If benefits administration managers across the United States appear particularly upbeat these days, it's for good reason.Their responsibility for overseeing employee benefits plans-which many managers have long viewed as a nuisance-is undergoing a significant transformation. In an ongoing process, a pipeline is being built that directly links group benefits insurers to employees in matters pertaining to the individual plan-with employers in many instances serving as intermediaries.
Even if employers still have a large stake in plan administration, the emergence of Web-based solutions supporting employee benefits administration is undoubtedly making their processing duties easier.
That's reassuring news indeed: Faced with rising healthcare expenses coupled with internal administrative overhead costs, employer groups have indicated in no uncertain terms that a change in the landscape is long overdue-one that shifts responsibility to the employees and away from them.
By implementing Web-enabled programs configured within their existing automated human resource architecture, a benefit manager can eliminate manual processing of enrollment and beneficiary forms, a task that often involves a great deal of keying and re-keying data. They also can spend less time calculating premiums and verifying evidence of insurability.
And, by washing their hands of a significant degree of administrative headaches, these managers ultimately can redirect efforts to other human resource (HR) and benefits-related matters.
"Benefits managers have found they can reduce their costs about 10% when they select an online solution," says Diana Van Blaricom, HR product marketing manager, at St. Paul, Minn.-based Lawson Software. "These solutions enable benefits managers to eliminate data entry as well as do away with massive spreadsheets. Overall, Web-based benefits administration enables benefits managers to refocus: They can reallocate their time and money away from plan administration and toward adopting HR strategies."
Adds John Jackson, vice president, benefits outsourcing for Framingham, Mass.-based Workscape, a provider of Web-based employee benefits and HR-related tools: "HR executives face a multitude of challenges, not the least of which is a mandate to improve service levels while reducing the administrative costs to provide those services. Given the increasing acceptance of Web-based solutions to address processes, such as annual benefits enrollment and compensation planning, HR has clearly realized the impact that technology can have in addressing those challenges."
Will adoption grow?
Most employer groups understand the benefits of automating HR functions and benefits administration. But what's become prevalent-where it was not only two years ago-is the growing number of employees who seek direct control over their group plans.
"We already knew that employers want to eliminate manual processing of paying premiums and overseeing eligibility. What we have seen more of is the desire on the part of employees to access materials and conduct research online," says Bob Reiff, vice president of sales and marketing, employee benefits, at Portland, Ore.-based The Standard Insurance Co. of America. "It's become an expectation of all these parties to have these services offered online."
Employee adoption of Web-based programs is absolutely essential because the effort won't work without their participation. "What many organizations still don't recognize is the critical role that workforce adoption plays in this equation," explains Workscape's Jackson. "To put it simply, if the managers and employees don't use the solution implemented, none of the promised cost and productivity benefits can be realized."
Insurers need to be convinced that adoption will flourish if they are to invest in electronic offerings at the workplace. Many indications point to an increased dependence on Web-based self-service.
A survey by Rochester, N.Y.-based market research and consulting firm Harris Interactive reveals that 109 million Web users in the United States have sought healthcare information online in the past year, up from 97 million in 2001. To reinforce these findings, a survey by human resource consulting firm William M. Mercer states that 19% of all employers-and 29% of those with more than 20,000 workers-indicate they intend to offer a consumer-directed health benefits plan in the near future, a decision that effectively enables employees to control their out-of-pocket expenses by directly managing their packages.
Moreover, the Medicare reform law passed in November may "open the floodgates for the adoption of consumer-directed health plans as well as health savings accounts (HSA)," says Ralph Borzillo, director of e-business, middle market accounts, at Hartford, Conn.-based Aetna Inc., which serves 12 million group insurance customers.
"Employees craft an HSA plan and then manage it-it's their money, so there is a great deal of impetus to spend it wisely. The onus falls on health providers to create more value-added online tools that can support HSAs and enable employees to maximize their investments in these accounts."
These adoption trends create an opportunity for insurers and third-party affiliates to leverage technology toward more robust Web-based benefits administration systems and solutions that cater to employers, employees and brokers.
But pinpointing needs has not been easy. That's because the priorities at the workplace level have been a moving target: The expectations that corporate America had with Web-based employee benefits two years ago are vastly different than the expectations of today.
The Standard, which sells life and disability products, recently increased functionality of its AdminEASE program, a Web-based benefits administration platform serving small to large employer groups.
