Humana Inc.
Q1 2020 Earnings Call Transcript

Published: 29 Apr 2020

[Operator:]

Ladies and gentlemen, thank you for standing by. Welcome to the Humana First Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' remarks, there will be a question-and-answer session . Please be advised that today's conference is being recorded . Thank you.

[Amy Smith:]

Thank you, and good morning. In a moment, Bruce Broussard, Humana's President and Chief Executive Officer and Brian Kane, Chief Financial Officer, will discuss our first quarter 2020 results and our updated financial outlook for 2020, as well as our pandemic relief efforts. Following these prepared remarks, we will open up the lines for a question-and-answer session with industry analysts. Our Chief Legal Officer, Joe Ventura, will also be joining Bruce and Brian for the Q&A session. We encourage the investing public and media to listen to both management's prepared remarks and the related Q&A with analysts. This call is being recorded for replay purposes. That replay will be available on the Investor Relations page of Humana's Web site, humana.com later today. Before we begin our discussion, I need to advise call participants of our cautionary statements. Certain of the matters discussed in this conference call are forward-looking and involve a number of risks and uncertainties. Actual results could differ materially. Investors are advised to read the detailed risk factors discussed in our latest Form 10-K, our other filings with the Securities and Exchange Commission and our first quarter 2020 earnings press release as they relate to forward-looking statements. And to note in particular that these forward-looking statements could be impacted by risks related to the spread of response to the COVID-19 pandemic, including a potential impacts to us of; one, actions taken by federal, state and local government to mitigate the spread of COVID-19 and in turn, relax those restrictions; two, actions taken by us to expand benefits for our members and provide relief for the healthcare provider community in connection with COVID-19; three, disruptions in our ability to operate our business effectively; and four, negative pressure in economic, employment and financial markets among other, all of which creates additional uncertainties and risks for our business. Our forward-looking statements therefore be considered in light of these additional uncertainties and risks, along with other risks discuss in our SEC filings. We undertake no obligation to publicly address or update any forward looking statements in future filings or communications regarding our business or results. Today's press release or historical financial news releases and our filings with the SEC are all also available on our Investor Relations site.

[Bruce Broussard:]

Thank you, Amy. And good morning and thank you for joining us. Let me say that in these unprecedented times, we are grateful for the tireless efforts of the many clinicians who have been front and center in treating patients with COVID-19. We are all better off for their compassionate and unwavering commitment to the health of others. At Humana, we've been working relentless to ease some of the burden on all stakeholders by being proactive and transparent in our engagement as we navigate the global coronavirus pandemic, including the recovery and reentry efforts as we emerge into a new normal that is yet to be defined. I'm thankful for and proud of the extraordinary efforts of our associates in addressing this generational challenge. This crisis has confirmed the strength of our integrated care delivery strategy with a deep focus on member and provider experiences, and a multifaceted personalized approach to care that combines digital, data analytics and telehealth across home and clinic settings to deliver quality care and improved clinical outcomes to those we serve. As an organization focused on serving vulnerable population, including over 8 million Medicare beneficiaries, we recognize that safety and particularly consumer confidence in the ability to once again safely begin using the healthcare system are top of mind with everyone and we play a pivotal role in ensuring both. Humana will continue to persist in addressing health and financial concerns for members, providers and employer groups, while also supporting our associates who are critical to our success. We are being proactive in our actions to support all these stakeholders, including our outreach to nearly 500,000 members most at risk for COVID-19 across our segments as identified by their proximity to COVID-19 hotspots and those with multiple chronic conditions. One of our key learnings from the crisis is that a significant number of beneficiaries have concerns about food and security, social isolation and access to needed prescription medicines. To help address these concerns around social determinants of health, we've taken several actions. Specifically, we've fulfilled orders for over 0.5 million meals, initiated efforts to address loneliness by connecting members with emotional support services, like the friendship line and the National Disaster hotline and have several pharmacy efforts underway, including early refills and increased mail order delivery.

