Q4 2020 Anthem Inc Earnings Call
Ladies and gentlemen, thank you for standing by and welcome to anthems fourth quarter earnings Conference call.
All participants are in a listen only mode.
The Q&A session, if you'd like to ask a question you touched on I wanted to share.
As a reminder, today's conference is being recorded on <unk>.
I'd like to turn the conference over to the company's management. Please go ahead.
Good morning, This is Chris Rigg and welcome to anthems fourth quarter 2020 earnings call.
As many of you know I have transitioned out of Investor relations.
Financial officer of our commercial and specialty business Division.
Steve and al will be joining anthem.
New Vice President of Investor Relations, and we look forward to welcoming him next week.
With us this morning on the earnings call are Gail Boudreaux, President and CEO, John Gallina, our CFO.
Pete Italian president of our commercial and specialty business Division and Felicia Norwood President of our government business Division.
During the call we will reference certain non-GAAP measures.
Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures are available on our website anthem, Inc. Dot com.
We will also be making some forward looking statements on this call.
Listeners are cautioned that these statements are subject to certain risks and uncertainties, many of which are difficult to predict and generally beyond the control of anthem.
These risks and uncertainties can cause actual results to differ materially from our current expectations.
We advise listeners to carefully review the risk factors discussed in today's press release.
On a quarterly filings with the SEC I will now turn the call over to Gail.
Good morning, and thank you for joining us for anthem fourth quarter 2020 earnings call.
Despite a year challenged by COVID-19, and significant economic uncertainty, we delivered strong growth across all of our business yes.
This morning anthem reported fourth quarter 2020, GAAP earnings per share of $2.19 on adjusted earnings per share of $2.54.
From a full year anthem reported GAAP earnings per share of $17 98, and adjusted earnings per share of $22.48.
Our full year results reflect the ongoing impact of COVID-19 treatment costs and more normal utilization patterns in the second half of the year.
Consistent with our expectations fourth quarter utilization was above baseline, reflecting higher costs attributable to the recent surge of COVID-19 cases.
Coupled with the return of non COVID-19 care utilization.
I'm incredibly proud of what we've accomplished in 2020, and the strength and resiliency shown by our enterprise and that's the global pandemic.
We met our financial commitments.
Delivered strong growth and we stepped up as a business and through the commitment and compassion of our associates.
Port our members partners and communities when they need it got Smith to address the new increasingly urgent needs.
Growth in 2020 with powered by strategic investments we've made in recent years.
Streamline and simplify our business and enhance our member and customer experience.
Membership trends year on year exceeding expectations on all fronts.
Medical enrollment finished the year strong at $42 9 million members representing.
Representing growth of one 9 million members over the prior year.
We're pleased that our commercial business has continued to grow even in this challenging economic environment.
In addition to the narrowband acquisition.
Growth has been fueled by strong customer retention and a steady pipeline of new accounts sales.
In fact.
Sales in our large group business about peaks lapses in 14 of our 16 months, reflecting the market leading performance of our new virtual strategy from tools as well as the benefit.
Our innovative products such as total health total you and further integration of our pharmacy offerings from Gmail Rx.
Total commercial membership was flat sequentially in the fourth quarter, reflecting growth in our risk based group business offset by Ingrid change in our fee based business.
As a result of the economic environment.
Our risk based business has been incredibly resilient as we deepen talent enhanced our products and improved sales execution across our markets.
Asian sales.
Sales of our large groups specialty dental and vision products outperformed 2019 results.
Demonstrating that employers value the affordability and simplicity of anthems integrated medical specialty offerings. It.
It's clear the actions we've taken to focus on the consumer and their unique needs are garnering a strong market response.
Medicaid membership grew by roughly one 6 million consumers during the year and nearly 300000 lives in the fourth quarter marked by strong organic growth aided by the pause on lead Verifications and two strategic acquisitions in Nebraska and Missouri.
Medicare advantage membership ended the year up nearly 18% compared to 2019, continuing our meaningful growth in senior business.
Our central extra suite of benefit options are resonating with seniors as we saw greater than 300% increase in the selection of benefits.
Such as personal Home-helper services transportation benefits and access to personal health safety devices.
We're pleased with our continued growth in this important segment for anthem and the demonstrated resilience of our diversified portfolio.
Our AEP performance was in line with expectations and we expect another year of double digit growth once again outperforming the industry average growth rate.
Over the past year anthem stepped up as a trusted partner to support our stakeholders as they navigated the pandemic.
We adapted and accelerated our digital innovations enhanced our focus on community health.
And that's where many of our products and solutions and simplify our processes in the context of COVID-19.
We recognize our critical role in ensuring safe access to care and COVID-19, vaccinations and have launched a nationwide partnership with lyft to support universal access to vaccines.
We're leveraging anthem local market strength provider relationships and data assets in combination with its on demand transportation network to serve.
At risk communities.
Proportionately affected by COVID-19, our goal is to provide 60 million free rides to and from vaccination sites for low income on insured and at risk communities.
Further we recently launched a new online C 19 vaccine tracker to provide personalized vaccination insights for anthem members.
This web based dashboard aggregates vaccine related data from public and private sources to give consumers a real time view of vaccine distribution progress can help to inform our members when they might be eligible to receive the vaccine.
We recognize the increased social and health needs of our members and communities during this pandemic.
With each of our Medicaid States, we're performing detailed community needs assessments, it's great localized solutions with our partners to support issues with housing job training and free Internet for underserved children and.
On our Medicare members are providing access to some day social workers to help coordinate local resources from services.
<unk> their needs around food and security transportation and more.
For members with complex conditions, such as cancer, receiving care has become even more difficult during this pandemic.
In response, we've launched anthem concierge cancer care program.
From diagnosis to recovery members receive personalized 24 by seven guidance and support to live health online and remote monitoring technology with access to top tier cancer facilities across the country, which unique program has more than tripled since its launch in 2020. It is now available to nearly nine.
<unk> thousand members.
Throughout the course of this past year are deeply committed associates have stepped up and shown great compassion and care to those we serve and to one another.
It's more than 100000 volunteer hours logged in our local communities through in person and virtual giving.
Our associates have embodied our values and culture.
Collecting fabric on from New York.
As we move into 2021 day.
We will continue to modernize our business to drive growth.
Efforts to transform our business are not new and in fact, our focus with sharpened and investment accelerated in line it depend Dennis.
Day, we are continuing to consolidate our system automate and streamline processes and embed digital on AI across the enterprise.
Simplify and improve the customer experience and deepen engagement with all of those we serve.
We recognize the power of digital technologies to reach more of our stakeholders, particularly as part of our community health efforts.
Kidney health is personal lines and care for consumers.
