GLP-1 medication costs are one factor contributing to tighter margins in the Medicaid space, Centene executives said.
At an investor presentation on Sept. 4, CFO Drew Asher said Medicaid redeterminations are continuing to put pressure on the company's Medicaid business. The company lowered its Medicaid membership expectation for the year from 13.6 million to 13 million.
The lower membership guidance led to the largest one-day drop in Centene's share price in a year, according to Bloomberg.
The pressure is largely driven by redeterminations, Mr. Asher said, but individual changes by states also play a role.
"Either there's a new program, or the state has done something wonky with the pharmacy benefits — whether they've carved out to a single PBM or added GLP-1s — we have to get paid for that," Mr. Asher said.
According to data from consulting firm Leverage and the Robert Wood Johnson Foundation, 13 states cover GLP-1 drugs for weight loss indications through Medicaid.
Utilization is also rising in behavioral health, Mr. Asher said, a trend the company has observed over the past two years.
As of Aug. 23, more than 25 million Medicaid enrollees have been disenrolled through the redeterminations process, according to KFF. Centene and other insurers have said beneficiaries remaining in Medicaid tend to have more health needs, driving up costs in the program.
The trend should be short-lived, according to an analysis from Fitch, as states adjust their rates to account for higher acuity.