[Brian Kane:]

Thank you, Bruce and good morning, everyone. I would also like to begin by acknowledging the unique and challenging times we are facing during which we are guided by the best interest of all the constituencies that we serve. As Bruce described and as I will discuss later in my remarks, we are committed to continuing to invest to minimize the impact of this global crisis on our members, provider partners, employer groups and the communities we serve, while advancing the long-term sustainability of our company and the healthcare system as a whole. I will first discuss our results for the quarter. Today, we reported adjusted EPS $5.40 ahead of our previous expectations and as Bruce indicated, reflects a strong start to the year for all of our businesses prior to the impact of COVID. Our January through mid-March fundamentals, including strategic operational and financial metrics, were solid in outperforming our previous expectations.

[Operator:]

Thank you, sir . Your first question will come from the line of Justin Lake from Wolfe Research. Sir, please proceed. Mr. Justin Lake, your line is now live.

[Amy Smith:]

Let's go to the next question and we can come back to Justin.

[Operator:]

Your next question comes from the line of Kevin Fischbeck from Bank of America. Sir, please proceed. Your line is now live.

[Kevin Fischbeck:]

So it does seem like COVID create some disruption in a lot of different ways. I guess specifically when I think about the ways that you submit your bids and how you think about both coding and debt that cap score and STARs and quality. How is that factoring into what you're thinking about 2021 bids? And I guess specifically around coding, how does that impact your view on the ramp up of the new membership you got last year and this year, if it's difficult to get the right counter data?

[Brian Kane:]

First with respect to stars, there won't a STARs impact for 2021 as that's already locked in. In fact as you think about bonus year 2022, CMS also made some adjustments such that the HEDIS and cap scores are going to be using the 2021 bonus year numbers. And so that reduces the volatility around bonus year around 2021. It does impact potentially bonus year 2023, because that's based on the service periods for 2020 and so we're working with CMS now, as well as thinking through plans as the system opens up, how do we ensure that the membership, the care they need and we close those gaps in care that drive STARs results. With respect to coding, you are correct that is one of the variables as we think about 2021 bids and the impact of COVID on those. It really will depend how quickly the system opens up, because as you alluded to the conditions that we document this year impact next year's payment. And so that's both the significant number of new members that we received last year and this year but also redocumenting conditions that are concurrent membership base has. So it's something we're very, very focused on. We obviously are working hard to make sure that we can engage with all the members we can. We're embracing telehealth, which now qualifies on video telehealth for risk adjustment purposes. So as you can imagine, it's top of mind for us.

[Operator:]

Thank you. And we can go ahead and go back to Mr. Justin Lake from Wolfe Research. Sir your line is now live. Please proceed.

[Justin Lake:]

So Brian, just wanted to specifically I know you talk about more information on the bids for 2021 as you go forward. But a couple things here. One, just on the HIP benefit take a lot of question around how much of that you might take to the bottom line given you usually let it flowed through historically. But I think we all expect probably less than $2 plus well into the bottom line next year. Curious if you have any updated color there? And then any early thoughts on how the potential COVID impact, depending on how long it lasts, could impact membership growth next year in terms of the ability of brokers to get in front of the seniors during this crisis?

[Brian Kane:]

Well, with respect to the HIPs and the bottom line and what we take to the bottom line and what we pass back to the members, that's just not something we're prepared to comment on. What you said about all going to the bottom line that won't happen. I think we've been very clear about that. And we always take a balanced approach to top and bottom line growth and I think you'll see us take a similar approach. That's really the way we've typically managed the HIPs coming in and out and you can expect a similar balance that we try to strike, as well as ensuring that we invest in our long-term sustainability and our integrated model, which is very, very important. With respect to COVID membership, it really will depend on how long this lasts. As I mentioned in my remarks, we have seen a decline in sales because the field brokers can't get in front of members but we've also seen a really strong telephonic sales channel and they've done quite well and continue to keep strong sales. And so we're monitoring that very closely and what the impact might be. I think, again, it depends whether this lockdown extends into the fall, or will people be comfortable out in about and engaging with brokers in person. But we're very focused on making sure that all of our brokers have the digital capabilities to be able to engage with our members telephonically and digitally if they can't do it in person. So we'll see where it goes, but I think it's really too early to comment on that for 2021.

