ICYMI: Anthem’s 62% Profit Margin in Federal Health Plan Contract Raises Transparency and Oversight Concerns

FOR IMMEDIATE RELEASE
December 16, 2025

CONTACT 
Christopher Sheeron
+1 (202) 823-2333
media@action4health.org

A recent audit by the Office of Inspector General (OIG) uncovered that Anthem’s (now Elevance Health’s) Blue Cross and Blue Shield plans operating under the Federal Employees Health Benefits Program (FEHBP) may have earned an estimated 62% profit margin by paying themselves through their own subsidiary, according to new reporting from Healthcare Un-Covered. 

According to the OIG report, the issue of subrogation arose after they “observed irregularities in recoveries and fees being passed through the plan” in what was supposed to be a routine audit. Although subrogation, recovering costs from insurers, auto carriers or liable third parties, is a normal function of health insurance, the system Anthem created is not.

Anthem launched Carelon health services in 2022, and is viewed by Elevance as their “profit engine” and a subsidiary of Anthem. According to the article:

“The OIG discovered that Anthem treated Carelon as a commercial provider of services in an arm’s length transaction and paid Carelon a percentage of recoveries, even though, as OIG wrote, this was a “related party transaction.” Auditors discovered that Anthem had contracted its subrogation work to Carelon, and then billed the FEHBP a percentage-based “fee,” deducted directly from the recoveries, and recorded it as a health benefit expense rather than an administrative cost. The subrogation fees then passed through FEHBP as medical claims, thereby avoiding oversight limits on administrative costs and creating “unlimited” profit on a function that should have been cost-based.”

The OIG report found that the transaction was a “related party transaction,” basically meaning Anthem was paying itself through its own subsidiary. 

Auditors found that:

”The method Anthem uses to charge these subrogation recovery fees results in unlimited profits for essentially an ‘in-house’ service…” and that “Elevance Health, Anthem, and/or Carelon  should not benefit or self-enrich at the expense of the FEHBP.” 

Anthem then resisted providing underlying cost documentation and refused to accept the OIG’s report.

Chris Deacon wrote in her piece: “What’s most shocking about this audit isn’t what Anthem did – it’s how openly they did it, and how little anyone plans to do about it.” Based on the limited data available, the OIG concluded that the arrangement likely resulted in an approximate 62% profit margin, far higher than what is permissible under FEHBP rules. 

The audit highlights concerns about lack of contract compliance, transparency, and effective oversight in a major federal health plan covering millions of beneficiaries. This report follows increased scrutiny of health insurer providers, where critics note insurers have enjoyed significantly high profit levels in recent years. The takeaway is straightforward: Anthem used accounting tricks to extract profits from a federal program, and that kind of behavior demands stronger oversight and accountability.