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Anthem Inc (NYSE:ANTM)
Q4 2020 Earnings Call
Jan 27, 2021, 8:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, thank you for standing by, and welcome to Anthem's Fourth Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] As a reminder, today's conference is being recorded.

I would now like to turn the conference over to the company's management. Please go ahead.

Chris Rigg -- Vice President of Investor Relations

Good morning. This is Chris Rigg, and welcome to Anthem's fourth quarter 2020 earnings call. As many of you know, I have transitioned out of Investor Relations to be the Chief Financial Officer of our Commercial and Specialty Business Division. Steve Tanal will be joining Anthem as the new Vice President of Investor Relations. We look forward to welcoming him next week. With us this morning on the earnings call are Gail Boudreaux, President and CEO; John Gallina, our CFO; Pete Haytaian, President of our Commercial & Specialty Business division; and Felicia Norwood, President of our Government Business division.

During the call, we will reference certain non-GAAP measures. Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures are available on our website, antheminc.com. We will also be making some forward-looking statements on this call. Listeners are cautioned that these statements are subject to certain risks and uncertainties, many of which are difficult to predict and generally beyond the control of Anthem. These risks and uncertainties can cause actual results to differ materially from our current expectations. We advise listeners to carefully review the risk factors discussed in today's press release and in our quarterly filings with the SEC.

I will now turn the call over to Gail.

Gail Boudreaux -- President & Chief Executive Officer

Good morning, and thank you for joining us for Anthem's fourth quarter 2020 earnings call. Despite a year challenged by COVID-19 and significant economic uncertainty, we delivered strong growth across all of our businesses. This morning, Anthem reported fourth quarter 2020 GAAP earnings per share of $2.19 and adjusted earnings per share of $2.54. For the full year, Anthem reported GAAP earnings per share of $17.98 and adjusted earnings per share of $22.48. Our full year results reflect the ongoing impact of COVID-19 treatment costs and more normal utilization patterns in the second half of the year.

Consistent with our expectations, fourth quarter utilization is above baseline, reflecting higher costs attributable to the recent surge of COVID-19 cases, coupled with the return of non-COVID-19 care utilization. I'm incredibly proud of what we've accomplished in 2020 and the strength and resiliency shown by our enterprise amid the global pandemic. We met our financial commitments, delivered strong growth, and we stepped up as a business through the commitment and compassion of our associates to support our members, partners, and communities when they need us most to address the new increase in urgent needs. Our growth in 2020 was powered by strategic investments we've made in recent years to streamline and simplify our business and enhance the member and customer experience. The membership trends in the year exceeded expectations in all fronts. Medical enrollment finished the year strong at 42.9 million members, representing growth of 1.9 million members over the prior year.

We are pleased that our commercial business has continued to grow even in this challenging economic environment. In addition to the AmeriBen acquisition, growth has been fueled by strong customer retention and a steady pipeline of new account sales. In fact, sales in our large group risk business have outpaced lapses in 14 of the last 16 months, reflecting the market-leading performance of our new virtual strategies and tools, as well as the benefit of our innovative products such as Total Health Total You and further integration of our pharmacy offerings from IngenioRx.

Total commercial membership was flat sequentially in the fourth quarter, reflecting growth in our risk-based group business offset by in-group change in our fee-based business as a result of the economic environment. Our risk-based business has been incredibly resilient as we deepened talents, enhanced our products, and improved sales execution across our markets. In addition, sales of our large group specialty dental and vision products outperformed 2019 results, demonstrating that employers value the affordability and simplicity of Anthem's integrated medical specialty offerings. It's clear, the actions you take and the focus on the consumer and their unique needs are garnering a strong market response.

Medicaid membership grew by roughly 1.6 million consumers during the year and nearly 300,000 lives in the fourth quarter, marked by strong organic growth, aided by the pause and reverifications and two strategic acquisitions in Nebraska and Missouri. Medicare Advantage membership ended the year up nearly 18% compared to 2019, continuing our meaningful growth in senior business. Our essential extra suite of benefit options are resonating with seniors as we saw greater than 300% increase in the selection of benefits, such as personal home helper services, transportation benefits, and access to personal home safety devices. We're pleased with our continued growth in this important segment for Anthem and the demonstrated resilience of our diversified portfolio. Our AEP performance was in line with expectations and we expect another year of double-digit growth, once again outperforming the industry average growth rate.

Over the past year, Anthem stepped up as a trusted health partner to support our stakeholders as they navigated the pandemic. We adapted and accelerated our digital innovations, enhanced our focus on community health, transformed many of our products and solutions, and simplified our processes in the context of COVID-19. We recognized our critical role in ensuring safe access to care and COVID-19 vaccinations and have launched a nationwide partnership with Lyft to support universal access to vaccines. We are leveraging Anthem's local market strength, providing relationships and data assets in combination with this on-demand transportation network to serve at-risk communities disproportionately affected by COVID-19. Our goal is to provide 60 million free rides to and from vaccination sites for low-income, uninsured, and at-risk communities.

Further, we recently launched a new online C-19 vaccine tracker to provide personalized vaccination insights for Anthem members. This web-based dashboard aggregates vaccine-related data from public and private sources to give consumers a real-time view of vaccine distribution progress and help to inform our members when they might be eligible to receive the vaccine. We recognized the increased social and health needs of our members and communities during this pandemic. With each of our Medicaid states, we're performing detailed community needs assessments to create localized solutions with our partners, to support issues with housing, job training, and free Internet for underserved children. And our Medicare members are provided access to funding social workers to help coordinate local resources and services to support their needs around food insecurity, transportation and more.

For members with complex conditions such as cancer, receiving care has become even more difficult during this pandemic. In response, we have launched Anthem's concierge cancer care program from diagnosis to recovery. Members receive personalized 24/7 guidance and support through live health online and remote monitoring technology with access to top tier cancer facilities across the country. This unique program is more than tripled since its launch in 2020. It is now available to nearly 900,000 members. Throughout the course of this past year, our deeply committed associates have stepped up and shown great compassion and care to those we serve and to one another. With more than a 100,000 volunteer hours logged in our local communities to in-person and virtual giving, our associates have embodied our values and culture, reflecting the fabric of who we are.

As we move into 2021, we will continue to modernize our business to drive growth. Efforts to transform our business are not new. And in fact, our focus was sharpened and investments accelerated in line with the pandemic. Today, we are continuing to consolidate our systems, automate and streamline processes, and embedding digital and AI across the enterprise to simplify and improve the customer experience and deepen engagement with all those we serve. We recognize the power of digital technologies to reach more of our stakeholders, particularly as part of our community health efforts. Sydney Health is personalizing care for consumers, helping to bridge gaps in care and improve outcomes for underserved populations. In fact, Sydney Health recently received several awards including Corporate Insight's gold medal for virtual care, recognizing our ability to give members more options and how we engage with care providers whether it'd be the chat, email, phone or video.