[Bruce Broussard:]

And Justin, I’d just reemphasize. We are doing a lot of planning right now to be able to plan for more electronic and virtual sales than in the past, our market point sales and our partner are all walking side-by-side with us on this.

[Operator:]

Thank you. And your next question comes from the line of Mr. Ralph Giacobbe from Citi. Sir please proceed.

[Ralph Giacobbe:]

I guess just one quick one here. Are you hoping or advocating for bids getting pushed out and what's the likelihood of that in your mind? And then just the real question. Your business mix is obviously weighted to Medicare. So just wondering if you can give us a rough estimate of what percentage of your total consolidated medical costs you do consider elective and what has history suggested in terms of how much the further canceled procedures come back? Thanks.

[Bruce Broussard:]

I'll take the first question and I'll let Brian spend a little bit of time on the second. Obviously, we had more time with the bids. Just as we can see how this evolves and we really would embrace that with CMS. It does create some difficulties as a result of just the timing. If we delay the bids then there's a really work process that goes through that. Ultimately, doesn't have a lot of time separated between one to another and ends up being going right up to the September time frame. So, we would love to see it happen. We are not planning on it to happen. And we are planning to submit our bids the first weekend. Brian, do you want to talk a little bit about the utilization side?

[Brian Kane:]

The definition of elective procedures obviously has changed a bit. I think traditionally, we would use elective with the probably in the mid-teens percentage of our spend. So a relatively low dollar spend or low percentage spend, but it’s still a high dollar spend. I think in this crisis there have been a number of procedures that are necessary, but have been deferred and are not urgent. So I think what you'll see is a number of those procedures start to get rescheduled and so we wouldn't consider those elective, because they have to get done but we'll just go back into the queue effectively as to when they get performed. So things like cardio procedures as a perfect example, where they don't necessarily have to be done from an emergent perspective, emergency perspective, but they have to get done. So we wouldn't consider those elective. And so really the question then is just how much of this utilization bounces back and how quickly. And what we've said today is that our expectations is that there will likely be a bounce back in the coming weeks and months. It could run over a normal, I call it a modest premium to what would be normal utilization but then ultimately settle back down. And what will be interesting to watch is not only the confidence of members and patients coming back into the healthcare system, but also their comfort about using institutional settings versus more non-institutional settings. So embracing telehealth, the home for example. And so that's something we're monitoring very closely as well to understand the demand patterns of the utilization.

[Operator:]

Thank you. And your next question comes from the line of Steve Valiquette from Barclays. Sir please proceed.

[Steve Valiquette:]

So actually two questions, one just to follow up quickly on that last question. Just overall for a more senior population and more Medicare focused book of business. Would you expect elective procedure percent of total cost to be lower for senior population versus more diversified population overall? Or would you be sort of in line with overall averages?

[Brian Kane:]

I would say it should be lower, just given just the nature of the chronic conditions of the members that we serve over $0.65. So we would expect the percentage of truly electives to be less.

[Steve Valiquette:]

And the question I really want to ask that was really just around your comment that your JV and physician clinics kind of remained open during the crisis. And given that some other physician practices may have opposite close at least temporarily. I don’t know if you’re able to reconcile whether you've actually taken any share within the ambulatory setting and knowing that your volume might still be down versus your baselines if overall utilization is just down overall. Just any extra color around just how you're kind of performing relative to the overall physician practice environment right now might be sort of helpful? Thanks.

[Bruce Broussard:]

Our clinics are closed from the standpoint that they are all value-based payments and really for the most part of full risk model. They are also in that relationship are very oriented to much more holistic and much more proactive care models of those to fit in a care model, and the main reason we stay open is to ensure that we do keep that activity out there. Our members are attributed for lack of a better description to our clinics and therefore, they are more oriented to our sales side as they begin to come in and as they've selected both of their insurance plan and then in terms of selecting the particular clinic that they want to join. So the shear does not move as quick as a fee for service volume base, where there’s someone's not open that need to go down the street to go to another area that's just not the way this business model works. And the beauty of this our clinics remaining open is that they're very active and preventing downstream costs from happening and maturing and the progression of specific diseases, and they can get to much more proactive as is our outreach program. And so much more oriented to how do we care in this time where a lot of providers .

