What changed in this filing

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Item 1. Business

2023-02-15 compared with 2022-02-16 · 229 added, 243 removed, 370 unchanged (56% of the section changed)

At Anthem, our purpose – to improve the health of humanity – is central to who we are.

At Elevance Health, our purpose – to improve the health of humanity – is central to who we are.

It inspires all we do and is the driving force behind our unique approach to health.

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social, behavioral and physical.

We believe in working together to achieve our goals of improving lives and communities, simplifying healthcare and expecting more.

We strive to accomplish these goals through a collaborative focus on execution and delivering for those we serve in order to become a lifetime, trusted health partner.

We believe in working together to achieve our mission of improving lives and communities, simplifying healthcare and expecting more.

We strive to deliver on our mission by maximizing the power of partnerships, innovating to fuel growth and health equity, and having a high-performance culture.

Our strategy is to become a lifetime, trusted health partner through the following four core focus areas:

• Whole Health – Partner to address physical, behavioral, social, and pharmacy needs to improve health, affordability, quality, equity, and access for individuals and communities.

• Exceptional Experiences – Put the people we serve at the center of all that we do, to exceed expectations and optimize health outcomes.

• Care Provider Enablement – Be the easiest payer to work with by supporting care provider partners with data, insights, and tools they need to deliver exceptional care for our consumers.

• Digital Platform – Use digital technologies to improve efficiency and experiences, convert data into insights, and create a platform that connects stakeholders from across the health ecosystem.

With an unyielding commitment to meeting the needs of our diverse customers, we are guided by the following values:

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• Agility – Delivery today, transform tomorrow

• Diversity – Open your hearts and minds

In pursuing our strategy and becoming a lifetime, trusted health partner, we intend to transform healthcare by taking a whole health approach and providing trusted and caring solutions, delivering quality products and services that give customers access to the care they need and removing barriers to health.

We are one of the largest health benefits companies in the United States in terms of medical membership, serving greater than 45 million medical members through our affiliated health plans as of December 31, 2021.

• Diversity – Open our hearts and minds

We are one of the largest health insurers in the United States in terms of medical membership, serving approximately 47.5 million medical members through our affiliated health plans as of December 31, 2022.

We offer a broad spectrum of network-based managed care risk-based plans to Individual, Group, Medicaid and Medicare markets.

In addition, we provide a broad array of managed care services to fee-based customers, including claims processing, stop loss insurance, provider network access, medical management, care management and wellness programs, actuarial services and other administrative services.

We also provide services to the federal government in connection with our Federal Health Products & Services business, which administers the Federal Employees Health Benefits (“FEHB”) Program.

We provide an array of specialty services both to our subsidiary health plans and also unaffiliated health plans, including pharmacy benefit management (“PBM”) services and dental, vision, life, disability and supplemental health insurance benefits, as well as integrated health services.

We provide services to the federal government in connection with our Federal Health Products & Services business, which administers the Federal Employees Health Benefits (“FEHB”) Program.

We provide an array of specialty services both to customers of our subsidiary health plans and also unaffiliated health plans, including pharmacy benefit management (“PBM”) services and dental, vision, life, disability and supplemental health insurance benefits, as well as integrated health services.

We are an independent licensee of the Blue Cross and Blue Shield Association (“BCBSA”), an association of independent health benefit plans.

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In a majority of these service areas, we do business as Anthem Blue Cross, Anthem Blue Cross and Blue Shield, and Empire Blue Cross Blue Shield or Empire Blue Cross.

We also conduct business through arrangements with other BCBS licensees as well as other strategic partners.

Through our subsidiaries, we also serve customers in numerous states and Puerto Rico as AIM Specialty Health, Amerigroup, Aspire Health, Beacon, CareMore, Freedom Health, HealthLink, HealthSun, MMM, Optimum HealthCare, Simply Healthcare, and/or UniCare.

PBM services are offered through our IngenioRx, Inc.

(“IngenioRx”) subsidiary.

In addition, we conduct business through arrangements with other BCBS licensees as well as other strategic partners.

Through our subsidiaries, we also serve customers in numerous states as AIM Specialty Health, Amerigroup, Aspire Health, Beacon, CareMore, Freedom Health, HealthLink, HealthSun, MMM, Optimum Healthcare, Simply Healthcare, UniCare and/or Wellpoint.

We offer PBM services through our CarelonRx, Inc.

(“CarelonRx”) subsidiary, which was named IngenioRx, Inc.

prior to January 1, 2023.

We are licensed to conduct insurance operations in all 50 states, the District of Columbia and Puerto Rico through our subsidiaries.

As part of our name change to Elevance Health, in June 2022, we announced that over the next several years we will organize our brand portfolio into the following core go-to-market brands:

• Anthem Blue Cross/Anthem Blue Cross and Blue Shield — represents our existing Anthem-branded and affiliated Blue Cross and/or Blue Shield licensed plans;

• Wellpoint — we intend to unite select non-BCBSA licensed Medicare, Medicaid and Commercial plans under the Wellpoint name;

• Carelon — this brand brings together our healthcare-related services and capabilities, including our formerly named Diversified Business Group and IngenioRx businesses, under a single brand name.

In 2022, we managed our operations by customer type through four reportable segments:

Commercial & Specialty Business, Government Business, CarelonRx (formerly known as IngenioRx) and Other.

As we continue our journey to evolve our business from a traditional health insurance company into a lifetime, trusted health partner, we are evaluating and making changes to how we manage our business.

This included a review of the products in each of our operating segments, which resulted in restructurings between some of our operating segments.

Therefore, our reportable segment presentation in 2023 and its composition will reflect how we began managing our operations and monitoring performance, aligning strategies and allocating resources on January 1, 2023.

For additional discussion, see “Reportable Segments” below in this “Business” section and Note 20, “Segment Information,” of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.

We believe healthcare is local and that we have the strong local presence required to understand and meet local customer needs with regard to any product they are enrolled in with us.

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We feel that our commitment to health improvement and care management provides added value to customers and healthcare professionals.

Ultimately, we believe that practical and sustainable improvements in healthcare must focus on improving healthcare quality while managing

costs for total affordability.

Ultimately, we believe that practical and sustainable improvements in healthcare must focus on improving healthcare quality while managing costs for total affordability.

We have implemented initiatives driving payment innovation and partnered with providers to lower cost and improve the quality of healthcare for our members, and we continue to develop new and innovative ways to effectively manage risk and engage our members.

Further, we are expanding our financial arrangements with providers to include payment models that encourage value-based care.

Further, we continue to expand our financial arrangements with providers to implement payment models that advance value-based care.

We believe focusing on quality of care rather than volume of care is the foundation for improving patient outcomes.

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In addition, we are focused on achieving efficiencies from our national scale while optimizing service performance for our customers.

Finally, we expect to continue to rationalize our portfolio of businesses and products and align our investments to capitalize on new opportunities to drive growth in our existing markets and expand into new markets in the future.

Finally, we expect to continue to rationalize our portfolio of businesses and products and align our investments to optimize our core businesses, invest in high-growth opportunities, and accelerate capabilities and services.

Impact on Our Results of Operations

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For additional information on our networks and provider relations, product pricing and healthcare cost management programs, see “Pricing and Underwriting of Our Products,” “Networks and Provider Relations,” “Medical Management Programs,” “Care Management and Wellness Products and Programs” and “Healthcare Quality Initiatives” below in this “Business” section.

Advances in medical technology, increases in specialty drug costs, increases in hospital expenditures and other provider costs, the aging of the population, other demographic characteristics and the COVID-19 pandemic continue to contribute to rising healthcare costs.

Our managed care plans and products are designed to encourage providers and members to participate in quality, cost-effective health benefit programs by using the full range of our innovative medical management services, quality initiatives and financial incentives.

Advances in medical technology, including new specialty drugs, the aging population, other demographic characteristics and the COVID-19 pandemic continue to contribute to rising healthcare costs.

financial incentives.

We believe our market position and high business retention rates will enable us to realize the long-term benefits of investing in preventive and early detection programs.

Our ability to provide cost-effective health benefits products and services is enhanced through a disciplined approach to internal cost containment, prudent management of our risk exposure and successful integration of acquired businesses.

In addition, our ability to manage selling, general and administrative costs continues to be a driver of our overall profitability.

The future results of our operations will also be impacted by certain external forces and resulting changes in our business model and strategy.

In addition, our ability to manage general and administrative costs continues to be a driver of our overall profitability.

Our future results of operations will also be impacted by certain external forces and resulting changes in our business model and strategy.

Changes to our business environment will continue as elected officials at the national and state levels enact, and both elected officials and candidates for election propose, modifications to existing laws and regulations, including changes to taxes and fees.

For additional discussion, see “Regulation” below in this “Business” section and Part I, Item 1A “Risk Factors” in this Annual Report on Form 10-K.

Our results of operations are also impacted by levels and mix of membership, which can change as a result of the quality and pricing of our health benefits products and services, an aging population, economic conditions, changes in unemployment, acquisitions, entry into new markets and expansions in or exits from existing markets.

These membership trends could be negatively impacted by various factors that could have a material adverse effect on our future results of operations such as general economic downturns that result in business failures, failure to obtain new customers or retain existing customers, premium increases, benefit changes or our exit from a specific market.