To bridge gaps in care and improve outcomes for underserved populations.
Kidney health recently received several awards, including corporate insights gold medal for virtual care, recognizing our ability to give members more options and how they engage with care providers, whether it be via chat E mail phone or video.
We're excited to be introducing the first of its kind digital nutrition assistant.
He used to day I, our Sydney nutrition, App will be able to automatically recognize food and log meals in real time, providing users with personalized information and progress on nutrition golf.
This integrated tool is currently available to anthem associates.
Be available more broadly later this year to provide our members with a fully connected health and wellness experience.
Consumers are experiencing health care more digitally so we focused on creating greater access to care via telehealth.
Particularly in the behavioral health space, who usage has gone up from single digit pre pandemic percentage levels.
As much as 60% of all visits and that level has stayed consistent over the past four months.
Our AI based care Finder is now live for all segments of our business and differentiate anthem moving fully integrated approach using predictive tools and AI to help guide members to the right care at the right time and place for them.
Which could mean via text phone video in person or chat.
Additionally, through our AI based predictive service from chat functionality, we were able to redirect 5 million member calls last year to on demand digital channels to provide members with information they need it quickly and efficiently.
Today, we are delivering on consumer demands for simplicity and affordability, we're helping to restore growth, while making positive and sustainable change for our local communities.
Grounded by our mission and driven by our purpose to improve the health of humanity.
When we move into 2021 with a bold agenda as we continue to grow and transform our business and fundamentally improved the health care experience for those we serve.
Our 2021, adjusted EPS guidance of greater than $24 50.
It reflects challenges unforeseen when we reported third quarter results.
Specifically <unk>.
Adjusted net income guidance reflects the passage of the consolidated Appropriations Act, which includes the one year increase in Medicare physician rates as well as other COVID-19 related impacts on the Medicare business.
All in we estimate these items equate to a 50 to 70 net negative headwind.
Accordingly, these factors are transient and should diminish as we move into 2022.
Looking ahead, we are poised to deliver membership growth of nearly one 5 million members at the midpoint.
Driven predominantly by our risk based businesses.
Our outlook reflects our ability to deliver solid enrollment growth. Despite the uncertainties in 2021, we remain confident in our ability to achieve long term, 12% to 15% earnings growth and look forward to our March 3rd virtual Investor day.
We will provide a more detailed look into our strategy, including the transformative digital and community health initiatives that are driving real growth across our business.
And now I'll turn it over to John <unk> for a detailed look at our performance numbers John.
Thank you Gail and good morning.
As Gil stated we are pleased to report strong fourth quarter from full year financial results.
Fourth quarter adjusted earnings per share was $2.54 down 35% year over year, driven primarily by cost related to the COVID-19 pandemic.
Including actions taken to support our members.
For the full year adjusted earnings per share was $22 48, representing growth of 16% over 2019.
Total operating revenue for the fourth quarter was 41 $5 billion, an increase of more than 16% over the prior year quarter, reflecting solid growth in Medicaid and Medicare.
For the full year, we ended 2020, serving $42 9 million members.
On the growth of 300000 lives during the fourth quarter.
Medicaid membership was up more than 11 times the decline in our commercial space business.
This is the 10th consecutive quarter of membership growth further demonstrating the strength and resiliency of our business.
For the full year operating revenue grew over 17% the fourth quarter medical loss ratio was 88, 9% a decrease of 10 basis points over the prior year quarter.
Covid related cost accelerated during the quarter above expectations. However, this was offset by non COVID-19 utilization coming in lower than expectations.
Taken together overall utilization was above baseline, albeit slightly better than expected. The SG&A expense ratio in the fourth quarter was 13, 7% an increase of 80 basis points over the prior year quarter due primarily to increased.
To support growth.
Including efforts taken to modernize our business and become a more agile organization as well as the return from the health insurer fees in 2020.
While on a hits adjusted basis, our SG&A ratio decreased 30 basis points compared to the prior year quarter.
Primarily driven by double digit growth and operating on a revenue.
Full year 2020, operating cash flow was $10.7 billion or two three times net income.
Fourth quarter operating cash flow was $3 $8 billion compared to $1 $3 billion from the prior year quarter.
The increase is primarily attributable to changes on our net working capital.
Growth in our government businesses.
Our operating cash flow on the fourth quarter benefited by a number of payments that were originally expected to be achieved in 2021.
The early receipts.
Along with other items that benefited 2020 cash flow, including payment deferrals allowed under the cares Act, we will reverse in 2021, the negatively impact our 2021 operating cash flow metrics.
We ended 2020 with a strong balance sheet the debt to cap ratio was 38, 7% consistent with Australia range.
Days in claims payable was 43 four days, an increase of 2.3 days sequentially and five four days versus the prior year along with the growth in medical claims payable on 28 per cent compared to an increase in premium revenue other.
So it really 11%.
During the fourth quarter, we repurchased four 4 million shares at a weighted average price of $305.66.
In total we were approaching $2 $7 billion of stock in 2020, or nine 4 million shares.
As a reminder, our original guidance contemplated share repurchase of $1 $5 billion.
After reinstating share repurchases in the second quarter.
Celebrated the pace of share buyback in the second half of the year in response to market conditions.
Turning to our 2021 outlook our current guidance reflects our latest assumptions related to the COVID-19 pandemic importantly.
Importantly, our guidance includes new items that were unknown at the time of our third quarter call, including the passion of the consolidated Appropriations Act in late December and the corresponding one year increase in Medicare physician payment rates and other COVID-19 related impact.
Next on our Medicare business day.
In addition, the significant decline in non Covid utilization in our Medicare business. During the fourth quarter will have an impact on our rich revenue by more than we had anticipated.
All in these items resulted in a net negative headwind.
50% to 70 cents per share relative to the outlook, we shared on our third quarter call.
While 2000 22021 presents its own set of unique challenges that we believe to be transient.
Our core business and the underlying fundamentals remain strong.
Absent these new and unique circumstances, we remain confident that our long term earnings growth target of 12% to 15% is the credible and sustainable.
Turning to our 2021 guidance metrics total.
Medical membership is expected to reach 44 4 million members at the midpoint, which reflects growth across our key business segments.
In the commercial business, we project our risk based enrollment will end the year between four five to $4 6 million members.
Our fee based business or anywhere between 25, five and 25 7 million members.
In our Medicaid business, we expect to end the year with approximately 10 to $10 2 million lives.
Reflecting organic growth in our existing markets and the expectation that the re verification process may remain on hold through the end of the year.
In addition, our guidance also includes growth from North Carolina, which is expected to go live later this year in Medicare advantage, we're projecting double digit growth at the midpoint as we expect continued measured growth over the balance of 2021.