[Operator:]

Thank you. And your next question comes from the line of Mr. Josh Raskin from Nephron Research. Sir, please go ahead.

[Josh Raskin:]

I want to follow up on the line question around provider groups. And not necessarily the ones that are capitated that continue to receive their monthly payments, but more around other groups that you're using in your networks. And curious what sort of stresses you're seeing? I know you talked about accelerating payments. Were those sort of prepayment of fee per service like cost typically or was that just the capitated groups and maybe any comments on network disruption and how you're dealing with that?

[Bruce Broussard:]

Yes, a few things there. I think first we did accelerate payments for all providers. So first that we didn't differentiate between one provider or not and how we accelerated the payments. And the same thing on the removal of any kind of authorization and any administrative matters that were getting in the way of getting access to care. The second thing is and we did accelerate as part of our payments the area of bonus payments for performance and risk providers. So they naturally, since they are one of the only ones that would be getting those bonus payments, would benefit from that. But the primary acceleration came from just accelerating our payment faster than what we normally do. From a sort of a network stability, we haven't fully been able to assess that, because we're waiting for the system to open back up. We obviously have fulfilled a lot of the care gaps temporarily through telehealth and other means as to ensure that we're continuing to maintain the access to health in the area. I think over the coming months and maybe even possibly longer, we'll see what that disruption is and have a better impact on that. But in general, I will tell you, we do see some providers and some significant financial challenges and we assisted them in many different ways. But I suspect that we'll have longer term impact, both in how people operate their business, they will see more come to value based payment models and in addition maybe some of the older physicians deciding to retire.

[Operator:]

Thank you. And your next question comes from the line of Mr. Charles Rhyee from Cowen. Sir, please proceed.

[Charles Rhyee:]

Maybe staying on telehealth for a second here. A lot of the regulations were relaxed and trying to deal with this, obviously the pandemic and you mentioned how you're kind of accelerating your efforts here. If I'm not mistaken, a lot of these rules obviously were not necessarily intended right opening it up in Medicare fee for service, obviously, Medicare advantage was planned but other areas like, in home health allowing, first time visits in home health to be done virtually, et cetera. When this kind of passes, what parts of these kind of regulations do you think will stay? And are there ones that you think the federal government will kind of reinforce again? I know like some of the HIPAA rules on licensing and things like that have been sort of, are being not enforced right now. Maybe give a sense of how you think things will shape up in this area once we get past the worst of it? Thanks.

[Bruce Broussard:]

I can't give specifics on every one of them. But I would say in general what we're hoping and working with the governmental partners here on, I think a number of these will stay and be waived permanently, because I do believe what has come out of this circumstance is a renewed focus on how do we expand the access points for members, specifically members that don't have transportation, are limited in mobility. And I do believe that that will structurally change the way care is provided in the long run. In addition, what we've seen is as a result of the circumstances that physicians embracing telehealth has actually increased greatly for many that were not interested in at the outset. And I think both of those constraints waivers that have been allowed, allowed us to be much more flexible in our approach and in addition our physicians being more comfortable to using it. I think we'll continue to go forward and I think we'll see structural changes. I do think some of the protection areas, as you identified the HIPAA area, I think some areas to ensure for check between a visit, like an home health that requires you need to have a home visit, I think there will be a combination of those things that will continue and probably be a little more restrictive. But I think in general we're going to see more support for telehealth on both the regulation side and on the physician adaptability.

[Operator:]

Thank you. And your next question comes from the line of Mr. A.J. Rice from Credit Suisse. Please proceed.

