Molina Healthcare, Inc. (NYSE:MOH) Q2 2020 Earnings Conference Call - Final Transcript
Jul 30, 2020 • 08:00 pm ET
So we'll catch up and we'll get the risk scores in line with the acuity of the membership. But that's the reason for the small shortfall in our marketplace business for the quarter. With respect to the business, yes we projected a medical costs baseline on COVID impacted use 2019 is the medical costs baseline and then trended forward without any COVID impacts. So we believe that the rates we filed for 2021 are solid, fully contemplated all the costs related to medical services for our members, and the scores that we will attain.
The next question comes from Kevin Fischbeck of Bank of America. Please go ahead.
Great, thanks. I wanted to ask about that the rate environment, how should we think about the $75 million number? You characterize it as retroactive? Does that mean that there's not expected to be a go forward impact or is they also a go forward impact on these initiatives in your guidance?
Well, the retroactive refunds that we record in the quarter really are a reflection of exactly how the rate apparatus should work. Obviously, rates never contemplated this rather dramatic curtailment in utilization. So whether states enact refunds themselves or whether the minimum MLRs in seven of our States get triggered, the money is rightfully going back to the States because it wasn't spent on benefits for their beneficiaries. So we recorded the retroactive component, either back to in some cases back to March in some cases back to the beginning of the year.
And certainly we contemplated the forward looking aspects of those rate decreases and refunds, as we provided our very cautious outlook to the balance of the year. So the 75 million was truly the retroactive component that takes us through June 30, but we certainly contemplated the continuation of those refunds that have already been enacted, and obviously the potential for more actions to be enacted by our State customers.
Okay, that's helpful. And then, I guess it was a little bit confusing. It sounded Joe like you were saying that MCC is in your revenue, guidance for 2021. But then Tom mentioned that you don't include deals until they are closed. I just wanted to make sure I understood how the treatment of MCC in that 2021?
That's a fair point. I think I'm going to use that as the opportunity to make sure we clarify the outlook we're giving for premium revenue in 2021. First thing, I would say is, you know, our revised forecast for 2020 is $17.8 billion of premium revenue, which is a 10% increase over 2019. That's a pretty strong pivot. Now as we really activate the growth strategy, projecting a 20% growth rate off of 2020 is certainly something we're pleased with. And yes, it does contemplate the Magellan Complete Care acquisition closing on January 1.
For every month it would be delayed you can proportionately reduce that. But we expect it to close at the earliest