Centene Corporation Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Medical Claims Liability

Medical Claims Liability

3 Months Ended

Mar. 31, 2018

The following table summarizes the change in medical claims liability ($ in millions):



	Three Months Ended March 31,
	2018			2017
Balance, January 1	$	4,286		$	3,929
Less: Reinsurance recoverable	18			5
Balance, January 1, net	4,268			3,924
Acquisitions	—			—
Incurred related to:
Current year	10,302			9,557
Prior years	(263		)	(235		)
Total incurred	10,039			9,322
Paid related to:
Current year	6,579			5,973
Prior years	2,970			2,991
Total paid	9,549			8,964
Balance at March 31, net	4,758			4,282
Plus: Reinsurance recoverable	13			8
Balance, March 31	$	4,771		$	4,290

Reinsurance recoverables related to medical claims are included in premium and related receivables. Changes in estimates of incurred claims for prior years are primarily attributable to reserving under moderately adverse conditions. Additionally, as a result of development within "Incurred related to: Prior years" due to minimum HBR and other return of premium programs, we recorded $13 million and $3 million as a reduction to premium revenues in the three months ended March 31, 2018 and 2017, respectively.

Incurred but not reported (IBNR) plus expected development on reported claims as of March 31, 2018 was $3,688 million. Total IBNR plus expected development on reported claims represents estimates for claims incurred but not reported, development on reported claims, and estimates for the costs necessary to process unpaid claims at the end of each period. We estimate our liability using actuarial methods that are commonly used by health insurance actuaries and meet Actuarial Standards of Practice. These actuarial methods consider factors such as historical data for payment patterns, cost trends, product mix, seasonality, utilization of healthcare services and other relevant factors.