Health insurance giant Centene (NYSE: CNC) has announced a new deal with Express Scripts, the pharmacy benefits management business of Cigna Corp.'s (NYSE: CI) Evernorth. Beginning in January 2024, Express Scripts will manage pharmacy benefits for approximately 20 million Centene members.
On Centene’s recent third-quarter earnings call, Drew Asher, executive vice president and chief financial officer, said the company previously had “about $40 billion plus or minus” of gross spend on pharmacy benefits, and that almost all of that was with CVS Caremark.
Also on the conference call, Centene CEO Sarah London said that “a major cornerstone of our value creation plan was achieved this month when we concluded our PBM RFP process ahead of schedule. As many of you know, we expected the RFP process to drive significant value for Centene, our members, and our state and federal partners. This new partnership will allow us to innovate and redesign the way our pharmacy benefits are administered as we deliver improved value to our customers and shareholders. As a result of this new contract, we anticipate delivering savings that exceed our previous expectations in 2024 and throughout the duration of the multiyear agreement.”
"We're proud to partner with Centene to deliver greater prescription drug affordability and access for their customers," said Amy Bricker, president of Express Scripts, in a statement. "This further demonstrates the value of our growth strategy, our long track record as a partner of choice to government-sponsored plans, and the opportunity we have to further extend our services to more and more Americans. We look forward to working with Centene to create innovative health services that help people live healthier lives and unlock meaningful savings for those we serve."
In addition to greater savings on prescription drugs, Centene customers will also have access to Express Scripts' extensive national network of retail pharmacies, the company said.
On its website, St. Louis-based Centene describes itself as offering coverage “to nearly 1 in 15 individuals across the nation, including Medicaid and Medicare members (including Medicare Prescription Drug Plans) as well as individuals and families served by the Health Insurance Marketplace, the TRICARE program, and individuals in correctional facilities.”
Also on the conference call, Centene announced third-quarter revenue of $35.9 billion, up 11 percent from the third quarter of 2021, and earnings per share of $1.30. The company saw successful Medicaid re-procurements in Mississippi, Nebraska, and Texas this quarter, although its Health Net subsidiary did not win re-procurements in Los Angeles, Sacramento, or Kern counties in California.
London said that the California RFP carries implications for earnings power in 2024. “Shortly after the August Medical award announcement and after closely reviewing the results, Centene, along with many other RFP participants filed protests with the state of California. Centene takes a matter of filing protests seriously. When we do so, it is not a matter of reflex but done only when we see serious errors in a decision-making process, resulting in negative impacts on our beneficiaries. Because of our historic discipline around these decisions, Centene has a proven track record of success in the protests we have undertaken. And given our strong view of the merits of our California protest, we intend to exhaust all available avenues of appeal.”
Centene also saw year-over-year deterioration of its Medicare Advantage Star Ratings. London said that was driven in part by the sunsetting of disaster relief provisions related to COVID. “We were additionally impacted by a decline in specific metrics related to ops and admin, a result of our own operational challenges during late 2020 and 2021,” she said.
London said the company has taken aggressive action to change its approach to the Stars program. It hired a chief quality officer and centralized oversight of the quality program and moved the entire organization under Jim Murray, the company’s chief transformation officer, “to directly connect quality to our value creation office and take advantage of Jim's long experience driving Medicare quality outcomes,” she said. “In addition, we launched a focused effort to standardize and streamline our quality processes, and we implemented real-time operational dashboards to track key performance metrics.”
London added that Centene has invested in new technology to enhance its access to clinical data around gaps in care, “and we committed to integrating the company's numerous quality platforms into a single unified workflow. Finally, we made significant investments to improve our Medicare members onboarding journey, including the redesign of our approach to those mission-critical survey questions that impact caps and other metrics.”