We're excited to be introduced in the first of its kind digital nutrition assistant. Through the use of AI, our Sydney Nutrition app will be able to automatically recognize food and log meals in real time, providing users with personalized information and progress on nutrition goals. This integrated tool is currently available to Anthem associates and will be available more globally later this year to provide our members with a fully connected health and wellness experience. We know consumers are experiencing healthcare more digitally. So, we focused on creating greater access to care via telehealth, particularly in the behavioral health space whose usage has gone up from single digit pre-pandemic percentage levels to as much as 60% of all visits, and that level has stayed consistent over the past four months.

Our AI-based care finder is now live for all segments of our business and differentiates Anthem with its fully integrated approach using predictive tools and AI to help guide members to the right care at the right time and place for them, which could mean via text, phone, video, in person or chat. Additionally, through our AI-based predictive service and chat functionality, we were able to redirect 5 million member calls last year for on-demand digital channels to provide members with information they needed quickly and efficiently. Today, we're delivering on consumer demands with simplicity and affordability, and we're helping to still hope we're making positive and sustainable change for our local communities. Grounded by our mission and driven by our purpose to improve the health of humanity, we move into 2021 with a bold agenda as we continue to grow and transform our business and fundamentally improve the healthcare experience for those we serve.

Our 2021 adjusted EPS guidance of greater than $24.50 reflects challenges unforeseen when we reported third quarter results. Specifically, adjusted net income guidance reflects the passage of the Consolidated Appropriations Act, which includes a one-year increase in Medicare physician rates as well as other COVID-19-related impacts on the Medicare business. All in, we estimate these items equate to a $0.50 to $0.70 net negative headwind. Importantly, these factors are transient and should diminish as we move into 2022. Looking ahead, we are poised to deliver membership growth of nearly 1.5 million members at the midpoint, driven predominantly by our risk-based businesses. Our outlook reflects our ability to deliver solid enrollment growth despite the uncertainties in 2021. We remain confident in our ability to achieve long-term 12% to 15% earnings growth and look forward to our March 3 Virtual Investor Day. We will provide a more detailed look into our strategy, including the transformative digital and community health initiatives that are driving real growth across our business.

And now, I'll turn it over to John Gallina for a detailed look at our performance numbers. John?

John Gallina -- Chief Financial Officer

Thank you, Gail, and good morning. As Gail stated, we are pleased to report strong fourth quarter and full year financial results.

Fourth quarter adjusted earnings per share was $2.54, down 35% year-over-year, driven primarily by cost related to the COVID-19 pandemic, including actions taken to support our members. For the full year, adjusted earnings per share was $22.48, representing growth of 16% over 2019. Total operating revenue for the fourth quarter was $31.5 billion, an increase of more than 16% over the prior year quarter, reflecting solid growth in Medicaid and Medicare. For the full year, we ended 2020 serving 42.9 million members, including growth of 300,000 lives during the fourth quarter. Medicaid membership was up more than 11 times with a decline in our commercial aerospace business. This is the 10th consecutive quarter of membership growth, further demonstrating the strength and resiliency of our business. For the full year, operating revenue grew over 17%. The fourth quarter medical loss ratio is 88.9%, a decrease of 10 basis points over the prior year quarter. COVID-related cost accelerated during the quarter above expectations. However, this was offset by non-COVID utilization coming in lower than expectations. Taken together, overall utilization was above baseline, albeit slightly better than expected.

The SG&A expense ratio in the fourth quarter was 13.7%, an increase of 80 basis points over the prior year quarter due primarily to increased spending to support growth, including average taken to modernize our business and become a more agile organization as well as the return of the health insurer fee in 2020. On a HIF-adjusted basis, our SG&A ratio decreased 30 basis points compared to the prior year quarter, primarily driven by double-digit growth in operating revenue. Full year 2020 operating cash flow was $10.7 billion or 2.3 times net income. Fourth quarter operating cash flow was $3.8 billion compared to $1.3 billion in the prior year quarter. The increase is primarily attributable to changes in our net working capital and enrollment growth in our government businesses. Our operating cash flow in the fourth quarter benefited by a number of payments that were originally expected to be received in 2021. These early receipts, along with other items that benefited 2020 cash flow, including payment deferrals allowed under the CARES Act will be reversed in 2021and negatively impact our 2021 operating cash flow metrics.

We ended 2020 with a strong balance sheet as the debt-to-cap ratio was 38.7% consistent with our target range. Days in claims payable was 43.4 days, an increase of 2.3 days sequentially and 5.4 days versus the prior year, along with the growth in medical claims payable of 28% compared to an increase in premium revenue of approximately 11%. During the fourth quarter, we repurchased 4.4 million shares at a weighted average price of $305.66. In total, we repurchased $2.7 billion of stock in 2020 or 9.4 million shares. As a reminder, our original guidance contemplated share repurchase of $1.5 billion. After reinstating share repurchases in the second quarter, we accelerated the pace of share buyback in the second half of the year in response to market conditions.

Turning to our 2021 outlook. Our current guidance reflects our latest assumptions related to the COVID-19 pandemic. Importantly, our guidance includes new items that were unknown at the time of our third quarter call, including the passing of the Consolidated Appropriations Act in late December and the corresponding one-year increase in Medicare physician payment rates and other COVID-related impacts on our Medicare business. In addition, the significant decline in non-COVID utilization in our Medicare business during the fourth quarter will have an impact on our risk revenue by more than we had anticipated. All in, these items resulted in a net negative headwind of $0.50 to $0.70 per share relative to the outlook we shared on our third quarter call. While 2020 -- 2021 presents its own set of unique challenges that we believe to be transient, our core business and underlying fundamentals remain strong. Absent these new and unique circumstances, we remain confident that our long-term earnings growth target of 12% to 15% is both credible and sustainable.

Turning to our 2021 guidance metrics. Total medical membership is expected to reach 44.4 million members at the midpoint, which reflects growth across our key business segments. In the commercial business, we project our risk-based enrollment to end the year between 4.5 million to 4.6 million members and our fee-based business to end the year between 25.5 million and 25.7 million members. In our Medicaid business, we expect to end the year with approximately 10 million to 10.2 million lives, reflecting organic growth in our existing markets and the expectation that the reverification process will remain on hold through the end of the year. In addition, our guidance also includes growth for North Carolina, which is expected to go live later this year. In Medicare Advantage, we're projecting double-digit growth at the midpoint, as we expect continued major growth over the balance of 2021. Medicare Supplement is expected to end the year between 950,000 and 1 million members. And our FEP business is expected to be flat to slightly down at 1.6 million members.

With IngenioRx now firmly embedded in our baseline, we expect 2021 operating revenue to be approximately $135.1 billion, representing growth of 13.5% on a HIF-adjusted basis. The consolidated medical loss ratio is expected to be 88% plus or minus 50 basis points, an increase of 120 basis points at the midpoint from 2019, which is the most recent year in which the health insurer fee does not apply. The increase is largely driven by a mix of business more heavily skewed to Medicaid and Medicare and the impact of COVID, including the recently announced increase in Medicare physician rates.