Our results of operations are also impacted by levels and mix of membership, which can change as a result of the quality and pricing of our health benefits products and services, an aging population, economic conditions, changes in unemployment, the continued and future impact of the COVID-19 pandemic, acquisitions, entry into new markets and expansions in or exits from existing markets.

See Part I, Item 1A “Risk Factors” and Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in this Annual Report on Form 10-K.

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These enhancements can also help improve the quality, coordination and safety of healthcare through increased communications between patients and their physicians.

Through our participation in various federal government programs, we generated approximately 20.7%, 20.3% and 20.7% of our total consolidated revenues from agencies of the U.S.

government for the years ended December 31, 2021, 2020 and 2019, respectively.

These revenues are contained in our Government Business segment as described below.

Through our participation in various federal government programs, we generated approximately 28% of our total consolidated revenues from agencies of the U.S.

government for each of the years ended December 31, 2022, 2021 and 2020.

The majority of these revenues are contained in our Government Business segment as described below.

An immaterial amount of our total consolidated revenues is derived from activities outside of the U.S.

The COVID-19 pandemic continues to impact the global economy, cause market instability and uncertainty in the labor market and put pressure on the healthcare system, and it has impacted, and will likely continue to impact, our membership, our benefit expense and our member behavior, including how members access healthcare services.

We continue to assist our customers, providers, members and communities in addressing the effects of the COVID-19 pandemic, including by providing expanded benefit coverage for COVID-19 diagnostic tests, treatment and vaccine administration and taking steps to increase vaccinations by enabling, educating and encouraging vaccine acceptance among our members as well as in the communities in which we operate.

COVID-19 care, testing and vaccine administration, and the impact of new COVID-19 variants, have resulted in increased medical costs for us in 2021.

In 2021, our Medicaid membership continued to grow as a result of the temporary suspension of eligibility recertification in response to the COVID-19 pandemic, which we expect will remain suspended at least until the second quarter of 2022.

Our Commercial fee-based membership decreased in 2021 due to in-group attrition likely attributable to the COVID-19 pandemic.

See Part II, Item 7, “Management's Discussion and Analysis of Financial Conditions and Results of Operations - Business Trends - Medical Cost Trends” for a discussion of the impact of COVID-19 on our healthcare costs.

The COVID-19 pandemic continues to evolve and the full extent of its impact will depend on future developments, which are highly uncertain and cannot be predicted at this time.

We will continue to monitor the COVID-19 pandemic as well as resulting legislative and regulatory changes to manage our response and assess and mitigate potential adverse impacts to our business.

For additional discussion regarding our risks related to the COVID-19 pandemic and our other risk factors, see Part I, Item 1A, “Risk Factors” in this Annual Report on Form 10-K.

and Puerto Rico.

Reportable Segments

We manage our operations by customer type through four reportable segments:

Commercial & Specialty Business, Government Business, IngenioRx and Other.

We regularly evaluate the appropriateness of our reportable segments, particularly in light of organizational changes, merger and acquisition activity and changing laws and regulations.

As discussed in the “General” section above, we are in the process of organizing our brand portfolio into three core go-to-market brands, and are reviewing and modifying how we will manage our businesses in the future.

In 2022, we managed our operations by customer type through four reportable segments:

Commercial & Specialty Business, Government Business, CarelonRx (formerly known as IngenioRx) and Other.

Our Commercial & Specialty Business segment offers plans and services to our Individual, Group risk-based, Group fee-based and BlueCard ® members.

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provides a broad array of administrative managed care services to our fee-based customers;

and provides a variety of specialty and other insurance products and services such as dental, vision, life, disability and supplemental health insurance benefits as described below.

and provides a variety of specialty and other insurance products and services such as stop loss, dental, vision, life, disability and supplemental health insurance benefits as described below.

Our Government Business segment includes our Medicare and Medicaid businesses, National Government Services (“NGS”) and services provided to the federal government in connection with the FEHB business.

Our IngenioRx segment includes our PBM business.

IngenioRx markets and offers PBM services to our affiliated health plan customers, as well as to external customers outside of the health plans we own.

IngenioRx has a comprehensive PBM services portfolio, which includes services such as formulary management, pharmacy networks, prescription drug database, member services and mail order capabilities.

Our Other segment includes our Diversified Business Group, which is our health services business focused on lowering the cost and improving the quality of healthcare by enabling and creating new care delivery and payment models, with a special emphasis on serving those with complex and chronic conditions.

This segment also includes certain eliminations and corporate expenses not allocated to our other reportable segments.

Our CarelonRx (formerly IngenioRx) segment includes our PBM business.

CarelonRx markets and offers PBM services to our affiliated health plan customers, as well as to external customers outside of the health plans we own.

CarelonRx has a comprehensive PBM services portfolio, which includes services such as formulary management, pharmacy networks, a prescription drug database, member services and mail order capabilities.

Our Other segment includes our Diversified Business Group, now known as Carelon Services, which is our health services business focused on lowering the cost and improving the quality of healthcare by enabling and creating new care delivery and payment models, with a special emphasis on serving those with complex and chronic conditions.

This segment also includes certain intercompany eliminations and corporate expenses not allocated to our other reportable segments.

This included a review of the products in each of our operating segments, which resulted in restructurings between some of our operating segments.

As a result of these changes, beginning with our Quarterly Report on Form 10-Q for the first quarter of 2023, we will report our results in the following four reportable segments:

(i) Health Benefits, which will combine our existing Commercial & Specialty Business and Government Business segments;

(ii) our existing CarelonRx segment;

(iii) Carelon Services (our former Diversified Business Group), which will be carved out from our existing Other segment;

and (iv) Corporate and Other, which will include businesses that do not individually meet the quantitative thresholds for an operating segment, as well as corporate expenses not allocated to our other reportable segments.

We expect to reclassify previously reported information to conform to the new presentation.

For additional information, see Note 20, “Segment Information,” of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.

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We believe that one of the keys to our success has been our focus on these distinct customer types, which better enables us to develop benefit plans and services that meet our customers’ unique needs.

Further, IngenioRx was built to simplify pharmacy care and focus on the whole person, and we expect it will make it easier for our customers to achieve better health outcomes at a lower total cost of care.

Further, CarelonRx was built to simplify pharmacy care and focus on the whole person, and we expect it will make it easier for our customers to achieve better health outcomes at a lower total cost of care.

We market our Individual, Medicare and certain Group products with a smaller employee base through direct marketing activities and an extensive network of independent agents, brokers and retail partnerships.

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Federal subsidies are available for certain members, subject to income and family size, who purchase Public Exchange products.

In 2021, we made the decision to modestly expand our participation in the Public Exchange market for 2022 after also expanding in 2021.

In 2022, we made the decision to expand our participation in the Public Exchange market for 2023 after also expanding in 2022.

As a result, for 2023 we are offering Individual Public Exchange products in 138 of the 143 rating regions in which we operate, in comparison to 122 of 143 rating regions in 2022.

Our strategy has been, and will continue to be, to only participate in rating regions where we have an appropriate level of confidence that these markets are on a path toward sustainability, including, but not limited to, factors such as expected financial performance, regulatory environment and underlying market characteristics.

Being a licensee of the BCBS association of companies, of which there were 34 independent primary licensees including us as of December 31, 2021, provides significant market value, especially when competing for very large multi-state employer groups.

Being a licensee of the BCBS association of companies, of which there were 34 independent primary licensees including us as of December 31, 2022, provides significant market value, especially when competing for very large multi-state

employer groups.

For example, each BCBS member company is able to utilize other BCBS licensees’ substantial provider networks and discounts when any BCBS member works or travels outside of the state in which their policy is written.

This program is referred to as BlueCard ® .

BlueCard ® host members are generally members who reside in or travel to a state in which an Anthem subsidiary is the Blue Cross and/or Blue Shield licensee and who are covered under an employer-sponsored health plan serviced by a non-Anthem controlled BCBS licensee, which is the “home” plan.

BlueCard ® host members are generally members who reside in or travel to a state in which an Elevance Health subsidiary is the Blue Cross and/or Blue Shield licensee and who are covered under an employer-sponsored health plan serviced by a non-Elevance Health controlled BCBS licensee, which is the “home” plan.

We perform certain administrative functions for BlueCard ® host members, including claims pricing and administration, for which we receive administrative fees from the BlueCard ® members’ home plan.

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See “BCBSA Licenses” below in this “Business” section for additional information on our BCBSA licenses.

We refer to members in our service areas licensed by the BCBSA as our BCBS-branded business.

Non-BCBS-branded business refers to members in our non-BCBS-branded Amerigroup, Freedom Health, HealthSun, MMM, Optimum HealthCare and Simply Healthcare plans, as well as HealthLink and UniCare members.

We refer to members in our service areas licensed by the BCBSA as our BCBS-branded, or Anthem BCBS, business.

Non-BCBS-branded business refers to members in our non-BCBS-branded, or Wellpoint plans, which include Amerigroup, Freedom Health, HealthSun, MMM, Optimum Healthcare and Simply Healthcare plans, as well as HealthLink and UniCare members.

For additional information describing each of our customer types and changes in medical membership over the last three years, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Membership ” included in Part II, Item 7 of this Annual Report on Form 10-K.

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Also, certain plans offer members incentives for healthy behaviors, such as smoking cessation and weight management.

Members are charged periodic, prepaid premiums and generally pay co-payments, coinsurance and/or deductibles when they receive services.

Members are charged periodic, prepaid premiums and generally pay copayments, coinsurance and/or deductibles when they receive services.