"From an employee self-service perspective, we've worked to make AdminEASE far more robust than it had been in the past," Reiff says. "Now employees can make all coverage elections during open enrollment, run 'what if' scenarios to view the impact of benefits and coverage changes to their paycheck, modify personal information and benefits elections, view their employee benefits summary and select or change primary care providers."
The adjustments have made a big difference: Employer participation over the past 12 months grew from about 5,500 plan sponsors to 9,000, Reiff adds.
Aetna also implemented strategic adjustments to its electronic benefits solutions based on changing demands in the workplace. For individuals, Aetna offers its Employee Self Service solution, a personalized and secure Web site powered by EZLink, its Web-based benefits administration and online billing solution.
Aetna offers Employee Self Service at no cost to companies with 51 to 3,000 employees. Using Self Service, employees can enroll online for all their Aetna benefits including medical, dental, pharmacy, life, supplemental life, short- and long-term disability and flexible spending accounts. They can also view their personalized home page; review benefits online; run "what if" scenarios to view the impact of benefit and coverage changes to their paycheck; and make all coverage elections during open enrollment online.
While Aetna was increasing self-service functionality for employees, it was also reducing some of the features once offered to benefit managers. "We eliminated some HR-related functions that had been part of the first-generation EZLink program," says Borzillo.
"We're not experts in HR-centric areas such as electronic performance reviews, so we eliminated these features. Many of our plan sponsors have already implemented automated HR solutions, such as PeopleSoft HR, which do a far better job providing these services. We realized it was much more important to emphasize benefits administration features, such as real-time access to reports and online billing."
What are the benefits?
So far, Aetna has 200 plan sponsors using EZLink encompassing 200,000 members nationwide. When its sales force approaches companies about incorporating EZLink into their workflow process, employers accustomed to offering multiple carrier health and benefits plans have to weigh their options.
That's because when employers opt to implement a solution such as EZLink-as well as The Standard's AdminEASE, which are both proprietary programs-they are effectively committing their employee benefits program to that of a single insurer. While they might still offer multiple plans, the health provider offering the electronic solution essentially becomes the preferred plan in the employer network.
Many employers see value in this strategy, and a survey commissioned by Washington, D.C.-based global consulting firm Watson Wyatt Worldwide reinforces this trend.
The survey, "Putting Employees in Charge: A Survey of Employers, Health Care Providers and Health Plans," reveals that "employers are offering more choice when it makes sense-but fewer plans when they can strike a better bargain on their employees' behalf," states Watson Wyatt.
Aetna is stepping up to make it appealing for employers to align with them.
The company, which offers EZLink free to participating employers, has found that a handful of its competitors in the marketplace charge employers a fee to activate a Web-based program, fees that range between $2 and $6 per employee per month, Borzillo states.
That's not acceptable to many employer groups that are attempting to reduce their costs when it comes to employee benefits administration.
"We believe that over the next two years, 90% of all our employer customers will select EZLink as the way to conduct business with us," Borzillo says. "We've had to make a significant number of modifications to make our Web properties (Employee Self Service, EZLink) as appealing as possible."
For example, Aetna modified its billing process. "Originally, our requirements with EZLink were very stringent. Plan sponsors were limited in what they could do," Borzillo explains.
"We now let plan sponsors control the process-they select the pay date and they have more options on the mode of payment, such as EFT or wiring payment to us. And of course, all the added functionality for Employee Self Service is making a big difference with employee adoption."
The Standard also offers AdminEase free to all participating employer groups, marketing the solution as an "e-business platform."
Moreover, The Standard, has found that employers are continuously seeking value-added services that can be implemented with the suite of services. For instance, reporting has become a priority to many employers.
"Online reports provide a great deal of value with the feedback provided," says Kathy Chusid, manager of e-business and strategic services for The Standard. "Benefits managers can use these features for evidence of insurability and to analyze claims information and trends over a period of time. An employer may want to examine how many claims have been filed based on a medical diagnosis or how many claims based on job type," she says.
"We have 26 different reporting templates to offer. In the end, it helps not only the employers, but the brokers understand the business better."
Of course, there are still a large number of employer groups that offer employees a so-called "supermarket" of health plans. Many do this to attract the best employees. But from a workflow standpoint, benefits managers potentially face huge hurdles in communicating with so many insurers from disparate databases.
Web-enabled employee benefits so-lutions such as Sageo, which is offered by Lincolnshire, Ill.-based benefits consultant and provider Hewitt Asso-ciates, enables businesses to seamlessly interact with multiple insurers from one unified data exchange platform.
