Elevance Health, Inc. (ELV) Earnings Call Transcript & Summary

Good morning, everyone. Welcome to the Anthem session. I'm Bob Jones. I'm joined by my colleague, Kevin Hartman. We cover the health care services sectors here at Goldman Sachs. Very excited to have with us from Anthem, Dr. Prakash Patel, the EVP and President of the DBG segment. Also joining us is Paul Marchetti, who is now President of IngenioRx; and a familiar face, Steve Tanal is also with us on the virtual stage who now heads up Investor Relations and FP&A at Anthem. So welcome, gentlemen. I appreciate you doing this.

Thanks, Bob. Thanks for having us.

So I thought maybe to start just because it's still very top of mind for everyone as we hopefully emerge from what's been a very long and trying year plus now of the pandemic, I thought maybe just to kind of level set everyone just given how quickly things are moving lately. What are you seeing as it relates to COVID and non-COVID utilization broadly across your books of business?

Sure. Yes. Thanks for that, Bob. Thanks for having us as well. Excited to be here. So what we've seen to date is really consistent, I would say, with our expectations, if not maybe even a little bit better, certainly in Q1. I think you heard that from us. We've modeled in all-in utilization, really cost of care, taking into account COVID as well as non-COVID running north of baseline for 2Q, 3Q and 4Q this year. Probably bears mentioning what is baseline. I think that term gets used quite a bit, and it seems to be different things in different places. For us, as we've defined it, baseline is our estimate of what cost would have been in '21 if COVID never happened. And so we're comparing what we're seeing now to that level, if you will. And again, 2Q, 3Q and 4Q, we have modeled in, in the context of our guidance running north of baseline. Different factors driving that by quarter. In 2Q, what you're seeing is -- in terms of the key swing factors that get you above, really what we framed is the fourth wave that, that was late March into April. Obviously, not nearly as big as sort of the third wave of COVID, which is more December, January. But cases came up a bit at the end of March. That stayed that way into April. We factored that into our outlook for 2Q. The other big sort of swing factor there that changed really from Q4 to Q1 when you think about our reporting calendar and how our view of the year has evolved was the vaccine administration costs, primarily in the commercial business being a higher number now. And those are really the 2 factors I would say that drive that projection above baseline in Q2. In Q3, we're also expecting costs to be above baseline, a little bit of a different flavor, continued rollout of vaccines. We've assumed that the 12 and above population will begin getting vaccinated kind of ahead of back-to-school. That's baked into the third quarter outlook. We also expect some return of pent-up demand in the non-COVID utilization side, with some higher-than-average acuity on that, and I'll come back to that in a sec, too, as we round out this response. In Q4, also, again, projected to be above baseline. We had modeled vaccines continuing, have made some assumptions around kids under 12 and the potential to be eligible for the vaccine by year-end. Again, assume pent-up demand and deferred procedures come through in that quarter, but also made some assumptions around new COVID variants. This idea that COVID's really not going away in total is what has been factored in. But we've also assumed we'll have more of a traditional flu season versus what we saw in the pandemic. So those are our assumptions, and we hope we're being -- we hope we'll be proven to have been conservative. But as we stood here today, we think this approach is prudent, if not cautious. And to date, as we've said recently here, we have not seen evidence in the data of a real material change in acuity. And that's been encouraging. Non-COVID care is coming back, but not in a way that's problematic relative to how we built the forecast for the year. So we continue to feel pretty good about where we sit today and how we've looked at the year coming together. But still early and as you know less to be said, there's a lot that's still unknown and it's still uncertain year. And so we're trying to manage that situation really prudently. So maybe I'll let Paul comment as well on script trends and any other thoughts he might have on this as well.

Yes. No. Thanks, Steve. I would say, as it relates to what just -- what Steve just outlined, from a script volume perspective, in the first quarter, we saw a relatively flat trend. And so -- but we started to see a slight uptick in Q2, and we expect that to be a gradual increase as more volume and procedures are coming back and being done as well as other utilization occurring in a more normal fashion. We expect script volume to follow along with that trend. So we'll obviously be watching that closely in terms of how the rest of the year unfolds and into '22. But flat to start, gradual increase the rest of the year, and into '22, we expect that to continue.