Medicare supplement is expected to end the year between 950001 million members and our FPP business is expected to be flat to slightly down at $1 6 million members.
With <unk> now firmly embedded in our baseline we expect 2021 operating revenue to be approximately $135 $1 billion representing growth of 13, 5%, Inc. On adjusted basis.
<unk>.
The consolidated medical loss ratio is expected to be 88% plus or minus 50 basis points, an increase of 120 basis points at the midpoint from 2019, which is the most recent year from which the health insurer fee did not apply.
The increase is largely driven by a mix of business more heavily skewed to Medicaid and Medicare.
And the impact of Covid, including the recently announced increase in Medicare physician rates.
On the SG&A expense ratio is expected to be 10, 8% plus or minus 50 basis points price.
Merrily due to growth in operating revenue in addition to the permanent repeal of the health insurer fee line.
The benefit of modernization efforts, including systems consolidation and broader process automation looking.
Looking below the line, we expect investment income to be $940 million net interest expense of $785 million. The tax rate is expected to be on the range of 20% to 22% with the decrease primarily driven by the permit.
Net repeal of the health insurer fee.
Full year operating cash flow is expected to be greater than five $7 billion.
As a reminder, operating cash flow in 2020 was heavily impacted by COVID-19, pandemic as well as certain other receipts that were accelerated into 2020.
Option to pull through on those cash receipts, our 2021 operating cash flow will be roughly one one to one two times net income.
Long term capital deployment targets are unchanged as we progressed on which path of becoming the most innovative and valuable and inclusive part other than the health care ecosystem with a continued focus of delivering sustainable long term shareholder returns.
Terms of capital deployment I am pleased to announce that we are increasing on a quarterly dividend by nearly 19% to $1 13 per share, bringing our dividend to.
One four per share and continuing our trend of annual dividend increases.
We expect full year share repurchase of at least $1 $6 billion and our weighted average share count to end the year on the range of 246 to 248 million shares outstanding.
As Gale mentioned this past year presented its own unique set of challenges from <unk>.
While much has changed it is clear that we are still on the doubts on a global pandemic.
We remain committed to our mission of improving the lives and communities, which we serve.
We will continue to do our part in 2021 to meet the needs of our associates members customers and health care providers as we persevere through this pandemic together.
Operator, we will now open it up for questions.
Ladies and gentlemen, if you wish to ask a question. Please press star one on your telephone keypad.
Here, a prompt that you had the cute.
You may withdraw your question at any time by pressing star two.
If you are using a speaker phone please pick up the handset before pressing the numbers.
Once again, we ask that each participants limit themselves to a single question to allow ample time to respond to each participant that may wish to participate in this portion of the call.
Our first question, we go to a lot of Justin Lake from Wolfe Research. Please go ahead.
Thanks. Good morning, all wanted to see if you can walk worry that 50 to 70 cents in as much detail as possible. So you mentioned the stimulus with a higher physician fee schedule on the quarterly sequestration. So I estimated that it's about 2000.
So I was hoping you could break out the Barnett and breakout the other 40 in terms of retail locations and how that benefits Medicaid the higher total costs on the 20% add on the Medicaid rebates et cetera, and then lastly can we assume that when you think about the correct 2021 jump off point.
But the 12 to 15 per cent EPS growth next year does it grow up with $25 10.
60.
Thanks.
Okay. Thank you adjusted and good morning, I appreciate the question and the opportunity to clarify the 50 to 70 cent change in our expectations.
As you mentioned with the appropriations Bill and the extension of the Federal Health emergency.
We now have a disconnect between some of the cost and reimbursements.
We completely agree with your approach to the Medicare 375% fee schedule rate increases relative sequence frustration the other Medicare rate increases from 12 months.
The sequestration is only for three months as an offset.
But there's a third component as well and that's the 20% bump in the inpatient DRG is going to be extended for the full year as well as part of the the.
The federal health emergency so when you take the three of those combined that actually accounts for about two thirds of the 50% to 70% I'm on a differential that youre asking about.
The other one third really relates to the fact that the non COVID-19 utilization in the fourth quarter was lower than we had anticipated.
Non COVID-19 utilization being lower than anticipated, we are unable to to accurately capture all of the HCC codes.
To reflect our appropriate risk scores are in.
Our Medicare business and and so once you factor that in that's about the other third so you take those that goes out.
Come down to the sales of 25 time that youll be modeling to the $2004 50 at the midpoint.
Then in terms of your question associated with a with a 2022 jump off point, while it is premature to give 2022 guidance.
We do believe that many of these issues are transient and we are very comfortable affirming the 12% to 15% long term sustainable growth rate on a on the 25 10 starting point.
We always have the issue with Covid and risk revenues and things could linger and we will clearly be on top of that throughout the year, but as an outset, we're very comfortable with a 25 turn jumbo loans.
And thank you for the question. Thank.
Thank you for the question Justin next question.
Next we'll go to the line of a J Rice with credit Suisse. Your line is now open.
Oh, hi, everybody.
I know there are a lot of puts and takes around this question but.
You know right now and people are trying to make an assumption as to when theyre be mass distribution of the vaccine and when things might start to get back to normal conceptually when you think about your 'twenty one guidance.
Have you peg that thinking and if.
We were to find out for example, if you say you've pegged it for the middle of the year or later in the year. If it happens if theres. Various sei is the March orders in October would that how would that change the financial outlook. The company is presenting.
Thank you Jeff.
Hey, I'm, sorry, a great question and as you indicated there is a lot of variability in the assumptions.
The most vulnerable populations.
Include Medicare advantage members et cetera.
Expectation is by the end of the first quarter that day.
It will Ah.
They achieve a vaccination level appropriate we're really looking at having somewhere in the neighborhood of about 60% of Americans vaccinated for the year on.
Medicare we would expect to be a bit higher the commercial population from the Medicaid population, we wouldn't expect the vaccines to be rolled out and completed until the end of the summer.
Maybe even a little bit longer with <unk>.
Commercial population being close to the average for the for the per America for the year on the Medicaid being a little bit less.
So to the extent of the rollout from the efficacy of the vaccine.
Very clearly could have an impact on the on the financial results for the year.
You know as a COVID-19 costs go down when we do expect non COVID-19 utilization to increase so it's certainly not a one per one.
There's clearly a lot of dynamics associated with that modeling and if the vaccine is either faster or slower it'll have an impact in one direction or another.
Hopefully that helps.
The scale from Joe I think in addition to John's question as we've shared it is an incredibly dynamic environment relative to what's happening with COVID-19 and the vaccine as.
As I shared in my opening comments, we are working very closely though to try to ensure access for our members.
