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Centene vice chairman talks CMS changes, the Alzheimer’s drug, and COVID-19 hospitalizations

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Sarah London, Vice Chairman of Centene, joins Yahoo Finance Live to talk about Centene's health care initiatives, CMS changes, and how they are handling COVID-19 hospitalizations.

Video transcript

[MUSIC PLAYING]

- The JP Morgan Health Care Conference is ongoing. And one of the headlines today that's sort of overshadowing some of the goings on there is a new ruling out for the Centers for Medicare and Medicaid Services having to do with Biogen's Alzheimer's treatment, basically offering a very narrow coverage of that drug for folks who are in clinical trials. One of the companies that may be affected by this is Centene.

And the Vice Chairman Sarah London is here to talk with us about that and about much more that's going on at the company. Our Angelique Khemlani, who covers health care, is with us as well. Sarah, thanks so much for being here. I do want to ask you about that ruling first, whether you were surprised by it, and what the implications are for Centene.

SARAH LONDON: Yeah, it's one that we've been waiting for guidance on for a little bit. And in the meantime, have been tracking utilization in our population. We haven't actually seen very much to date. But I would say in general, you know, we are big believers in taking an evidence-based and a data-driven approach to these kinds of decisions.

And that certainly seems like it's in line with what CMS is proposing. So obviously, early in the comment period, but I think there's a lot of merit in taking a more methodical approach and really making sure that we understand the-- the link between the drug and outcomes. But we're obviously going to do everything we can to you know, do the right thing for our members, regardless of where this all lands.

ANGELIQUE KHEMLANI: Sarah, I wonder about the implications for other companies, as well. We know Eli Lilly and Roche are also looking at the same category of drugs. Do you see the CMS steps as sort of a cautionary tale and something that maybe the insurance industry, largely speaking, can also sort of learn from when it comes to other drugs broadly?

SARAH LONDON: Yeah, I mean, I think it's interesting. Over the last couple of years, I think the dialogue around you know, less of a focus on volume and more of a focus on efficacy and outcomes in how we invest in drugs is actually an important paradigm shift and one that has started to happen. I think will continue to happen.

It's something obviously, we're very supportive of. And some of these new technologies that are getting better at linking a member with the right drugs, so that we know that when we're prescribing that it's actually going to have the impact that we want. That's going to have a material effect, not only in outcomes, but in overall cost. So I think directionally, again, there's a lot to be said for making sure that we are gathering the right data and being really thoughtful about putting drugs into a therapeutic regimen, or taking a member on a patient journey that's ultimately going to have the right outcome for them.

ANGELIQUE KHEMLANI: I want to pivot now to the broader business. Of course, Medicare Advantage is really hot, a lot of discussion about really, the competition that's been building up for the past couple of years. But it seems like it's really impacting this year. How do you see that affecting Centene?

I know that you're also opening up a couple more-- a couple hundred more counties. So how do you see all of that impacting? And do you expect to have to maybe, reassess enrollment outlook for the year?

SARAH LONDON: Yeah, so we did expand this year as part of open enrollment. We saw really strong performance in the Medicare Advantage product. And that-- that's really a byproduct of a lot of work that we've done over a number of years. And it's bringing together the-- the product expertise of well care with the geographic expansion of provider relationships that Centene had.

This is sort of the second year that we've gone to market with that combined platform, made a lot of investments in brand recognition. And then you know, we've been very focused on some of the different channels for distribution over a number of years, and really, figuring out the right strategy to get out in front of members, bring the right benefits forward, and sort optimize the overall product.

So it's definitely gotten more competitive. But I think our team has been focused on that for the last couple of years. And I think we're seeing the positive impact in that, given the performance in this most recent enrollment period.

- And Sarah, just to put a fine point on this. I mean, I think it's in focus as well, because one of your competitors, Humana, recently came out with a forecast that sent the stock down sharply, in part because of a cut forecast for Medicare Advantage growth. So it sounds like, if I can read between the lines from what you're saying, that we are not necessarily going to see a similar move from Centene. That you guys are holding on and even expanding market share there.

SARAH LONDON: Yeah, we are feeling good about the guidance we provided back in December and again, the performance through the enrollment period. And again, a lot of that I think, is just the focus that we put on optimizing different channels and really executing, which is a major focus for the company in 2022.

- And Sarah, I wanted to ask you about coronavirus, which I'm kind of amazed we haven't talked about more as of yet. I believe you guys said at the conference that Omicron is running on average, about 60% of the inpatient utilization trend compared with Delta at the same point of its surge. What are the implications then for your patients, for the coverage? And how do you see the arc of this particular surge going over the next several months?

SARAH LONDON: Yeah, it's a good question. And we're still a little bit early. Although again, a lot of that depends on how quickly things peak and whether they come back down just as quickly as we've seen in some of the early geographies, like South Africa and even New York.

So we are seeing-- you know, we track that on a daily basis. We run it over a seven-day average. We are seeing case rates similar to what's being reported in public data higher than Delta, which itself, was even higher than the peak of original COVID.

We are seeing a lag in the hospitalizations, only about 60% as you noted. But that's also a lagging indicator. So we're watching that closely to see if that changes.

The other thing that we are seeing is lower severity in the inpatient case rate, which is just a good message overall. But these next few weeks are going to be really important to understand what the impact is going to be on non-COVID utilization and any pent-up demand. And our focus is really-- we did a nice job managing our members through what was a fairly impactful Delta peak for us back in August and September.

So we applied the lessons learned from that to manage through this peak. And we'll continue to do that going forward, and really, just trying to make sure we're supportive of our members as we watch how the data and how the case rates are evolving.

ANGELIQUE KHEMLANI: Sarah, a final question about the coronavirus pandemic and the impact there. I know that CMS has really expanded some things that need to be covered throughout the pandemic. How do you see this playing long term? Do you see some of these turning into more permanent coverage, say for meals, for example, or you know, the recent changes for hearing aids, et cetera? How do you see CMS looking at some of the things that have come up from the pandemic?

SARAH LONDON: Yeah, I think whether it was driven by pandemic or just some of the broader political and policy discussions that have been going along with Build Back Better, we think there are some really positive broad policy, not Centene-specific policy, changes that are on the table. We're very supportive of those.

You know, even if you just think about you know, a more sort of macro item in terms of the enhanced safety TCs and the subsidies really providing the right access and affordability of coverage. And then some of those benefits that we know have a really positive impact, either in terms of maintenance or prevention, and impact long-term outcomes and lower costs for members-- those are all things that are very much in line with our managed care mentality.

- Sarah, thanks for being here. Appreciate it. Sarah London is the vise chairman at Centene.

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