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, 2020

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



	Three Months Ended March 31,
	2020			2019
Balance, January 1	$	7,473		$	6,831
Less: Reinsurance recoverable	20			27
Balance, January 1, net	7,453			6,804
Acquisitions and divestitures	3,697			6
Incurred related to:
Current year	20,866			14,376
Prior years	(446		)	(494		)
Total incurred	20,420			13,882
Paid related to:
Current year	15,147			8,771
Prior years	5,031			4,560
Total paid	20,178			13,331
Balance at March 31, net	11,392			7,361
Plus: Reinsurance recoverable	21			20
Balance, March 31	$	11,413		$	7,381

Reinsurance recoverables related to medical claims are included in premium and trade receivables. Changes in estimates of incurred claims for prior years are primarily attributable to reserving under moderately adverse conditions. Additionally, as a result of minimum health benefits ratio (HBR) and other return of premium programs, we recorded $31 million as a reduction to premium revenue and $8 million as an increase to premium revenues in the three months ended March 31, 2020 and 2019, respectively.

Incurred but not reported (IBNR) plus expected development on reported claims as of March 31, 2020 was $7,527 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.