Added a number of new tools in terms of the our trackers on our online tool to ensure that people know where vaccines are available we're going to work with our states closely we entered a partnership with Lyft to provide 60 million free rides.
On our sense is that the senior population obviously on the rollout is going to have first access to that.
And then you know as each of the states to make their determinations and supply becomes available we'll be side by side with our partners to ensure that that we can be as efficient in helping as possible. So again everything John said I think we are trying to model in this incredibly dynamic environment, but remain optimistic and supportive of whats happening and I Wanna be it up.
Partner to other states and our customers. So thank you for the question next question. Please.
Next we'll go to the line of Steven Valiquette with Barclays. Your line is now open.
Hi, great. Thanks, Good morning, Gail on John Thanks for taking the question here. So just in relation to those higher Medicare position rates for 'twenty one.
I was curious to hear more about the mechanics of this and just whether or not any of your.
Capitate or at risk payment arrangements with physicians would provide any sort of protection for anthem again impact.
Therefore, this might have greater impact on your fee for service arrangements with physicians or is everything just index to the rate update on that doesn't really matter just curious to hear more about the mechanics on that thanks.
Yeah. Thanks, Steve I appreciate the question.
The amount that we disclosed in terms of the impact on our guidance. It was really the net amount.
Regardless of the.
The risk methodology would have with the provider network. So.
Certainly in a complicated arrangement, where there is an impact.
As I had stated in the <unk>.
To <unk> question, we also have the 20% bump on the inpatient DRG relative <unk>.
Factoring all of this as well and then the sequestration all set.
Very good I'll take them all on the consideration look at how they play through the through the reimbursement methodologies and what we provided is the net impact of all of those.
Okay. Thank you next question please.
Yes next where the line of Ricky Goldwasser with Morgan Stanley. Your line is now open.
Yeah, Hi, good morning.
<unk> focused on the exchange business appears to.
I mean, it's always been competitive that where I'm hearing some anecdotes on increased competition.
How do you think about the dynamics and specifically how do you think about sort of kind of like the margin goals that you've articulated in the past.
Thanks for the question Ricky I'm mask on P&I tie in who leads our commercial business to respond Pete.
Yeah. Thanks, a lot for the question Ricky.
In terms of the individual business.
And sort of how we see Q1 played out.
We feel good about our strategy, we continue our thoughtful targeted approach and Ah and targeted growth approach and in the individual business. We've expanded into about 115 counties in 2021.
Our approach continues to be based upon our focus on best in class economics through value based relationships differentiated medical management, but really try to partner with key providers.
To enable excellence in quality and risk adjustment and so thats been our grounding and we continue with that strategy.
Overall this year, while we're experience growth environmental you know I think youre alluding to this there is more competition also.
There does appear to be less.
Less overall, new sales across the federal facilitated marketplace and the state based exchanges it seems to be down a bit year over year. We believe this is due to a variety of different factors. We all know that in several states. There was special election periods throughout 2020, which certainly could have been a factor.
So less overall government engagement and that could change with the Biogen administration just in terms of overall marketing and then then less prospect engagement. We saw that just in light of the political environment and the economic climate, but you know on.
All that said as we look forward, we do remain optimistic regarding this business on the new administration certainly.
It looks like they're going to promote and pop up on prop up excuse me the AC business.
We just heard this week that we'll likely see.
An extension to open enrollment or special enrollment periods throughout the year, and then a possibility of more marketing and facilitated enrollment expenditures. So so overall I think we'll continue with our thoughtful approach, but with the new administration.
Think there's an opportunity for further growth there, yeah, and I would I would just add to Pete's comments that we've had a very consistent strategy around the individual marketplace that really hasnt changed year over year.
We've done some expansion in states, where we obviously have a very deep footprint and we will continue to be opportunistic and I'm very optimistic about what we think the opportunities are there. So so again very consistent with what we shared with you on the last last couple of years next question. Please.
Next we'll go to the line of Ralph Giacobbe with Citi. Your line is now open.
Thanks, Good morning, I was hoping to get into the MLR guidance, a little bit more John on the 80% maybe if you can give us some underlying assumptions. It does imply a step up and I know you mentioned mix, but but even outside of that seemed a little bit higher so hoping maybe a sense of expectation of what you assumed in guidance around maybe local group.
Medical cost for 2021, and how we should consider that may be off on either 2020 or maybe 2019.
Yeah. Thank you well for that question and when you look at our or in lower guidance. Yeah. We certainly believe it's appropriate given the uncertainty around the timing and the efficacy of the vaccine rollout and the full year impact of Covid.
As well as those unexpected changes in Medicare physician rates and sequestration timing mismatch that I talked about earlier, obviously all been incorporated.
And the 88%.
But really looking at 2019 as the point of comparison since that was the last period that there was not a chef.
It's really it's a fairly simple roll forward from that perspective.
You look at the mix of the business.
We have today with far more Medicaid members, we actually have had exceedingly strong growth on our Medicare advantage last few years being in the upper teens on a.
A couple of year basis, and exceeding the rest of the industry and all of that obviously changes our business mix.
And just on a apples to apples basis mix is driving about 60 basis points of the increase in the 2021 and more versus the 2019 and more.
And then when we look at the impacts of.
Of Covid and Theres, a lot of things that go on to Covid.
Certainly the cost of Covid, which is in the billions of dollars there is non COVID-19 utilization impacts.
And.
In terms of we believe that non COVID-19 utilization will be less.
What a normal year would be in a vacuum.
And of course, you have the pricing actions that we've taken into account for that as well as our reimbursements from regulatory entities.
They were appropriate in the Covid environment.
Take the net of all those the impact of Covid is another 40% to 50 basis points.
On the MLR for 2021, and Theres, a multitude of other small items going in both directions that may be comprised of last 10 basis points, but it's really with those two items, which mixing COVID-19. Thank you for the question next question. Please.
Next we'll go to the line of George Hill with Deutsche Bank. Your line is now open.
Yes. Good morning, John you actually just covered everything that I was going to ask about the MLR on the Covid impact I guess I would just say one of your peers.
Called out the Covid impact in Q4, I'm wondering if you guys would be willing to do that and then Gail My follow up is now that <unk> is kind of fully stood up on where do you see the white space in anthem offering going forward.
Sure I'll start with your question George and then and then turn it over to Gail.
In terms of other Covid cost I think really probably your question is what type of Covid costs are included in our guidance on.
As I said there is many factors and variables in short we've spent considerable time analyzing the modeling potential impacts there are a few.
The peers on a J in particular was asked what happens with other vaccines a lot of different consume well I will tell you of all the modeling assumptions, we have the timing and efficacy of the vaccine is one of the assumptions that has the greatest amount of variability associated with it.
