Molina Healthcare, Inc. (NYSE:MOH) Q4 2022 Earnings Call Transcript

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Mark Keim: Great. So a bunch there, Justin. Let me start with Medicaid. We ended 2022 with about 4.7 million members. As Joe mentioned earlier, I expect to conclude 2023 with about the same. We’ll go in there. The moving pieces is redetermination probably around 300,000 or more coming off, but replaced by a number of good guys. For example, the Iowa acquisition about 200,000 members, the My Choice acquisition about 40,000 members; California fee-for-service coming in a bunch of offsets there. So pretty much flat over the year from a membership perspective. On the DCP, you’re talking about and the payments related to medical expenses. In general, when I look at DCP and I look at our reserving, our purchase is the same. It’s the same actuarial on leadership, same approach to development and our triangles, the same external audit review.

So I feel very confident about our process. What has changed is, in the fourth quarter, we added AgeWell, which brought in the LTSS membership, that membership adjudicates a whole lot faster and pays a whole lot faster. We also had the extra payment cycle. So when I look at the fourth quarter, we actually paid more than what I recorded in medical expense. So that’s driving a bunch of that DCP decline from 50 to 47. Hope that helps.

Justin Lake: Right. Thanks for the color.

Operator: The next question comes from Calvin Sternick with JPMorgan. Please go ahead.

Calvin Sternick: Hey. Good morning. Just a quick follow-up. It sounded like you said if the marketplace was stable, you could look to grow it again next year. And that just sounds a little different than some of your previous comments where you kind of let the membership float up and down year-to-year. I just want to understand that in the context of your overall strategy. Is the growth outlook for Marketplace just based on your evaluation in the market this year, and that’s something that you look to reevaluate next year or are you saying that you kind of want to grow Marketplace going forward.

Joe Zubretsky: Now in that line of business, we are going to look at the stability of the risk pool, chasing and moving target with respect to the government rules around who’s eligible, how many people are eligible when they become eligible has thrown in the past couple of years, that risk pool into what we consider to be a period of instability. If that should stabilize and now we’re convinced that the pricing that’s put into the market by us and the competitors is rational. I’ve always said, we could put this business back into the growth category, allocate more capital to it and grow it, but grow it in a very responsible and measured way. So I’m not sure, we’re seeing anything new, but right now, keep it small silver and stable until we conclude that we should allocate more capital to it and grow it in a very measured and responsible way. And that’s been our strategy all along.

Calvin Sternick: Got it. And I know you’re not forecasting growth from Marketplace from redeterminations. But just curious if you have a sense for what the recapture rate was pre-COVID. So when someone got redetermined in Medicaid, how long did they typically go uninsured before they got coverage elsewhere? And I guess how often are you able to recapture some of those members in a Molina Marketplace product?

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