Question-and-Answer Session
Operator
[Operator Instructions] Our first question, from the line of Chris Rigg from Susquehanna Financial Group.
Christian Rigg – Susquehanna Financial Group, LLLP, Research Division
Could you just remind us, in your MA book, what percentage of the members are in special needs plans, or people that you would consider sort of in the dual eligible category?
Thomas L. Tran
Chris, this is Tom. Yes, roughly about 1/3 of our MA members are in the D-SNP category.
Christian Rigg – Susquehanna Financial Group, LLLP, Research Division
Okay. And so do you think, when you look at the rate projections for next year, that, that — that you’ll be able to maintain that membership in particular? Or is that where you see the most risk right now?
Alexander R. Cunningham
Chris, just a clarification. So 1/3 of our members is in D-SNP, but roughly 1/2 of our overall MA is duals. As you know some duals can choose the non-dual products. But look, and the recent regulatory changes certainly provide pressure to MA, but we take a long-term view when we’re assessing our strategy and believe the product will continue to provide value to consumers. That said, it’s worth noting that in recent years, MA penetration is up over 30% and that’s on a growing population, so clearly, there’s continued demand for the product. So to our population, there are low-income individuals who rely on MA as a mechanism, really, for financial security and budget predictability. And just to provide a little color, our data suggests that the average household income for our non-dual members doesn’t differ much from that of our duals. It’s roughly a few thousand dollars in difference for annual household income. So when you consider that the alternative is going to be less financial certainty in the product and indemnity product like a private fee or traditional medical advantage or stuff,] we think that the MA product is going to be — will continue to be an attractive offering, so — and there are people, also, aging in the MA every day that are accustomed to this sort of network products. So as we’ve stated in the past, we’re 100% HMO concentrated and the risk transfer mechanisms and flexibility and benefits that we have provide a toolkit would leverage to help manage through challenging rate environment. So — and we’re going to continue to evaluate the MA book by product and market for next year, but our focus remains on [indiscernible].
Christian Rigg – Susquehanna Financial Group, LLLP, Research Division
Okay. And just one point of clarification here on the sequestration impact. So just to be clear, your guidance would be $0.30 higher if not for sequestration, is that correct?
Thomas L. Tran
That’s correct. The initial guidance we provide back in February, we did not factor in sequestration, so we estimate that’s going to be approximately $0.30 EPS for the balance of this year.
Operator
Our next question, from the line of Carl McDonald with Citigroup.
Carl R. McDonald – Citigroup Inc, Research Division
I wanted to start with that guidance question. So if sequestration is a negative $0.30 — the benefit of favorable development was a positive $0.23 so that nets out to a negative $0.07.Guidance is going up $0.05 to $0.10. What’s the major driver of the $0.12 to $0.17 increase?
Charles G. Berg
Sure, Carl, this is Tom. As you know, in the first quarter, we had the negative impact due to flu, which we don’t expect that to really be [indiscernible] for the balance of the year. Secondly, Missouri Care, as we mentioned before, would be accretive to us for the balance of the year. That transaction closed at the end of March. And thirdly, as we have more visibility into the first quarter and a number of other initiatives that we have accomplished, we feel that our outlook is improved by a number of those factors.
Carl R. McDonald – Citigroup Inc, Research Division
Got it, okay. And second question is, what would be the days claims payable or the medical claims payable balance have been without the Missouri Care acquisition?
Thomas L. Tran
Sure. Missouri Care has an impact of 2 days. In other words, without that, DCP would’ve been 2 days lower. However, as you know, in the first quarter of each year, we have the seasonal impact of PDP, which has the effect of decreasing the DCP by at least a few days because of the — as you can see, the MBR for the first quarter is fairly high, especially this year, the impact of the hands product also magnify that. So DCP is really in line with what we expected.
Operator
Our next question, from the line of Brian Wright, from Monness, Crespi, Hardt.
Brian Wright – Monness, Crespi, Hardt & Co., Inc., Research Division
Just to follow-up on that one. All the acquisitions in the quarter added 2 days to the DCP, or just the Missouri Care?