Great. I think that's a good way to level set where we kind of are today versus where we were over the last 14 months or so. Maybe, Paul, just to stick with you and Ingenio. I think there was a view because of COVID that there was a lot less churn or switching of PBM services. Obviously, I think a big part of the Ingenio story is kind of the ability to kind of break into the big 3 PBMs market share more aggressively as time goes on. It seems like last year, because of the environment, there was just a lack of people really putting out full RFPs. Any sense you can give us on what you're hearing so far this year? Are you seeing a bigger appetite for folks to really want to put out more fulsome RFPs and have a real process versus maybe where they were last year?

Yes. No. Thanks, Bob. I would say, again, I've been in the role a couple of weeks now. But as I've gathered the facts and looked at the data, it's still too early to tell in terms of how the '22 -- 1/1/22 will shape up. But I can tell you a few things. We've had a strong pipeline that's built. The bid activity is absolutely up. And there's much more activity and bidding going on. Our bid activity is up and we more than doubled our finalist rate. So our integration story is beginning to resonate as the market learns more about Ingenio, our capabilities, et cetera. Our carved-win rate is up as well. And so as we look at other areas from a segment standpoint strategy, an area that we've historically underpenetrated is in the labor market. So labor bids have more than doubled, and we've had some nice wins already for '22 and we expect to have some more. The other area that we've historically underpenetrated is in the 3,000 to 10,000 space. And so that's an area -- and that's a sweet spot for us on the medical side. So naturally, an integrated value proposition targeted at existing customers is an area where we're focused in on. That's an area I'm going to put a lot of emphasis on as we go forward. So bid activity is up. We have seen more of a tendency -- while the bid activity is up, we've seen the incumbents being favored more. So switching, there's still some hesitancy at switching given the environment. But we expect to have our fair share of wins certainly more than prior year. The last thing I would say is that as it relates to ASO, we expect to continue to increase our trajectory towards -- right now, we're running around 20% on that ASO 5 to 1 to 3 to 1. The target is really to get to 30 -- to mid-30s by 2025. And we are going to look to continue to accelerate performance there to achieve those numbers as part of that trajectory because that's how the business will be optimized as we sell Ingenio services to our ASO customers.

And Paul, maybe just one follow-up there. When you say maybe performing better in the labor market, is that kind of synonymous with health plan business? Just wanted to make sure I understood what market that was.

In some cases, it is. In other cases, it's sole new business. But where we have labor clients, that's absolutely an area where we have to leverage and grow that business across in an integrated selling point.

No, that's helpful. I guess maybe one broader question around the offering. When you are winning or when you're making it to these finals, which sounds like it's improved relative to history. Are there a few things that you'd call out that you're hearing from clients that have them choosing either to keep Ingenio in the discussion or actually select Ingenio as their new PBM? Are there a few specific characteristics you feel like are really resonating?

Yes. I think customers and consultants, as we think about our consultant strategy and broker strategy, we have started and we need to do more of roadshows to educate them on the integrated value story. But for those that have believed in the integration -- and what I would say there, Bob, is you can't -- from a member's perspective, our strategy is around whole person health. You hear us talk about it all the time. Well, as you think about these businesses, you can't separate medical and pharmacy and behavioral with -- programmatically. So we look at -- we've been very factual about the proof points and the incremental integrated value proposition of what customers will get. And so in terms of the benefits on cost and quality, that has resonated in some circles. And those that have purchased us really like that level of integration as well as, as we develop the capabilities more robustly with the diversified business group, we're thinking about a much more seamless experience between pharmacy, our value-based partners and the provider side as well as the diversified business group assets.

