InnovAge Holding Corp. (NASDAQ:INNV) Q2 2023 Earnings Call Transcript

Jason Cassorla: Okay, got it. Thanks. Maybe just switching gears for a second here, I wanted to ask about rates. Maybe just a quick clarification, Barbara. Did you say that a low-double-digit Medicare Advantage rate to begin? And then just more so on the 2024 proposed MA rates, those have come in a bit lower than expected versus the past couple of years. I guess, can you just help give a barometer on what you would expect a realized rate would look like if the proposed rate comes in as finalized. Just any color around 2024 MA rates at this point? And then just, sorry, quickly another one here. Just on the state side, Patrick, given your comments, your prepared remarks on Medicaid rates, can you just give us an idea what the differential is between where your Medicaid rates are coming in right now versus where you believe it could go on a more appropriate basis? Thanks.

Barbara Gutierrez: Yes. So, I’ll get started, Jason. So, yes, just to clarify, so for calendar year 2023, so Medicare is on a calendar year, we did say low-double-digit increase. So, we have for calendar year 2023, we have a nice Medicare increase. So, that’s clarification there. And for calendar year 2024, you’re right, the preliminary rates for MA were pretty low and pretty disappointing. I think it was net of just over what percent, you know net of risk score and star ratings. Our first read on that is our rates are in the same zip code. So, disappointing for us as well, but that’s the first read on it. It’s very similar to the MA rates. Related to the state rates, I’ll start and then Patrick can weigh in. So, one of the things that we’re trying to emphasize for example is the cost.

There’s a delay in our state Medicaid rate setting in terms of the data that’s used to set the rates. And so, one of the things we’re trying to really work on and work with the states on is to really identify our current cost trends relative to historical data that they’re using to separate. So, I referenced California for calendar year 2023. They’re using data from 2019 and 2021 to set the 2023 rates. And so, one of the things we’re going to work on €“ try to work on with them is to really demonstrate the current cost trends, which were not reflective in 2019 and 2021. So that’s an example of the things we’re trying to work.

Patrick Blair: Yes. I’ll just reinforce, it’s probably a little too early because we’re studying our own data right now, but just to reinforce a couple of things that we’re going to be looking for in this next round of rate discussions. First, it’s really important that our distribution of our participants between those that are living in their own home versus those that are in some form of supportive housing, you know we want to make sure that mix is taken into account as we work on our rates together with our states. So, if we see more people that are in assisted living as an example, we want to be sure that that’s recognized and how the rates are set versus more of a general community rating assumption. And then second, I think what Barb was saying is just doing everything we can to ensure that we’re factoring in our most recent experience.