Thomas L. Tran
Just Missouri Care, 2 days. And if you include the South Carolina, it’s marginally somewhere in the mid-2.
Brian Wright – Monness, Crespi, Hardt & Co., Inc., Research Division
In the mid-2, okay. And then could you just sort of give us an update on your current New York membership and can kind of just ballpark revenues there now?
Thomas L. Tran
Sure. If you give me a second, I can tell you what membership in New York obviously. We would’ve been growing membership in New York and as of the end of March, we had approximately, in terms of Medicaid, about 85,000 to 86,000 members. And that has been growing for us, especially on the long-term care and even on dependent population. And that does not include the, obviously, the MA business which is separate from that number.
Brian Wright – Monness, Crespi, Hardt & Co., Inc., Research Division
And what’s your average kind of PMPM [ph] on the Medicaid side of New York now?
Thomas L. Tran
We don’t have that numbers. We don’t disclose that, but if you can follow up with Gregg, we’ll see what we can come for you.
Operator
Our next question is from the line of Josh Raskin from Barclays Capital.
Joshua R. Raskin – Barclays Capital, Research Division
Just the first question here, on the MA growth. Obviously in California, the strongest in New York, also very strong. I’m just curious what’s driving that. What are you guys seeing in that market? I know the acquisition in California. I know that’s been a very fast growing plant, historically. I was curious, what it is that’s attracting. And then in some of that New York Medicare growth in the CMS data, is that the be LCC stuff showing up in there?
Alexander R. Cunningham
No, Josh, this is Alec. There are really 3 parts to the growth for MA book over the last year and continues. As you point out, one is the acquisitions, of course, in California and we’ve talked about. It might [indiscernible] that in the Arizona acquisition that’s Medicare only at this point. Secondly, we’ve got the geographic expansion. Just last year, we added additional counties to our footprint, so we’ve got more geographies to be selling into. But a big driver of that entry year sale is of course is that we are operating dual plans in all but 2 of our counties nationwide So we’ve got a permanent sales presence and we’ve got sales promotion and sales support activity happening year-round and with the agents of the boomers who can choose a plan as they come into program and then the duals’ ability to select a plan at anytime or make a change. That gives us that opportunity to have a 12-month, 4-season-selling cycle.
Joshua R. Raskin – Barclays Capital, Research Division
And Alec, are you guys doing anything in terms of monitoring that new membership from an MLR? Are you guys more attuned to sort of the growth membership as opposed to the existing book? Anything you’re doing to monitor that?
Thomas L. Tran
Sure. Josh, this is Tom. Yes, we do monitor that closely. Certainly, the performance of the new members versus existing member that renew with us. We don’t disclose those data, but we track that — most of those members and they’re tracking fairly close to our expectation.
Alexander R. Cunningham
And Josh, as we said in the prepared remarks, too, 70% of our current MA book is served through some sort of the capitation risk transference aligned incentive, kind of a contractual model as well, so we do monitor cost, we monitor tenure. But that, we think, is one of the strengths of our model is that solid financial alignment with the majority of our members in those risk-sharing arrangements.
Joshua R. Raskin – Barclays Capital, Research Division
Got you. And just the last one, just to clarify again and understand the DCP. I think down 3% year-over-year. If you exclude Missouri Care, maybe that’s 5%, and PDP is a smaller percentage of the overall book. So maybe you could just help us understand what’s going on in a year-over-year basis?
Thomas L. Tran
So comparing to the end of December, we just start with that first. DCP is flat and you count the acquisition then DCP would’ve been down by about, let’s say, 2 to 2.5 days. However, the first quarter was impacted by PDP by at least — more than offset that. So compare it to prior years, it was 43 days and in prior years, as you know, we had significant favorable development that also had an impact on the DCP versus this year.
Operator
Our next question, from the line of Kevin Fishbeck with Bank of America Merrill Lynch.
Kevin M. Fischbeck – BofA Merrill Lynch, Research Division
Just wanted to go into the Medicaid MLR guidance. I think that the $16 million that they will give of Medicaid. [indiscernible] should’ve added [indiscernible] MLR by about 30 basis points, but it looks like you’re reaffirming the outlook there? Is there any offset in the future that you’re forecasting now?