No. That's very helpful. Maybe one other question, Paul, around the offering and some of the targets out there. I was wondering if maybe you could give us an update on your progress towards the 3 to 1 target as we think about the C risk population and getting towards the ASO profitability. Where are we in that evolution? And what are some of the key components that will help get us there?

Yes. So as I mentioned, our pharmacy penetration and self-matured is approximately 20% today. It's got some fluctuation to it and -- because of COVID last year. So -- but where we see the opportunity is to improve our penetration. As the environment is improving, it's going to help the commercial team drive sales up. We are -- we've got together whole case underwriting, narrowing the -- looking at our pricing more aggressively between our risk-based and fee-based businesses. So we feel good about the progress that we've made, right? And so we think that by the end of this year, COVID slowed us down. But by the end of this year, we expect to be slightly better than 4 to 1. And lastly, the continued growth of our IngenioRx penetration, our shared savings programs overall, specialty offerings, all of that's going to contribute to that 5 to 1 to 3 to 1. But Ingenio specifically, areas that we can and will differentiate, our specialty pharmacy capabilities, our virtual capabilities, those are areas where we want to control the member experience and leverage our size and scale and relationships with providers in an integrated fashion to really drive the optimal results where others can't do that. And so that's the power of the IngenioRx capabilities. People get confused with our relationship with CVS, and we leverage their scale for purchasing power. But the rest of the pharmacy benefit services are IngenioRx. Formulary compliance, steerage, network design, network control and integration with our medical and DBG assets, that's really the power of integration that we're going to continue to improve, be fact-based about it, bring it to the market and make sure we have proof points and guarantees and pricing that all align to support growth.

And Bob, maybe I could just add to Paul's comment. The other parts, I think we can add, and Paul referenced DBG, some of the areas around enhanced behavioral health offerings that can, again, help that 5 to 1 to 3 to 1 march, program integrity on the shared savings program. And also with our recent acquisition of myNEXUS and thinking about evolving home care service market, what else can we do in that environment? Perhaps partnering with Ingenio, for example, in an integrated home infusion, a model that really could take off and help to again drive that 5 to 1 to 3 to 1 march that Paul was just referencing.

That's great. Yes. Maybe just taking a step back, still on the PBM side. Obviously, regulation is always a focus in this market. I think, particularly in the wake of the Rutledge versus PCMA ruling, it seems like we've been seeing a little bit more of action at the state level. And so some things being like patient steering restrictions in California or mandatory -- limiting mandatory mail order in New York. Just overall, curious what you guys have been seeing on the regulation front. If you feel like there's been a pickup in activity. And just broadly what you think this could mean for the PBM model and how that evolves over the coming years.

Yes. No, thanks for that question. Yes, I think we have seen increases in volume of state legislation that impacts PBMs, but only a few really are targeting the self-funded employer market implicated by the Rutledge decision. The examples that you referenced in the question, things like patient steering restrictions and limiting mail order, those have been -- those kind of laws or -- the physicians have been prevalent for many years and are not being driven by Rutledge. We also don't think that -- when you think about patient steerage and limiting mandatory mail order for specialty drugs, those are areas where actually the delivery system and the capabilities that exist in technology are moving in a direction that actually create a better experience for the member and patient to steer them to the optimal site of service, to be able to deliver drugs to their home, to optimize both place of infusion services, but also being able to deliver those drugs there. So we are against those state pushes specifically. But again, we don't see the self-funded employer market implicated by those decisions. We continue to engage the legislation pretty broadly with facts, with data around what those limitations actually restrict and actually would drive up costs and create worse experiences for the consumer and provider.

Got it. No, I think that makes sense. And so I guess if I'm hearing you right, it doesn't sound like you think there's any major disruption that might come as a result of this. So I guess from a high level, like how encompassing do you think this Rutledge ruling could be? And just any sense of whether or not the industry will challenge any of these laws as they potentially get implemented?

