State governors have named behavioral health as a top priority. This could give a boost to Centene Corp.’s (NYSE: CNC) behavioral health business and improve its business with state Medicaid programs.
Behavioral health challenges for Medicaid enrollees have been a “top 3” issue conveyed by the “over 30 governors” with whom Ken Fasola, Centene’s president, and CEO Sarah London have met over the last six months.
“Whether that’s staffing shortages, access, thinking about broadband in order to increase telehealth — they are all focused on ways that they can support providing additional behavioral health to their membership and it has actually created really nice tailwinds relative to our Magellan business,” London said.
Centene’s business focuses on contracting with government programs to administer benefits.
It acquired specialty managed care organization Magellan Health in January 2022. Key parts of the deal included integrating behavioral health benefits management into Centene’s core Medicaid managed care business and creating new population-specific programs and strategies.
Fasola didn’t name a specific state but said Centene was working “behind the scenes to cultivate opportunities to capitalize on this growing interest among governors in supporting the needs of their Medicaid members with behavioral health.”
London mentioned better integration of physical health and mental health as a key talking point with governors.
At the same time, London downplayed behavioral health as a driver of medical costs at the company.
“Relative to behavioral, that is still a component of underlying utilization; it’s not creating quite as much pressure as we were seeing before,” London said. “Substance use and opioid use disorder continue to be something that the whole industry is focused on.”
Earlier in the year, Centene CFO Drew Asher said Centene was keeping an eye on behavioral health costs: “They’re up a little bit year-over-year with some substance abuse,” he said during the company’s first-quarter earnings call.
Other large payer executives have called out increased behavioral health utilization during their company’s earnings calls.
Earlier in the month, execs with the health care titan UnitedHealth Group (NYSE: UNH) said they have seen increased utilization in their health insurance and health services lines. It’s also deepening its efforts to integrate behavioral health into various services.
Similarly, CVS Health Corp. (NYSE: CVS) executives pointed to dental and behavioral health utilization as driving up medical costs.
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