Thomas L. Tran
Yes. So this is Tom here. And essentially, in the first quarter, as we mentioned in our prepared remarks, that we had the flu impact. And most of the flu impact was in the Medicaid segment and I would say that, that adds at least 100 bps to the first quarter Medicaid MBR. So that, obviously, would not be repeating for the balance of the year. So the second part is that, obviously, more than offset much of the favorable development that you saw in the first quarter. So for the balance of the year, we continue to expect Medicaid to perform within the range of expectation.
Kevin M. Fischbeck – BofA Merrill Lynch, Research Division
Okay. And then can you just clarify the prices here, a percent number that you feel like the risk adjustments are going to impact your ways above and beyond the actual rate changes? And then you just go into a little bit more detail about how you plan to respond through the MA changes? You mentioned that you’re already very well aligned with providers, so — you mentioned network changes as an option. That’s why I want to get more color there as to what you might be able to do [ph].
Thomas L. Tran
Sure, I will — the MA rate change for 2014 has a net effect to us by approximately 4% to 5%. So certainly, we are in — the biggest factor really impacting us was the recalibration of risk adjustment model. Certainly, that is new phenomenon to us more than we have expected in 2014. So we are in then midst of, obviously, evaluating 2014 plan design, benefits and we have certainly a lot of toolkits that we can look at to figure how we can minimize some of the impact to our financial model.
Alexander R. Cunningham
Yes, Kevin, it’s Alec. As I said earlier, we’re really evaluating every one of those plans by county and by market. And again, we think that being 100% HMO gives us relatively strong positioning to weather some of the challenges, but we have the risk transference that we mentioned. Obviously, we’re ever diligent looking at unit pricing and opportunities to reprice or negotiate. Unit pricing benefits, obviously, are something that we’re visiting. The so-called extra benefits and enhanced benefits to see if there are changes that need to be made there. And then of course, our operating multiple products crossed 204 counties and 14 states and so they can certainly be strategic shift in our different products or realignment of resources and other things year-over-year. So a number of different levers, a number of different things that we’re evaluating, but that’s — again, we think that HMO — 100% HMO product is going to give us solid footing to think about 2014.
Kevin M. Fischbeck – BofA Merrill Lynch, Research Division
And just to clarify, the 4% to 5% rate headwind, does that include the impact of the industry fee or is the industry fee on top of that?
Thomas L. Tran
That does not include the impact of the industry fee.
Operator
Our next question, from the line of Anna Gupta [ph] from Downing & Partners.
Unknown Analyst
Just following up on the last question again, then, going from 2013 and what you’re seeing in your legacy Medicare book, exact divisions, it still seems there’s still a little bit of the deterioration in the margin. And then as you — was that intentional? Does that personally include the sequester? And as you’re thinking about what this might play out into 2014, wanted to explore a couple of the levers you’ve got. You do have the slow income population, thus this vision, dental, fitness type of thing, if you — do you have an opportunity to take that out and is that not in the total beneficiary cost of max that is stipulated by CMS? And then secondly, on the star scores, your performance has been weaker and that will be a big headwind in ’15, so can you give us some color on what’s going on there?
Thomas L. Tran
Sure. There are many pieces within your question there. Let me see if I can chip away at those items, and if I miss something, please prompt me. So the MA MBR, we anticipate that to increase relative to 2012 because of the benefit design that the bid for 2013. And secondly, a few acquisitions that had toward the 2012 — the end of 2012 also operated at a higher MBR, for example, California, whereby we operated at a very high level of global capitation or strong risk sharing arrangement with providers, whereby by design, MBR is typically higher. Third, in terms of the — talking about the existing book, new book, I mentioned before, we track those items we expect right now based on the early week that they track close what we expected. In terms of the benefit design that you’re talking about, the ancillary benefit — actually, we definitely are going to take a look at those relative to 2014 benefit design to ensure that we still have a competitive product relative to the fee for service or the computation, as well as ensuring that we have an outright margin there within our expectation. So premature for me to talk about 2014, however, we have a lot of tools that we can look at to ensure that we will operate okay on the MA side.