[A.J. Rice:]

Maybe just a specific question and then a broader one on the commercial business. Can you give us any updated numbers as to how many people or what percentage are taking advantage of grace periods in terms of paying premiums and has that increased in a meaningful way? And then I appreciate the comments on the virtual care and telemedicine. Is there any other areas where you would say in these early days, did you think about how this crisis is impacting the healthcare system that would be worth highlighting as potential changes long-term that could persist after the crisis?

[Brian Kane:]

So on the commercial side with respect to grace period, we've seen some. I'd rather not give the specifics. We are still seeing payments for effectively April effectives and we're getting into May effectives. We have worked with certain of our customers to provide that grace period, but I'd rather not give a percentage. Obviously, it's an increase from what we typically see. But I think it's still early candidly in terms of where that might shake out, particularly as this wears on, you could see more of that. I'd say it's been reasonably modest but nonetheless, we've been working with a number of our customers in that regard.

[Bruce Broussard:]

And maybe I would say a few things there. I would say first, as you mentioned telehealth. I also would say home is continuing to be an area where we're seeing a lot more interest in the ability to provide more acute services. Those services are primary care services that would normally be in an office setting, even getting to a hospital in the home area even if that's in the home. And what we're seeing in our business is ability to offer alternative setting to to the telehealth side. For our organization I think that we really saw in this crisis is the ability to be much more personalized and direct in the cohorts that we were focused on to be able to provide a care model as much more much more at the condition, the needs of the individual and become focused on how do we deliver that in a way that has got a number of different services to it. So that's the analytic area. But in addition, the care plan and the other area and then in addition the providers that provide that. So we saw much deeper opportunity to be most helpful with our members in a much more proactive fashion. And then the last thing I would really emphasize the value based payment model. What we have seen and heard back from providers and from both side, the fee for service traditional model and then also the members, I mean the physicians that have relationships with us that are risk based. On the risk-based side they say, I’m thankful I was in a risk-based model where, A, I was getting a consistent cash flow being paid as a percentage of premiums. In addition, I was able to be much more proactive and going and reaching out to my patients. I had both had the motivation and the reason to do it that allowed me to not only have the cash flow, but in addition the proactive nature of it also benefits me longer term. And so we saw this awareness of what value based relation shifts are and the ability to leverage that. So in summary, I would say telehealth, home, analytics and value based payments.

[Operator:]

Thank you, sir. And your next question comes from the line of Mr. Scott Fidel from Stephens Inc. Sir, please proceed.

[Scott Fidel:]

I wanted to just ask a question just know it's hard to ask sort of non-COVID questions. But just interested in your assessment on the final 2021 rates. And then in just particular how comfortable you are at this point in terms of how CMS addressed ESRD for next year. I know that prior to the preliminary rates, you had expressed quite a bit of concern and then you sounded a bit more comfortable after the prelims came out. So just interested in where your sentiments are now and now post the final rates. Thanks.

[Brian Kane:]

So with respect to broad rates, obviously they're less than the last two years but still from a historical perspective largely in line. It does vary year-over-year. The rates are below our trend. And so that forces us to ensure that we're being effective at matching the health of our members and ensuring that their medical costs stay in line with the rates that we get. And so that's always a challenge. And so obviously, we’d like to see higher rates, because our unmanaged trends are meaningfully higher than the rates that were provided. But nonetheless, we understand year-to-year it's going to vary. With respect to ESRD, there was there was a modest increase from the preliminary to the final, more meaningful potentially if these are finalized and we're hopeful that they will be around the network adequacy rules and what would qualify for dialysis, and allowing us to use more innovative sites of care for dialysis. And so we've been a strong proponent of those. It's clearly something that we're very focused on for our 2021 pricing. I think the teams have worked very hard to do everything they can to ensure that we can provide a really good care for our members in a cost efficient way. And so we're working through that but it's something that we're eagerly anticipating the final network adequacy rules being finalized.

[Operator:]

Thank you, sir. And your next question comes from the line of Ms. Sarah James from Piper Sandler. Ma'am please go ahead. Your line is now live.

[Sarah James:]

I'm wondering if you guys can help us think about the sizing of the impact of extended length of stay at acute due to the CDC guidelines on requiring two negative tests before patients can be admitted into a SNF or an IRF. Are you seeing that pressure your hospital costs or extend length of stay?