Yes. No, I think that's fair. I think it's important to note that the Supreme Court in Rutledge was clear that they were looking at cost regulations, right? And so pharmacy reimbursement only. And other issues of related to plan design continue to be protected by ERISA preemption. So in that regard, there -- it's kind of apples and oranges. But as it relates to Rutledge, some states are taking a look at their current PBM laws to consider expanding certain elements to look -- to include, I should say, ERISA plans. And so thus far, the legislation has been pretty narrow to focus on issues that were specifically addressed in Rutledge, such as the reimbursements. And then lastly, I would just say it's too early really to tell whether the broader issues will be targeted if there would be future legal challenges on issues that go beyond the specific things noted in the Supreme Court in the Rutledge case. But we are always engaged, fact-based around whether it be a state partner or a federal partner or customers around what our data shows and what we think is the right thing for the industry as a whole to move forward in our business.

Paul, maybe one more specific one on some of the key metrics within the PBM world. One would just be generic deflation. It's become a bigger focus as of late, seems like a bit of a debate in the marketplace on how stable or deflationary generic drugs are in general. Just wanted to get your thoughts on kind of -- from Ingenio's perspective, what are you seeing as far as generic pricing in the current environment?

Yes. We've been successful as a business as well as the PBM industry in driving down costs of existing and new generics. And to be honest, the majority of the value of driving down those cost is passed along to the customers through year-over-year improvements in our guarantees, et cetera. But as long as the PBMs generate enough value, Bob, to your question, to cover those commitments, then it's neutral, or potentially, there's a surplus that possibly favors our business in terms of the revenue aspect of it. But the other thing I would say too is beyond just generics that are nonspecialty, recently, what we've seen is new specialty generics have created kind of new opportunities in an otherwise fair market. So PBM acquisition pricing has accelerated beyond those general commitments to the market. And earnings -- our Q '21 earnings suggests strong returns for us and the industry. So I think while there has been some restrictions on more generics, specialty new introductions offset that. But it gets back to the fundamentals of the way we generate cost improvements and bring that forward, helps our business and our customers.

That's really helpful. I appreciate it. Maybe one last one, and then I wanted to transition to Prakash and DBG. But I think, obviously, big news this week in the Alzheimer's community with Biogen's Amab getting approval. We've gotten a ton of questions across the supply chain and the insurance landscape. So probably -- correct me if I'm wrong, probably less of an issue within the PBM just given where the drug, I believe, will be covered. But I'm just curious, either Paul or Prakash or Steve, how are you guys thinking about this? I know it's only a few days old. But again, it seems to be a big focus because it is going to be a very expensive drug and obviously a very meaningful -- potentially meaningful therapeutic for people with Alzheimer's. Just any initial kind of thoughts as an organization, I think, would be helpful for the market.

Yes. No. I'll give you some -- make some quick comments on it. First of all, as you know, if you read any of the materials that are out there, only -- over 6 million people have roughly Alzheimer's, and 72% of them are 75 and older. So as we think about this -- and we plan for this for a while and forecast around it in terms of the pipeline. So it's predominantly going to be utilized by the Medicare population, right? So if you look at and read the studies, the drug was only studied in new onset Alzheimer's in the trials. And so -- also, there are still some questions around, has it truly demonstrated a clinical benefit? So more to come on that. Even the clinical community is kind of on both sides of the fence. The other reality is pricing has not come out from CMS. The manufacturer has put out a price of about $56,000 for the drug. CMS has not come out with a price yet. And the way we think about it is if the actual cost breaches the significant cost threshold that CMS comes out with, that national average per capita cost, CMS will cover its cost by statute. So we've been forecasting for over a year around this drug, as we do with many drugs. And we have plans and forecast around the new drugs. And the last thing I would say is if it doesn't breach the threshold, we're comfortable basically stating because we've planned for it that the cost would be minimal this year. We don't even think the cost will be that exorbitant next year given that it's still under question. We don't think that the efficacy is there. So we don't think -- there might be some consumer demand. The last thing is we don't have confirmation yet from CMS whether it be covered under Part B or Part D. And so we have factored in not only the cost of the drugs in our forecasting models, but also the additional episodic costs, additional MRIs that would be a result of patients getting this drug, being treated appropriately. So we are on top of it. We forecasted for it. I think your point, Bob, is spot on. We don't see it to be a significant impact at all in terms of our earnings focused within our Medicare business. Steve, anything to add or Prakash?

