Elevance Health is facing financial struggles and has announced layoffs of 123 employees across two locations in Southern California.
The layoffs are classified as "permanent" under the state's Worker Adjustment and Retraining Notification Act (WARN). The company's CEO, Gail Boudreaux, mentioned during an earnings call that they are considering their options due to the decline in their star ratings for the Centers for Medicare and Medicaid Services' (CMS) 2025 Medicare Advantage Star Ratings. This decline has had a significant impact on the company's financial performance.
In the third quarter, Elevance reported a 22.5% year-over-year decrease in net income, leading to a drop in its share price. The company attributes these challenges to issues related to Medicaid and a timing mismatch between Medicaid rates and patient acuity.
Elevance's struggles are further compounded by regulatory challenges, particularly concerning Medicare Advantage payments. The company won a legal case against the federal government regarding Medicare Advantage payments, which resulted in a directive for CMS to redetermine the star ratings for Blue Cross Blue Shield of Georgia. These challenges highlight the complexities faced by insurers in navigating regulatory environments and maintaining competitive performance in the healthcare industry.