Commercial & Specialty Business

• Commercial Risk-Based Products.

Our Commercial & Specialty Business offers a diversified mix of managed care risk-based products including:

Our Commercial & Specialty Business offers employer groups a diversified mix of managed care risk-based products including:

Preferred Provider Organization (“PPO”), Health Maintenance Organization (“HMO”), Consumer-Driven Health Plans (“CDHP”), Traditional Indemnity and Point-of-Service (“POS”) plans.

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• Commercial Fee-Based Products.

Our Commercial & Specialty Business provides a broad array of managed care services to fee-based customers, including claims processing, stop loss insurance, provider network access, medical management, care management and wellness programs, actuarial services and other administrative services.

Our Commercial & Specialty Business provides a broad array of managed care services to fee-based groups, including claims processing, provider network access, medical management, care management and wellness programs, actuarial services and other administrative services.

Fee-based health plans are also able to use our provider networks and to realize savings through our negotiated provider arrangements, while allowing employers the ability to design certain health benefit plans in accordance with their own requirements and objectives.

We also charge a premium to underwrite stop loss insurance for employers that maintain fee-based plans but want to limit their retained risk.

also charge a premium to underwrite stop loss insurance for employers that maintain fee-based plans but want to limit their retained risk.

In addition, we perform certain administrative functions for BlueCard ® host members, discussed under “Membership” above, including claims pricing and administration, for which we receive administrative fees from the BlueCard ® members’ home plans.

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• Specialty Products.

We offer an array of products and services to both risk-based and fee-based customers in conjunction with our health plans as well as to unaffiliated healthcare plans that are not Anthem subsidiaries.

◦ Stop Loss Insurance.

Our stop loss insurance arrangements are built around our clients’ needs while assuming 100% of the risk.

We offer specific and aggregate plans that will provide options to meet our clients’ coverage terms, budget and risk tolerance;

active claims management to help avoid errors and missing claims;

as well as cost containment to assist our clients with claims and cost control.

Our dental plans include networks in certain states in which we operate and are offered on both a risk-based and fee-based basis.

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Medicare Advantage SNPs are coordinated care plans specifically designed to provide targeted care, covering all the healthcare services considered medically necessary for members and often providing professional care coordination services, with personal guidance and programs that help members maintain their health.

Medicare Advantage membership also includes Medicare Advantage members in our Group Retiree Solutions business who are retired members of Commercial accounts, or retired members of groups who are not affiliated with our Commercial accounts who have selected a Medicare Advantage product through us.

Medicare Advantage membership also includes Medicare Advantage members in our Group Retiree Solutions business who are retired members of Commercial accounts or groups who are not affiliated with our Commercial accounts that have selected a Medicare Advantage product through us.

MMP is a demonstration program focused on serving members who are dually eligible for Medicaid and Medicare.

Medicare Supplement plans typically pay the difference between healthcare costs incurred by a beneficiary and amounts paid by Medicare.

Medicare Supplement plans typically pay the difference between healthcare costs incurred by a beneficiary and amounts paid by the traditional Medicare Fee-For-Service program.

Medicare Part D offers a prescription drug plan to Medicare and MMP beneficiaries.

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Our Medicaid plans also cover certain dual-eligible customers, as previously described above, who also receive Medicare benefits.

As of December 31, 2021, we provide Medicaid and other state sponsored services, such as administrative services, in Arkansas, California, Colorado, Florida, Georgia, Indiana, Iowa, Kentucky, Louisiana, Maryland, Minnesota, Missouri, Nebraska, Nevada, New Jersey, New York, North Carolina, Puerto Rico, South Carolina, Tennessee, Texas, Virginia, Washington, West Virginia and Wisconsin.

As of December 31, 2022, we provide Medicaid and

other state sponsored services, such as administrative services, in Arkansas, California, Colorado, Florida, Georgia, Indiana, Iowa, Kentucky, Louisiana, Maryland, Minnesota, Missouri, Nebraska, Nevada, New Jersey, New York, North Carolina, Ohio, Puerto Rico, South Carolina, Tennessee, Texas, Virginia, Washington, West Virginia and Wisconsin.

• Federal Employees Health Benefits Program.

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Part B of the Medicare program provides coverage for services provided by physicians, physical and occupational therapists and other professional providers, as well as certain durable medical equipment and medical supplies.

Our subsidiary IngenioRx markets and offers PBM services to our affiliated health plan customers throughout the country in both our Commercial & Specialty and our Government business segments, as well as to customers outside of

the health plans we own.

Our subsidiary CarelonRx markets and offers PBM services to our affiliated health plan customers throughout the country in both our Commercial & Specialty and our Government business segments, as well as to customers outside of the health plans we own.

Our comprehensive PBM services portfolio includes features such as formulary management, pharmacy networks, a prescription drug database, member services and mail order capabilities.

IngenioRx delegates certain PBM administrative functions, such as claims processing and prescription fulfillment, to CaremarkPCS Health, L.L.C., which is a subsidiary of CVS Health Corporation (“CVS Health”), pursuant to a five-year agreement (the “CVS PBM Agreement”).

With IngenioRx, we retain the responsibilities for clinical and formulary strategy and development, member and employer experiences, operations, sales, marketing, account management and retail network strategy.

CarelonRx delegates certain PBM administrative functions, such as claims processing and prescription fulfillment, to CaremarkPCS Health, L.L.C., which is a subsidiary of CVS Health Corporation (“CVS Health”), pursuant to a five-year agreement (the “CVS PBM Agreement”) that is set to terminate on December 31, 2024.

With CarelonRx, we retain the responsibilities for clinical and formulary strategy and development, member and employer experiences, operations, sales, marketing, account management and retail network strategy.

From December 2009 through December 2019, we delegated certain PBM functions and administrative services to Express Scripts Inc.

(“Express Scripts”).

Express Scripts managed the network of pharmacy providers, operated mail order pharmacies and processed prescription drug claims on our behalf, while we sold and supported the product for our members, made formulary decisions, sold drug benefit design strategy and provided front line member support.

We began transitioning existing members from Express Scripts to IngenioRx in the second quarter of 2019, and completed the transition by January 1, 2020.

We transitioned existing members from Express Scripts to CarelonRx by January 1, 2020.

Our Other segment includes our Diversified Business Group, now known as Carelon Services.

Business units in Carelon Services offer a broad array of healthcare related services and capabilities to internal and external customers including integrated care delivery, behavioral health, palliative care, utilization management, payment integrity services and subrogation services, as well as health and wellness programs.

Key services offered include:

• Behavioral Health.

We provide comprehensive behavioral health management services through clinical and network administration.

In a limited capacity, we also provide high-quality, evidence-based behavioral healthcare and counseling services through licensed clinicians in convenient and accessible locations.

• Care Delivery .

We provide highly integrated, personalized care to patients with chronic and complex conditions, whether in their home, care centers, mobile units, skilled nursing facilities, hospitals, or virtually.

Additionally, we provide non-hospice, community based palliative care to deliver an extra layer of personalized support and whole-person care.

• Advanced Analytics and Services.

We leverage data, analytics, and insights to help improve outcomes and lower the cost of care, by working to ensure that our members receive safe, appropriate, high-quality, cost-effective care and that our providers are reimbursed accurately and timely.

The managed care industry is highly competitive, both nationally and in our local markets.

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We believe that we have good relationships with our agents and brokers, and that our products, support services and commission structure compare favorably to those of our competitors in all of our markets.

In addition, the PBM industry is highly competitive, and IngenioRx is subject to competition from national, regional and local PBMs, insurers, health plans, large retail pharmacy chains, large retail stores, supermarkets, mail order pharmacies, web pharmacies and specialty pharmacies.

In addition, the PBM industry is highly competitive, and CarelonRx is subject to competition from national, regional and local PBMs, insurers, health plans, large retail pharmacy chains, large retail stores, supermarkets, mail order pharmacies, web pharmacies and specialty pharmacies.

Strong competition within the PBM industry has generated greater demand for lower product and service pricing, increased revenue sharing and enhanced product and service offerings.

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For our risk-based business, any deviation, favorable or unfavorable, from the medical costs assumed in determining the premium is our responsibility.

Some of our larger groups employ retrospective rating reviews, where positive experience is partially refunded to the group, and negative experience is charged against a rate stabilization fund established from the group’s favorable experience or charged against future favorable experience.

In addition, our ACA and government risk-based contracts may include minimum medical loss ratio, risk adjustment, or risk corridor arrangements, which also stabilize premiums based upon claims experience.

Our pharmacy pricing through IngenioRx is presented to market via discounts off the average wholesale price for drugs dispensed through the retail, mail and specialty channels as well as through rebate projections.

Our pharmacy pricing through CarelonRx is presented to market via discounts off the average wholesale price for drugs dispensed through the retail, mail and specialty channels as well as through rebate projections.

We utilize group-specific script data, formulary, network and clinical care program selection combined with administrative expense, risk and profit guidance to set market competitive pricing discounts and rebate projections.

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The RBRVS structure was developed, maintained, and updated by CMS and is used by the Medicare program and other major health plans.

In addition, we have implemented

and continue to expand physician incentive contracting, or “pay-for-performance,” which ties physician payment levels to performance on clinical measures.

In addition, we have implemented and continue to expand physician incentive contracting, or “pay-for-performance,” which ties physician payment levels to performance on clinical measures.