No. I mean look, I would just point out that, as always, Bob, you want to think about our exposure in total at the enterprise level, MA isn't a massive business for us. And I think part of what gave us the comfort, underlying Paul's commentary, is really not in and of itself. So nothing more on that.

Makes total sense. No. I appreciate the thoughts. Maybe, Prakash, moving over to DBG, and I thought maybe just to kick it off at a high level. I really felt like this past Analyst Day, you guys outlined a lot of different areas. You could tell the excitement level was very high around what you guys have put together with DBG. I thought maybe just to kind of level set everyone, what are the biggest opportunities that you see within DBG as we sit here today?

Great. Thank you. Appreciate that question. We're actually very pleased where we are right now with DBG. It's very consistent with our long-term growth plan. And as we deploy our strategy to really maximize the total health care dollar that we manage under value-based and risk-based deals that we referenced in the Investor Day that you just mentioned, all 3 of our business pillars are really going to drive the growth. And really what we're marching towards is 70% of our business is going to be driven by Anthem. The rest of it, externally. The vast majority under risk-based contracts. If we look at where we are today, we're actually at that 70-30. And also, the majority of our business is already under value-based and risk-based contracts, which is obviously going to continue to get larger and increase. And if I look at the 3 business pillars, maybe I'll highlight a few areas where I think we're going to see some significant growth. First of all, on the care delivery, which includes our CareMore and Aspire assets, one is just getting further penetration with Anthem. We have significant opportunities with Medicare and Medicaid. In particular, also, I would pull out the ISNIP and duals. We're just really getting -- going in those populations. And obviously, a real big need for integrated solutions for those populations, which speaks to our strength. The other area is at CareMore, we've now added 3 new non-Anthem external payers to the mix. So we're expanding beyond that. And we're talking about some of the regulatory and CMS changes earlier. A really positive for us at CareMore again is the direct-to-CMS contracting. So we had a nice launch of that. We believe that's going to continue to be a nice growth vehicle for us. So those are some, I think, real great opportunities on the CareMore, Aspire side. If we look at the advanced analytics and services pillar. When we look at the pathway and our network management, both with AIM and now our recent acquisition with myNEXUS, in both of these, we have an opportunity to expand our risk deals within Anthem. For example, at AIM, our risk deals right now inside of Anthem are only with our commercial business, so looking at -- and obviously, on the government side. Similarly, on myNEXUS, now we did use myNEXUS already at Anthem, but we're not fully penetrated within our Medicare book of business, and we do no business with our Medicaid or commercial today. So those opportunities -- we're building in those plans for the latter part of this year and into next year. The other part is myNEXUS in cross-selling. myNEXUS today has no Blues as customers. Their whole focus was on the non-Blues and then obviously with Anthem. We have now 27, very soon to have 28 of 35 Blues. We think there's significant interest already there. We've already been preselling that. We think there's great opportunities in integrating myNEXUS in the home care with some of the other assets that we have. So that will be a nice growth. Another thematic area within the analytics and services is health guide. We didn't talk about a lot of -- we didn't talk about that a lot at the Investor Day meeting. But advocacy, social drivers of health, member navigation and support and coordination become very big themes, much bigger than they were pre-COVID, really big themes that we think are going to continue in the future. And what we're doing a little bit differently is we're using the health guide asset to actually combine it with chronic condition management, so you get a whole person integrated solution. And again, that helps us to drive towards managing more and more of that health care dollar. It's combining high touch with high tech, if you will. And then finally, on Beacon. On the behavioral health side, we closed Beacon in February. I would say we had a pretty good fortune because when COVID hit, utilization really was very high, as we've talked about in the past, in all forms. And we were well positioned through telemedicine, through some of the crisis programs and others that we've built out. And in particular, a really important growth area for us is going to be Medicaid. And Beacon, if you recall, is probably has the most longitudinal Medicaid behavioral health experience in the country. That's really their sweet spot. And we talked about the $82 billion of RFP pipeline coming from Medicaid. And there's going to be a significant portion of that is going to be for behavioral health. And what's interesting there is even though the most common conditions, the high-cost common behavioral health conditions are the same for care and commercial. The incidence rate and prevalence is 4x higher in the Medicaid population. So you really need to have that expertise to merge in social drivers of community and then obviously the behavioral health. So we're well positioned there. The other part I would just highlight, the way we're also looking at behavioral health in a unique way is we are now looking at combining that again with chronic condition management. I'll give you a great example. A really good example is around chronic pain. Chronic pain, probably half of that has a behavioral health overhang, either through depression, anxiety or substance abuse. So the program we're putting together will combine that health guide navigation, behavioral health capabilities and chronic condition management around chronic pain and then take an end-to-end capitated risk or episode risk around that to really be able to take on more of that total health care dollar. Just as a reference point, Bob, 40% of our behavioral health diagnosed members have at least one chronic physical health condition. So it's a natural interplay that we're going to build out as we go forward. So those are the areas that I would highlight as good growth areas within Anthem, but also outside of Anthem as well.