The SG&A expense ratio is expected to be 10.8% plus or minus 50 basis points, primarily due to growth in operating revenue, in addition to the permanent repeal of the health insurer fee and the benefit of modernization efforts including systems consolidation and broader process automation. Looking below the line, we expect investment income to be $940 million and interest expense of $785 million. The tax rate is expected to be in the range of 20% to 22% with the decrease primarily driven by the permanent repeal of the health insurer fee. Full year operating cash flow is expected to be greater than $5.7 billion. As a reminder, operating cash flow in 2020 was heavily impacted by COVID-19 pandemic as well as certain other receipts that were accelerated into 2020. Absent the pull-through of those cash receipts, our 2021 operating cash flow would be roughly 1.1 to 1.2 times net income.

Our long-term capital deployment targets are unchanged as we progress down this path of becoming the most innovative, valuable, and inclusive partner in the healthcare ecosystem with the continued focus of delivering sustainable long-term shareholder returns. In terms of capital deployment, I am pleased to announce that we are increasing our quarterly dividend by nearly 19% to $1.13 per share, bringing our dividend yield to roughly $1.4 per share and continuing our trend of annual dividend increases. We expect full year share repurchase of at least $1.6 billion and our weighted average share count ending the year in the range of 246 million to 248 million shares outstanding.

As Gail mentioned, this past year presented its own unique set of challenges. And while much has changed, it is clear that we are still in the depths of the global pandemic. We remain committed to our mission of improving the lives and communities, which we serve, and we will continue to do our part in 2021 to meet the needs of our associates, members, customers, and healthcare providers as we persevere through this pandemic together.

Operator, we will now open it up for questions.

Questions and Answers:

Operator

[Operator Instructions] Our first question will go to the line of Justin Lake from Wolfe Research. Please go ahead.

Justin Lake -- Wolfe Research -- Analyst

Thanks, good morning. Wanted to see if you can walk through the $0.50 to $0.70 in as much detail as possible. You mentioned the stimulus with a higher physician fee schedule and the quarter sequestration. So I estimated that of about $0.20. So I was hoping you could break out -- confirm that and break out the other 40 in terms of reverifications and how that benefits Medicaid, the higher total costs in the 20% add on the Medicaid reverification, etcetera. And then lastly, can we assume that when you think about the correct 2021 jump off point with the 12% to 15% EPS growth next year, would you grow off with $25.10 getting back to $0.50 [Phonetic]? Thanks.

John Gallina -- Chief Financial Officer

Thank you, Justin, and good morning. I appreciate the question and the opportunity to clarify the $0.50 to $0.70 change in our expectations. As you mentioned, with the Appropriations bill and the expansion of the federal health emergency, we now have a disconnect between some of the costs and investments. We completely agree with your approach to the Medicare, 3.75% fee schedule rate increase as well as the sequestration related to Medicare rate increases for 12 months. The sequestration is only for three months is an offset, but there is a third component as well and that's the 20% bump in the inpatient DRG is going to be extended for the full year as well as part of the federal health emergency. So if you take the three of those combined, that actually accounts for about two-thirds of the 57% differential that you're asking now.

The other one-third really relates to the fact that the non-COVID utilization in the fourth quarter is lower than we had anticipated, and with the non-COVID utilization being lower than anticipated, we are unable to accurately capture all of the HCC codes to reflect our appropriate risk scores in our Medicare business. And so, once you factor that in, that's about the other third. So you take those out and you come down to the, say the 25.10 you have been modeling to the 24.50 at the midpoint. And then, in terms of your question associated with the 2020 to jump-off point, while it is premature to give 2022 guidance, we do believe that many of these issues are transient and we are very comfortable affirming the 12% to 15% long-term sustainable growth rate on a 25-10 starting point. It always have the issue with COVID and risk revenues and things could linger. And we will clearly be on top of that throughout the year, but as an outset, we're very comfortable with the 25-10 jump-off point.

And, thank you for the question.

Gail Boudreaux -- President & Chief Executive Officer

Thank you for the question, Justin. Next question?

Operator

Next, we'll go to the line of A.J. Rice with Credit Suisse. Your line is now open.

A.J. Rice -- Credit Suisse -- Analyst

Hi, everybody. I know there are a lot of puts and takes around this question, but right now, people are trying to make an assumption as to when there be mass distribution of the vaccine and when things might start to get back to normal. Conceptually, when you think about your '21 guidance, how have you pegged that thinking? And if we were to find out, for example, if you say you pegged it for the middle of the year or later in the year, if it happens, if there is various, say it's in March or it's in October with that, how would that change the financial outlook that the company is presenting?

John Gallina -- Chief Financial Officer

Yeah. Thank you, Jeff -- or A.J., I'm sorry. Great question. And as you indicated, there is a lot of variability and assumptions. You have the most vulnerable populations, which include Medicare Advantage members, etcetera. Our expectation is, by the end of the first quarter, that they will achieve the vaccination level appropriately and we're really looking at having somewhere in the neighborhood of about 60% of Americans vaccinated for the year. Medicare, we expect to be a bit higher. The commercial population and the Medicaid population, we wouldn't expect the vaccines to be rolled out and completed until the end of December, maybe even a little bit longer with the commercial population being close to the average for America through the year and then Medicaid being a little bit less. So, to the extent of the rollout, the efficacy of the vaccine very clearly could have an impact on the financial results for the year. If COVID cost go down, then we do expect non-COVID utilization to increase. So it's certainly not a one-for-one, but there's clearly a lot of dynamics associated with that modeling. And if the vaccine will do the faster or slower, it will have an impact in one direction and now hopefully that helps.

Gail Boudreaux -- President & Chief Executive Officer

And A.J., this is Gail Boudreaux. I think, in addition to John's question, as we shared, it is an incredibly dynamic environment relative to what's happening with COVID and the vaccine. As I shared in my opening comments, we are working very closely though to try to ensure access for our members. We've added a number of new tools in terms of the -- our trackers and our online toolkit, ensure that people know where vaccines are available, we're going to work with our states closely. We entered a partnership with Lyft to provide 60 million free rides and our sense is that the senior population obviously in the rollout is going to have first access to that and then it's each of the states make their determinations and supply becomes available will be side-by-side with our partners to ensure that that we can be as efficient in helping as possible. So again, everything John said, I think we are trying to model in this incredibly dynamic environment, but remain optimistic and supportive of what's happening and want to be a good partner to our states and our customers.

So, thank you for the question. Our next question, please?

Operator

Next, we'll go to the line of Steven Valiquette with Barclays. Your line is now open.

Steven Valiquette -- Barclays -- Analyst

Great, thanks. Good morning, Gail and John. Thanks for taking the question here. So, it's just in relation to those higher Medicare physician rates for '21. If I was curious to hear more about the mechanics of this and just whether or not any of your capitated are at-risk payment arrangements with physicians would provide any sort of protection for Anthem again impact and therefore at this point to have greater impact on your fee-for-service arrangements with physicians or is everything just indexed to the rate update and that doesn't really matter, just curious to hear more about the mechanics on that. Thanks.