Alexander R. Cunningham
Anna, it it’s Alec. Just to capitalize on that and answer one of the — part of the questions that you asked. In terms of the benefit design, in addition to things that are generally referred to as the extra benefits, the dental, vision, [indiscernible] those sorts of things, and the member call [ph] sharing arrangements and the physical component of the benefit also fits into that evaluation in that logic. And so as we’ve said earlier, there’s certainly an attraction to some of these extra benefits, so to speak, but we also view particularly with our strategic focus on that low-income strat of the population, that’s complementary to our Medicaid book that there is a real budget sensitivity, and for that population, the economic security of the predictable out-of-pockets and co-pays and premiums and other things, is enormously important. So we have to evaluate all of that when we think about our plan designs by product and by market. And in terms of quality, we agree with your contention that that’s important and that’s why we’ve said that that’s one of our — improving the health care quality and access is one of our 3 strategic points of emphasis as a company and we continue to invest heavily and have significant efforts to raise the bar there and pleased to see that our Florida company, both Medicaid and Medicare, just got the commendable accreditation from NCQA. But that’s exactly why this remains a strategic focus for us.
Unknown Analyst
And then just finally on the network strategy, you’re already at 100% HMO. How much of this is partial risk arrangements versus full risk? In other words, are you’re already maxed out on the baseline there, or is there room to move the needle?
Alexander R. Cunningham
There’s a broad spectrum of arrangements in terms of risk transference and so as we said, 70% of our network already has some sort of aligned interest across everything from primary to fully integrated risk arrangements. And what we offer is in large part a function of what is appropriate for the organization and sophistication and capabilities networks in the various geographies, as you can imagine the sort of integrated group and sophistication that might exist in the major metropolitan areas could be quite different in our more rural areas of certain of our states. And so we pick the right arrangement that creates the right alignment around cost and quality based on the market that we serve and what we think are the capabilities and interests of our network providers.
Operator
Our next question is from the line of David Windley with Jefferies & Company.
David H. Windley – Jefferies & Company, Inc., Research Division
I wanted to try to understand a little better the mechanics on the admin ratio. So if — I’ll first start with your acquisitions. Did those come in, I presume they did, but did those come in with higher admin ratios than the company? And then from the sound of your comments, it sounds like rather than seeing some immediate synergies, you were actually adding investment to the integration of those acquisitions and that contributed to a higher admin ratio? I just want to make sure I got that right.
Alexander R. Cunningham
David, I’ll let Tom talk about the math and just to recount some comments I made last quarter, with those acquisition’s, in addition to the basic integration work of getting them on our platform, getting them implemented into our daily activities, each of those is also part of a broader growth strategy as we’ve talked about in our 3-product strategy. 2 of the acquisitions were Medicare only, 2 of them were Medicaid only. But in addition to getting them onto our platform, there are various activities that we have underway in terms of network expansion, geographic expansion and others things in anticipation of growth and expansion opportunities across our 3-product portfolios. So that’s the reality for this year. And I think it’s important to think about those, not only as the acquisition themselves, but now that the feeds into a longer-term growth and expansion strategy. And Tom, what would you offer?
Thomas L. Tran
Yes. So I want to go into the details of the expense ratio of each one of these entities that we acquired. However, I will look at a holistic picture. As Alec mentioned before, we do incur certain upfront integration cost that bring these entities into our platform. And second, we continue to invest in these entities in terms of service and quality and also expansion of their footprint. And third is that, we also continue to invest in certain infrastructure and development in anticipation of the Affordable Care Act implementation and also to continue to invest in expansion in anticipate of ’14. So those are really the items that really impact the first quarter, but as you can see, we continue to expect that expense ratio will be in the range as we provide in initial guidance range.
David H. Windley – Jefferies & Company, Inc., Research Division
Right, okay. A couple other clarifications. You mentioned, in terms of the roll forward for Carl, or the bridge for Carl, you mentioned Missouri accretion. I don’t think you quantified that accretion. Would you be willing to do that?