While we generally do not delegate full financial responsibility to our physician providers in the form of capitation-based reimbursement, we maintain capitation-based arrangements in certain markets where we determine that market dynamics result in it being a useful method to lower costs and reduce underwriting risk.

Our provider engagement and contracting strategies have evolved to include value-based contracting arrangements that meet providers where they are in the movement from traditional fee-for-service to value-based care.

These programs are designed to support Commercial, Medicare and Medicaid programs and the unique characteristics of these populations.

Our value-based contracting programs are designed to reward our contracted providers for improving the overall quality of care they deliver by adhering to evidence-based medicine.

In addition, these value-based contracts also share with the providers total cost of care savings that are achieved by adhering to evidence-based medicine over time.

For providers who contract in one of our value-based programs, we work with them to share gaps in care information and other important data to assist them in managing the care of their patients.

Often providers will also grant us access to data to support the efficient administration of program components.

This data can allow us to more efficiently capture information regarding the risk of our membership and the overall adherence to evidence-based medicine, as well as information to more efficiently perform utilization management administration.

Our hospital contracts provide for a variety of reimbursement arrangements depending on local market dynamics and current hospital utilization efficiency.

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A small percentage of hospitals, primarily rural, sole community hospitals, are reimbursed on a discount from approved charge basis for covered services.

Our “per-case” reimbursement methods utilize many of the same attributes contained in Medicare’s Diagnosis Related Groups methodology.

Our “per-case” reimbursement

methods utilize many of the same attributes contained in Medicare’s Diagnosis Related Groups methodology.

Hospital outpatient services are reimbursed by fixed case rates, fee schedules or percent of approved charges.

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In addition, the majority of our hospital contracts include a pay-for-performance component where reimbursement levels are linked to improved clinical performance, patient safety and medical error reduction.

Our provider engagement and contracting strategies have evolved to include several new value-based contracting arrangements that meet providers where they are in the movement from traditional fee-for-service to value-based care.

These programs are designed to support Commercial, Medicare and Medicaid programs and the unique characteristics of these populations.

Our value-based contracting programs are designed to reward our contracted providers for improving the overall quality of care they deliver by adhering to evidence-based medicine.

In addition, these value-based contracts also share with the providers total cost of care savings that are achieved by adhering to evidence-based medicine over time.

For providers who contract in one of our value-based programs, we work with them to share gaps in care information and other important data to assist them in managing the care of their patients.

Often providers will also grant us access to data to support the efficient administration of program components.

We experience seasonality in our Commercial & Specialty Business and Government Business segments.

While our premium revenues are not seasonal, our benefit costs typically increase during the year as our risk-based members pay their annual deductibles and reach their out-of-pocket maximum limits.

However, this seasonality may change in the future as the COVID-19 pandemic continues.

While our premium revenues are not seasonal, our benefit costs typically increase during the year as our risk-based members pay their contractual portion of claims responsibility under annual deductibles and reach their out-of-pocket maximum limits.

Medical Management Programs

Our medical management programs include a broad array of activities that facilitate improvements in the quality of care provided to our members and promote cost-effective medical care.

These medical management activities and programs are administered and directed by physicians and nurses.

The goals of our medical management strategies are to ensure that the care delivered to our members is supported by appropriate medical and scientific evidence, is received on a timely basis and occurs in the most appropriate setting.

The following is a general description of our medical management programs, which are available to our members depending on the particular plan or product in which they participate:

Care coordination:

A traditional medical management strategy we use is care coordination, which is based on nationally recognized criteria developed by third-party medical specialists.

With inpatient care coordination, the requirements and intensity of services during a patient’s hospital stay are reviewed, at times by an onsite, skilled nurse professional in collaboration with the hospital’s medical and nursing staff, in order to coordinate care and determine the most effective transition of care from the hospital setting.

In addition, continued stay cases are reviewed with physician medical directors to ensure appropriate utilization of medical services.

We also coordinate care for outpatient services to help ensure that patients with chronic conditions who receive care from multiple physicians are able to manage the exchange of information between physicians and coordinate office visits to their physicians.

Case management:

We have implemented a medical management strategy focused on identifying the small percentage of the membership that will require a high level of intervention and assistance to manage their healthcare needs.

Case management identifies members who are likely to be re-admitted to the hospital through claims analysis using predictive modeling techniques, the use of health risk assessment data, utilization management reports and referrals from a physician or one of our other programs, such as the 24/7 NurseLine.

Registered nurses, medical directors, behavioral health experts, pharmacists and other clinicians focus on these members and help them coordinate their care through pharmacy compliance, post-hospital care, follow-up visits to see their physician and support in their home.

Increasingly, we collaborate with our providers and key health partners within the member’s provider care team by providing actionable patient data insights, practice-coaching capabilities, technology and programs, and products that help our providers and health partners to successfully deliver the right care, at the right time, in the right place.

Precertification:

Precertification involves assessment of the appropriateness of certain hospitalizations and other medical services prior to the services being rendered.

For example, precertification is used to determine whether a set of hospital and medical services is being appropriately applied to the member’s clinical condition, in accordance with criteria for medical necessity as that term is defined in the member’s benefits contract.

All of our health plans have implemented precertification programs for selected medical services including surgeries, major diagnostic procedures, devices, drugs and other services to help members maximize benefits and avoid unnecessary charges or penalties.

Formulary management:

We have developed formularies, which are selections of drugs based on clinical quality and effectiveness.

A pharmacy and therapeutics committee of physicians uses scientific and clinical evidence to ensure that our members have access to the appropriate drug therapies and receive these therapies through proper settings.

Medical policy:

A medical policy committee determines our national policies and guidelines for the application of medical technologies, procedures and services.

This committee is comprised of internal and external physician leaders from various specialties and areas of the country.

We also work in cooperation with academic medical centers, practicing community physicians and medical specialty organizations.

All guidelines and policies are reviewed at least once a year or as new published clinical evidence becomes available.

Quality programs:

We have a broad array of medical management activities that facilitate improvements in the quality of care provided to our members and promote cost-effective medical care.

These medical management activities and programs are administered and directed by physicians and nurses with the goal of ensuring that the care delivered to our members is supported by appropriate medical and scientific evidence, is received on a timely basis and occurs in the most appropriate setting.

The medical management programs available to our members may vary depending on the particular plan or product in which they participate.

Care coordination is one of the strategies we utilize and is based on nationally recognized criteria developed by third-party medical specialists to help coordinate inpatient as well as outpatient care and monitor appropriate utilization of such services.

Our case management focuses on identifying membership that will require a high level of intervention and providing assistance to manage their healthcare needs.

Precertification is utilized to assess appropriateness of certain hospitalizations and other medical services prior to the services being rendered.

Our medical policy committee determines our national policies and guidelines for the application of medical technologies, procedures and services and reviews these policies and guidelines at least once a year or as new published clinical evidence becomes available.

We are actively engaged with our hospital and physician networks to enable them to improve medical and surgical care and achieve better outcomes for our members.

We endorse, encourage and incentivize hospitals and physicians to support national initiatives to improve the quality of clinical care and patient outcomes and to reduce medication errors and hospital infections.

External review procedures:

We work with outside experts through a process of external review to provide our members scientifically and clinically, evidence-based medical care.

When we receive member concerns, we have formal appeals procedures that ultimately allow coverage disputes related to medical necessity decisions under the benefits contract to be settled by independent expert physicians.

Provider cost comparison tools:

We offer web-based tools that allow our members to compare cost estimates, quality accreditation data and patient reviews for common services at contracted providers and cost estimates for facility, professional and ancillary services.

Members can also estimate out-of-pocket costs based on a member’s own benefit coverage, deductible and out-of-pocket maximum.

We continue to work on enhancing and evolving our tools to assist members in making informed and value-based healthcare decisions.

In addition, we collaborate with an external independent vendor to support employers wanting to purchase a consumer engagement solution with certain additional functionality.

Anthem Health Guide:

Anthem Health Guide is an educational resource that integrates the customer service experience with clinical and wellness coaching to provide easier navigation of healthcare services for our members.

Anthem Health Guide provides members with education on benefit options and digital opportunities that fit member preferences, and makes recommendations for eligible clinical programs to ensure members are connected to the most appropriate care and clinical resources.

By allowing members to connect with us using voice, click-to-chat, secure email and mobile technology, we enhance our ability to engage with our members.

Anthem Whole Health Connection:

Anthem Whole Health Connection is included when our health benefits are combined with one or more of our pharmacy, dental, vision, life, disability, behavioral health or supplemental health coverage plans and connects medical, pharmacy, dental, vision, disability, behavioral health and supplemental health clinical

and claims data to proactively identify health issues earlier and engage our members with their health providers in new ways to support health, lower costs and deliver a better healthcare experience.

We also work with outside experts through a process of external review to provide our members scientifically and clinically, evidence-based medical care.

Our web-based tools allow our members to obtain or compare cost estimates for care, including out-of-pocket costs.

We remain committed to assisting our members in making informed and value-based healthcare decisions, providing for easier navigation of healthcare services and delivering a better healthcare experience.

Care Management and Wellness Products and Programs

We continue to expand our suite of integrated care management programs and tools and offer the following programs, among others, which are available to our members depending on the particular plan or product in which they participate, and have been designed to increase quality and reduce medical costs for our members:

Sydney Health is our digital engagement platform.

Sydney Health gives our members access to personalized health and wellness resources;

We continue to expand our suite of integrated care management programs and tools.