John Gallina -- Chief Financial Officer

Yeah. Thanks, Steve. Appreciate the question. The amount that we disclosed in terms of the impact on our guidance has really been that amount regardless of the risk methodology we have with the provider network. So, certainly in the cafeteria arrangement, there is an impact as I had stated in the -- to A.J.'s question. We also have the 20% bump in inpatient TRG. It's impacting all this as well and then the sequestration offset. So, really going to take them all into consideration, look at how they play through the reimbursement methodologies, and what we provided is the net impact of all those.

Steven Valiquette -- Barclays -- Analyst

Okay.

Gail Boudreaux -- President & Chief Executive Officer

Thank you. Next question, please?

Operator

Next will be the line of Ricky Goldwasser with Morgan Stanley. Your line is now open.

Ricky Goldwasser -- Morgan Stanley -- Analyst

Yes. Hi, good morning. Question focused on the exchange business appears to continuously -- I mean, it's always been competitive but we are hearing some anecdotes in increased competition. How do you think about the dynamics and specifically how do you think about sort of kind of like the margin goals that you have articulated in the past?

Gail Boudreaux -- President & Chief Executive Officer

Thanks for the question, Ricky. I'm going to ask Pete Haytaian who leads our commercial business to respond. Pete?

Pete Haytaian -- President of Commercial & Specialty Business Division

Yes, thanks a lot for the question, Ricky. In terms of the individual business and sort of as we see Q1 play out, we feel good about our strategy, we continue our thoughtful targeted approach and targeted growth approach in the individual business we've expanded into about 115 counties in 2021. Our approach continues to be based upon our focus on best-in-class economics through value-based relationships, differentiated medical management. We really try to partner with key providers to enable excellence in quality and risk adjustment. And so that's been our grounding and we continue with that strategy. Overall, this year, while we experience growth environmental and I think you're alluding to this, there is more competition. Also, there does appear to be less overall new sales across the federal facilitated marketplace and the state based exchanges, it seems to be down a bit year-over-year. We believe this is due to a variety of different factors. We all know that in several states, there were special election periods throughout 2020 which certainly could have been a factor. Also, yes, overall government engagement and that could change with the Biden administration just in terms of overall marketing and then less prospect engagement. We saw that just in light of the political environment and the economic climate. But all that said, as we look forward, we do remain optimistic regarding this business. The new administration certainly looks like they're going to promote and pop up -- and prop up, excuse me, the ACA business. We just heard this week that we'll likely see an extension to open enrollment or special enrollment periods throughout the year and then a possibility of more marketing and facilitated enrollment expenditures. So, overall, I think we will continue with our thoughtful approach, but with the new administration, I think there is an opportunity for further growth there.

Gail Boudreaux -- President & Chief Executive Officer

Yeah. And I would just add to Pete's comments that we had a very consistent strategy around the individual marketplace that really hasn't changed year-over-year. We've done some expansion in states where we obviously have a very deep footprint and we will continue to be opportunistic and up and very optimistic about what we think the opportunities are there. So, again very consistent with what we've shared with you in the last couple of years. Next question, please.

Operator

Next, we'll go to the line of Ralph Giacobbe with Citi. Your line is now open.

Ralph Giacobbe -- Citi -- Analyst

Thanks, good morning. I was hoping to get into the MLR guidance a little bit more, John. The 88% maybe you can give us some underlying assumptions. It does imply a step up and I know you mentioned mix, but even outside of that seemed a little bit higher. So hoping maybe a sense of expectation of what you assumed in guidance around maybe local group medical cost for 2021 and how we should consider that maybe off of either 2020 or maybe 2019? Thanks.

John Gallina -- Chief Financial Officer

Yes, thank you, Ralph, for the question. And when you look at our MLR guidance this year, we certainly believe it's appropriate given the uncertainty around the timing and the efficacy of the vaccine rollout and the full year impact of COVID as well as those unexpected changes, Medicare physician rates and sequestration timing mismatch that I talked about earlier. Obviously, all have been incorporated in the 88%. By only looking at 2019 as the point of comparison since that was the last period that there was not a HIF, it's really -- it's a fairly simple roll forward from that perspective. You look at the mix of the business that we have today with far more Medicaid members. We actually have had exceedingly strong growth in our Medicare Advantage last few years in the upper teens on a couple of year basis and exceeding the rest of the industry. All of that obviously changes our business mix. And just on the apples-to-apples basis, mix is driving about 60 basis points of the increase in the 2021 MLR versus the 2019 MLR.

And then, when we look at the impacts of COVID and there is a lot of things that go in COVID, where there is certainly the cost of COVID which is in billions of dollars. There is non-COVID utilization impacts, and in terms of, we believe that non-COVID utilization will be less than that of normal year would be in vacuum. And then of course you have the pricing actions that we've taken into account for that as well as reimbursements from regulatory entities that we believe are appropriate in the COVID environment. When you take the net of all those, the impact of COVID is another 40 to 50 basis points on our MLR for 2021, and there is a multitude of other small items going in both directions that may be comprised the last 10 basis points, but it's really it's those two items, it's mix and COVID.

Thank you for the question.

Gail Boudreaux -- President & Chief Executive Officer

Next question, please?

Operator

Next, we'll go to the line of George Hill with Deutsche Bank. Your line is now open.

George Hill -- Deutsche Bank -- Analyst

Yeah, good morning, John. You actually just covered everything that I was going to ask about the MLR and the COVID impact. I guess I would just say one of your peers called out the COVID impact in Q4. I'm wondering if you guys would be willing to do that. And then, Gail, my follow-up is now that Ingenio was kind of fully stood up, where do you see the white space in Anthem's offering going forward?

John Gallina -- Chief Financial Officer

Sure, I'll start with your question, George, and then turn it over to Gail. In terms of the COVID cost, I think really probably your question is, what type of COVID cost you are included in our guidance? And as I said, there is many factors and variables, and so we've spent considerable time analyzing modeling potential impacts. There are a few of the peers, where A.J. in particular has asked, what happens if the vaccine rollout is different than soon? Well, I'll tell you. Of all the modeling assumptions we have, the timing and efficacy of the vaccine is one of the assumptions and that's a greatest amount of variability associated with it. But anyway, all in, we're estimating that we have about a $600 million COVID headwind inherent in our 2021 guidance. And as I said, COVID cost will include testing, treatment, vaccine administration, all the other things such as the Medicare fee schedules, the sequestration, the various ways. It's several billions of dollars, but offsetting that is non-COVID utilization less than the normal year, the pricing actions that we've taken and regulatory reimbursements. And with the modeling all of that, it's coming out to about -- well about $600 million. And you know, you only think about that, think about our $24.50 [Phonetic], and then you add $600 million to that. That puts us really at the high end or slightly above the high end of our 12% to 15% growth rate range that we've talked about on a sustainable basis. So again, we do believe that a lot of these issues are transient and that'd probably see some lingering effects in the 2022. Inflow is very good about the underlying core business fundamentals that we have in the company.

So with that, I'll turn it over to Gail.

