Centene Corp. (NYSE: CNC) has cited behavioral health utilization and applied behavioral analysis (ABA) therapy as the primary drivers of a substantial portion of the increase in spending in its Medicaid business, similar to trends documented in the company’s Q3 and Q2 results.
Executives of the managed care giant said behavioral health accounted for around 50% of its excess costs during the fourth quarter, followed closely by home health and high-cost drugs as “secondary pressure points.”
“The drivers were really consistent… behavioral health, home health, and high-cost drugs, those did not materially shift… ABA being sort of a primary underpinning of that,” Centene CEO Sarah London said during the company’s earnings call on Feb. 6.
To tamp down some of its cost pressures, Centene formed an ABA task force in 2025 with the aim of analyzing data, identifying utilization patterns and improving care quality. By analyzing data on how ABA services are delivered, the company has also underscored a pivot that many in the autism therapy sector have recently made: higher volumes of ABA therapy hours drive costs, but there is no clear evidence of improved outcomes with 40 hours per week of ABA therapy.
“What we found were consistent patterns of outlier providers with volume versus outcomes-driven care patterns, where the maximum number of hours are prescribed for every patient instead of an individualized care plan,” London said.
That, combined with poor oversight of certified behavior technicians, “drive costs in the system, but far more importantly, they are red flags relative to the quality of patient care for a very vulnerable population,” London said.
In response, Centene has developed an ABA-specific engagement program for members that are led by doctorate-level board-certified behavioral analysts (BCBAs).
As the largest Medicaid insurer, throughout 2025, Centene has also concentrated on revitalizing its Medicaid segment to profitability. Its health benefits ratio for Medicaid was marginally better in Q4 than it was in Q3, but still reflects the impact of rising health care costs.
“As we head into 2026, we continue to organize around the key levers that will drive improvement in the Medicaid business, including optimizing our networks for cost and quality performance, thoughtful implementation of new and enhanced clinical programs, rate advocacy, and collaboration with our state partners on program reform, increasing vigilance in our detection and reduction of unnecessary utilization, and a more aggressive approach to fraud within the provider ecosystem in service of our mandate to protect Medicaid program integrity,” London said.
The managed care provider will also be keeping a close eye on changes in membership dynamics brought on by the One Big Beautiful Bill’s eligibility redeterminations, rate pressures as well as network tightening, she added.
“We did continue to see sort of a low level of continued membership attrition through 2025 as states were getting tighter with their eligibility criteria, which I think naturally put some pressure on the trend relative to core trend,” London said.
If its competitors choose to exit certain markets or geographies due to rate pressures, Centene will watch what changes its state partners make to decide which levers need to be pulled, so to speak.
Overall, the company is expecting margin improvement throughout 2026 and beyond.