- Anthem announced its first quarter earnings Wednesday, with revenues flat at $22.3 billion and net income up 30% to $1.3 billion as the payer continues its aggressive push to cut costs with policies like reviewing emergency claims for medical necessity.
- Medical enrollment declined by about 616,000 members to 39.6 million, a decrease of 2.5% year-over-year that the payer attributes to a reduced footprint in the ACA exchange markets and to sales execution.
- Anthem increased its full-year 2018 net income to be greater than $14.12 per share, with adjusted net income expected to exceed $15.30 per share.
Anthem CEO Gail Boudreaux, who took over the top post late last year, said GAAP earnings per share and adjusted earnings were ahead of the company's expectations, but added she is "disappointed " in the decline in membership. The enrollment drop, however, is partially offset by growth in the payer's Medicare division and the acquisitions of Health Sun and America's 1st Choice.
Boudreaux said the company has "significant organic growth opportunities" within its own business and is looking to solidify its presence in current markets, specifically in Florida, while capitalizing on current and future opportunities. The company is not looking to acquire providers, but rather "build great partnerships" with care providers in current markets, she said.
Anthem has angered providers recently with numerous policies intended to reduce costs, some of which it has rolled back. The payer rescinded a 25% cut to same-day services in February after outcry from the American Medical Association, and also recently added some exceptions to its policy of reviewing ER claims and denying those it deems medically unnecessary. It is still, however, refusing to pay for MRIs and CT scans performed at hospitals on an outpatient basis and limiting coverage of anesthesiologists during cataract surgery.
While Anthem's Q1 membership losses were driven by the company's reduced footprint in the individual market and a greater percentage of employers opting for self-funded health plans, executives on the earnings call attributed some of the medical enrollment decline to sales execution.
"I'll say this very directly, I think this is really a matter of execution more than anything, quite frankly," Peter Haytaian, president of Anthem's commercial and specialty business division, said on the call.
The company now expects medical membership to end the year within 40.1 million to 40.3 million, which is "relatively flat" from where Anthem ended 2017 at 40.2 million members.
At $22.3 billion for the first quarter of 2018, operating revenue, too, was flat compared to the prior year's quarter, a result of premium rate increases and the return of the Affordable Care Act's health insurance tax in 2018. The health insurance tax also drove Anthem's benefit expense ratio down 2.2 percentage points to 81.5%, which executives said was better than expected. That ratio is now expected to be in the range of 84.4% for 2018.