As a result of prior period development booked in the first quarter and the higher commercial health care costs run rate entering 2012, we now expect commercial health care cost to be higher than our premium yields on a reported basis by 200 to 220 basis points.In giving this guidance, we additionally took into account, first, our premium yields are coming in higher than previous guidance by about 50-basis-point, as we continue to hold the line on pricing. The pricing trend assumptions we had used were primarily based on claims experienced through the first half of 2011. They are basically unchanged even when we look at the fourth quarter of '11 with the prior period development included. We are still confident that our pricing adequately reflects underlying run rate medical claims trends. Second, as we've earlier indicated, we have a new pharmacy agreement with CVS Caremark that will improve our pharmacy trend. And third, negotiated provider unit costs are coming in slightly below expectations.
Health Net's CEO Discusses Q1 2012 Results - Earnings Call Transcript
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