Gail Boudreaux -- President & Chief Executive Officer

Yeah. Thanks, John, and I just want to reiterate what John said in terms of just we feel very good about these issues and our long-term EPS trajectory. And as you think about your question on IngenioRx, first of all, we're really pleased with the performance of IngenioRx. It's coming on our expectations and I think that we're past the transition and now we're into full integration of that business with our other opportunities. If you think about it, IngenioRx, one of the areas this year, we had some nice sales and some really good throughput and integration with our commercial business, but it was impacted somewhat by the jumbo accounts really not going out to market this past year. So we would expect as we sell through '21 that there is continuing and ongoing opportunities to integrate IngenioRx with our commercial footprint, and that's one of our biggest opportunity still. We still see a lot of runway for us to increase the penetration, particularly in our middle-sized and large accounts with integrated pharmacy benefit offerings.

We did see some nice wins in 2021 on stand-alone business, which we're really, really happy with and we think that that's a big opportunity to continue the impact in large accounts this year for just what's happening in the economy, I think it's sort of depressed sales activity and movement, but we had very strong retention across both our commercial and our IngenioRx book. So overall, we feel IngenioRx' tracking very much aligns our expectations and really pleased with the performance of the business to date.

Next question, please?

Operator

Next, we'll go to the line of Kevin Fischbeck with Bank of America. Your line is now open.

Kevin Fischbeck -- Bank of America -- Analyst

Great, thanks. I wanted to see what your guidance was including for two of the, I guess, I think that may still be a little bit in flux as far as the Biden policies I guess first on the view about redeterminations or do you assume that they're going to come back this year or in fact not come back until next year? And the second, how you're thinking about testing costs? It sounds like you're including some testing costs in there, but I guess Biden has been talking about having insurers cover potentially back-to-work and back-to-school-type testing which is not clear that insurance companies will necessarily price into.

Gail Boudreaux -- President & Chief Executive Officer

Yeah. Thanks for the question. In terms of the sort of understanding inside of our guidance on the two issues, reverification and testing, first on reverification, we originally, I think, shared with you our thoughts on where this year would come out. Our assumption was that the public health emergency would end in the first quarter, that's what we knew at the time, but we also thought that Medicaid reverifications would probably really begin in the summer. So that was embedded in our thinking. The other thing, I think it's important to know is right now, we're assuming based on the letter to governors that recently came out that reverifications will be on hold for all of 2021, but in -- even in our original assumptions, we never assume that there will be cliff events. And I think that's also an important assumption as you think about the progression of enrollment over the course of the year that where states were trying to understand their data and managing this, that given just the challenging conditions within each of these states that that would happen over time in the back half of the year. So again as we think about this year, we're expecting no reverification -- really reverifications to be on pause for the full year given sort of the initial guidance that's been given to governors.

In terms of your second question, the policy issue on testing, no, we agree that testing is probably one of the most critical parts of controlling the spread of COVID and even strongly supportive of wide availability of testing offerings. And it is unprecedented in terms of the situation, trying to understand the additional support for all types of testing and expanding that capacity and also finding it quite frankly new, reliable, rapid, and inexpensive ways to do this. To think about our industry, health plan benefits have always traditionally covered medical tests as appropriate to diagnose and treat individuals that were ordered by a physician. This is consistent with long health insurance practices or contracts and quite frankly federal guidance. And so, we think about workplace testing. Examples of that have happened over certainly drug testing or other traditional ways and employers would pay for that outside of the health benefit. And then, similarly public health surveillance testing has traditionally been paid for by states and local health departments. So those are -- I mean, as we think about that, we follow that consistent approach to testing and also give you a sense of what we did on reverification.

Well, thank you for that question. Next question, please?

Operator

Next, we'll go to the line of Gary Taylor with JP Morgan. Your line is now open.

Gary Taylor -- JPMorgan -- Analyst

Hi, good morning. We've kind of hit on this from various different quantifiable angles around MLR, etcetera, but just maybe going back conceptually, I think one of the biggest concerns investors have is the risk that as COVID subsides, there is a bolus of deferred utilization and/or that utilization might be a higher acuity as its health conditions have progressed and worsened because of deferred care. So when we think in the line of business where that impacts seems to be -- the deferred impact seems to be most significant throughout 2020 seems to be the Medicare business where seniors have stayed away as much as they are able to. So as we think about your sort of house view in 2021, how are you thinking about non-COVID utilization, whether there is really pent-up demand not just getting back to normal, and whether that acuity is higher, and is that view particularly any different for commercial Medicare or Medicaid?

John Gallina -- Chief Financial Officer

Thank you for the question, Gary. And as you can imagine, when I discussed earlier, the extensive modeling that we've done, there is a lot of different thought processes around that, but conceptually, yes, we do believe that there is pent-up demand in the system, and we do believe that there is a chance as it could be higher acuity associated with when folks get care and that's probably most pronounced in the Medicare line of business. So, really the question is not if those will happen because we do believe this will happen. The question is to what extent and how significant. And then you also have things like emergency growing volume, we believe, will remain low, in that the way that people access care will continue to change a bit in the future as it has in the past to the extent that COVID stays high, then we expect non-COVID utilization whether it's a normal utilization pent-up demand or anything else to actually be below normal. To the extent that COVID subsides and the vaccine is extremely successful, we do expect that the roll out is really clearly a natural hedge in there. I have talked in response to other questions about what the net impact is and we really don't want to talk about specifically how much we have for each of those buckets, because we're so fungible and interchangeable and they do hedge and offset each other. But, the premise of your question, we completely agree with. What we believe is that, based on our various modeling, sensitivities, and understanding of our membership, but we believe that the guidance we provided is very solid and very appropriate and prudent and that we'll be able to manage through changes in either direction.

Thank you for the question.

Gail Boudreaux -- President & Chief Executive Officer

Next question, please?

Operator

Next, we'll go to the line of Whit Mayo with UBS. Your line is now open.

Whit Mayo -- UBS -- Analyst

Hey, thanks. I'm just curious what you guys are sort of assuming and thinking about COVID cost sharing this year? Is there any change in how you approach that? Should we anticipate continuing to waive co-pays for the entirety of the year? And one other question I had is just around the sequester that if it does get delayed for the balance of 2021 how -- is there any way to us to maybe size the impact there?

Gail Boudreaux -- President & Chief Executive Officer

Thanks. Thanks for the question, Whit. As we think about, as you've heard actually on this call, it's an incredibly dynamic environment in terms of cost shares, part of the public health emergency, we are waiving right now cost shares for testing. And obviously when the vaccine deployment comes in, those will all be included as part of this environment. I think the biggest impact of cost shares is going to be in the first quarter, which we have shared with you. We're assessing access to care and how all of that is happening across each of our businesses. So from that perspective again what I would say is, first quarter is really how you should be thinking about the biggest impact of cost share waivers and again, because of all the impacts that are happening, it's pretty dynamic. And so, we are reacting and making sure that we assess that on a real-time basis. In terms of the sequester, maybe I'll ask John to comment on the sequester.

John Gallina -- Chief Financial Officer

Well, yeah, thank you. So, there's clearly a disconnect right now associated with the sequestration versus the DRG bump and the Medicare rate increase of 3.75%. The issue really is that with the extension of the federal health emergency, the DRG bump is going to be for full year. We know that based on the Appropriations Act that the Medicare rate schedule is going to be for the full year and sequestrations only for the first 90 days. And unfortunately, that will require a legislative action in order to extend the sequestration. So we have not included an extension of that in our guidance at this point in time and hopefully that helps.