Thomas L. Tran
We are not disclosing the accretion. So I would say that the improvement that we’re talking about in terms of the outlook is part of that, but I wouldn’t say that it’s all of that.
David H. Windley – Jefferies & Company, Inc., Research Division
Okay. And then you also commented on higher flu. Is the number you gave the amount above your expectations? Or was that the total impact of flu in the quarter?
Thomas L. Tran
The total impact — the $0.17 is really the variance between 2013 versus 2012. So the impact of flu in a quarter was much higher than that $0.17, somewhere in the mid $0.20.
David H. Windley – Jefferies & Company, Inc., Research Division
Okay. And so would use call that $0.17 cents kind of higher than your expectations?
Thomas L. Tran
No, not all of the $0.17 is higher than expectation. A component of that was higher. Now let me just comment a few more things on the flu. We saw the flu kind of peak in December. It stabilized in January. We typically see a significant drop based certain seasonality that we observed in the past. February and March did drop significantly from January and December, but not as much as we had hoped for.
David H. Windley – Jefferies & Company, Inc., Research Division
Okay. My last question, a little more conceptual. On stars, I’m wondering what you’re investment activity and your aspirations for improvement on stars are for 2013’s measure later in the year. And I guess by contrast, do you have plans that would be at risk for having sub 3 stars for 3 years in a row?
Alexander R. Cunningham
Yes, David, in terms of aspiration and the planning, what we have that is if you think about the 4 attributes of stars that HEDIS caps off the administrative data, we have plans at the market level. So based on where we are and where we need to get, and certainly, where we need to get is 3 stars and above in our various markets. And then ultimately, of course, we want to track towards the bonus levels. But for each of those, HEDIS identifying and closing care gaps, we have a whole set of activities from infrastructure improvements and upgrading operating platforms and things here to feel base care teams and pay for performance and other activities, the hose the caps and the other stuff that we’ve talked about quarter-over-quarter, have a whole variety of initiatives targeting the member experience, making sure that we’re meeting member perception, making sure that those chronically ill patients that are measured through hose and things are getting handled appropriately. So it’s broad base, it’s corporate, it’s field, it’s infrastructure, it’s physician alignment, it’s member incentives, it’s really all of the levers that you would imagine and exactly how we approach it at the market specific level is going to be a function of our performance there, demography, the benefit designs and other things.
Operator
Our next question, from the line of Tom Carroll, with Stifel, Nicolaus.
Thomas A. Carroll – Stifel, Nicolaus & Co., Inc., Research Division
Just one question on the PDP. As we sit here in May, does the MLR in this book remain above your expectations, or would you suggest maybe it’s gotten more in line?
Thomas L. Tran
As I commented in my prepared remark, Tom, that absent sequestration, we expect PDP to be in a range of guidance that we have previously provided back in February. So obviously, you have the seasonal impact of the PDP in our first quarters as you kind of expect with people before they go into the doughnut hole and paying for portion of their cost of care. Secondly, the enhanced product that we have offered to choose are primarily in this year, we have very good success, far more than we had expected in terms of membership growth, so that kind of put a little bit more pressure in the first quarter, but we expect that MBR for the enhanced product to really turn around in the last 3 quarters of the year, as well as for the classic or basic products that also has seasonal impact in the first quarter.
Alexander R. Cunningham
Yes, Tom, just to reiterate one of the points that Tom made. As we’ve talked about over the last couple of quarters, we’ve been targeting that very price-sensitive, cost-conscious, low-income chooser segment, and so we’re pleased to see that our benefit design for that enhanced product is attractive to the population and we’re certainly pleased to see that we’ve gotten sales for it.
Thomas A. Carroll – Stifel, Nicolaus & Co., Inc., Research Division
So I just think that PDP was one of the key risk items for you guys this year and it sounds like that sequestration is really the only impact and you’re not seeing any kind of outsized overutilization or additional, I guess operational expense flowing through there. That’s good.
Operator
Our next question, from the line of Matt Borsch from Goldman Sachs.