[Brian Kane:]

Sarah, I don't know the answer to that. I have not heard that directly but we can come back to you and get you the answer.

[Bruce Broussard:]

And as Brian articulated in his opening comments. For us, we have seen not a significant number of COVID cases and so the impact would be small in any event.

[Sarah James:]

And then continuing on the telehealth theme, I know you guys have this innovative product on hand, partnership with doctor on demand, but that is sort of a telemedicine first type of product. How are you thinking about expanding that or bringing it to the Medicare book now that more seniors have been forced into adopting and installing and understanding telemedicine? So how much of a priority is that when you think about your 2021 product profile?

[Bruce Broussard:]

I would say telehealth has this has been an important attribute within our method plan even before this, so we're very oriented to incorporating telehealth in there. With that being said, I think it's less about getting it into the, I would say, into the benefit and more getting adaptability with our members. What we do find is that the adaptability of pure telehealth with a video is much less than what you’re seeing in the commercial space as a result of both access to technology and just the comfort of using technology. And so one of the areas that we're working hard on is to continue to find ways that we can increase the adoption of pure telehealth as opposed to just telephonic there. So I would say for us, it's not as much about the benefit itself, but as much as how can we get people to use it and utilize it. And we have a number of initiatives going on even before this but now even more intensely after the crisis.

[Operator:]

Thank you. And your next question comes from the line of Mr. Ricky Goldwasser from Morgan Stanley. Sir, please proceed.

[Ricky Goldwasser:]

So two questions here. One, when we think about the benefit from telehealth, I mean, you talked about the fact that primary care physicians are now feeling more comfortable and incorporating into the work flow, part of it is necessity, part of it is also the fact that now their reimbursement rates have been brought up in the same level. So as you think about kind of benefit design for the future, do you expect that component of primary care rates for televisit or some sort of virtual visit to be in line with the current level to really encouraged him to continue and use telehealth and advocate it to their patients? That's one. And then the second question is around testing. We've been hearing in last few days a lot about drug retailers and labs and some plans working together on both the molecular and serology testing. So any color, any plans of what you're doing in that area?

[Bruce Broussard:]

The first question around the telehealth visit and they're going to be equal to an in office. We have to study that. I think there's a number of motivations outside of just payment of using telehealth. And I think the awareness of the power of telehealth I think is increasing the physician area and their workflow, I think has been adapted for it. And I don't know if this payment has to be at that level or not. I think we'll find the right motivators for that, because everyone is keen on continuing to find a more distributed touch point for healthcare. We'll obviously keep you guys updated on that. I don't have a full analysis on that so that one, we'll talk about it sometime in the future. And then on the serology testing, we are very supportive of it. We feel that the serology testing is an important part of being able to reopen the economy and be able to know if you're safe and going into both the healthcare system but in the public side. I think we are very supportive of our lab partners and in addition our distributors are able to deliver those tests to be work with them. I would say one of the things that we continue to try and understand is that how impactful, they are because of their accuracy and in addition the percentage of the population that is truly immune to this. And I think we are eagerly watching a few studies out there, and Providence out on the West Coast is doing a study that with their providers and being able to understand how the test works there. I know there's a large study in the New York City area that is also going about doing that. So we will be very supportive and it's the right thing to do but we are also observing is it effective.

[Operator:]

Thank you. And your next question will come from the line of Mr. George Hill from Deutsche Bank. Sir please proceed. Your line is now live.

[George Hill:]

I guess my first question would be, could you talk about what you saw in the Q1 reselection season as it relates to Medicare Advantage individual market? I thought that you guys raised the outlets there. And I guess was that related to more people opting into Humana plans during the reselection season? And then just my tack on would be, you alluded to trying to step up electronic selection in the MA open enrollment period process. Any comments around the plan to expect to make there in the back half of the year would be helpful? Thank you.