Thanks for the question, Whit.

Gail Boudreaux -- President & Chief Executive Officer

Next question, please?

Operator

Next, we'll go to the line of Dave Windley with Jefferies. Your line is now open.

Dave Windley -- Jefferies -- Analyst

Hi, good morning. Thanks for taking my question. You had -- management had sized a $500 million number from Medicaid risk corridor or clawback. I wondered if that turned out to be into the $100 million that was going to fall in the fourth quarter, if that turned out to be an accurate assessment or if it was different than that and to what extent are you viewing those clawbacks continuing into '21? And then if I could slip in, the flu season is just extraordinarily low apart from COVID and wondered if that has any impact on your thoughts or guidance for '21. Thanks.

John Gallina -- Chief Financial Officer

Thanks, Dave. Appreciate the question. And just to give all the listeners a little bit of frame of reference in terms of what I answer, in terms of some of the Medicaid clawbacks, etcetera, we have experienced about $100 million in the first six months of the year, had about $300 million worth in the third quarter. And during the third quarter call, I was asked, what do you think the full year is going to be? And I said probably we expect it to be a little bit more than $0.5 billion, meaning just over $100 million in the fourth quarter. Well, it turned out that it was more than that in the fourth quarter. It is almost $250 million in the fourth quarter and to make almost $650 million for the year. I think it's very important to note that even with that $650 million clawbacks, with all the various corridor and collar and other rate protections that existed within that block of business, that Medicaid still ended 2020 within target margin ranges.

In terms of the impacts for the future, we have about half of our Medicaid states repriced on January 1. We are very comfortable with the actuarial credibility of those rates thus far and believe that we will continue to work with our state partners in terms of the challenges that they're facing and respectful of their budget issues, but they still receive rates that are actuarially sound and actuarially solid for 2021. And then, there are rate protection, as I said, between collars, corridors, rebates, whatever you want to call, they all have the same aspect to try to better align cost and revenue within the same timeframe and same period. So, we're actually very bullish about our ability here in Medicaid. And then, in terms of the flu season, we have a quote unquote, typical flu season. The influenza season is much less than anticipated. We've factored that in and have talked about non-COVID utilization being less than normal in total for the year. That is part of the calculus. So, we are actually thrilled with a lot of things that we did even. We took steps to ensure that our members had access to the flu vaccine through our fall flu campaign.

You may not know this, but Anthem partnered with over 100 community-based organizations across our markets. And we stood up 500 pop-up and drive-through clinics in uninsured neighborhoods to promote and support higher immunization rates, and we believe some of our efforts helped contribute to the lower-than-normal flu incidents. And as I said, that's all factored into the non-COVID utilization comments that I made earlier. So, I appreciate the question, Dave. Thank you.

Gail Boudreaux -- President & Chief Executive Officer

Next question, please?

Operator

Next, we'll go to the line of Joshua Raskin with Nephron Research. Your line is open.

Joshua Raskin -- Nephron Research -- Analyst

Hi, thanks and good morning. Question is to Anthem's strategy around working with physicians and health systems in risk-based arrangements. And if you could size the overall spend that you see going through risk-based contracts and specifically through global capitation.

Gail Boudreaux -- President & Chief Executive Officer

Yeah, thanks for the question, Josh. We've shared this publicly a few times. You know we are north of 60% in some type of, I would call, upside-downside risk. So what does that mean? It's a variety of relationships that we have and we are moving to increase the much more capitated full risk arrangements, particularly in our government business. At this stage, a lot of them are game shares, although we do have a component of that 60% in full risk. Our strategy is to continue to build upon that, and we believe that having one in eight patients in our markets are Anthem patients across. Our book of business provides us a real foothold in those marketplaces, and we have been working with our care providers to improve that. We started with the program, it's really based on primary care capitation and working with them on this year to get them more involved. So our strategy does revolve around primary care and we're going to continue to build on that. We have 180 accountable care organizations, 23% of those were roughly operating under shared risk arrangements as well.

And then, if you think about other innovation programs, we've got about 60% of our medical spend tied to performance-based contracts as well. So as you can see this for us is evolving, it's something that we've been working on for a number of years, we've had the infrastructure in place to do it and now we are increasing and enhancing the amount of full risk that our care providers are taking with us, and we actually expect that to accelerate because of the pandemic. We see increased interest across our businesses and physicians working with us and we find plenty of access in our markets. I mean, I think that's a question that's been asked before, is there enough capacity in our markets? And we've seen many of our physicians very willing to move along the continuum with us. It's a journey, probably a few years still until we get to where we want to be. But ultimately, we make progress every year and it's a core part of our strategy.

The other area that I just want to touch on is telehealth, which is another part of our strategy not tied necessarily to behavioral health -- or not tied necessarily to risk-based payments, but we also see telehealth, behavioral health in particular, a growing part of our strategy. I shared more than 50% of our visits in behavioral are done via telehealth. We think that's a great access. We also think bringing in quite frankly not just physical health on the medical side, but behavioral health into these arrangements and our pharmacy actually completes the circle for us and then some of the capabilities within our diversified business group around palliative care and the work that they're doing to make sure that we are in the better position with data to help manage these relationships is another area that we've been investing very heavily in. So, thanks for the question. It's a core part of our strategy. We're on a journey. We still have some work to do, but I think we've made really good progress and are going to continue to move down the risk quarters.

Thank you. Next question?

Operator

Next, we will go to the line of Lance Wilkes with Bernstein. Your line is now open.

Lance Wilkes -- Bernstein -- Analyst

Yeah. Could you talk a little bit about your strategy in partnering and cross-selling into other Blue Cross organizations? In particular, could you hit three areas that would just be interesting to understand the progress and the outlook for Ingenio, for diversified in particular the Beacon asset name, and then also your Medicaid partnerships? Thanks.

Gail Boudreaux -- President & Chief Executive Officer

Thank you very much. I'll begin and then I'm going to ask Felicia to share some comments around our Medicaid partnerships. You hit really on the three key areas that we're partnering with our Blue -- other Blue plans on and even there is a couple of others. First, in terms of Ingenio, as you know, Blue Cross of Idaho is one of our first commercial partners in that space and we just added their Medicare Advantage business on January 1. We continue to work across Ingenio in addition to several other relationships that we've had with other groups. It's a longer-term sales process, because as you know, most of those contracts are 3- to 5-year contracts. So it takes some time and we really, until this year, were not in a position, I think with the transition and other things we're doing, to take on most of those kind of arrangements. So we've actually done very balanced in pacing the relationships that we've had there, but we actually do think there is a really good opportunity for us to continue to build and expand.