But anyway.
All of them were estimating that we have about a $600 million COVID-19 headwind inherent in our <unk>.
2021 guidance.
And as I said Covid cost. When you include testing treatment vaccine administration, all the other things such as the medical care fee schedules with sequestration.
The.
Various waves, it's several billions of dollars.
But offsetting that is non COVID-19 utilization less on a normal year.
Other pricing actions that we've taken and regulatory reimbursements.
And we've been modeling all of that is coming out to about Oh about $600 million and you really think about that and think about our 2450.
And then you add 600 million without that puts us really at the high end or slightly above the high end of our 12% to 15% growth rate range that we've talked about on sustainable basis. So again, we do believe that a lot of these issues are transient.
And that would.
Probably some lingering effects from the 2022, but we flow.
Very good about the underlying core business from minerals that we have on the company.
With that I'll turn it over to Dale Yeah, Thanks, Jonathan and I want to reiterate what John said in terms of just we feel very good about these issues on our long term our long term EPS trajectory and as you think about your question on NGL Rx first of all we're really pleased with the performance of NGL or exits to come in.
On our expectations and I think that we're past the transition and now we're into full integration of that business with our other opportunities to think about it.
<unk> one of the areas. This year, we had some some nice sales and some really good throughput and integration with our commercial business, but it was impacted somewhat by the jumbo accounts really not going out to market. This past year. So we would expect as we sell through 'twenty. One that there is continuing and ongoing opportunities to integrate in January.
Rx with our commercial footprint and that's one of our biggest opportunities still we still see a lot of runway for us share increase the penetration, particularly in our middle size and large accounts with.
Integrated pharmacy benefit offerings, we did see some nice wins in 2021 on Standalone business, which are really really happy with and we think that that's a big opportunity to continue.
On the impact on large accounts this year for just what's happening in the economy. I think is sort of depressed sales activity on movement, but we had very strong retention across both our commercial and our engineer book. So overall, we feel NGL is tracking very much aligned to our expectations and really pleased with the performance of the business to date.
Next question please.
Next we'll go to the line of Kevin Fischbeck with Bank of America. Your line is now open.
Great. Thanks.
I wanted to see what your guidance was including for two of the.
I think that might still be a little bit in flux as far as the baidu policies I guess first on the <unk>.
The view about Redetermination do you assume that they're going to come back.
This year or in fact, not come back until next year, and then second how you're thinking about.
Testing costs, it sounds like you're including some testing cost in there, but I guess <unk> been talking about having insurers cover potentially back to work on back to school type testing, which it's not clear that companies will necessarily pricing too.
Yeah. Thanks. Thanks for the question in terms of the sort of understanding inside of our guidance on the two issues would be verification and testing first on on re verification you know when we originally I think shared with you our thoughts on.
We are this year would come out our assumption was that the public health emergency would end in the first quarter. That's what we knew at the time, but we also felt that Medicaid re verifications would probably really begin in the summer. So that was embedded in our thinking the other thing I think it's important to know is right now we're assuming based on the letter to governors that recently came out that.
I'll be verifications will be on hold for all of 2021, but in or even in our original assumptions. We never assumed that there would be cliff events and I think that's also an important assumption as you think about the progression.
Progression of enrollment over the course of the year that while states were.
Trying to understand their data and managing net that given just the challenging conditions within each of these states that that would happen over time in the back half of the year. So again as we think about this year.
We're expecting no re verification really reverse re verifications to be on pause for the full year given sort of the initial guidance thats been given the governors in terms of your second question on the policy issue on testing now we agree that testing is probably one of the most critical parts of controlling the spread of Covid and we've been strongly supportive of.
A wide availability of testing offerings.
And then it is unprecedented in terms of the situation trying to understand the additional support for all types of testing and expanding that capacity and also finding it quite frankly, new reliable rapid and inexpensive ways to do that.
Think about our industry health plan benefits of always traditionally covered medical tests as appropriate to diagnose and treat individuals that were ordered by a physician.
This is consistent with the.
On health insurance practices, our contracts and quite frankly federal guidance and so as we think about workplace testing examples of that that have happened.
Certainly drug testing or other traditional laser employers are paid for that outside of the health benefit and then similarly public health surveillance testing has traditionally been paid for by states and local health departments.
Those are I mean, as we think about that we followed that consistent approach to testing and.
I also gave you a sense of what we get on a new verifications.
Thank you for that question next question. Please.
Next we'll go to the line of Gary Gary Taylor with Jpmorgan. Your line is now open.
Hi, Good morning was kind of hit on this from various different quantifiable angles around the MLR et cetera, but just maybe going back conceptually I think.
One of the biggest concerns investors have is the risk that as COVID-19 subsides as there's there's a bolus of deferred utilization.
Or that utilization might be higher acuity.
As health conditions have.
Progressed and worse than that because of deferred care. So when we think in the.
The line of business, where that impacts seems to be that deferred impact seems to be most significant throughout 2020 seems to be the Medicare.
Business, where seniors have stayed away.
Much as they're able to so as we think about your sort of house view in 2021, how are you thinking about.
Non COVID-19 utilization, whether there is really pent up demand not just getting back to normal.
Whether that acuity is higher and is that view, particularly any different for commercial Medicare Medicaid.
Yeah.
Thank you Peter for the question Gary and.
As you can imagine when I discussed earlier the extensive modeling that we've done there is a lot of different thought processes around that but but conceptually, yes, we do believe that.
There is pent up demand in the system.
We do believe that there is a chance that it could be higher acuity.
Associated with one when folks get care and that's probably most pronounced in the Medicare line of business so that really.
Really the question is not if those will happen because we do believe those will happen.
Question is to what extent on how significant and then you also have things like emergency room volume, we believe will remain low.
The way that people access care will continue to change a bit in the future as it has in the past.
To the extent that that Covid stays high and then we expect non COVID-19 utilization, whether it's normal utilization pent up demand or anything else.
To actually be below normal, but to the extent that COVID-19.
Subsides and the vaccine is extremely successful we do expect that to go off is really clearly a natural hedge in there.
I've talked in response to other questions about what the net impact is and we really don't want to talk about specifically how much we have for each of those buckets, because you're so fungible and interchangeable and they do hedging offset each other but yeah the per.
How much of your question, we completely agree with what we believe is that based on our various modeling sensitivities and understanding of our of our membership revenue.
With the guidance, we provided is very solid and very appropriate and prudent and that we'll be able to manage through a.
Changes in either direction.
Thank you for the question next question please.
Next we'll go to the line of Whit Mayo with UBS. Your line is now open.
Hey, thanks.
I'm just curious what you guys are sort of assuming and thinking about COVID-19 cost sharing this year is there.
