Elevance Health (NYSE: ELV) will expand behavioral health interventions as a means to tighten medical cost management. The segment continues to experience elevated cost pressures and high acuity, driving higher utilization.

Elevance’s health care services subsidiary Carelon has continued to drive growth for its parent company. During its third-quarter earnings call, executives reported that further expanding external relationships and scaling services like behavioral health will be an ongoing priority.

Overall, Elevance’s operating revenue was up 12% at $50.1 billion compared with results from the third quarter of 2024. This is in line with expectations, but the health plan’s executives reiterated they are closely monitoring headwinds from Medicaid cuts and rate adjustments.

Elevance’s current outlook projects that its Medicaid operating margin will decline by 125 points year-over-year, creating a challenging 2026.

“While next year will reflect challenging Medicaid dynamics, membership changes and disciplined investment, we expect 2027 to mark a return to a more balanced earnings growth profile,” Mark Kaye, Elevance Health’s chief financial officer and executive vice president, said during the call.

Kaye said the company expects to gain visibility on how things will play out in January once the Centers for Medicare and Medicaid Services release rates and when they learn of state-specific program changes to Medicare. The company is also monitoring how eligibility redeterminations under the new guise of the One Big Beautiful Bill Act, which cut Medicaid funding and introduced new rules for eligibility and work requirements, are playing out.

In the meantime, underpinning much of its long-term, “durable” performance strategy is a deeper focus on the integration of artificial intelligence and other digital tools.

Elevance Health just inked a partnership with OpenAI, the tech giant behind the generative AI tool ChatGPT, Kaye announced during the call.

“We’re going to actually train our folks to be able to use these skills appropriately,” Kaye said. “The reason I wanted to share more detail on that is we’re embedding these [tools] at scale across our operations and prioritizing high-use impact cases that reduce the complexity, drive savings and enhance the experience, which are two of our core goals. … This is going to create leverage for us, improve affordability, strengthen operational performance, and support sustainable, long-term growth.”

Elevance executives did not give specifics about how exactly the AI investments will be used other than to improve efficiency, outcomes and member experience.

“We see it as a strategic enabler of what we are trying to accomplish, which will really drive more affordable, accessible and personalized care,” Gail Boudreaux, president and CEO of Elevance said. “We’ve been embedding AI responsibly — not just as an experiment — but at scale.” 

Bourdreaux said that to the degree the company has deployed AI tools, it has already realized efficiencies, elevated its personalization match feature for members, reduced denials by 68% and reduced charting and other administrative burdens for providers. 

“This is going to create leverage for us, improve affordability, strengthen operational performance, and support sustainable, long-term growth,” Boudreaux said.

Elevance Health executives also emphasized a renewed, strategic focus on value-based care, which they said leveraging AI and digital tools will help them work toward. The company reiterated its aim to lower the total cost of care over time in line with this goal. Carelon’s value-based arrangements were specifically cited as one of the company’s ongoing strengths, as it continues to drive retention.

“We are sharpening pricing, accelerating our digitization and automation journey, and embedding value-based care principles across our enterprise relative to the earning cadence previously described,” Kaye said. “Results this quarter benefited from the timing of planned tax actions contemplated in our full year guidance, and stronger net investment income, a portion of which we intend to reinvest to support our long-term growth.”

The company stopped short of sharing 2026 earnings guidance just yet, but will maintain a “prudent posture” for now and share further details on its fourth-quarter earnings call in January.

Executives did not touch on the ongoing lawsuits related to ghost networks that Elevance Health and Carelon have been involved in throughout the last year.

“We do expect a rate update to be modestly above the historical level, but still trail the trend into 2026, given state rates, cycle lag, claims data and that more acute risk pool. …” Kaye said, “We do view 2026 as … not the beginning of a reset period. And the actions we are taking will position us to improve through the cycle as we ultimately target that 2% to 4% margin range over time.”

The executives expect to see a rebound of some margins in 2027, they said.