Aetna Inc. (NYSE:AET) Q4 2014 Earnings Conference Call - Final Transcript

Feb 03, 2015 • 08:00 am ET

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Aetna Inc. (NYSE:AET) Q4 2014 Earnings Conference Call - Final Transcript

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Q & A
Operator
operator

Josh Raskin, Barclays.

Analyst
Josh Raskin

I guess question for some of the comments that Mark had made around the value-based reimbursement and you've seen some announcements from the government. I guess I am just curious from your perspective what do you think the government is trying to accomplish? And then how do you think that impacts Aetna's ability to sort of differentiate delivery systems relative to whether it's a fee-for-service world on the government side or even other payers that are going to start sort of accelerating that change?

Executive
Mark Bertolini

Thanks, Josh. I think probably the most important part of what the government is trying to do is to partner with private sector to get more value-based contracting underway. And so, I actually welcome the opportunity to work with the government, because as you know Medicare and Medicaid can comprise up to 60% of a hospital's revenue. And as a result, unless we have impact with the government as a partner, unless we can't move value-based contracting along and get the kind of behavior change that we need to get as a result from health systems themselves.

So we view this as positive. We are not quite sure on the details yet. We will probably likely to go faster and bigger, but I think we have more a longer road to hold before we get to a conclusion that we are completely comfortable with where they are headed. But so far, so good and we welcome the opportunity.

Analyst
Josh Raskin

And I guess just to follow up on a pragmatic view of Medicare Advantage, does this help expand networks to make MA more attractive in light of the fact that providers may be you know looking at some of those same types of arrangements, whether it's with the government or with the health plan?

Executive
Mark Bertolini

I think, actually Josh, the genesis of our whole Healthagen program was built off of early positive results by us partnering with health systems on Medicare Advantage by sharing with them the risk-adjusted revenue through capitation to those health systems. So I think the most important part of value-based insurance is changing the hospital, the health system model from one of revenue generation to one of margin generation, and you can only

Executive
Unidentified Speaker

do that by passing some of that risk and helping those health systems manage their risk. So I think for us 6, 7 years ago this ability to pass across risk adjusted revenue to health systems was a hah moment for us in building the Healthagen enterprise.

Operator
operator

Peter Costa, Wells Fargo.

Analyst
Peter Costa

Can you talk a little bit about the decision to not book receivable for the risk quarter payment relative to what you did in the third quarter where I think there was an offsetting receivable relative to the adjuster?

Executive
Shawn Guertin

Yes, Peter. That is correct. We did have that contemplated when we closed the third quarter. The decision to not do that, probably strained our numbers by about a dime this quarter, but obviously the performance of the core business