Reprinted from HEALTH PLAN WEEK, the most reliable source of
objective business, financial and regulatory news of the health insurance
industry.
By Judy
Packer Tursman, Senior Reporter
May 1, 2017 Volume 27 Issue 15
Amid a flurry of strong first-quarter earnings results for several
managed care companies, Anthem Inc. also beat Wall Street’s expectations. But,
along with glowing reports of growing membership for its commercial and
government-sponsored lines of business, Anthem’s CEO stressed in an April 26
earnings call that the industry “continues to face disruption on multiple
fronts” that requires “corporate agility.” Apart from worries over
market-stability issues related to the Affordable Care Act (ACA), he didn’t shy
away from controversies over Anthem’s ongoing efforts to improve its pharmacy
management (see box, p. 7) and acquire Cigna Corp.
Anthem reported quarterly net income of $1,009.9 million, or $3.73
per share, on operating revenue of $22.3 billion, all figures up
year-over-year. Its medical enrollment increased by 715,000 over the quarter,
to total about 40.6 million members as of March 31.
CEO Joseph Swedish led off Anthem’s recent earnings call by
discussing the company’s growth in Medicare Advantage and Medicaid, even
touching on its dental and vision lines of business before addressing the
Affordable Care Act (ACA)’s individual-market exchanges.
Anthem is pleased with exchange membership growth, he said, but
its claims experience was “slightly higher than anticipated.” He said nearly
50% of the population is new to Anthem, so full-year implications of this should
become clearer in the second quarter ending June 30.
Anthem Assesses ‘Footprint’
Swedish said the insurer is assessing its ACA exchange market
footprint for 2018 and looking for more signs of marketplace stability, he
said, adding that the company will “give more clarity” on next year’s exchange
footprint by its second-quarter earnings call, “if not sooner.”
Anthem “only will participate in markets with a visible path
toward sustainability,” Swedish said the morning of April 26. Despite the
recent release of the Trump administration’s final market stabilization rule,
he said “significant uncertainty” remains. Anthem expected to file preliminary
rates for 2018 assuming that cost-sharing reduction (CSR) payments to plans for
their low-income exchange enrollees will continue and make adjustments as
needed, perhaps “exiting certain ACA markets altogether,” if there’s no CSR
certainty by early June.
Anthem is assessing the need for rate increases, Swedish said,
explaining that rates could increase by an additional 20% or more if
cost-sharing subsidies are not funded, and climb by another 3% to 5% if the
ACA’s health insurer fee (HIF) returns as expected for 2018.
Later in the day April 26, the White House said it intends to
continue the ACA’s CSR funding in the short term. But it remains unclear
whether CSR payments will continue over the long term.
After discussing exchange participation, Swedish said Anthem is
working through an expedited appeals process on its ongoing effort to acquire
Cigna Corp. He noted a hearing will be held May 8 in a Delaware court on
Anthem’s motion to stop Cigna from terminating their agreement. Earlier this
year, Cigna sued Anthem in an effort to exit the acquisition agreement and
collect damages.
“We remain committed to completing the [Cigna] acquisition as soon
as possible,” Swedish said. Anthem is trying to evaluate its options under
various potential appeals court outcomes that might allow the deal to move
forward, categorically deny it, or accept it in part. Anthem’s board and
management are resolved to see it through and “make the best choice for us,” he
said.
A day prior to Anthem’s release of earnings, Centene Corp. said
its exchange enrollment has climbed by more than 70% since 2016 and it intends
to stay in exchanges — even as Aetna Inc., Humana Inc. and others are backing
away.
In a note to investors, Credit Suisse analyst Scott Fidel
described the ACA’s exchanges as “the primary driver of organic growth” for
Centene in first-quarter 2017. The insurer ended the quarter with 1.189 million
exchange members, slightly ahead of management’s expectations and more than
double its 537,000 exchange members at the end of 2016. Fidel said the
exchanges represented about 13% of Centene’s risk-based members in the first
quarter, up from 8% in first-quarter 2016.
Humana, during its annual investor day held April 24, was bullish
on its growth prospects in Medicare Advantage (MA) and for smaller commercial
employer-group accounts of up to 1,000 lives. Humana said its integrated care
delivery model is key to its strategy and is a competitive differentiator in
the marketplace.
During the week of May 1, Aetna Inc., WellCare, Molina Healthcare
and Cigna Corp. are scheduled to report their first-quarter figures.
View Anthem’s earnings release at http://tinyurl.com/n2g2659.
https://aishealth.com/archive/nhpw050117-01?utm_source=Real%20Magnet&utm_medium=email&utm_campaign=113355850
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