Goal: To reduce benefit administration costs by reducing paper work
Strategy: To market Internet-based benefits administration systems to managed care plans, insurers and employers; replace paper forms with electronic transactions
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Thanks to the range of health benefit options they offer to their employees, most large employers — regardless of the industry they're in — find themselves getting dragged into the publishing business each year at open enrollment time. Provider directories the size of phone books, along with brochures and booklets describing each option, must be updated and distributed, preferably before the information they contain becomes obsolete.
Open enrollment is one of many paper-intensive processes that are routine parts of providing health benefits. Something as simple as adding a dependent to health coverage typically involves submitting a paper form to the human resources department, which sends it to the insurer, which, after several days, notifies the beneficiary that the dependent has been added.
Members of health plans run by Blue Cross and Blue Shield insurers in three Western states are among a growing number of Americans using new tools that take advantage of the Internet to simplify the administration of health benefits. Rocky Mountain Health Care Corp., in Denver, which manages Blues plans in Colorado, New Mexico and Nevada, has contracted with Healtheon Corp. to put benefits information online, in an effort to save time and money for employers and employees.
Using technology developed by Healtheon, employees can log on to a desktop computer, enter a secure password and add a dependent to their health plan with immediate confirmation. The service is being tested as part of a pilot program.
Healtheon focuses on four core areas: benefits enrollment, provider directories, confidential health risk appraisals and secure E-mail among users, plan administrators and eventually physicians.
Palo Alto, Calif.-based Healtheon, along with BeneSphere Administrators of Pleasanton, Calif., and Benefit & Risk Management Services of Sacramento, sees opportunity in using the Internet to streamline benefits administration.
Healtheon was founded by Jim Clark, who won his entrepreneurial bona fides as founder of Silicon Graphics and Netscape Communications. His frequent appearance in the business press gives his latest startup a leg up in attracting at least the attention, and perhaps the business, of large insurers and employers.
A paperless future?
To market its system nationally, Healtheon has formed a strategic partnership with Computer Services Corp., a systems integrator that had $5.4 billion in revenue last year. CSC will provide management consulting and technical support and help to fold Healtheon's software into employers' human resources and payroll systems.
"Healtheon's long-range goal is to revolutionize health care administration," Clark says. "By replacing paper-laden systems with networked, online services, we can reduce costs and help employees make better-informed, more timely decisions about health care."
Other Healtheon clients include Blue Shield of California and Blue Cross and Blue Shield of Massachusetts. The Massachusetts plan is among the most advanced health insurers in the country in its use of online transactions, and already processes more than 70 percent of enrollments electronically through its AccountLink system, which connects to employers. Healtheon plans to extend this link to employees as well.
Health plans that contract with Healtheon pay an upfront licensing fee and a per-member, per-month fee for use of services. Employers that contract with the plans and their employees have free access to them.
BeneSphere positions its online enrollment as one part of a menu of outsourced employee benefits services, which also include flexible benefits administration, spending accounts, administration of benefits under the Consolidated Omnibus Budget Reconciliation Act (COBRA) and consolidated billing and eligibility tracking services. In the last three years, BeneSphere (which was known as Benefits-Plus Administrators until last September) has seen revenue increase from $300,000 to $4.5 million.
"As companies face rapid changes, cost pressures and increasing competition in domestic and world markets, they are more prepared to outsource many of the employment-related functions previously performed in-house," says Tom Sinton, president and CEO of ProBusiness Inc., BeneSphere's parent company. BeneSphere's clients include Stanford University and high-tech companies 3Com, Intuit and Oracle.
Benefit & Risk Management Services is a four-year-old firm that has created software, called Best Online, to help manage eligibility information for employers. The company's clients include the California School Employees' Association and the Lodi United School District, also in California. Twenty-five health plans in the state use Benefits & Risk's software to process some billing and eligibility information. The software helps employers update and transfer information electronically among multiple HMOs and insurance carriers.
Big players, too
The online benefits business is not solely the province of relatively small companies. IBM is developing a customized online network it calls a "Health Village," now being tested in program with Allina Health System of Minneapolis. More ambitious than the other three entries, Health Village would provide answers to general health questions along with information about health plan options and benefits.
By clicking on the picture of a membership services building, users could enroll in a health plan, verify coverage, check on a claim, schedule appointments, enroll in classes and seminars, or review data on quality, service and cost of participants in a plan's provider network.
The electronic village also includes a library for researching information on health topics; a wellness center with information on fitness, nutrition and health assessment; a Time-Life Medical Center, containing all of the consumer health care information from that company's series of books and videos; and a government building, with updates on local, state and national health initiatives, health alerts and immunization programs.
The security issue
All the new online benefits vendors assure potential clients that any information exchanged over the Internet will be secure. Healtheon touts its use of "state-of-the-art, industrial-strength security technology" that protects the privacy and integrity of all information that is gathered and exchanged. The company's web site includes a white paper on information security.
The issue of security is less a technical challenge than a matter of building users' familiarity with and confidence in using computers in new ways. Winning that battle will go a long way toward determining the fate of the new online benefits administrators.