That's a super helpful overview. I guess maybe just within some of the things you touched on, one area that gets a lot of focus lately is PC -- primary care-related assets, a number of obviously different approaches to the market these days both from the large established managed care companies and also some newer IPOs that we've seen come to market. You clearly have some exposure to primary care clinics through CareMore, as you mentioned. Recently the investment in Privia, I think, is another approach. They have a different approach to that market. I just was hoping maybe could talk about how you see this market, this PCP-related asset market evolving in the coming years. And maybe more specifically, what's Anthem's approach today versus what it could evolve into?

Yes. Great. It's a really interesting question because if I say where you all are, it can be very confusing. You just mentioned all of the moving parts there. And as we've been deploying our strategy, again, to take on that maximum total health care dollar under risk-based deals -- I can tell you one theme, Bob, we have not seen is the mandate or requirement to really roll up en masse the PCP groups. Now having said that, that doesn't mean we don't already participate in the provider revenue stream. And you mentioned it. So obviously, through Aspire, we have provider revenue stream. We're paid as a provider, though, we take capitated or episode risk on that. CareMore. You mentioned CareMore. Now with myNEXUS in the home care, we're also having that provider stream. So we're going to continue to look at building and/or acquiring these specialty provider capabilities in the future. Plus, we also have, as you know, the flexibility to use a payer/provider integrated model with our HealthSun and now soon to be our MMM acquisition. So we're going to keep the flexibility to buy PCP groups where we have to, where they meet a strategic need. But to go out and do a wholesale acquisition and roll up PCPs, that is not our primary strategy. Our primary strategy, and maybe give you an insight on how we're looking at the marketplace, we see the marketplace evolving in 2 ways. One is the vast majority of PCP groups are going to need support to really be able to think on true end-to-end, capitated risk to manage value-based and truly deal with the way we're talking about in the next generation. There's going to be a smaller group of providers that truly can manage end-to-end. And the way we're going to play is that the DBG role will be -- will sit on top of the PCPs, the vast majority that need support. We can take the risk. We can embed the PCP networks within the overall integrated offering, fill in gaps for support, data and services. And in cases where we feel that Privia could be a better option, you referenced Privia, we can bring them to bear as well. But it's a partnership model where we have a significant play in that capitated revenue stream. Where you have the smaller -- have a smaller number of players that can truly take that end-to-end capitated risk, we can be vendors to them. And particularly what we're hearing in the marketplace is 2 areas of gaps. One is the transition of care: home care, the skilled nursing, the hospitalist program. We have some programs that obviously we'll bring forward with myNEXUS and that we've been building out already that we can bring to bear to support these groups. And then on the behavioral health side, everyone struggles with behavioral health. And now we've created programs not only to embed PCPs with our behavioral health specialists in the high-volume areas, but also created [ virtual ] programs to support those providers so they can offer a more whole person care model. So that's the way we're going to be looking at the market. It's a very supportive opportunity for us. We bring a flexibility in our model. And I think, together, we're going to be able to leverage the market share we also have to really drive that next generation of value-based care and capitated risk that we're really talking about from a cost and an outcome perspective.

