view on the ability to change the model of the timing? And just to clarify, this is a mandatory program. So payers basically have to switch with you. And I guess, what’s the risk of payer relationships that they don’t want to? Thanks.
Karen Lynch: Yes, I would say that the comments and the feedback have generally been positive with the discussions. Initially, obviously, there’s a lot of details to go through and to work through. But we’re really pleased with sort of the initial reaction. And I’ll ask Prem to give you a little bit more detail here.
Prem Shah: Yes. Thanks for the question, Ann. And what I’d say is we launched model at Analyst Day and really excited about the progress we’ve made. We’ve been able to, over the course of the last week, delivered the initial terms and conditions to several of the pharmacy benefit managers are and we’re engaged in constructive discussions with all of them. What really excites me is we’re leading the way in providing greater transparency in drug pricing and passing through our leading cost of goods through to payers in our new model. So this is not about effectively raising prices. It’s about continuing to pass through our size and scale and the acquisition costs that we received back to payers and provide a transparent model that can benefit consumers and payers as we go forward.
Remember, one of the biggest challenges as you think about the health care ecosystem, the problems we face is the rising cost of brand drugs. And if you think about what the biggest pain point for our payers is, it’s the fact that these brand drugs and specialty drugs now constitute the majority of — that kind of get passed through to the payers and plan sponsors. It’s not the pharmacy reimbursement that’s driving that. So — and just some quick data points on that. If you think about the impact of GLP-1 2022 to the system, it was about $14 million, right? And that continues to grow. So from my perspective, we continue to be — have good discussions with payers. We’re driving forward on eliminating some of the key problems in the systems such as cross subsidization and creating an easier path and a much more transparent path to allow payers and consumers to receive their pharmacy pharmaceuticals in the U.S. and more to come as we make progress over the course of the next couple of quarters.
Karen Lynch: And Ann, I would just remind everyone that the industry has continually talked about the importance of driving cost transparency and affordability and simplicity. And with this model and our TrueCost model, we are really kind of leading at the forefront to support those items. And I think as Prem has been out in the market, there is a lot of support for this.
Operator: The next question comes from Josh Raskin from Nephron Research. Josh your line is open, please go ahead.
Josh Raskin: Thanks. Good morning here with Eric as well. I’m going to hopefully close the loop on the MA side. So can you speak to just your philosophy overall on MA bids? And do you consider the benefit of the enterprise from growth? Or does the HCB segment have to stand on its own when you talk about that 4% to 5% margin? And can you speak to the impact of growing your Healthspire assets and how that impacts your MA bid strategy? I’m specifically thinking about growth in Oak Street probably creates a short-term headwind but long-term enterprise value?