Any change in how you approach that should we anticipate continuing to wave co pays for the entirety of the year and one other question I had is just around the.
The sequester that if it does get delayed for the balance of 2021.
Is there any way to maybe size the impact there.
Thanks. Thanks for the question as we think about you know as you've heard actually on this call. It's an incredibly dynamic environment in terms of co share class shares here.
Part of the <unk>.
Public health emergency we are waiving.
Right now class shares for testing and obviously on the vaccine deployment comes in those will all be included as part of this environment I think the biggest impacted cost shares is going to be in the first quarter, which we've shared with you.
We're assessing access to care and how all of that is happening across each of our business is so from that perspective, and what I would say is first quarter is really how you should be thinking about the biggest impact of course share waivers and again because of all of the impacts that are happening.
Pretty pretty dynamic and so we're reacting on making sure that we assess that on a real time basis.
In terms of the question, maybe I'll ask John to.
To comment on the sequester.
Well.
Yeah. Thank you. So there's clearly a disconnect right now associated with the sequestration versus the.
On the DRG bump in the AR and the Medicare.
Rate increase of 375%.
The issue really is is that with the extension of the federal health emergency.
The DRG bump is going to be for a full year of <unk>.
We know that based on the Appropriations Act with the Medicare rate schedule is going to be for a full year and sequestration is only for the first 90 days.
And unfortunately that will require a legislative action in order to extend the other sequestration. So we have not included an extension of that in our guidance at this point in time.
Hopefully that helps thanks for the question, but next question. Please.
Next we'll go to the line of Dave Windley with Jefferies. Your line is now open.
Hi, Good morning. Thanks for taking my question you have management had size a 500 million dollar number from Medicaid risk corridor recall back I wondered if that turned out to be.
You know the $100 million that was going to fall on the fourth quarter, if that turned out to be an accurate assessment or if it was different from that and to what extent.
Are you viewing those those callbacks or continuing into <unk> into 'twenty, one and then if I could slip in the flu season is just extraordinarily low.
Apart from Covid and I wondered if that has any impact on your thoughts or guidance for 'twenty one. Thanks.
Thanks, Dave appreciate the question and I guess to give oh.
All of US and there is a little bit of a frame of reference in terms of when I answer it.
In terms of some of the Medicaid callbacks et cetera.
Experienced about $100 million in the first six months of the year.
<unk> had about $300 million worth in the third quarter and during the third quarter call was asked what do you think the full year is going to be and I said, probably we expect it to be a little bit more than a half a billion, leaving just over 100 million in the fourth quarter, while it turned out that it was more than that in the fourth quarter.
It is almost $250 million in the fourth quarter and to make almost $650 million per the year I think.
It's very important to note that even with that 650 million callbacks with all the various corridor on caller on other rate protections that exist within that block of business that Medicaid still ended 2020 within target margin ranges.
In terms of.
The impacts for the future.
About half of our Medicaid States are repriced on January one.
We are very comfortable with the actuarial credibility of those rates, thus far and believe that we will continue to work with our state partners.
Terms of of the challenges that they're facing and respectful of their budget issues, but still receive rates that are actuarially sound and actually sold from 2021.
And then there are rate protections as I said between the collars corridor as rebates wherever you want to call them. They all have the same aspect, we tried to better align cost and revenue within the same timeframe from same same periods.
We're actually very bullish about our ability here in the Medicaid.
And then in terms of the flu season, you have a.
The quote unquote typical flu season or influenza season is much less than anticipated.
But we've factored that in and I've talked about non COVID-19 utilization being less than normal.
In total for the year that is part of the calculus. So we're actually thrilled with a lot of things that we did even we took steps to ensure that our members had access to the flu vaccine to a fall flu campaign.
You may not know this but add some partnering with over 100 community based organizations across our markets.
And we stood up 500 pop up and drive through clinics and other shows neighborhoods to promote and support higher utilization rates.
And we believe some of our efforts helped contribute to the.
Due to lower than normal flu, a flu incidents and as I said, that's all factored into the non trailer utilization commented on made earlier.
Great question, Dave. Thank you next question please.
Next we'll go to the line of Joshua Raskin with Nephron Research. Your line is open.
Hi, Thanks, good morning.
As with anthem strategy around working with physicians and health systems in risk based arrangements and if you could size. The overall spend that you see going through risk based contracts.
And specifically through global capitation.
Yeah. Thanks, Thanks for the question Josh.
We've shared this publicly a few times, we're north of 60% in some type of other.
Okay upside.
Upside downside rats, so what does that mean.
It's a variety of relationships that we have on we are moving to increase the much more capitate at full risk arrangements, particularly in our government business at this stage a lot of them are gained share. Although we do have a component of that 60% in <unk>.
In full risk our strategy is to continue to build upon that and we believe that having one in eight patients in our markets that are anthem patients across our book of business provides us a real foothold in those marketplaces and we've been working with our care providers to improve that we started with the program was really based on primary care.
Capitation and working with them on their share to get them one ball so our strategy does.
Off around primary care.
We're going to continue to build on that we have 180 accountable care organizations.
23% of those are roughly operating under shared risk arrangements as well.
And then as we think about other innovation programs, you've got about 69% of medical spend tied to performance based contracts as well. So as you can see this for US is evolving it's something that we've been working on for a number of years, we've had the infrastructure in place to do it and now were increasing and enhancing the amount of full risk that our care providers are.
Taking with us.
And we actually expect that to accelerate because of the pandemic. We see increased interest across our business is when physicians working with us and we find plenty of access in our markets. I mean, I think that's a question. That's been asked before is there enough capacity in our markets and we've seen many of our physicians very willing to move along the continuum.
With us it's a journey probably a few years still until we get to where we want a day, but ultimately we've made progress every year and it's a core part of our strategy. The other area that I just wanted to touch on is telehealth, which is another part of our strategy not tied necessarily to behavioral how are not tied necessarily to risk.
Risk based payments, but we also see telehealth behavioral health.
In particular, our growing part of our strategy I shared more than 60% of our visits in behavioral.
Non via Telehealth, we think that's a great access and we also think.
Bringing in quite frankly, not just physical health.
On the medical side, but behavioral health into these arrangements in our pharmacy actually completes the circle for US and then some of the capabilities within our diversified business group around palliative care and the work that they're doing to make sure that we are better positioned with data to help manage these relationships is another area that we've been investing very heavily.
So thanks for the question, it's a core part of our strategy. We're on a journey, we still have some work to do but I think we've made really good progress on or get continue to move down the risk corridors.
Next question.
Next we'll go the line of Lance Wilkes with Bernstein. Your line is now open.
Yeah could you talk a little bit about.