Matthew Borsch – Goldman Sachs Group Inc., Research Division
Just if I could ask a couple more questions on the outlook for 2014 directionally. Would you be able to disclose about what your aggregate per member per month or per member per year rebate is on your Medicare Advantage products? I’m just trying to get a sense for how much room you guys have to make potential benefit adjustments going into next year.
Alexander R. Cunningham
Tom, that benefit design — excuse me, Matt, it differs quite a lot across our 204 counties and 14 different states, but that’s obviously, given the competitive value to those sorts of numbers, we’re not going to size that or price it. But I would say, again, is that we think the HMO product gives us good footing and we’re certainly reevaluating the entire benefit design. But again, I think particularly for our population, it’s very, very important to think about the economic security peace of mind coefficient that comes with the predictable out-of-pocket and other things compared to frankly, any other alternative that these folks are going to have. Going to traditional Medicare means giving up budgets predictability by essentially entering an indemnity product, similarly with a private fee or a PPO product where you may not have a close network with a gatekeeper and those sorts of utilization tools and aligned economic incentives. And so I think you’ll find that, that largely influences a lot of our thinking, but that — those PDPs are going to be very different by county and by population.
Matthew Borsch – Goldman Sachs Group Inc., Research Division
All right. We’ll track that going forward. Just on another front, on the industry fee, not so much on Medicare Advantage, but on the Medicaid side. Have you had more discussions with regulators or state officials about handling the fee on the Medicaid side as you go into next year?
Thomas L. Tran
Sure, Matt, this is Tom. Certainly, we have had those discussions with our various state customers and generally, we expect that the industry fee will be an element of the cost structure that we’ll be baking to the rate development from an actuarial sounding viewpoint. In fact, maybe a few already know that in the state of Florida, they do have a line item in their budget to recognize the industry fee.
Matthew Borsch – Goldman Sachs Group Inc., Research Division
Yes, got it, got it. And maybe just one last one, back on Medicare Advantage. Is there anything that’s changing in the star scoring methodology that you think could be particularly helpful to you with your population? I mean, we’ve noted with other plans the challenges that star has set up for some of the lower income dual-focused plans in particular. I’m not sure whether it could be characterized as unfair or not, but does not seem like it’s getting rectified at all as you go into the scoring that you’re going to get in September?
Alexander R. Cunningham
Matt, I won’t predict the future in that way, but I would certainly say, we’ve engaged fully in that dialogue and have tried to raise an awareness to the way some of the scored measures and the relative weights between the measures might impact a number of our members, given their challenges in terms of chronic condition, prevalence, behavioral health, mobility challenges and other things. So we think that there is certainly is a policy argument to be made that using a single process of measurement across all populations in all geographies might not be optimal, but we’re going to stay engaged in that discussion, but we won’t — I wouldn’t predict what our customers would do in the coming months.
Operator
Our next question, from the line of Peter Costa with Wells Fargo.
Peter Heinz Costa – Wells Fargo Securities, LLC, Research Division
A question on Medicare Advantage. Last year, your Medicare Advantage MLR deteriorated through the year from the first quarter on up. And some of that would have been due to the prior period development. But since you said that most of the PPD this year and last year was in the Medicaid segment, it still rose through the year. The seasonality should be worse this year, you think, given with the timing of Easter and sequestration. Your guidance of 86.75% to 87.75% is just, if you analyze, is going to be about flat in Medicare. You said there are some other factors, I assume one of those is acquisitions, but can you kind of quantify those for us so that we can understand exactly how you’re going to get the MLR to otherwise improve?
Thomas L. Tran
So this is Tom, and as we mentioned in our prepared remark, that we expect MBR for the MA segment to be within the range of the previous guidance, absent the sequestration that we didn’t factor in before. So we feel reasonably comfortable with what we have seen in the first quarter and certainly, based on a number of other activities relating to our cost and care management for the balance of the year, we feel comfortable with our range of guidance for the MBR. Regarding the new acquisition, certainly, in California, as you know, it’s primarily global cap major risk sharing arrangement with providers, whereby you have delegation of a lot of activities to them, whereby admin expense can be much lower to operate, therefore, you’re willing to operate it at a much higher MBR. So we don’t disclose those specific numbers, but I would say, it would be fair to say that California, which is over 54,000 members, becomes a significant component of our membership base and certainly have an impact on the MBR.