[Brian Kane:]

Well, yes. As we mentioned, the open enrollment period, which is where you're referring to the January to March period. We did see higher sales and better term, so lower terminations than we had expected. I think the broker teams have done a great job in really conveying to potential members our value prop. And so they really exceeded our expectations and our members are stuck with us and so that's been positive relative to our expectations. And that's why we were able to raise guidance today in terms of Medicare growth. As COVID really started the social distancing and forced some of our brokers who go into people's homes, they weren't able to do that. We've had to encourage them and work with them to adopt digital channels, telephonic, digital, any way we can get to potential members, not in person. And so for some of our distribution channel, that's a very different distribution mechanism than they typically do. And so we've been working closely with them. And we'll continue to do so as the year progresses, particularly if this continues, as Kevin asked earlier, if this continues into the fall, we’re prepared to have a strong annual enrollment period for 2021. We also think that members are becoming more receptive to digital channels and telephonic sales. We have seen a significant increase and migration from in-person to more telephonic and digital channels. And so we think that is a good thing and so we expect that to continue. And COVID could potentially accelerate that trend.

[Operator:]

Thank you. And your next question will come from…

[Amy Smith:]

Bruce, were you able to rejoin. I think Bruce accidentally got disconnected and sort of make sure he got back on.

[Operator:]

Mr. Bruce Broussard, is not back online. Give me one second please. Ms. Smith, Mr. Mr. Bruce Broussard is back online. Your next question will come from the miners, Mr. Gary Taylor from JP Morgan. Sir, please proceed. Your line is now live.

[Gary Taylor:]

Most of my questions have been answered. Just wanted to maybe have you help us think about a little further out '21 and '22. I know, Brian, you said $18.50 would be the jumping off point from 2020, which I think sort of alludes to the possibility might over earn this year if utilization remains low. That raises the possibility might under or next year if cost trend is higher and then maybe everything's back to normal in 2022. Is that a rough framework make sense? And how does the one year MA rebate play into that? Because we have a little bit of concern that if utilization remains really low this year, you could end up paying a rebate, but you don't get that back if cost trends as higher, because the recovery, you know rolls into 2021. So as we kind of think about this normalized earnings. Does that make sense or any additional color you’d provide?

[Brian Kane:]

Well, I guess I would say that 2020 is going to be a unique year for sure. And I think we've said very clearly that we anticipate staying within our guidance range of $18.25 to $18.75. And there are a number of variables that can impact that and so we're going to manage that. And it's important to ensure our various constituents are taken care of. And so we plan to provide support there. I think as you roll forward to 2021, assuming things stabilize and get back to normal, I think it's possible to anchor off the $18.50 more of, think about 2020 is a more traditional year and then price off that. To the extent there are MA rebates or other challenges, I think we would effectively reset expectations back at the $18.50 baseline for 2020. So it's how we're thinking about our pricing and that's why we say it's a jumping off point for 2021. So really only to the extent that there are premium issues with respect to COVID and utilization differences than what we would have expected for 2021, I think that's where it might impact the 2021 earnings. But as we've said, I think we're trying to be very prudent about how we think about the potential COVID impacts for 2021 and incorporate those into our pricing. So I think we're able to create a stable baseline here, notwithstanding the potential meaningful volatility we'll see in 2020.

[Operator:]

Thank you, sir. And your next question will come from the line of Mr. Dave Windley from Jeffries. Sir your line is now live. Please proceed.

[Dave Windley:]

I'm wondering, is it possible in the first maybe a couple of months before you started to see a little bit of COVID impact to tell whether the repositioning in your PDP business actually achieved what you wanted it to achieve. And then how that might influence further strategy for 21 bids, and do you think that you can return that to membership growth going forward?