On your strategy in partnering and cross selling into other Blue Cross organizations in particular could you hit three areas that would just be interesting to understand the progress on the outlook for Jennie O.
<unk> diversified in particular, the Beacon assets name and then also your Medicaid partnerships.
Thank you very much.
I'll begin and then I'm going to ask Felicia to share some comments around our Medicaid partnerships you hit on really on the three key areas that we're partnering with our blue other blue plans on them and even there's a couple of others.
First in terms of Ngls, you know Blue Cross of Idaho was one of our first commercial partners in that space and we just added their Medicare advantage business on January one.
We continue to work across and Genie out.
In addition to several other relationships that we've had with other blues, it's a longer term sales process because as you know most of those contracts are three to five year contracts. So it takes some time and we really until this year, we're not in a position I think with the transition and other things we're doing to take on.
Most of those kind of arrangements. So we've actually been very balanced in pacing.
The relationships that we've had there, but we actually do think there's a really good opportunity for us to continue to build and expand an area that you didn't talk about specifically what is the relationship we have in the group Medicare business. We've got some partnership there also with other blues that we think will help us to expand our combined footprint and we've been working.
Our blue partners on that because we think we offer obviously some capabilities in that space and we can work with them on their commercial business to convert that to group Medicare and we've had some wins this year in that area as well the last the last day or is the diversified business group and beacons are Great example, I mean net add.
Asset that we purchased from brought on to the anthem family last year, we see a very big opportunity. They obviously have a large footprint even before integrating with anthem. They work with a number of our blue partners, we consider that an opportunity to integrate our whole health strategy and we see on our blue peers also very interested in expanding there.
In addition on the diversified business group, we've seen meaningful opportunities to expand care more and aspire. Those are two other companies that have worked with new partners and then.
We're in a joint venture.
On our integrated health consumer capabilities, which we've talked about in terms of total health total you and some of the other work that we're doing because those awful also offer opportunities. So as you can see a lot of different things are happening. These are generally several year sales. So I won't say that it's going to happen overnight, but we've seen it.
Will increase and the external business that we've had in working with our Blue partners. Medicaid is the space that we started our partnerships with and they've expanded that into Medicare in the duals and I'm going to ask Felicia maybe to comment on that because that's probably been our longest standing relationships with our blue partners.
Good morning, Lance and thank you for the question.
We're very pleased with our blue partnerships, we started the year.
With five partnerships on the Blue side is now at at Nebraska and Missouri.
On both branded it as healthy blue the opportunity that we have is that we're really a natural partner.
To our belief plans and see this as an opportunity for us to continue to leverage the breadth and scope of anthem deep knowledge around Medicaid execution and being able to continue to grow that membership as we go forward. When you take a look at where we are today the great opportunity stems not from Medicaid, but also to Medicare.
We were able to elaborate on our partnerships for example that we had in Louisiana to move forward with the D. SNP offering and we're doing the same thing with our partnership in North Carolina as well so the future of our alliances and partnerships is strong I think this is an opportunity price to demonstrate the value that we bring across the board to our blue.
Partners and we will continue to enhance that as we go forward Gil also mentioned GRS and our opportunities there and we were able to actually partner with independence Blue Cross per one 121 in terms of our partnership with them going forward. So between.
Kate in Medicaid the opportunity continues to be robust and we will continue to grow this business as we move forward.
Yeah, I think the summary of all that is this we're making some good progress. We're in early days and we do think that theres significant opportunity, but again the pipeline takes some time.
And we expect over the next several years to continue to advance this but it's an important part of our overall growth strategy. So thank you for the question next question. Please.
Next we'll go to the line of Robert Jones with Goldman Sachs. Your line is now open.
Great. Good morning. Thanks for the question I guess, maybe just one on the SG&A expense ratio expectation.
For 10, 8% plus or minus at the midpoint I know, there's some moving pieces. This year I was I was hoping John maybe you could give us a little context on the drivers of this obviously would have the SG&A ratio lower than what we saw this year and I know, we're thinking about the hip and mix and then just other cost initiatives. So just any any breakdown of that would be helpful. And then.
As it relates to the.
The cadence of how we should be thinking about SG&A throughout the year would be helpful. Thanks.
Sure. Thank you for the question on.
Our SG&A levels are decreasing.
And they really are going to be more consistent with the plans that we discussed at our Investor day, a couple of years ago.
Continue to have systems migration strategies.
Very hard to eliminate non value added work flows and really enhancing our digital capabilities.
So you know at the end of the third quarter of last year, we had some business optimization charges and you're starting to see some of the benefits of that already come through the P&L.
So.
All in we feel very good about that.
Yes.
Clearly, we've seen significant revenue growth as well and are on.
Our revenue growth has far exceeded our growth in SG&A expenses, which served to lower the SG&A ratio.
As you know, we're anticipating a lot of growth in Medicaid.
Medicaid parity as a lower SG&A ratio than a company does in general in terms of our mix and weighted average so a lot of moving parts on a lot of factors.
But we're very confident with our 10, 8% and believe that it's a very much delivering on the promises that we laid out a couple of years ago at Investor day. So thank you for the question next question.
Next we'll go to line of Scott Fidel with Stephens. Your line is open.
Hi, Thanks.
Actually I wanted to just ask about diversified business group just more broadly in terms of thinking about that.
The 2021 outlook.
And if you could maybe talk about how youre thinking about revenue.
Our revenue growth and margin profile for the business I know, there's a bunch of businesses within that but generally more broadly and then call out any key COVID-19 headwinds or tailwind to consider around that segment. Thanks.
Yeah sure Scott. Thank you for the question you know diversified business group is extremely important part of our long term strategy on our long term growth aspirations.
It is not yet large enough to be considered a separate reporting segment on the FCC report on guidelines so.
There's only so much information there that we can provide on on a detailed basis, but you know in 2021, we do expect to see some nice growth on our specifically on a percentage basis.
On a diversified business group.
We are proactively managing capacity as volume returns and we continue to monitor volumes as utilization demand normalizes.
Beacon has initially experienced a reduction in utilization and then rebounded significantly throughout the year.
You want to speak and then once the vaccine stabilizes, we are where the cash.
Covid issue, we expect beacon to really be a meaningful growth driver in that area here for the future and you know our program integrity area is also in the SRU is also within Dbg and yeah, that's been impacted a little bit here in 2020 with lower claims volume.
We expect that to kick back up in 2021. So there are both opportunities for DDG with further penetrate anthem membership and do things appropriate to help bend the cost curve within anthem, and then saw that external J I'll just talked a minute ago about from the opportunities there.
They have on DDG and penetrating more and more of the blues. So we're very bullish about dbg as long term aspirations and helping drive the overall growth for them from from future.