Availability of these programs and tools to our members may depend on the particular plan or product in which they participate.

Our care management tools and programs are designed to increase quality and reduce medical costs for our members and help them make better decisions about their well-being as they navigate the healthcare system.

Our digital engagement platform, Sydney Health, is designed to give our members access to personalized health and wellness resources;

medical, pharmacy, dental, vision, life, and disability benefits details;

as well as virtual care services, all in one place.

ConditionCare and FutureMoms are care management and maternity management programs that serve as adjuncts to physician care.

Skilled nurse professionals, with added support from our team of dietitians, social workers, pharmacists, health educators and other health professionals, help participants understand their condition, their doctor’s orders and how to become a better self-manager of their condition.

We also offer members infertility consultation through our SpecialOffers@Anthem program, a comprehensive and integrated assembly of discounted health and wellness products and services from a variety of the nation’s leading retailers.

24/7 NurseLine offers access to qualified, registered nurses anytime.

This allows our members to make informed decisions about the appropriate level of care and avoid unnecessary worry.

This program also includes a referral process to the nearest urgent care facility, a robust audio library, accessible by phone, with more than 600 health and wellness topics, as well as on-line health education topics designed to educate members about symptoms and treatment of many common health concerns.

MyHealth Advantage utilizes integrated information systems and sophisticated data analytics to help our members improve their compliance with evidence-based care guidelines, providing personal care notes that alert members to potential gaps in care, enable more prudent healthcare choices and assist in the realization of member out-of-pocket cost savings.

Key opportunities are also shared with physicians through Availity ® at the time of membership eligibility verification.

Availity ® is an electronic data interchange system that allows for the exchange of health information among providers over a secure network.

MyHealth Coach provides our members with a professional guide who helps them navigate the healthcare system and make better decisions about their well-being.

MyHealth Coach proactively reaches out to people who are at risk for potentially serious health issues or have complex healthcare needs.

Our health coaches help participants understand and manage chronic conditions, handle any health and wellness related services they need and make smart lifestyle choices.

HealthyLifestyles helps employees transform unhealthy habits into positive ones by focusing on behaviors that can have a positive effect on their health and their employer’s financial well-being.

HealthyLifestyles programs include smoking cessation, weight management, stress management, physical activity, and diet and nutrition.

Wellbeing Coach provides our members with an experienced health educator who provides counseling, tools, and support to transform unhealthy habits into positive ones, focusing on tobacco cessation or weight management.

Behavioral Health Case Management is a comprehensive program supporting a wide range of members who are impacted by their behavioral health condition, including specialty areas such as eating disorders, anxiety, depression and substance abuse.

Our care management, infertility services and maternity management programs serve as adjuncts to physician care.

Through these programs, medical professionals help to educate participants regarding their care and condition.

Our 24/7 NurseLine offers access to qualified, registered nurses to allow our members to make informed decisions about the appropriate level of care and avoid unnecessary worry.

Our CareMore subsidiary specializes in whole-person care for members with complex and chronic conditions to improve clinical outcomes and patient wellbeing.

Our Aspire Health subsidiary engages with members near-end-of life and/or requiring palliative care to manage serious illnesses and improve quality of life during a difficult time.

With our integrated information systems and sophisticated data analytics, we help our members improve their compliance with evidence-based care guidelines, provide personal care notes that alert members to potential gaps in care, enable more prudent healthcare choices and assist in the realization of member out-of-pocket cost savings.

Our employee assistance programs provide 24/7 telephonic support for personal and crisis events and provide resources such as counseling and referral assistance with childcare, health and wellness, financial issues, legal issues, adoption and daily living.

We have a comprehensive behavioral health case

management program supporting a wide range of members who are impacted by their behavioral health condition, including specialty areas such as eating disorders, anxiety, depression and substance abuse.

The program assists members and their families with obtaining appropriate behavioral health treatment, offering community resources, providing education and telephonic support, and promoting provider collaboration.

Autism Spectrum Disorder Program is a specialized case management program staffed by a dedicated team of clinicians who have been trained on the unique challenges and needs of families with a member who has a diagnosis of autism spectrum disorder.

These clinicians provide education, information on community resources to help with care and support, guidance on the appropriate usage of benefits and assistance in exploring effective treatments, such as medical services, that may help the member and their families.

Employee Assistance Programs provide 24/7 telephonic support for personal and crisis events and provide resources such as counseling and referral assistance with childcare, health and wellness, financial issues, legal issues, adoption and daily living.

Healthcare Quality Initiatives

Increasingly, the healthcare industry is able to define quality healthcare based on preventive health measurements, outcomes of care and optimal care management for chronic disease.

A key to our success has been our ability to work with our network physicians and hospitals to improve the quality and outcomes of the healthcare services provided to our members.

Our ability to promote quality medical care has been recognized by NCQA, the largest and most respected national accreditation program for managed care health plans.

Increasingly, the healthcare industry is able to define quality healthcare based on effective, safe, equitable and affordable care in preventive health, outcomes of care and optimal care management for chronic disease.

A key to our success has been our ability to develop partnerships by working with our network physicians, hospitals, and social resources providers to improve the quality outcomes of the healthcare and social impact services provided to our members, their families, and the community-at-large.

Our ability to promote quality medical care, address health-related social risks, and advance health equity has been recognized by NCQA, the largest and most respected national accreditation program for managed care health plans.

Several quality healthcare measures, including the Healthcare Effectiveness Data and Information Set (“HEDIS ® ”), have been incorporated into NCQA’s accreditation processes.

HEDIS ® measures range from preventive services, such as screening mammography and pediatric immunization, to elements of care, including decreasing the complications of diabetes, improving treatment for patients with heart disease, integration of behavioral health, and racial and ethnic stratification measurement to help close healthcare disparities.

Our health outcomes research subsidiary, HealthCore, Inc.

(“HealthCore”), generates consistent and actionable evidence to support decision making while helping to guide fresh initiatives for a range of stakeholders in the healthcare industry.

By leveraging a rich array of medical and pharmacy utilization data queried from administrative claims, patient surveys, medical charts and laboratory diagnostics, among other health records, HealthCore’s multi-disciplinary research teams develop a broad spectrum of safety, clinical research trials, effectiveness, pharmacoepidemiology and health economics evidence.

HealthCore’s real world evidence and comparative effectiveness research, among other data, have played roles in the product planning and development campaigns of biotechnology and pharmaceutical companies and today it lists most of the leading biologics and drug manufacturers as clients or alliance partners.

Through our American Imaging Management, Inc.

subsidiary, doing business as AIM Specialty Health (“AIM”), we promote appropriate, safe and affordable member care in the areas of imaging, sleep disorders, cardiac testing, oncology drugs and musculoskeletal procedures.

Through our AIM Specialty Health (“AIM”) subsidiary, we promote appropriate, safe and affordable member care in the areas of imaging, sleep disorders, cardiac testing, oncology drugs and musculoskeletal procedures.

These expanded specialty benefit management solutions leverage clinical expertise and technology to engage provider communities and members in the more effective and efficient use of outpatient services and to promote the most appropriate use of clinical services to improve the quality of overall healthcare delivered to our members and members of other health plans that are covered under AIM’s programs.

Through our subsidiary myNEXUS, Inc.

(“myNEXUS”), we perform management review for home health services provided to Medicare members, with the goal of ensuring they receive appropriate, high-quality care and supporting their transition back into the home.

Through our myNEXUS, Inc.

(“myNEXUS”) subsidiary, we perform management review for home health services provided to Medicare members, with the goal of ensuring they receive appropriate, high-quality care and supporting their transition back into the home.

Effective management of these services can help reduce preventable hospital admissions and readmissions, thereby improving healthcare outcomes for patients.

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Both AIM and myNEXUS programs are examples of how we facilitate improvements in the quality of care provided to our members and promote cost-effective medical care.

The physical aspects of health have been traditionally the focus and the priority for healthcare.

However, unique life circumstances and experiences impact every individual and their health.

We seek to understand our members' health-related social needs to create a healthcare system that synchronizes care delivery for physical, behavioral, social and pharmacy needs.

We are advancing our efforts through consistent screening of our members for their social needs by using industry-standard tools such as the Protocol for Responding to & Assessing Patients’ Assets, Risks & Experiences, co-creating social action plans with our members, connecting members to related social support services, and evaluating the entire process for continuous quality improvement.

We are committed to ensuring that all people, regardless of age, race or ethnicity, sexual orientation, gender identity, disability, and geographic or financial access can receive individualized care.

Harnessing data gives a more complete picture of each individual and their health needs and can help make healthcare more personalized and equitable.

Strengthening communities has a positive effect on health therefore we value and nurture our local ties which are a key component of our whole-health approach and drive us to work closely with community organizations that create support networks.

Using our data, we also identify the resources needed to support local residents, including the people who we serve, to ensure those resources can better meet local needs.

BCBSA Licenses

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BCBSA is a national association of independent Blue Cross and Blue Shield companies, the primary function of which is to promote and preserve the integrity of the BCBS names and marks, as well as provide certain coordination among the member companies.

Each BCBSA licensee is an independent legal organization and is not responsible for obligations of other BCBSA member organizations.

We currently have no right to market products and services using the BCBS names and marks outside of the states in which we are licensed to sell BCBS products.