An area that you didn't talk about specifically was the relationship we have in the Group Medicare business. We've got some partnership there also with other Blue that we think will help us to expand our combined footprint. And we've been working with our Blue partners on that because we think we offer obviously some capabilities in that space and we can work with them on their commercial business to convert that to Group Medicare and we've had some wins this year in that area as well. The last area is the diversified business group, and Beacon is a great example. I mean that asset that we purchased and brought onto the Anthem family last year, we see as a very big opportunity. They obviously have a large footprint even before integrating with Anthem, they work with a number of Blue partners. We consider that as an opportunity to integrate our whole health strategy and we see our Blue peers also very interested in expanding there. In addition, on the diversified business group, we've seen meaningful opportunities to expand CareMore and Aspire. Those are two other companies that have worked with Blue partners. And then, we're in a joint venture on our integrated health consumer capabilities, which we've talked about in terms of Total Health Total You and some of the other work that we're doing because those also offer opportunities.

So, as you can see a lot of different things are happening, these are generally several year sales, I won't say that it's going to happen overnight, but we've seen a real increase in the external business that we've had and working with our Blue partners. Medicaid is the space that we started our partnerships with and have expanded that into Medicare and the duals. And I'm going to ask Felicia maybe to comment on that, because that's probably been our long-standing relationships with our Blue partners.

Felicia Norwood -- President of Government Business Division

Good morning, Lance, and thank you for the question. Now, we are very pleased with our Blue partnerships. We started the year with five partnerships on the Blue side. It's now added Nebraska and Missouri, both branded as Healthy Blue. The opportunity that we have is that we are really the natural partner to our Blue plans and see this as an opportunity for us to continue to leverage the breadth and scope of Anthem's deep knowledge around Medicaid execution and being able to continue to grow that membership as we go forward. When you take a look at where we are today, the great opportunity extends not for Medicaid, but also to Medicare. We were able to leverage our partnerships, for example, that we had in Louisiana to move forward with the D-SNP offerings and we're doing the same thing with our partnership in North Carolina as well. So, the future of our alliances and partnerships is strong. I think this is an opportunity for us to demonstrate the value that we bring across the board to our Blue partners and we will continue to enhance that as we go forward.

Gail also mentioned GRS in our opportunities there, and we were able to actually partner with Independence Blue Cross for 1/1/21 in terms of our partnership with them going forward. So, between Medicaid and Medicaid, the opportunity continues to be robust and we will continue to grow this business if we move forward.

Gail Boudreaux -- President & Chief Executive Officer

Yeah, I think the summary of all that is, as we're making some good progress, we're in early days and we do think that there is significant opportunity. But again, these pipelines take some time and we expect over the next several years to continue to advance this, but it's an important part of our overall growth strategy. So thank you for the question.

Next question, please?

Operator

Next, we'll go to the line of Robert Jones with Goldman Sachs. Your line is now open.

Robert Jones -- Goldman Sachs -- Analyst

Great, good morning. Thanks for the question. I guess maybe just one on the SG&A expense ratio, the expectation for a 10.8% plus or minus at the midpoint, I know there's some moving pieces this year. I was hoping, John, maybe you could give us a little context on the drivers of this, obviously would have the SG&A ratio lower than what we saw this year, and I know we're talking about the HIF and mix and then just other cost initiatives, so just any breakdown of that would be helpful. And as it relates to the cadence of how we should be thinking about SG&A throughout the year would be helpful. Thanks.

John Gallina -- Chief Financial Officer

Yeah, sure. Thank you for the question. Our SG&A levels are decreasing and they're really again to be more consistent with the plans that we discussed in our Investor Day a couple of years ago. We continue to have systems migration strategies, looking very hard to eliminate non-value-added work flows and really enhancing our digital capabilities. Also at the end of the third quarter of last year, we had some business optimization charges and you're starting to see some of the benefits of that already come through the P&L. So, all in, we feel very good about that. Yeah, we've clearly seen significant revenue growth as well, and our revenue growth has far exceeded our growth in SG&A expenses, which serves to lower the SG&A ratio. So, yeah, as you know, we're anticipating a lot of growth in Medicaid and Medicaid carries a lower SG&A ratio than the company does in general in terms of mix and made an average. So, a lot of moving parts and a lot of factors, but we're very confident with our 10.8% and believe that it's very much delivering on the promises that we laid out a couple of years at our Investor Day.

So, thank you for the question.

Gail Boudreaux -- President & Chief Executive Officer

Next question?

Operator

Next, we will go to the line of Scott Fidel with Stephens. Your line is open.

Scott Fidel -- Stephens -- Analyst

Hi, all. Thanks. Actually wanted to just ask about diversified business group, just more broadly in terms of thinking about the 2021 outlook and interested if you can maybe talk about how you're thinking about revenue growth in margin profile for the business. I know there's a bunch of businesses within that, but generally more broadly and then call out any key COVID headwinds or tailwinds to consider around that segment. Thanks.

John Gallina -- Chief Financial Officer

Yeah. Sure, Scott. Thank you for the question. Diversified business group is extremely important part of our long-term strategy and our long-term growth aspirations. It is not yet large enough to be considered a separate reporting segment under SEC reporting guidelines. So there is only so much information that we can provide on a detailed basis. But now in 2021, we do expect to see some nice growth on a specific on a percentage basis out of diversified business group. The aim is proactively managing capacity as volume returns and we continue to monitor volumes as utilization demand normalizes. The Beacon has initially experienced a reduction in utilization and then rebounded significantly throughout the year. Once peak Beacon and once the vaccine stabilizes the COVID issue, we expect Beacon to really be a meaningful growth driver in that area here for the future. And our program integrity area is also, the SIU is also within BBG and that's been impacted a little bit here in 2020 with lower claims volume and we expect that to kick back up in 2021. So, there are both opportunities for BBG to further penetrate Anthem membership and do things appropriate to help bend the cost curve within Anthem and then sell that externally. Gail just talked a minute ago about some of the opportunities that they have in BBG and penetrating more and more of the Blues. So we're very bullish about BBG's long-term aspirations and helping drive the overall growth of Anthem for the future.

Gail Boudreaux -- President & Chief Executive Officer

Yeah. And I'd add to John. As I said in my prior comments, the diversified business group is, you know it's in the early stages. We're really pleased with the growth that we've seen from it. We're very happy with Aspire and Beacon especially because of the opportunities to integrate as part of our whole health strategy. We see big opportunities. We've shared this at our last Investor Day about the impact that the diversified business group can have on Anthem's business to help accelerate our own growth. And we're starting to see some of that already inside of the Anthem numbers, where both CareMore and Beacon particularly this year have really supported Anthem's growth. But as John said, similar to other health services business, COVID did have an impact on our ability to do in-house assessments and some of the utilization certainly was up in the Beacon behavioral health business, but overall, we're still very positive about the long-term growth projections of our diversified business group and we are going to share a lot more about that, we see that going in our Investor Day in March.

Thank you for the question. Next question, please?

Operator

Next, we'll go the line of Matthew Borsch with BMO Capital Markets. Your line is now open.

Matthew Borsch -- BMO Capital Markets -- Analyst

Yes, I was just wondering if you could talk about the enrollment outlook for the beginning of the year, particularly what you're seeing in terms of large accounts. I think you referenced less movement there this year, which isn't surprising and then Medicare Advantage also, how you see that coming into the new year? Thanks.