Peter Heinz Costa – Wells Fargo Securities, LLC, Research Division
But what’s going to impact the seasonality this year to make it different from last year?
Thomas L. Tran
Obviously, each year, you bid on the benefits differently. So last year was different than this year, obviously. So last year, as you can see, the first quarter, our MBR was very low. And obviously, for the year, we operate that within the range that we kind of expect. And this year, we expect it to be in the range that we really have provided guidance before.
Peter Heinz Costa – Wells Fargo Securities, LLC, Research Division
And you can’t help me out with what exactly changed from last year to this year?
Thomas L. Tran
There are many factors, including, obviously, revenue, our course of members, new versus old, cost initiatives that we implement, network reconfiguration. I can go through the whole list. However, at the end of the day, what’s important is what is the MBR and what is operating margin that we expect from this block of business and we feel comfortable with that.
Operator
Our next question is from the line of Sarah James with Wedbush Morgan.
Sarah James – Wedbush Securities Inc., Research Division
You’ve talked about a mix shift towards the low income to an enhanced PDP products. And any time you have a new population come in or new product that’s been as successful as this, there’s always a possibility of behavior patterns of these people in that product being different from what you’ve seen in the past. So I was hoping you could tell us how new this low-income chooser population in an enhanced benefit design product is to you. Was it something that you had offered in the past that was just a smaller portion of the book, or is this a newer materially different product offering than what you’ve had in the past?
Thomas L. Tran
Sarah, let me just paint a broad picture. In 2012, as you know, the auto assignment, primarily the low-income subsidy to a significant portion of our membership, but after we dropped off the California auto assignment, that’s certainly from a distribution viewpoint, we are now more towards the chooser. And so that’s how we design benefits and plans for 2013 to targeted choosers, both for a base product, as well as an enhanced product. So the enhanced product, certainly, some of those new members that joined us are new to us without the experience from the past and we track them very closely. So the mix shift in the memberships is more towards the chooser versus the auto assigned from that perspective. However, overall, we believe that the MBR, the performance for the entire box is really tracking pretty close to what we expected, that’s why we provide a guidance range to be within what we had previously set.
Alexander R. Cunningham
And Sarah, you’re right. The process of on-boarding is what you fairly heard us before there’s transition of care and that’s something that we face, not only each on PDP, but it’s also something that we face for Medicaid launches and new membership on the Medicare Advantage side. And so that’s an effort that we undertake in the first quarter with the Part D population as really keep an eye on the claims data, understand what our members are using and undertake the appropriate efforts to get them aligned with our medication therapy management programs, our formulary and various other things. And so that’s an activity that we face each year across, frankly, the majority of our products. And the transition of care window, so to speak, is really, in large part, occurred by the end of the first quarter.
Sarah James – Wedbush Securities Inc., Research Division
It sounds like this enhanced product targeted towards users is something you’ve had before, and with the on-boarding being mostly done, you guys have a good amount of clarity…
Alexander R. Cunningham
I would characterize it — to the essence of that question, it is a new benefit design or a modified benefit design. It’s targeting that the population. We, of course, have had non-dual products in years past, but as we gain more and more experience with the book year-over-year, it then informs our strategic product positioning. So we’ve certainly had products that were non-dual products, but this one had some modifications this year that we thought would be attractive to choosers.
Sarah James – Wedbush Securities Inc., Research Division
Okay. And the last session — the last day of session in Florida is today, so I was just wondering if your contacts in Tallahassee are giving any indication on the likelihood of seeing an action or a special session being called over the summer. And if you could just remind us, how much of your current earnings is tied to the Florida acute rebid?
