Premium revenue includes direct policy premiums collected directly from members and from the Centers for Medicare & Medicaid Services ("CMS") as part of the Advanced Premium Tax Credit Program ("APTC") and Medicare Advantage programs, along with assumed premiums from the Company's reinsurance agreements. Premium revenue is adjusted for the estimated impact of the risk adjustment program required by CMS. Total premiums earned includes the effect of reinsurance premiums ceded as part of the Company's reinsurance agreements. Refer to Note 4 - Reinsurance for more information.


	Year Ended December 31,
	2022		2021		2020
	(in thousands)
Direct policy premiums	$	6,704,330	$	3,420,328	$	2,287,319
Assumed premiums	138,109		16,298		299
Direct and assumed premiums	6,842,439		3,436,626		2,287,618
Risk adjustment and corridor, net	(1,507,919)		(723,638)		(615,279)
Premiums before ceded reinsurance	5,334,520		2,712,988		1,672,339
Reinsurance premiums ceded	(1,463,403)		(881,968)		(1,217,304)
Total premiums earned	$	3,871,117	$	1,831,020	$	455,035

The following table summarizes the amounts of direct policy premiums received directly from CMS as part of APTC and Medicare Advantage for the year ended December 31, 2022:


	Year Ended December 31,
	2022		2021		2020
	(in thousands)
APTC	$	5,675,794	$	2,468,712	$	1,351,379
Medicare Advantage	$	54,355	39,562		17,269
Total paid by CMS	$	5,730,149	$	2,508,274	$	1,368,648

Administrative services revenue includes revenue earned for services provided under the Company's +Oscar offering. The Company leverages its technology platform to provide administrative services to providers and payors to directly enable their shift to value-based care. Revenue from contracts with customers is reported within administrative services revenue in the consolidated statements of operations.

As of December 31, 2022 and 2021, receivables from contracts with customers were $33.7 million and $2.8 million, respectively, and are reported within premiums and accounts receivable on the consolidated balance sheets.

The Company enters into reinsurance contracts under two different types of arrangements: quota share reinsurance contracts and XOL reinsurance contracts. In quota share reinsurance, the reinsurer assumes an agreed percentage of the underlying policies being reinsured and shares all premiums and incurred claims accordingly. In XOL reinsurance, the reinsurer agrees to assume all or a portion of the ceding company’s losses in excess of a specified amount.

All premiums and claims ceded under the Company's quota share arrangements are shared proportionally with the reinsurers. As part of the agreements, the Company also receives ceding commissions, which are calculated based on a percentage of ceded premiums, and experience refunds (resulting from actual claims experience being lower than a specified threshold).

ASC 944: Financial Services - Insurance requires the substance of all reinsurance arrangements to be evaluated to ensure that significant risk is transferred by the ceding entity to the reinsurer. When significant risk is transferred, reinsurance accounting is required. Reinsurance contracts that do not meet the risk transfer requirements necessary to be accounted for under reinsurance accounting are accounted for under the deposit accounting method. The Company currently has quota share reinsurance arrangements with more than one counterparty with multiple state-level treaties. These arrangements are accounted for under both reinsurance accounting and deposit accounting.

Under reinsurance accounting, premiums paid to the reinsurer are recorded as ceded premiums (a reduction to premium revenue). Expected reimbursements from the reinsurer for claims incurred are recorded as a reduction to claims incurred and a corresponding reinsurance recoverable asset.

Under deposit accounting, a deposit asset or deposit liability is recorded based on the consideration paid or received, irrespective of the experience of the contract. Fees retained by the reinsurer are recognized within other insurance costs on the statement of operations. As a result, premiums earned and claims incurred that would have otherwise been ceded under reinsurance accounting are recorded on a net basis on the consolidated balance sheet as a deposit liability. The Company classifies deposit liabilities within accounts payable and other accrued liabilities on its consolidated balance sheets.

The composition of total reinsurance premiums ceded and reinsurance premiums assumed, which are included as components of total premiums earned in the consolidated statement of operations, is as follows:


	Year Ended December 31,
	2022		2021		2020
	(in thousands)
Reinsurance premiums ceded, gross	$	(1,524,157)	$	(921,953)	$	(1,308,275)
Experience refunds	60,754		39,985		90,971
Reinsurance premiums ceded	(1,463,403)		(881,968)		(1,217,304)
Reinsurance premiums assumed	138,109		16,298		299
Total reinsurance premiums (ceded) and assumed	$	(1,325,294)	$	(865,670)	$	(1,217,005)

The Company records claims expense net of reinsurance recoveries. The following table reconciles the total claims expense to the net claims expense as presented in the consolidated statement of operations:


	Year Ended December 31,
	2022		2021		2020
	(in thousands)
Direct claims incurred	$	4,428,000	$	2,403,108	$	1,364,432
Ceded reinsurance claims	(1,290,349)		(800,769)		(1,055,371)
Assumed reinsurance claims	143,147		21,656		292
Total claims incurred, net	$	3,280,798	$	1,623,995	$	309,353

The Company records selling, general and administrative expenses net of ceding commissions. The following table reconciles total other insurance costs to the amount presented in the consolidated statement of operations:


	Year Ended December 31,
	2022		2021		2020
	(in thousands)
Other insurance costs, gross	$	868,385	$	492,609	$	343,374
Ceding commissions	(161,946)		(82,246)		(126,840)
Other insurance costs, net	$	706,439	$	410,363	$	216,534

The Company classifies reinsurance recoverable within current assets on its consolidated balance sheets. The composition of the reinsurance recoverable balance is as follows:


	December 31,
	2022		2021
	(in thousands)
Ceded reinsurance claim recoverables	$	776,266	$	406,017
Reinsurance ceding commissions	42,805		23,517
Experience refunds on reinsurance agreements	73,816		2,456
Reinsurance recoverable	$	892,887	$	431,990

The financial condition of the Company's reinsurers is regularly evaluated to minimize exposure to significant losses. A key credit quality indicator for reinsurance is the financial strength ratings issued by the credit rating agencies, which provide an independent opinion of a reinsurer’s ability to meet ongoing obligations to policyholders. The Company's reinsurers have most recently been issued financial strength ratings of A+ (A.M. Best).

The creditworthiness of each reinsurer is evaluated in order to assess counterparty credit risk and estimate an allowance for expected credit losses on the Company's reinsurance recoverable balances.