Humana needed to replace its outdated billing system that relied mostly on paper and snail mail. Today Humana offers its employer-group customers an easy-to-use e-billing alternative that's available in real-time on the Internet.Back in 1999, Humana Inc. began to implement a wide-ranging e-business strategy that would include customer self-service features across its spectrum of business lines.

As part of that effort, the Louisville, Ky.-based health plan updated its core billing processes. Humana converted its old mainframe system to a relational database management architecture in a client/server environment. It also implemented a Windows operating system with a graphical user interface-all part of an effort to support future Web-deployed capabilities.

After the $11.3 billion healthcare insurer modernized its core IT system, it still had an antiquated electronic bill presentment and payment system (EBPP).

Employer groups could only look at their monthly invoices on a computer screen. Benefits administrators couldn't make any deletions, additions or corrections to the invoice.

"The only view was a static snapshot of an employer's invoice," explains Tony Frerman, systems manager for premium billing in the information technology department of Humana.

"Employers couldn't do anything to that bill; they could only look at it online." Employer benefits' administrators couldn't add or terminate employees' coverage, they couldn't sort the bill, and they couldn't perform a search. They had to scroll through 1,000 or 2,000 employee names just to verify if new company employees had healthcare coverage."

Feeling the heat

Large and small employer groups alike began asking Humana for a Web-enabled electronic bill presentment and payment system. And Humana felt the pressure to provide modern-day e-billing for its largest source of revenue-employer groups.

"They wanted online payment, an easier way to make terminations (in their group healthcare coverage plans) and they wanted ways to filter and sort vast amounts of healthcare information," recalls Frerman.

"In addition, employers wanted a invoice that could be downloaded so they could import the file into an Excel spreadsheet and be able to perform various kinds of analysis," he explains.

In 2001, Humana began a search for vendors that could provide e-billing software and meet the demands of its largest customers.

Humana ultimately found the e-billing software solution that it sought from edocs Inc. of Natick, Mass. Humana is using two modules within edocs' eaSuite: eaDirect and eaPay. The first provides e-billing applications. The second provides payment warehousing, scheduling, and multiple online payment options for the health insurer's customers.

Humana's IT architecture already had Web-enhanced self-service features, so it didn't require those features that are already embedded in the edocs' software. The insurer started pilot testing edocs' applications on March 1, 2002, and went into production with the two applications two months later.

Humana had asked edocs Inc. for specific bells and whistles. As a result, the software firm created a custom sorting and filtering feature for its e-billing applications.

Another special feature enables employer groups to enter terminations for employees who have left the company and obtain billing credits from Humana.

"It's a nice feature for benefits administrators to be able to terminate employees as they look at an invoice on their computer screen with just the click of a radio button," Frerman notes.

E-billing benefits

When employers enter terminations, they can immediately see a corrected invoice online that accurately reflects the number of active members taking part in the employer's healthcare plan.

"Employers are a lot more anxious to get a retroactive termination into the system than they are to get a retroactive addition," Frerman says.

In the past, "employer groups typically asked health insurance companies to correct the bill before they would pay," explains Vishal Daga, industry solution executive for healthcare at edocs Inc.

Either that, or the employers would make corrections right on a paper copy of the bill because nobody wants to pay more than they owe, according to Daga. "For the healthcare insurer, any one of those scenarios creates a huge reconciliation nightmare. Payments are delayed to the health provider or you get payments coming in that your billing department can't reconcile," explains Daga.

Employer-group customers enrolled in Humana's e-billing program now receive their monthly bill online. It is displayed on a computer screen rather than arriving several days later via snail mail. If the billing date is June 15, the employer's invoice will be available online on June 16.

"By presenting information to the customer online instead of on paper and giving them the abilities to sort, store, analyze, and most importantly, adjust billings themselves, carriers can eliminate unnecessary work, expense, and frustration for themselves and their customers," notes Matthew Josefowicz, lead author of a recent report, titled "E-Billing for Group Insurers," by Boston-based Celent Communications Inc.

"Carriers who have embraced group e-billing have seen reductions in printing/mailing, reconciliation/processing and customer service costs," he adds.

Humana's customers now are able to make real-time changes in their invoice online, and arrange for electronic funds transfer at the same time without the back-and-forth haggling of the past.

Since Humana implemented its new premium billing system and the edocs e-billing applications, the healthcare carrier has seen a significant drop in retroactive premium adjustments. "This ends up making our monthly financial numbers a lot more stable because now we are making dramatically fewer retroactive adjustments," Frerman explains.

As more employers begin using the e-billing applications, the premium billing system will have a greater and greater impact, he adds. Previously, employers received an invoice in the mail with a coupon on the bottom, which they stuffed into an envelope and sent along with a check to a lock-box.

"Even for small companies with just 20 employees it was a pain for them to make terminations. Sometimes they'd scratch through the names of people terminated and sometimes they'd make errors and scratched off the wrong name," Frerman says.

"This represents a huge streamlining for employer groups and is something that competitively sets us apart," he notes. Customers using the Web-enhanced applications are served faster. With the new electronic bill presentment and payment system, employers can view the status of claims live online and with e-billing, they can "touch" their invoice very soon after the billing date.

Four years ago, Humana rewrote the software for its premium billing system that had used a so-called "green screen." The healthcare insurer also changed its information storage and access method from a legacy-based virtual storage access method (VSAM) to a storage system based on Database 2 tables.

Humana also implemented a Windows operating system with a graphical user interface (GUI). These changes to its information technology platform had to be in place before the e-billing applications from edocs could be successfully added.

"Today, it's a whole lot easier for our employer groups and customer service representatives to look at a Windows-based computer screen versus looking at a green screen," points out Frerman. Also, customer service representatives now can view the same invoice as a benefits administrator in real time, online.

Automation successes

Although Humana says it doesn't know the adoption rate or the exact number of employer groups using the Web-enabled e-billing system, it is growing. In addition, the carrier says it is hard to break out the exact benefits of the edocs software from Humana's e-business and self-service strategies.

But the company can talk about its overall Web-enabled self-service initiatives (of which the e-billing is a part) and the major changes that have take place. In September 2001, customer service representatives answered two-thirds of all inbound calls and one-third were handled over the Web or through interactive voice.

By April 2002, inbound calls answered by customer service representatives equaled those that were handled on the Web and through interactive voice response. As of January 2003, the percentage of calls answered by customer service representatives had fallen to 39% and the Web and interactive voice response had grown to 61%.

As a result of its overall e-business strategy and the re-engineering of information technology processes, Humana has dramatically reduced customer service staffing levels.

Humana has just completed the consolidation of six regional customer service centers into three-in Louisville, Ky., Green Bay, Wis., and Cincinnati-last month.

Brian S. Moskal is a Chicago-based business and financial writer.

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