However, if the terms of the subscriber settlement agreement and release (“Subscriber Settlement Agreement”) that was agreed to in 2020 by the BCBSA and Blue Cross and/or Blue Shield licensees, including us (the “Blue plans”), are approved, some large national employers with self-funded plans will have a right to request a second Blue plan bid in addition to the local Blue plan.

Each BCBSA licensee

is an independent legal organization and is not responsible for obligations of other BCBSA member organizations.

Although previously we did not have a right to sell products and services using the BCBS names and marks outside of the states in which we are licensed to sell BCBS products, under the terms of the subscriber settlement agreement and release (“Subscriber Settlement Agreement”) among the class of plaintiffs, BCBSA and Blue Cross and/or Blue Shield licensees, including us (the “Blue plans”), some large national employers with self-funded plans (specifically identified in the Subscriber Settlement Agreement) have a right to request a second Blue plan bid in addition to a bid from the local Blue plan.

The Subscriber Settlement Agreement received final approval in August 2022.

We are required to pay an annual license fee to the BCBSA based on enrollment and also to comply with various requirements and restrictions regarding our operations and our use of the BCBS names and marks.

These requirements and restrictions include, among other things:

minimum capital and liquidity

requirements;

minimum capital and liquidity requirements;

enrollment and customer service performance requirements;

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• regulate our products and services in great detail;

• regulate, limit, or suspend our ability to market products, including participation in Medicare and the ACA Public Exchanges;

• regulate, limit, or suspend our ability to market products, including participation in Medicare and the Public Exchanges;

• determine through a procurement process our ability to participate in certain programs, including state Medicaid programs;

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• monitor our solvency and reserve adequacy;

• audit, and recovery of audit discrepancies, including risk adjustment data validation (“RADV”) audits;

• scrutinize our investment activities on the basis of quality, diversification and other quantitative criteria;

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The health benefits business also may be adversely impacted by court and regulatory decisions that expand or invalidate the interpretations of existing statutes and regulations.

It is uncertain whether we could recoup, through higher premiums or

other measures, the increased costs of mandated benefits or other increased costs caused by potential legislation, regulation or court rulings.

It is uncertain whether we could recoup, through higher premiums or other measures, the increased costs of mandated benefits or other increased costs caused by potential legislation, regulation or court rulings.

See Part I, Item 1A “Risk Factors” in this Annual Report on Form 10-K.

Federal and state governments have enacted, and may continue to enact, legislation and regulations in response to the COVID-19 pandemic that have had, and we expect will continue to have, a significant impact on health benefits, consumer eligibility for public programs and our cash flows for all lines of business, and introduce increased uncertainty around our cost structure.

With the declaration of COVID-19 as a public health emergency (“PHE”), the federal and state governments have enacted, and may continue to enact, legislation and regulations in response to the COVID-19 pandemic that have had, and we expect will continue to have, a significant impact on health benefits, consumer eligibility for public programs and our cash flows for all lines of business, and which have introduced increased uncertainty around our cost structure.

These actions, which are or have been in effect for various durations, provide, among other things:

• mandates to waive cost-sharing for COVID-19 testing (including over-the-counter testing in accordance with state and federal requirements such as California SB 510 and January 2022 federal requirements), treatment, vaccines and related services;

• reforms, including waiving Medicare originating site restrictions for qualified providers of telehealth services;

• financial support to healthcare providers, including expansion of the Medicare accelerated payment program to all providers receiving Medicare payments;

• mandated expansion of premium payment terms, including the time period for which claims can be denied for lack of payment;

• mandates related to prior authorizations and payment levels to providers, additional consumer enrollment windows and an increased ability to provide telehealth services.

The Consolidated Appropriations Act

The Consolidated Appropriations Act of 2021, which was enacted in December 2020 (the “Appropriations Act”), contains a number of provisions that may have a material effect upon our business, including procedures and coverage requirements related to surprise medical bills and new mandates for continuity of care for certain patients, price comparison tools, disclosure of broker compensation, mental health parity reporting, and reporting on pharmacy benefits and drug costs.

The health plan-related requirements of the Appropriations Act have varying effective dates beginning as early as December 2021, some of which have been extended since the enactment of the Appropriations Act.

Implementation of the Appropriations Act brings with it significant oversight responsibilities by health insurers that may result in increased governmental audits, increased assertions of False Claims Act violations, and an increased risk of other litigation.

Federal regulatory agencies continue to issue regulations and guidance related to the Appropriations Act.

The American Rescue Plan Act

The American Rescue Plan Act of 2021 (the “Rescue Plan”), which was enacted in March 2021, contains several health-related provisions that have impacted our business, including expansion of premium tax credits for our Public Exchange business and full subsidization of the Consolidated Omnibus Budget Reconciliation Act (“COBRA”) continuation coverage for those who were involuntarily terminated or had their work hours reduced.

The Rescue Plan’s premium tax provisions became effective in January 2021, while the COBRA premium subsidization was effective from April 2021 through September 2021.

mandates to waive cost-sharing for COVID-19 testing, vaccines and related services;

financial support to healthcare providers;

and mandates related to prior authorizations, payment levels to providers, consumer enrollment windows and telehealth services.

The Biden administration renewed the PHE on January 11, 2023 and has indicated that they intend for the PHE to expire on May 11, 2023.

Under the Consolidated Appropriations Act of 2023 (the “2023 Appropriations Act”), Congress decoupled Medicaid eligibility recertification from the PHE.

As a result, states may begin removing ineligible beneficiaries from their Medicaid programs starting April 1, 2023.

When recertifications resume, we expect a decline in our Medicaid membership.

At the same time, we expect growth in our Commercial risk-based and fee-based plans and Medicare, including through the Public Exchanges, as members exiting Medicaid in our 14 Commercial states seek coverage elsewhere.

The Inflation Reduction Act of 2022

The Inflation Reduction Act of 2022 (the “Inflation Reduction Act”), which was signed into law in August 2022, contains a variety of provisions that impact our business including an extension of the American Rescue Plan Act of 2021's enhanced Premium Tax Credits (“PTC”) through 2025;

imposing a new corporate alternative minimum tax;

providing a one percent excise tax on repurchases of stock made after December 31, 2022;

allowing CMS to negotiate prices on a limited set of prescription drugs in Medicare Parts B and D beginning in 2026;

instituting caps on insulin cost sharing in Medicare Parts B and D;

redesigning of the Medicare Part D benefit;

adding a requirement that drug manufacturers pay rebates if prices increase beyond inflation;

and delaying the implementation of the Trump Administration Medicare drug rebate rule to 2032.

The extension of the enhanced PTC will likely allow for growth in Individual exchange market enrollment as Medicaid eligibility recertifications resume, supporting continuity of coverage for more people.

The Consolidated Appropriations Act of 2021

The Consolidated Appropriations Act of 2021 (the “2021 Appropriations Act”) has impacted us since passage and in the future may have a material effect upon our business, including procedures and coverage requirements related to surprise medical bills and new mandates for continuity of care for certain patients, price comparison tools, disclosure of broker compensation, mental health parity reporting, and reporting on pharmacy benefits and drug costs.

The requirements of the 2021 Appropriations Act applicable to us have varying effective dates, some of which were effective in December 2021 and during 2022, and others of which have been extended into 2023 since the enactment of the 2021 Appropriations Act.

State Regulation of Insurance Companies and HMOs

Our insurance and HMO subsidiaries must obtain a certificate of authority and maintain that license in the jurisdictions in which they conduct business.

The National Association of Insurance Commissioners (“NAIC”) has adopted model regulations that, where adopted by states, require expanded governance practices, risk and solvency assessment reporting and the filing of periodic financial and operating reports.

the filing of periodic financial and operating reports.

Most states have adopted these or similar measures to expand the scope of regulations relating to corporate governance and internal control activities of HMOs and insurance companies.

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These acts contain certain reporting requirements, as well as restrictions on transactions between an insurer or HMO and its affiliates, and may restrict the ability of our regulated subsidiaries to pay dividends to our holding companies.

These holding company laws and regulations

generally require registration with applicable state departments of insurance and the filing of reports describing capital structure, ownership, financial condition, certain intercompany transactions, enterprise risks, corporate governance and general business operations.

These holding company laws and regulations generally require registration with applicable state departments of insurance and the filing of reports describing capital structure, ownership, financial condition, certain intercompany transactions, enterprise risks, corporate governance and general business operations.

State insurance holding company laws and regulations require notice or prior regulatory approval of transactions including acquisitions, material intercompany transfers of assets, guarantees and other transactions between the regulated companies and their affiliates, including parent holding companies.

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Ongoing Requirements and Changes Stemming from the ACA

Since its enactment in 2010, the ACA has introduced new risks, regulatory challenges and uncertainties, and required changes in the way our products are designed, underwritten, priced, distributed and administered.

The ACA has evolved and various legal challenges since its enactment introduced increased uncertainty to our business.

In June 2021, the U.S.

Supreme Court issued its opinion and dismissed the latest legal challenge to the constitutionality of the ACA, leaving the law intact.

We expect that most of the ACA will remain in place and continue to significantly impact our business operations and results of operations, including pricing, minimum medical loss ratios (“MLRs”) and the geographies in which our products are available;

however, federal regulatory agencies continue to modify regulations and guidance related to the ACA and our businesses more broadly.

Since its enactment in 2010, the ACA has introduced new risks, regulatory challenges and uncertainties, has impacted our business model and strategy and has required changes in the way our products are designed, underwritten, priced, distributed and administered.