Employee self-service capabilities are also offered, enabling employees to enroll and maintain their benefits throughout the year.
Workscape, established in 1999 and serving employer groups of 5,000 employees or greater, provides a similar model-an ASP-driven benefits administration system that it hosts internally.
"Employers told us that they don't want to interact with multiple insurers and have a separate data exchange protocol with each one of them," says Workscape's Jackson. "They need an integrated system to capture all these health plans. That way, they can eliminate manual processing, enabling them to concentrate on employee benefits and other HR strategies," he says.
The shifting landscape of employee benefits administration
As employer groups concentrate on human resource and other employee benefits strategies, one of the decisions many are mulling is what their involvement will be in the employee benefits process in the future.
A recent survey by Washington, D.C.-based Watson Wyatt reveals that some employers are talking about getting out of the healthcare game altogether and giving their employees lump sums to go purchase their own care-maybe through Web sites that aggregate individual buying power.
This course of action would have great implications not only on employees and the autonomy it would provide them, but on the broker community, which works with employer groups to pinpoint the right benefits package to fit their needs. If more employers wash their hands of the process-and individuals independently select their coverage-brokers could be squeezed out.
But the Watson Wyatt survey states that employers "want to bring employees into the decision-making process, but are not yet ready to throw them into a healthcare market that is not designed for individual purchasers. For that reason, we still see many employers seeking to make their current arrangements work better."
Good news for brokers
That's good news for brokers who-like benefits managers and employees-are eager to implement Web-based solutions to participate in the sales and fulfillment process. Hartford, Conn.-based benefits provider Aetna Inc. offers a version of its EZLink program with a front-end interface for brokers.
"Brokers have a separate window into EZLink, with their own home page to upload requests for applications to Aetna and transmit data back and forth regarding existing client accounts. So far, we have about 500 brokers who use EZLink for this purpose," says Ralph Borzillo, director of e-business, middle market accounts, for Aetna Inc., which serves 12 million group insurance customers.
Another avenue available to brokers is alignment with third-party providers who establish relationships with both brokers and insurers. Some of these providers-once regarded as aggregators that connected brokers with insurers-have begun to emphasize technology and tools to support brokers over being online marketplaces.
This shift was born of necessity. "Even a good broker often only knows what's going on in his world," says Bernard DiFiori, president and CEO for Dallas-based BenefitMall, which has affiliations with more than 18,000 brokers and a stable of insurer partners. "We've begun to emphasize IT services that put tools in brokers' hands so they can better understand the marketplace-taking raw data and converting it into knowledge to better pinpoint needs, and providing information about legislative and regulatory developments that affect employee benefits."
A few years ago, providers such as BenefitMall might have placed a greater emphasis on the tools that support brokers in the selling phase of the process. Over time, it's become abundantly clear that benefits renewals are indeed a trouble spot for brokers.
"We recently launched an automated renewal piece for brokers," explains DiFiori. "Every month, a number of existing accounts come up for renewal. In any one month, a broker might have to prepare 30 cases for renewal.
"We've automated the renewal process whereby renewals are housed in our database and renewal cases can be managed and tracked. This frees brokers to attend to other pressing matters."
Under BenefitMall's operating policy, brokers use BenefitMall free of charge with BenefitMall's carrier affiliates paying BenefitMall a commission when business is placed.
As brokers are better able to identify benefits packages for employer groups, employees will then be able to take these options, customized to fit their needs, and proceed to select benefits.
An unknown quantity
But there is still a great deal of education that employees need to make Web self-service an exact science. Employees face a challenge in selecting the precise amount of life or disability coverage. They usually select less or too much coverage than they need.
"Disability coverage for many employees falls way down the line in benefits priorities," says Bob Reiff, vice president sales and marketing, employee benefits, Portland, Ore.-based The Standard Insurance Co. of America. "It's really an unknown quantity. We can offer tools that provide statistics about disability coverage. We'll provide information about how the incidence of disability affects home foreclosures."
These research tools are invaluable, but all told Web-based employee benefits solutions, many industry observers agree, still have a lot of heavy lifting to perform before the work is compete.
"When it comes to Web-based employee benefits programs, bottom-line dollars are playing a role in overall adoption levels-both in the workplace and with brokers," says Johnmichael Monteith, who heads the IT unit for Bellvue, Wash.-based Parker, Smith and Feek, a middle-market brokerage firm that provides employee benefits packages to employer groups. "Overall, in looking at this whole proposition, I don't yet think the rubber has hit the road yet."
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