Yeah, and I'd add to John as I said in my prior comments and other diversified business group is it's in the early stages.
Pages, we're really pleased with the growth that we've seen from it we're very happy with aspire and beacon, especially because of the opportunities to integrate as part of our whole health strategy, we see big opportunities. We share. This on our last Investor day about the impact that the diversified business group can have on anthem business to help accelerate our own <unk>.
And we're starting to see some of that already inside of the anthem members.
We're both care more and beacon, particularly this year it really supported anthems growth, but as John said similar to other health services business Covid did have an impact on our ability to in house assessments and some of the utilization certainly was up in the Beacon behavioral health business, but overall, we're still very positive about the long term growth.
Projections projections of our diversified business group and we're going to share a lot more about where we see that going in our investor day in March. Thank you for the question net.
Question. Please.
Next we'll go to a lot of Matthew Borsch with BMO capital markets. Your line is now open.
Yes, I was just wondering if you could talk about E N.
Enrollment outlook for the beginning of the year.
Particularly what youre seeing in terms of large accounts I think you on.
You referenced less movement there.
Which isn't surprising.
And then <unk>.
<unk> advantage also how you how you see that coming into the year. Thanks.
Sure.
On the ASP of our.
Pete to answer the commercial question.
Question, and then Felicia that Medicare advantage, but just a couple of overarching comments on that.
We are really pleased with what how our commercial business performed in 2020, but just given the economic headwinds and as you saw Inc.
Credibly resilient business with most of our impact having a result of just the downsize them inside of accounts, but our sales have been robust and our retention good but without feeling all of pizza under let me turn it over to him to give a bit of a perspective and how we see in 'twenty, one and then from Asia. Yeah. Thanks. Thanks, a lot for the question I appreciate it just to reiterate what Gil said, we're really pleased.
That's how we landed in 2020 on how the team performed.
Overall with all the headwinds we talked about 2020, we actually saw the commercial book growth sequentially year over year, So that was great and.
While we did see furloughs in our book of business and less risky segments being a factor as Gail just alluded to the execution was outstanding from the team our sales exceeded our lapses for this quarter again and for non in the last 12 months that was great to see and on the local from group.
Group business side, we actually grew our fully insured and self funded self funded business in the quarter. So that really played out well what you alluded to is what our headwind. It has been throughout the year and Thats really the Ingrid of change dynamics that occurred in the larger size accounts.
And that's really going to be the story for 2021 as it relates to our execution on how we're starting off the year in 2021, we still feel very good we feel very good about our portfolio, but again, depending on the economy and how in group change plays out, especially up market as you alluded to will.
A big factor as we head into 2021, if that changes on the economy improves quicker than we think.
Then then that would be a positive obviously, but overall, we're taking a more conservative view of that in light of where the economy is today and I would say that that would overall lend itself to about flattish overall membership growth on the commercial business.
And in terms of our Medicare business on.
Medicare advantage, particularly the results that the past AEP are in line with our expectations and as we referenced earlier in the call. We certainly expect another year of double digit growth outperforming the industry average growth rates as a reminder, our growth in Medicare advantage has historically been more balance throughout the year rather than.
That's limited to one one we're also pleased to be expanding our footprint into 109, new counties and for the first time, we will be offering Medicare advantage plans in Iowa, and statewide or cross, Kentucky, and Tennessee as well.
No our virtual sales comprised more than 60% of our total sales volume this past AEP and the results from our care guide, it's very promising care Guy provides our members with the new simplified orientation journey that begins at the point of sale and reduce its member touch points to ensure that they have consistency throughout the year.
Overall on boarding process.
And finally with respect to group retiree, while there was a bit of a delay in the GRS type line, we still think that opportunity is intact and we expect to see more of these opportunities as we move into 2022 and beyond.
I'd like to just really give a shout out to our teams in both the commercial and Medicare business. Because this was a really unusual year, we had to pivot.
And the investments that we made in our tools and our digital engagement with brokers et cetera, really pay dividends across all of our business as this year and I think that's on that really speaks to the kind of investments that we're making that we can engage even when we're not able to be in person with our clients from a sales and.
Account management perspective, so again overall 2020 I felt our team has really responded well and we're looking forward to 'twenty. One we've learned a lot in 90 day investments. We've made have really helped us support our clients in this environment next question. Please.
Next what are the line of Steve Willoughby with Cleveland Research. Your line is now open.
Hi, Good morning, Thanks for taking my question most of mine have been asked but two.
Two things for you.
A follow up on the last question I was wondering if maybe Felicia could comment at all as it relates to Medicare advantage between individual and group and then scale.
Was wondering if you have any thoughts or have seen any impact on the national accounts market as a result of the Blue Cross Blue Shield.
Lawsuit.
Subsequent resolution and any rule changes with Blue Cross Blue Shield Association.
Thank you C. If I read materially or or individual sales per AEP were in line with our expectations.
<unk> certainly had to pivot in light of what we were seeing in the pandemic.
That led to more virtual sales.
This AEP and results there were strong as well so certainly when we take a look and feel we are we are very pleased with what we saw and expect to deliver at the double digit growth that we reference from a group perspective group membership came in well.
I would say that as we've mentioned before there were some delayed decisions from employers with respect to group retiree business for 2021, we expect that pipeline, though remains intact as we are.
Sector to work when we take a look at our group business, we really have an inherent captive pipeline between the commercial business that we have and our ability to be able to penetrate that business and grow as we go forward. So while there was a real deferral I think in some respects with respect to growth in group this year.
Net those opportunities to remain intact, and just were delayed and pushed out to 2022 and beyond.
And in terms of the supply the last question about the NGL and the subscribers settlement I commented on that on the third quarter call and really.
It remains the same I don't really see that changing our strategy you know we talked a lot about the partnerships we have.
In terms of national accounts.
We're going to continue to be an active participant in that market as our peers. So other you know in terms of the blue.
Blue Cross Blue Shield litigation, and MTL, I really don't see anything different than what I shared on the third quarter call.
Well. Thank you very much that would be our last question I want to thank everyone for joining our call. This morning.
Heard here today anthem delivered strong results in 2020, and we're well positioned moving into 2021, despite the ongoing uncertainties.
We're very different company than we were even one year ago and I'm optimistic about the opportunities for more than 78000 associates to further improve the overall health of our members and communities. During these challenging times I look forward to speaking with you at our Investor Day event in March. Thank you again for joining us.
Ladies and gentlemen, a recording of this conference will be available for replay after 11 a M. Today through November 27th 2021, you may access the replay system at anytime by dialing 885, 660, 406 and entering the access code eight 850.
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Yeah.