We expect the ACA will continue to significantly impact our business and results of operations, including pricing, minimum medical loss ratios (“MLRs”) and the geographies in which our products are available.

We also expect further and ongoing regulatory guidance on a number of issues related to Medicare, including evolving methodology for ratings and quality bonus payments.

CMS is also proposing changes to its program that audits data submitted under the risk adjustment programs in a way that would increase financial recoveries from plans.

We will continue to evaluate the impact of the ACA as any further developments or judicial rulings occur.

CMS also frequently proposes changes to its program that audits data submitted under the risk adjustment programs in ways that could increase financial recoveries from plans.

We will continue to evaluate the impact of the ACA as any further developments occur.

Certain significant provisions of the ACA include, among others:

• Prohibitions against lifetime limits, certain annual limits, member cost-sharing on specified preventive benefits and pre-existing condition exclusions.

• Mandated coverage requirements and benefits associated with commercial health insurance.

• The creation of Public Exchanges for individuals and small group customers.

• Establishment of minimum MLR thresholds by line of business for the Commercial market (which may be subject to more restrictive MLR thresholds under state regulations, such as those in New York).

• The establishment of minimum MLR thresholds by line of business for the Commercial market (which may be subject to more restrictive MLR thresholds under state regulations, such as those in New York).

Medicare Advantage or Medicare Part D prescription drug plans that do not meet the mandated threshold will have to pay a minimum MLR rebate, will be subject to restricted enrollment if MLR is below the threshold for three consecutive years, and are subject to contract termination if the plan’s MLR is below the threshold for five consecutive years.

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Approximately 52.3% and 17.5% of our premium revenue and medical membership, respectively, were subject to the minimum MLR regulations as of and for the year ended December 31, 2022.

Approximately 54.8% and 20.2% of our premium revenue and medical membership, respectively, were subject to the minimum MLR regulations as of and for the year ended December 31, 2020.

Approximately 53.6% and 18.4%

of our premium revenue and medical membership, respectively, were subject to the minimum MLR regulations as of and for the year ended December 31, 2021.

• The creation of an incentive payment program for Medicare Advantage plans.

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The methodology and measures included in the Star ratings system can be modified by CMS annually.

As of December 31, 2021, all of our Medicare Advantage plans have received a rating of 3.0 or higher.

• Federal review requirements for unreasonable premium rate increases for Individual and small group products, or where the state does not have an effective rate review system.

• The establishment of the non-deductible Health Insurance Provider Fee (“HIP Fee”), which was permanently eliminated effective January 1, 2021.

For the year ended December 31, 2020, we recognized $1,570 as selling, general and administrative expense related to the HIP Fee.

• Implementation of a Medicare Advantage payment formula, which prevents reimbursement rates from increasing as much as otherwise would be expected.

In general, the Individual market risk pool that includes Public Exchange markets has become less healthy since its inception in 2014 and continues to exhibit risk volatility.

In addition, insurers have faced uncertainties related to federal government funding for various ACA programs.

These factors may have a material adverse effect on our results of operations if premiums are not adequate or do not appropriately reflect the acuity of these individuals.

Any variation from our expectations regarding acuity, enrollment levels, adverse selection, or other assumptions utilized in setting premium rates could have a material adverse effect on our results of operations, financial position and cash flows.

We make adjustments to our premium rates and participation footprint on an ongoing basis, based on our experience in Public Exchange markets to date, and continue to evaluate the performance of our Public Exchange plans.

In 2021, we made the decision to modestly expand our participation in the Individual ACA-compliant market for 2022 after also expanding in 2021.

As a result, for 2022 we are offering Individual ACA-compliant products in 122 of the 143 rating regions in which we operate, in comparison to 103 of 143 rating regions in 2021.

For payment year 2023, we expect to have approximately 73% of our Medicare Advantage members in 4.0 or higher rated plans.

• The implementation of a Medicare Advantage payment formula, which prevents reimbursement rates from increasing as much as otherwise would be expected.

We continue to evaluate our experience in the Public Exchange markets.

Based on the viability of the Public Exchanges and availability of federal subsidies, we have made adjustments to our premium rates and geographic participation, including a modest expansion in the Public Exchange markets in 2022 and further expansion into a limited number of additional counties in 2023.

As a result, for 2023 we are offering Individual Public Exchange products in 138 of the 143 rating regions in which we operate, in comparison to 122 of 143 rating regions in 2022.

In a separate development, in August 2020, the Court of Appeals for the Federal Circuit affirmed the federal government’s unambiguous obligation to make unpaid cost sharing reduction (“CSR”) payments to qualified health plans, but held that a plan’s payments should be reduced by the amount of additional premium tax credits an issuer received as a result of the government’s termination of CSR payments.

We recognized the net premium impact of the CSR recoveries for 2017 in the fourth quarter of 2021.

We will continue to review and evaluate the impact of this litigation as any further developments or judicial rulings occur.

Drug Benefit and Pharmacy Benefit Manager Regulation

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A number of proposals are being considered at the federal and state levels that would increase regulation of drug benefits and pharmacy benefit managers.

Such proposals under consideration include (1) regulation of rebates from drug

manufacturers that would require rebate dollars to be applied at the point-of-sale, (2) federal policy changes to set the prices for a subset of drugs covered under the Medicare program, (3) reforms to the Medicare drug benefit, such as beneficiary cost-sharing changes that aim to lower consumer costs, (4) attempts at both the federal and state levels to prohibit the use of spread pricing contracts in both the Commercial and Medicaid markets, and (5) electronic prior authorizations of drugs.

Such proposals under consideration include (1) regulation of rebates from drug manufacturers that would require rebate dollars to be applied at the point-of-sale, (2) federal policy changes to set the prices for a subset of drugs covered under the Medicare program, (3) reforms to the Medicare drug benefit, such as beneficiary cost-sharing changes that aim to lower consumer costs, (4) attempts at both the federal and state levels to prohibit the use of spread pricing contracts in both the Commercial and Medicaid markets, and (5) electronic prior authorizations of drugs.

These reforms have the potential to have broad impacts on our PBM business and could materially adversely affect our business if they are enacted.

Privacy, Confidentiality and Data Standards Regulation

The federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) and the administrative simplification provisions of HIPAA impose a number of requirements on covered entities (including insurers, HMOs, group health plans, providers and clearinghouses) and their business associates relating to the use, disclosure and safeguarding of protected health information.

protected health information.

These requirements include uniform standards of common electronic healthcare transactions;

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and unique identifier rules for employers, health plans and providers.

Also, the Health Information Technology for Economic and Clinical Health (“HITECH”) Act provisions of the American Recovery and Reinvestment Act of 2009 and corresponding implementing regulations have imposed additional requirements on the use and disclosure of protected health information such as additional breach notification and reporting requirements, contracting requirements for HIPAA business associate agreements, strengthened enforcement mechanisms and increased penalties for HIPAA violations.

Also, the Health Information Technology for Economic and Clinical Health (“HITECH”) Act provisions of the American Recovery and Reinvestment Act of 2009 and corresponding implementing regulations have imposed additional requirements on the use and disclosure of protected health information such as additional data breach notification and reporting requirements, contracting requirements for HIPAA business associate agreements, strengthened enforcement mechanisms and increased penalties for HIPAA violations.

Federal consumer protection laws may also apply in some instances to privacy and security practices related to personally identifiable information.

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Complying with conflicting cybersecurity regulations and varying enforcement philosophies, which may differ from state to state, requires significant resources and may materially and adversely affect our ability to standardize our products and services across state lines.

Federal regulations have been finalized in the following areas that will materially impact our operations:

• Federal regulations on data interoperability that will require claims data to be made available to third parties unaffiliated with us;

Federal regulations have been finalized in the following areas that will continue to materially impact our operations:

• Federal regulations on data interoperability that require claims data to be made available to third parties unaffiliated with us;

• Federal regulations requiring hospitals and health insurers to publish negotiated prices for services, including the health plan price transparency regulations issued in October 2020 by the U.S.

Departments of Health and Human Services, Labor and Treasury (the “Health Plan Transparency Rule”).

Beginning in July 2022, the Health Plan Transparency Rule will require us to disclose, on a monthly basis, detailed pricing information regarding negotiated rates for all covered items and services between the plan or issuer and in-network providers and historical payments to, and billed charges from, out-of-network providers.

Additionally, beginning in 2023, we will be required to make available to members personalized out-of-pocket cost information and the underlying negotiated rates for 500 covered healthcare items and services, including prescription drugs.

Beginning in July 2022, the Health Plan Transparency Rule required us to disclose, on a monthly basis, detailed pricing information regarding negotiated rates for all covered items and services between the plan or issuer and in-network providers and historical payments to, and billed charges from, out-of-network providers.

Additionally, beginning in 2023, we are now required to make available to members personalized out-of-pocket cost information and the underlying negotiated rates for 500 covered healthcare items and services, including prescription drugs.

In 2024, this requirement will expand to all items and services.

Federal regulations were proposed that would have expanded the final regulation on data interoperability to require health insurers to build new application programming interfaces to afford patients access to their health information and require electronic prior authorizations for Commercial Qualified Health Plans in the federal exchange, as well as Medicaid and CHIP fee-for-service and managed care organizations.

These regulations were withdrawn in early 2021 and are expected to materially impact our operations if re-proposed in substantially similar form.

