National health insurer Anthem said Wednesday that it will pay $594 million as part of a settlement reached by Blue Cross and Blue Shield plans in a federal antitrust lawsuit.
Anthem, a Blue plan that operates in 14 states, recorded the charge in the third quarter of 2020, though the settlement still must be approved by a federal court. Anthem said both the Blue Cross and Blue Shield Association and its member plans have signed off on the settlement.
The settlement also includes non-monetary terms. Anthem CEO Gail Boudreaux explained on an earnings call Wednesday that the agreement requires the Blue plans to eliminate a rule that limited how much revenue a member plan could derive from non-Blue-branded business.
It also requires national, self-funded employers to be able to request a bid for insurance coverage from a second Blue plan in addition to a local Blue plan, she said.
Boudreaux added that the settlement would not affect Anthem's business strategy. "We view our strategy as being very consistent and don't really see any changes in our overall strategy," she said.
The Wall Street Journal first reported in September that the Blue plans reached a $2.7 billion tentative settlement. The settlement resolves a major lawsuit first filed by customers in 2012 accusing the 36 Blue companies of anticompetitive practices. Under one of those practices, Blue companies hold rights to exclusive territories, in which they agree not to compete.
Anthem's share of the settlement ate into its third-quarter profits. The Indianapolis-based insurer recorded $222 million in net income in the three months ended Sept. 30, a decrease of 81.2% from $1.2 billion in the same period a year ago.
Its revenue, however, increased 16.8% to $31.2 billion in the quarter, driven by Medicaid and Medicare membership growth, as well as the launch of its in-house pharmacy benefit manager, IngenioRx.