Yes. No, that makes a ton of sense. Prakash, you touched on direct contracting. I know CareMore is participating. I thought just from a high level, is there any way -- a good way to think about how you guys think membership could potentially play out in the global model in the coming years? And then, obviously, the administration has put a pause on the geographic model. Any guess as to whether or not this is something that ultimately will get implemented? And is that something that you would envision DBG participating in, if that were to be the case?

Yes. Thanks, Kevin. In terms of the direct contracting, we are participating. We had a nice rollout already this year. We do think it's going to be a positive driver for us going in the future. We'll see how that rollout goes, but it's going to be a very material part of our external growth above and beyond the Anthem. So we're feeling very positive in it. It's a population that we can manage quite well. So that's the other part of this with our integrated model, now bringing myNEXUS in to support the home care piece. We're embedding behavioral health, so we can take more and more of the total value and total outcome there. So we have the pieces coming together. We feel very good about that. In terms of the geographic model, you're right, they put a pause. And we'll have to see how that -- what the ultimate modifications may be to that. But we are actually going to be looking at participating through the DBG assets in terms of what that opportunity looks like.

That's helpful. I guess maybe just in a couple of minutes we have left, I'll throw it out to the team. I don't know, Steve, if maybe you want to jump in on this one. But obviously, it's been an unprecedented year, especially if we think more on the risk side of the business, whether that's commercial or MA or anything where you're actually underwriting the risk of the individual. Any latest thoughts on just how you're thinking about next year? I mean, obviously, this is a completely unprecedented cycle that we just went through. And obviously, I don't envy any actuaries who have to come up with the underwriting for next year just given the range of outcomes. But I'd love to just hear your latest thoughts. I know it seems to probably change every month and week as we move through this pandemic, but I thought that would be a good place to wrap up.

Sure. Thanks for that question, Bob. I'll do my best to address it. It's obviously early to give specifics for '22, I mean, even internally in some respects. But what you can rest assured is the overall approach won't change. We will always price our forward view trend inclusive of all these factors and our best estimates of them. One thing we have said, as you think out beyond '21 is we don't expect COVID to go to 0, right? So we'll make some assumptions around where our COVID costs are likely to trend longer term. Hopefully, we'll get more insights as the year progresses around the variants. Obviously, it'd be a great outcome if we really don't have to think that much about those. But our expectation sitting here today is that there were will be some lasting costs associated with that. We've commented around higher acuity in the back half of this year. We're really trying to be thoughtful about all those kinds of elements as we head into '22 in all of our products and pricing for them as best we can. So a bit early to get really more specific than that. But we're doing everything we can to put a prudent financial targets that we can deliver against within a band of outcomes. And to your point, I mean, the actuaries are -- every week, honestly, updating the model with the myriad of inputs. And it's very complicated, a lot going on, still lot to learn as we get to this pandemic here. But hopefully, what you'll see from us and hindsight will be, 2020, on the point. We're going to try to manage as prudently, put our financial targets that we can nail and we'll continue to manage the business that way. And as we sit here today, feeling good about where we are now with the expectations we've set for the year. So hopefully, that's helpful.

No. Very helpful. And I think probably a good place to end. But yes, I definitely wanted to thank Steve and Prakash and Paul for participating today. Thank you, everybody, for listening in. Really appreciate your time.

Thanks.

Thanks, everyone.

Take care.