Question-and-Answer Session
Operator
(Operator Instructions). We’ll take our first question from Gregory Nersessian - Credit Suisse.
Gregory Nersessian - Credit Suisse
First question on the Nebraska Medicaid, what happened there and what’s your understanding of how it’s going to play out, are they going to re-bid the whole state, you’re going to have to resubmit your bids, or are they just going to re-score it? Any color there would be helpful.
Allen F. Wise
We’re not certain. What happened is that two of the unsuccessful bidders filed an appeal and we learned last week, I believe, it was very recently; at this time, their decision is to invalidate the whole process; we’re having discussions this week and we’ll send the letters since we weren’t in any way the subject of anyone else’s appeal to see if they can settle it among the other three, but the real answer is, we don’t know. Technically, they were not upheld, they technically took the positions to invalidate the whole process; we don’t know, it’s yet another education about being in the Medicaid business, but we’re following, I’m following through the strong position in the Mid West, strong position in that state, and scored the second highest score on the RFE process of the people applying for the risk contract and have a very solid position there and would like to see where it plays out.
Gregory Nersessian - Credit Suisse
So, if they ask you to re-bid, you’re still interested in that business?
Allen F. Wise
Well, I think yes, but I would like to know what the rules are; I’d like to see if the financial information is the same and to be satisfied that we’re not going to spend the time and effort if we don’t have an even chance. So, the answer is yes, but the devil is in the details.
Gregory Nersessian - Credit Suisse
And second question on the commercial premium yields came in a little bit better than expected, should we interpret that as perhaps the pricing environment is more conducive to pushing those kinds of yields through or is that may be reading too much into it, is it more a function of mix? Any color on your ability to pursue the yield?
Allen F. Wise
Shawn should answer part of that question; no, it wasn’t easy and I think we paid a price in membership for that; it was a highly disciplined process and we have spent an enormous amount of time looking into our underwriting model, looking at renewals, and we paid a real price on not our ability to go get new business necessarily but we paid a real price in the renewal area. Things have changed a bit; it used to be if your renewal was within 500 basis points and they liked your plan and you provided good service, which we do, that people will stay with you, but that’ll change for a 100 basis points in today’s economy; so, it was difficult and has been difficult, and we paid a bigger price than would be ideal in membership.
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