Gail Boudreaux -- President & Chief Executive Officer

Sure. I'm going to ask Pete to answer the commercial question and then Felicia about Medicare Advantage, but just a couple of overarching comments on that. Overall, we are really pleased with what -- how our commercial business performed in 2020 just given the economic headwinds, and as you saw, incredibly resilient business with most of our impact having a result of just the downsizing in the size of accounts. But our sales have been robust and are retention good, but without stealing all of Pete's thunder, let me turn it over to him to give a bit of a perspective and how we're seeing '21 and then Felicia.

Pete Haytaian -- President of Commercial & Specialty Business Division

Yeah, thanks. Thanks a lot for the question. Appreciate it. Just to reiterate what Gail said, we're really pleased with how we landed in 2020 and how the team performed. Overall, with all the headwinds we talked about in 2020, we actually saw the commercial book grow sequentially year-over-year. So that was great. And while we did see furloughs in our book of business and less risky segments being a factor, as Gail just alluded to, the execution was outstanding from the team. Our sales exceeded our lapses for this quarter again and for nine of the last 12 months. That was great to see. And on the local group business side, we actually grew our fully insured and self-funded business in the quarter. So that really played out well.

What you alluded to is what our headwind has been throughout the year and that's really the in-group change dynamics that occurred in the larger sized accounts and that's really going to be the story for 2021, as it relates to our execution and how we're starting off the year in 2021. We still feel very good. We feel very good about our portfolio. But again, depending on the economy and how in-group change plays out, especially up market, as you alluded to, will be big factors we had in 2021. If that changes and the economy improves quicker than we think, then that would be a positive obviously. But overall, we're taking a more conservative view of that in light of where the economy is today, and I'd say that that would overall lend itself to about flattish overall membership growth in the commercial business.

Felicia Norwood -- President of Government Business Division

And in terms of our Medicare business, Medicare Advantage particularly, the results of the past AEP are in line with our expectations. And as we referenced earlier in the call, we certainly expect another year of double-digit growth outperforming the industry average growth rates. As a reminder, our growth in Medicare Advantage has historically been more balanced throughout the year rather than just eliminate to one-one. We are also pleased to be expanding our footprint into 109 new counties, and for the first time, we will be offering Medicare Advantage plans in Iowa and statewide across Kentucky and Tennessee as well. Our virtual sales comprise more than 60% of our total sales volume this past AEP and the results from our care guide is very promising. Care guide provides our members with a new simplified orientation journey that begins at the point of sale and reduce its member touch points to ensure that they have consistency throughout the April onboarding process.

And finally, with respect to group retiree, while there was a bit of a delay in the GRF pipeline, we still think that opportunity is intact and we expect to see more of these opportunities as we move into 2022 and beyond. I'd like to just really give a shout out to our teams in both the Commercial and Medicare business, because this was a really unusual year. We had a pivot and the investments that we made in our tools, in our digital engagement with brokers, etcetera really pay dividends across all of our businesses this year and I think that's a -- that really speaks to the kind of investments that we're making to -- that we can engage even when we're not able to be in person with our clients from a sales and account management perspective. So again, overall 2020, I feel that our teams really responded well and we're looking forward to '21. We've learned a lot and I think the investments we've made have really helped us support our clients in this environment.

Gail Boudreaux -- President & Chief Executive Officer

Next question, please?

Operator

Next, we'll go to the line of Steve Willoughby with Cleveland Research. Your line is now open.

Steve Willoughby -- Cleveland Research -- Analyst

Hi, good morning and thanks for taking my question. Most of mine have been asked, but two things for you. One, just a follow-up on the last question. I was wondering if maybe Felicia could comment at all as it relates to Medicare Advantage between individual and group. And then, Gail, I just was wondering if you have any thoughts or seen any impact on the national account market as a result of the Blue Cross Blue Shield lawsuit and subsequent resolution in any rule changes with Blue Cross Blue Shield Association.

Felicia Norwood -- President of Government Business Division

Thank you, Steve. As I referenced earlier, our individual sales for AEP were in line with our expectations and the team certainly had to pivot in light of what we were seeing in the pandemic that led to more virtual sales. This AEP and results there were strong as well. So certainly, when we take a look at where we are, we are very pleased with what we saw and expect to deliver the double-digit growth that we referenced. From a group perspective, group membership came in well. I would say that as we mentioned before, there were some delayed decisions from employers with respect to group retiree business for 2021. We expect that pipeline though remains intact. As we've said before, when we take a look at our group business, we really have an inherent captive pipeline between the commercial business that we have and our ability to be able to penetrate that business and grow as we go forward. So far, there is a real deferral, I think in some respects with respect to growth in group this year. We expect those opportunities to remain intact and just were delayed and pushed out to 2022 and beyond.

Gail Boudreaux -- President & Chief Executive Officer

And in terms of the last question about the MDL and the subscriber settlement, I commented on that on the third quarter call, and really, it remains the same. I don't really see that changing our strategy. We talked a lot about the partnerships we have in terms of national accounts. We're going to continue to be an active participant in that market as are our peers. So other -- in terms of the Blue Cross Blue Shield litigation and MDL, I really don't see anything different than what I shared on the third quarter call.

Well, thank you very much. That would be our last question. I want to thank everyone for joining our call this morning. As you heard here today, Anthem delivered strong results in 2020, and we're well positioned moving into 2021 despite the ongoing uncertainties. We're a very, very different company than we were even one year ago, and I'm optimistic about the opportunities for our more than 70,000 associates to further improve the overall health of our members and communities during these challenging times.

I look forward to speaking with you at our Investor Day event in March. Thank you again for joining us.

Operator

Ladies and gentlemen, a recording of this conference will be available for replay after 11:00 AM today through November 27, 2021. You may access the replay system at any time by dialing 888-566-0406 and entering the access code 8850. International participants can dial 402-998-0591.

[Operator Closing Remarks]

Duration: 79 minutes

Call participants:

Chris Rigg -- Vice President of Investor Relations

Gail Boudreaux -- President & Chief Executive Officer

John Gallina -- Chief Financial Officer

Pete Haytaian -- President of Commercial & Specialty Business Division

Felicia Norwood -- President of Government Business Division

Justin Lake -- Wolfe Research -- Analyst

A.J. Rice -- Credit Suisse -- Analyst

Steven Valiquette -- Barclays -- Analyst

Ricky Goldwasser -- Morgan Stanley -- Analyst

Ralph Giacobbe -- Citi -- Analyst

George Hill -- Deutsche Bank -- Analyst

Kevin Fischbeck -- Bank of America -- Analyst

Gary Taylor -- JPMorgan -- Analyst

Whit Mayo -- UBS -- Analyst

Dave Windley -- Jefferies -- Analyst

Joshua Raskin -- Nephron Research -- Analyst

Lance Wilkes -- Bernstein -- Analyst

Robert Jones -- Goldman Sachs -- Analyst

Scott Fidel -- Stephens -- Analyst

Matthew Borsch -- BMO Capital Markets -- Analyst

Steve Willoughby -- Cleveland Research -- Analyst

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