Elevance To Acquire Indiana University Health’s Insurance Business

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Dive Brief:

• Elevance Health has entered into an agreement to buy Indiana University Health’s insurance business for an undisclosed sum, the payer said this week. 
• IU Health Plans offers Medicare Advantage plans to 19,000 members in 36 counties, according to a press release. The payer also provides commercial plans to employers, which insures 12,000 members. 
• After the deal closes, which is expected at the end of the year, IU Health Plans will operate as part of Elevance’s Anthem Blue Cross and Blue Shield subsidiary. 

Dive Insight: 

IU Health’s insurance business is relatively small, recording premium revenue of $179,488 for the six months ended June 30, according to financial filings. Revenue increased more than 8% over the same period last year, largely due to growing membership and higher acuity risk scores in its MA offerings, the health system said.

The insurance segment employs 160 Indiana-based workers, according to the Tuesday press release. A spokesperson did not return a request for comment on whether the company plans to reduce its headcount. 

The deal comes as Elevance has faced turbulence in its MA and Medicaid units. The payer lowered its long-term revenue growth outlook for its insurance business after reporting second-quarter earnings in July, with executives citing uncertainty in how its MA bids for next year will affect growth and declining membership in Medicaid amid redeterminations. Still, the insurer beat investor expectations on earnings and revenue during the second quarter, raking in $2.3 billion in profit.

Though usually a lucrative program for insurers, several payers have taken financial hits from MA this year as beneficiaries sought out more healthcare services following the COVID-19 pandemic. 

Meanwhile, more than 25 million Medicaid beneficiaries have been removed from the rolls as states redetermine eligibility for the safety-net program. Elevance has lost millions of Medicaid members, but leadership is hoping to recapture some of those beneficiaries through expanded Affordable Care Act offerings. 

The latest deal with IU Health Plans follows Elevance’s purchase of infusion and drug therapy company Paragon Health in March. 

The insurer also inked a deal to acquire Centers Plan for Healthy Living, a managed long-term care plan that works with Medicaid and dually eligible enrollees in New York, late last year. That acquisition is expected to close in the third quarter, Elevance said in a securities filing in February.