Centene Corp. (NYSE: CNC) is set to pull back on Medicare Advantage (MA) in at least six states next year. As the Centers for Medicare & Medicaid Services (CMS) has made cuts to core rates over the last couple of years, insurers have put the brakes on MA expansion.
Specifically, Centene will exit Alabama, Massachusetts, New Hampshire, Rhode Island, New Mexico and Vermont in 2025, according to the investment banking company Stephens.
In total, that will affect around 37,000 MA members, Stephens reported. By market share, Vermont is the biggest exit for Centene, where it owned about 9% of the market.
As of 2023, Centene owned about 4% of the MA market overall, according to Kaiser Family Foundation.
“We’ve said before that we expect to shrink in 2025 as we think about what business is going to serve this well in the long run,” Centene CFO Andrew Asher said recently on the company’s second-quarter earnings call. “First we’ve got to chip away at the degree of run rate negative margin and push towards break even and then we can talk about what the margin opportunity is in Medicare.”
CMS finalized a 3.7%, or $16 billion, increase to payments for MA plans in 2025, but the update will likely end up being a cut to core rates – the second in a row.
Humana Inc. (NYSE: HUM) also said that it is pulling out of certain markets in 2025 to “prioritize profitability.” Its CEO, Jim Rechtin, also defended the MA program in the company’s second-quarter earnings call last week.
“Let me start by just reinforcing what I think is basic truth about the business,” Rechtin said on the company’s second-quarter earnings call. “It’s a good business, it’s good for our members and it’s good for our patients. This is well documented, in my opinion. CMS and the federal government, state government, and by extension even taxpayers are also our customers. I think we need to constantly remind ourselves of that. What we do creates value for those customers as well.”
For home health providers, this suggests that MA penetration may be experiencing a “leveling off.”
And while that could be short-lived, for now, it may offer a respite for home health providers. They have been scrambling to adjust to a world more dominated by MA plans, which tend to pay less for home health services than traditional Medicare.
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