[Bruce Broussard:]

I'll say a few things about PDP. I think as we have indicated on our fourth quarter call, we did see meaningful growth in the new plan we set up the low price point and that actually did quite well. And the determinations really came from the plan and we had to increase in the premiums, significant increasing the premiums there and I would say that we had to raise our estimates as a result of that. As we’ve entered the first quarter, we've continued to see the same aspect of that, and we love to be in the lower premium plan that compete and we enter the bid season that is something we're constantly analyzing and seeing how we could be in the lower price premium plan. I would say in general what we are seeing in PDP and you saw an industry decrease in membership overall is that we're starting to see that there's more movement into Medicare Advantage and away from just the PDP side. And we see that as a very positive, I always say it industry wide but more importantly as we look at our numbers we've seen some great conversions coming from PDP to MA PDP. And so I would say that as we think about Part D, we look at that as a opportunity to grow. It's very competitive and going to both the share and we anticipate going into next year. But we see the real value is continuing to pay what more and more of our members under the Medicare Advantage.

[Operator:]

Thank you sir. And your next question will come from the line of Mr. Steve Willoughby from Cleveland Research. Sir, please proceed.

[Steve Willoughby:]

Just wondering if you could provide a little bit more color on something Brian was mentioning. As it relate to the drop off you're potentially going to see here in utilization, you've made some comments about providing additional support for members providers, and I believe the community. Just what does that actually mean going forward? And how do you decide sort of who's getting what and how and when? Just providing a little bit more color on how you're kind of balancing that offset there?

[Bruce Broussard:]

Yes, we believe first just to put context around it and continuing to support the broad constituents and those providers to our members to like communities -- our community support. That is just an area that I would like to say and that's sort of the broad area. As we think about what the most our plan and our initial stages, we found that the access to food was very, very important. Social isolation and behavioral health, prevention is more import, ensuring people had access to pharmacy and the continuation of ability to receive care we look at the same thing as being the social distancing will continue. We believe that the mobility of our most vulnerable patients will continue to be challenged as a result of that. And we believe that all of those things depression at the same time the ability to fill their script and support those in the communities and the provider side and the added ability that number of income and we feel that there are a number of charitable organizations that can help us and so support. As Brian's articulated and I articulated, it's important for us to also stage as best that those investments be staged as we see the evolution of the healthcare system come back and that we can reinvest any kind of depression and the utilization and to the opportunity to put it into those that are being supportive, because we're trying some of the impact of the utilization being depressed. We'll continue to invest in areas around if we see benefits needing to change and encouraging to ensure that there are not financial barriers that would be another area that we'll also focus on.

[Amy Smith:]

Bruce, you're breaking up a little bit there. So I just want to make sure, Steve, that you have any follow-ups, anything you might have missed.

[Steve Willoughby:]

No, I don't think so. I think he provided color. Thank you.

[Bruce Broussard:]

And Amy, I apologize for that. I'm on a landline. So I don’t know why I’m breaking out.

[Operator:]

And your next question will come from the line of Whit Mayo from UBS. Please proceed, your line is now live.

[Whit Mayo:]

I just have one question. With some of the MedSup and Medigap plans being phased out. Is that having any impact on seniors’ buying decisions around those plans versus MA coverage? Do you think that the potential economic challenges that will face may influence any changes that favors MA over Medigap? Just kind of curious your perspective on that dynamic. Thanks.

[Brian Kane:]

I would say the phase out of the effectively the full coverage plan on our MedSup, I would say it's more on the margin. There might be some marginal transfer to MA. There still are very rich plans on the MedSup side that allow people, if they want MedSup can get it. They're not full coverage, but very close with the deductible. And so I think there's probably some benefit, but it's on the margin. I think the question is as you go into economic uncertainty, I mean I think depending on the member, but in many, many cases, MA saves members money. And so from that perspective, I think on the margin we could see incremental growth, because of any economic downturn on the MA side. But again, I think it's on the margin that would be our assessment there.

[Operator:]

Thank you. And presenters, there are no further questions on the queue. I will be turning the call back to Mr. Broussard for the closing remarks.

[Bruce Broussard:]

teammates, employees and associates in the transition and really our reach to our members. And can't send enough to federal and local that have found ways to help the system how making the response much more quicker in addition the ability for us to have much more impact . And lastly, we always appreciate shareholders year, especially the . So with that, I hope everyone and stay safe. Thank you.

[Operator:]

Thank you everyone for participating. This concludes today's conference. You may now disconnect. You have a lovely day and stay safe.