Anthem is paying a substantial portion of Blues plans' tentative antitrust settlement, which is estimated to be nearly $3 billion, executives said on a call with investors on Wednesday morning.
Anthem has penciled in $594 million for its contribution to the $2.7 billion settlement. The Blue Cross and Blue Shield Association reportedly agreed to the settlement in a lengthy class action suit late last month.
Anthem chief financial officer John Gallina called the settlement "pending" during the earnings call, and said having a deal in the works "removes an uncertainty" for the business around the ongoing litigation.
In the suit, filed in 2012, Blues plans were accused of conspiring to split up geographic regions to avoid competing against one another directly. That lack of competition drove up costs, the plaintiffs allege.
The process of finalizing the settlement is likely lengthy and requires the judge and plaintiffs to sign off. If the settlement is approved, it would also include provisions that allow certain national employers to seek bids from more than one Blues plan, boosting competition.
Financial analysts said that while the hefty settlement payments are not great for Anthem, the settlement could pay off for the company in the long run because its size would allow it to compete more effectively on a national scale with other Blues plans.
On the call, the insurer also touted its ongoing pandemic response. Ahead of what's likely to be a tough flu season for the healthcare industry in tandem with COVID-19, Anthem is teaming with community groups to stand up "pop-up" clinics providing free flu vaccinations.
CEO Gail Boudreaux said on a call with investors Wednesday that the insurer has partnered with more than 100 community organizations across its markets to open 500 pop-up and drive-thru locations offering flu vaccines at no cost.
Boudreaux said that the effort is particularly aimed at underserved neighborhoods, which nationally have been hit particularly hard by the pandemic.
"We know this year's flu season is going to particularly challenging for our communities in combination with the rising spread of COVID-19," Boudreaux said.
The social determinants of health have also been a focus for Anthem under the pandemic, and the Anthem Foundation committed $50 million to address the areas of highest need, including food insecurity, provider safety and behavioral health.
The insurer teamed with Gleaners Food Bank in its headquarters Indianapolis to offer a $1 million match grant that will go to providing more than 10 million nutritious meals in the city. Anthem is also offering its employees volunteer opportunities virtually, such as remote teaching or sending cards to seniors who are isolated, so they can do community activities while avoiding exposure to COVID-19.
"Armed with our purpose of improving the health of humanity, Anthem has continued to leverage our insights, innovation, and partnerships to improve lives and deliver a simpler, more affordable and more effective healthcare experience," Boudreaux said.
Anthem raked in $222 million in profit for the third quarter, beating Wall Street expectations but representing a massive decrease compared to the third quarter of 2019.
In the third quarter of 2019, the insurer reported $1.2 billion in profit, for an 81.2% decline year over year.
Profit for the first nine months of 2020 is up compared to last year, however. Through Sept. 30, Anthem has earned $4 billion in profit, compared to $3.9 billion through three quarters in 2019, an increase of 3.8%.
Revenues for the quarter also beat Wall Street projections, with Anthem reporting $31.2 billion in revenue. In the third quarter of 2019, revenues were $26.7 billion, for an increase of 16.8%.
Revenue through the first nine months of the year is also up 17.2% compared to 2019. Anthem reported $90 billion in 2020, compared to $76.8 billion in 2019.
In a release, Anthem said the financial performance in the quarter represents "continued recovery" in healthcare utilization, which plummeted in the early days of the pandemic.
“I am proud of our performance this quarter to drive continued growth across our business, provide new and innovative solutions as a trusted health partner, and create positive and sustainable change for our communities," Boudreaux said in a statement. "As we look ahead, I know we are well-positioned to continue our strong momentum and continue to deliver greater value for all of our stakeholders.”
“Against the backdrop of the ongoing pandemic, Anthem and its dedicated associates have continued to respond quickly and with compassion to meet the evolving needs of our members, customers, partners, and communities,” she said.
Anthem reported 42.6 million total medical members, an increase of 4% compared to the first nine months of 2019. Medicare Advantage plans added about 200,000 members to reach 1.4 million, an increase of 17.7% year over year.
Medicaid membership was also up significantly compared to the first three quarters of 2019, reaching 8.6 million for an increase of 17.5%. That figure also represents a 4.8% increase in Medicaid membership compared to enrollment as of the second quarter of 2020, Anthem said.