Alexander R. Cunningham
So in terms of what’s going on in the Legislature, I certainly wouldn’t try to forecast that. And I guess we do have a few hours left. I think at this point, in terms of the expansion on Medicaid, there’s a lower — a very low likelihood. What I think is positive though, frankly, compared to where we were a handful of months ago, was if there was such robust dialogue this year among all 3 parties in terms of expansion. And the one thing that became clear is at this point, the House, the Senate and the Governor all focused on trying to get more people covered there, just quite distinct differences in the mechanisms and the funding and the way that they would like to do it. But I think in the longer term, given our size and our presence in Florida and the networks and programs that we have targeting that low-income population, regardless of what might happen, be it through traditional Medicaid, through the Florida Healthy Kids program or something else, we’re going to feel like we have an effective toolkit for it. So that wasn’t the case a handful of months ago when — and frankly, it appeared that any sort of discussions about expansion was not going to happen. But in terms of what might happen after the regular session ends, I have no insight into that.
Thomas L. Tran
In terms of your question relating to the contribution of Florida. Certainly, Florida is a significant market for us. So we disclosed in our news release, premium revenue, for a certain very significant state, including Florida, but absent the — beside that — outside of that, we don’t get into the MBR by specific market. We provide an MBR by the business segment for the whole Medicaid.
Sarah James – Wedbush Securities Inc., Research Division
Maybe if we don’t talk about earnings, but just stick to the premiums, can you give us an idea of how much of your Florida Medicaid premiums are tied to the rebid portion of the Florida Care contract?
Thomas L. Tran
Roughly about, on an annualized basis, $900 million of our premium is tied to the MMA bid.
Operator
And our final question for today will be from Scott Fidel from Deutsche Bank.
Scott J. Fidel – Deutsche Bank AG, Research Division
Just had a question, just going back to Medicare Advantage on 2014. And just interested if you’ve been able to tease out at all how the all in rates look for the duals, let’s say, the 1/2 of your MA memberships that are duals relative to the other 50%? And maybe just how much variability, I guess, around that, sort of down mid-single digits do you see in the rates between those 2 segments.
Thomas L. Tran
Well, it’s too early for us to talk about 2014. But I would say that generally, the recalibration of the risk adjustment has a more pronounced impact on the dual population. So because of our very large representation in that population, the overall rate impact, certainly, I would say that probably more than the average of the market. But too early for me to talk about 2014 at this point, so would will just step away from that for now.
Scott J. Fidel – Deutsche Bank AG, Research Division
Okay. And then just a follow-up on that area. Just on the MLR side, when you think about the duals, MA members relative to the none duals, I’m assuming there’s probably some differential in the MLR versus SG&A in that population given the higher revenues, but just interested in terms of how much differential do you see if you take your — the MA MLR guidance for, let’s say, sort of low 87-ish, at the midpoint, how much variability there is between the duals and then the non-dual by population.
Thomas L. Tran
So we do not disclose the specific MBR for the duals and non-duals. But I would say that generally, the duals perform somewhat better than the non-duals from an MBR perspective.
Scott J. Fidel – Deutsche Bank AG, Research Division
Okay. Then just quickly, just one last question, just on Medicaid, just on rate updates. Any states that you’ve had rates updated in recently, or where you’re expecting rate updates in the near future, just sort of interested in terms of how do you think about your average rate updates for 2013, whether those have been coming in line with your guidance or whether there’s been any differences in any end markets.
Thomas L. Tran
Sure. As you know, we disclose rate for the significant markets, material markets. And you know, Kentucky, we’ve already talked about it the last time. So regarding the Florida rates, it is effective September 1, 2013. We are in the middle of data exchange and discussion with the state, so premature for me to discuss that. Same thing with Georgia, but they will be effective July 1. So we’re in the midst of having those discussions with our state customers.
Operator
Mr. Cunningham, I’ll turn the call back to you for your closing remarks, sir.
Alexander R. Cunningham
Great. Thank you, operator, and thanks to all of you for participating in today’s call. And we look forward to speaking with you again next quarter. Have a great day.
Operator
Ladies and gentlemen, this does conclude the conference call for today. We thank you, all, for your participation. Have a great weekend, everyone.
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