Employee Retirement Income Security Act of 1974

The provision of services to certain employee welfare benefit plans is subject to the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), a complex set of laws and regulations subject to interpretation and enforcement by the Internal Revenue Service and the Department of Labor.

ERISA regulates certain aspects of the relationships between us, the employers that maintain employee welfare benefit plans subject to ERISA and participants in such plans.

ERISA regulates certain aspects of the relationships between us, the employers that maintain employee welfare benefit plans subject to ERISA and participants in

Some of our administrative services and other activities may also be subject to regulation under ERISA.

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International Regulation

We have various international subsidiaries, which provide back-office services, that are subject to different, and sometimes more stringent, legal and regulatory requirements, which vary widely by jurisdiction.

In addition, our non-U.S.

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Human Capital

At Anthem, it starts with our culture, and our associates are critical to fulfilling our purpose of improving the health of humanity.

As of December 31, 2021, we had approximately 98,200 associates.

We are working to build a high performance culture that enhances our ability to deliver on our commitments and guides us to address the challenges of today.

The foundation of our strategy starts with our culture, and our associates are critical to fulfilling our purpose of improving the health of humanity.

As of December 31, 2022, our employee population, including all full-time, part-time and temporary workers, consisted of approximately 102,300 individuals, 79,000 in the United States and 23,300 internationally.

We have built a high-performance culture that we believe enhances our ability to deliver on our commitments and guides us to address the challenges of today.

We believe that our culture allows us to attract and retain talented and experienced individuals to support the communities we serve.

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The diversity of our associates is central to achieving key strategies and improving performance.

We strive to maintain a diverse and inclusive workforce comprised of a vast array of backgrounds, life experiences and cultures, which we believe

enables a deeper connection with our members, allowing us to better serve our members and communities, and drives greater business results.

We strive to maintain a diverse and inclusive workforce comprised of a vast array of backgrounds, life experiences and cultures, which we believe enables a deeper connection with our members, allowing us to better serve our members and communities, and drives greater business results.

As of December 31, 2022, our U.S.

associate population was approximately 77% female and 47% racially and ethnically diverse.

associate population was approximately 77% female and 51% racially and ethnically diverse, while 65% of our managers are female and 36% are racially or ethnically diverse.

Elevance Health is committed to a fair pay workplace.

We were in the first cohort of companies certified by the Fair Pay Workplace (“FPW”), an independent certification that takes a holistic approach to pay equity, partnering to design an annual pay equity action plan that includes a perpetual review of all positions, new hires and promotions to effect meaningful and measurable change.

This independent certification is based on a set of publicly available rules and standards and the endorsed methodology of a group of leading experts from forward-thinking corporations, academia, human resources, data science and the legal field.

After partnering with and overseeing our review process, FPW has validated our analysis of our associate population, which found that pay for females is within 1% of their male counterparts and pay for people of color is equal to their white counterparts, after taking into account neutral job related factors.

Talent Development

Growing and developing our talent internally is key to our succession plans and our ability to lead at our best every day.

To inspire a high-performance culture and promote talent excellence, we offer individual, career and leadership development opportunities, encouraging associates to continually learn and grow.

To inspire a high-performance culture and promote talent excellence, we offer individual, career and leadership development

opportunities, encouraging associates to continually learn and grow.

We offer various instructor-led and virtual instructor-led programs and maintain a vast curriculum of relevant, on-demand learning and development resources.

Health & Wellbeing

We have the privilege of touching the lives of millions of people each day, and for us, this starts with the health of our own associates.

We have the privilege of touching the lives of millions of people each day, starting with the health of our own associates.

To improve the health and wellbeing of our associates, we offer a comprehensive compensation package, including competitive salaries, a 401(k) plan and medical, dental, vision and disability coverage.

In addition, we offer our associates wellness and behavioral programs and tools to help them get and stay healthy and more easily manage their work and personal lives.

In 2021, we modified our workforce practices in response to the ongoing COVID-19 pandemic, developing a hybrid remote and in-office workplace strategy, which will be fully deployed as we reopen facilities.

Until its full deployment, the majority of our associates continue to work remotely.

Information About Our Executive Officers

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Gallina 63 Executive Vice President and Chief Financial Officer

Haytaian 52 Executive Vice President and President, Diversified Business Group and IngenioRx

Haytaian 53 Executive Vice President and President, Carelon and CarelonRx

Kendrick, Jr.

56 Executive Vice President and President, Commercial and Specialty Business Division

57 Executive Vice President and President, Commercial & Specialty Business Division

McCarthy 70 Executive Vice President and Chief Administrative Officer

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Prior thereto, Ms.

Boudreaux was Executive Vice President of UnitedHealth Group Incorporated (diversified healthcare company) from 2008 to 2015, including roles as Chief Executive Officer of United HealthCare (managed healthcare company), a subsidiary of UnitedHealth Group Incorporated from 2011 to 2014 and President of the Commercial Business of United HealthCare from 2008 to 2011.

Before joining United HealthCare, she worked at Health Care Services Corporation (“HCSC”) (health insurance company) as Executive Vice President of External Operations from 2005 to 2008 and President of Blue Cross and Blue Shield of Illinois from 2002 to 2005.

Boudreaux was Executive Vice President of UnitedHealth Group Incorporated (diversified healthcare company) from 2008 to 2015, including roles as Chief Executive Officer of UnitedHealthCare (managed healthcare company), a subsidiary of UnitedHealth Group Incorporated from 2011 to 2014 and President of the Commercial Business of UnitedHealthCare from 2008 to 2011.

Before joining United HealthCare, she worked at Health Care Service Corporation (“HCSC”) (health insurance company) as Executive Vice President of External Operations from 2005 to 2008 and President of Blue Cross and Blue Shield of Illinois from 2002 to 2005.

Before joining HCSC, Ms.

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Gallina has served as our Executive Vice President and Chief Financial Officer since 2016.

Gallina joined Anthem in 1994 and has held a variety of leadership roles across the organization.

Gallina joined Elevance Health in 1994 and has held a variety of leadership roles across the organization.

Prior to his current role, Mr.

Gallina served as Anthem’s Chief Financial Officer for the Commercial and Specialty Business Division from 2015 to 2016, and as Senior Vice President and Chief Accounting Officer from 2013 to 2015.

Other leadership positions held during his tenure include

Senior Vice President, Chief Accounting Officer and Chief Risk Officer from 2011 to 2013, while also holding the title of Controller from 2011 to 2013.

Gallina served as Elevance Health’s Chief Financial Officer for the Commercial & Specialty Business Division from 2015 to 2016, and as Senior Vice President and Chief Accounting Officer from 2013 to 2015.

Other leadership positions held during his tenure include Senior Vice President, Chief Accounting Officer and Chief Risk Officer from 2011 to 2013, while also holding the title of Controller from 2011 to 2013.

Before joining the Company, Mr.

Gallina spent 12 years with Coopers & Lybrand in various positions, including as an Audit Senior Manager.

Haytaian has served as our Executive Vice President and President of our Diversified Business Group and IngenioRx since October 2021.

Haytaian has served as our Executive Vice President and President of Carelon (formerly known as our Diversified Business Group) and CarelonRx (formerly known as IngenioRx) since October 2021.

Prior to his current role, Mr.

Haytaian served as Executive Vice President and President of our Commercial and Specialty Business Division beginning in April 2018.

Haytaian served as Executive Vice President and President of our Commercial & Specialty Business Division beginning in April 2018.

From June 2014 until April 2018, Mr.

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From 2005 to 2013, Mr.

Haytaian held several leadership positions with Amerigroup, including serving as Chief Executive Officer of the North Region for Amerigroup’s Medicaid business from 2012 until 2013.

held several leadership positions with Amerigroup, including serving as Chief Executive Officer of the North Region for Amerigroup’s Medicaid business from 2012 until 2013.

Haytaian has extensive experience leading Medicare and Medicaid programs with Amerigroup and, prior thereto, with Oxford Health Plans, Inc.

Kendrick has served as Executive Vice President and President of our Commercial and Specialty Business Division since October 2021.

Kendrick has served as Executive Vice President and President of our Commercial & Specialty Business Division since October 2021.

From January 2021 until October 2021, Mr.

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Prior to that appointment, Ms.

Norwood served as President of the Mid-America Region for Aetna from 2010 until 2013.

Norwood held a variety of leadership roles at Aetna, with her most recent role as President of the Mid-America Region for Aetna from 2010 until 2013.

Todt has served as our Executive Vice President and Chief Legal Officer since November 2020 and our interim head of human resources and global security and safety team since January 2022.

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The SEC maintains a website that contains reports, proxy and information statements and other information regarding issuers at www.sec.gov.

Our website is www.antheminc.com .

Our website is www.elevancehealth.com .

We have included our website address throughout this Annual Report on Form 10-K as a textual reference only.

The information contained on, or accessible through, our website is not incorporated into this Annual Report on Form 10-K.

We make available through our website, free of charge, our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we

electronically file such material with or furnish it to the SEC.

We also include on our website our Corporate Governance Guidelines, our Code of Conduct and the charter of each standing committee of our Board of Directors.

In addition, we intend to disclose on our website any amendments to, or waivers from, our Code of Conduct that are required to be publicly disclosed pursuant to rules of the SEC and the New York Stock Exchange (“NYSE”).

Elevance Health, Inc.

is an Indiana corporation incorporated on July 17, 2001.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business