Anthem grows Medicare business as overall membership dips

• Anthem beat analyst expectations during its third quarter with a net income increase of nearly 29% to $960 million for the quarter on revenue of $23.2 billion, a 3.7% increase.
• Despite a slide in membership in the payer’s local group, Medicaid and individual business segments, Anthem reported an 18% increase in members in its Medicare unit, according to Q3 earnings reported Wednesday.
• The nation’s second largest insurer raised its guidance with the expectation that adjusted net earnings for 2018 will be greater than $15.60 per share.

Anthem has come under fire from providers this year for a number of controversial policies designed to help drive down care costs. In some states, the payer has begun denying certain emergency room claims if the visit is later decided to have not been a medical emergency. A recent report found that were that policy to be adopted universally by commercial insurers, one in six ER visits would be denied coverage.

But so far the backlash hasn’t hurt revenue for the Blues payer. Similarly, Aetna and UnitedHealth Group and Centene have all reported revenue increases for Q3. Cigna releases its earnings report Thursday.

Anthem’s significant profit growth in the third quarter was driven by an increase in its government accounts, mainly large gains in Medicare enrollment, and an improved benefit expense ratio.

Overall, the payer’s membership declined nearly 2% to a total of 39.5 million members during Q3. The decline was largely due to Anthem scaling back its footprint in the individual exchange business, a 59% drop off in enrollment. Declines were offset by the nearly 18% growth in its Medicare business, now covering 1.76 million lives.

The Indianapolis-based insurer also saw slight declines in its Medicaid and local group segments.

The company’s local group segment remains its largest in terms of enrollment with 15.7 million members. National accounts represent the second largest enrollment group with 13.4 million members.

“Third quarter membership met expectations and we expect growth to accelerate in the fourth quarter,” CEO Gail Boudreaux told investors Wednesday morning.

The insurer improved its benefit expense ratio to 84.8% from 87% during the prior year. Benefit expense ratio is a key metric that measures spending on members’ claims compared to the revenue the payer generates from premiums.

“Our third quarter medical cost performance was strong and reflects the impact of our value-based, integrated care arrangements,” Boudreaux said.

During the third quarter, Anthem repurchased 1.5 million shares for $397 million. The company paid a quarterly dividend of $0.75 per share during the third quarter. It also expects to pay another $0.75 per share quarterly dividend during the fourth quarter.

https://www.healthcaredive.com/news/anthem-grows-medicare-business-as-overall-membership-dips/541063/