Technology premiums worth the risk

Insurance industry CTOs are taking advantage of the opportunities offered by Web services to streamline services for customers and increase workflow efficiency. These executives see the benefits in the automation and integration of data sources around XML-related standards bodies, such as the Association for Cooperative Operations Research and Development (ACORD ), a nonprofit standards developer, and HIPAA (Health Insurance Portability and Accountability Act), enacted in 1996.

The insurance industry has moved rapidly to transform its technology from mainframe-based, batch-processing, legacy systems to one emphasizing integration and automation, often using a Web services model, says Shaw Lively, a research manager in the e-finance group at Framingham, Mass.-based IDC. "There is a knitting together of far-flung enterprises -- in claims, processing, status checks -- that link the folks in the field and allow them to log in and access information," Lively says. "This is Web-enabling claims by allowing end-to-end claim processing."

For example, Walt Culbertson, CTO of Jacksonville, Fla.-based Availity LLC, a subsidiary of Blue Cross and Blue Shield of Florida and Humana Inc. of Louisville, Ky., is using a Web services model to automatically connect patients, insurance agents, and others participating in health insurance formation. IT executives at The Hartford Financial Services Group Inc. in Hartford, Conn., and the Heffernan Group in Walnut Creek, Calif., are also using XML-based models to bring parties together in a seamless way.

Health care needs fulfillment

Describing the transition to integrated Web-based services and transactions that tap into legacy systems, Availty's Culbertson is in effect outlining a cutting-edge Web services model. "We are allowing workflow to connect to our back-end legacy systems that respond in real time," says the CTO.

"We believe this new Web services model is the direction health care insurance is headed in," Culbertson says. "It is an open system that allows information to be shared among all the stakeholders in health care insurance rather than having it locked up in a vault." In effect, all parties have access to the formation of a health insurance policy, he adds.

An important element in the integration and open access of health insurance data is HIPAA, the government initiative that establishes new standards for data content, codes, and formats for submitting electronic claims and other administrative health care transactions.

Blue Cross and Blue Shield of Florida and Humana launched Availity last year to respond to the increasingly complicated demands of health insurance processing, Culbertson says. Availity acts as a clearinghouse for information from disparate health insurance parties using an integration platform from Vitria.

Vitria's platform processes administrative transactions federally regulated by HIPAA, which requires companies to perform business-to-business connectivity, EDI processing, EAI, and business process management across multiple enterprise systems. The platform will also help Availity manage transactions, security, and validation requirements for health care payers, providers, clearinghouses, and government agencies in time for the mandated October 2003 deadline set for HIPAA compliance.

Culbertson says Availity's portal connects health sector professionals with multiple payers through an online forum that transmits the information and documentation associated with health care transactions.

The process has only begun, says the CTO, as he anticipates more and more streamlined integration models for applications as the return on investment of such models becomes apparent. "The ROI is there for full-time employees who have historically had to spend time dealing with claims status and eligibility checks," Culbertson says. "Plus, there are savings in security and pricing considerations and in the efficiencies involved for the patients."

Opening up systems

Other insurance companies, including property and casualty insurers, are following their own paths to integrate information from their customers and partners, although some are deploying XML as a common thread and adhering to the standards developed by the ACORD organization. IT leaders at both The Hartford and the Heffernan Group are integrating systems following ACORD standards, they say.

More than 30 years old, ACORD initially was developed to create standard forms to enable information-sharing in the industry, and in the 1980s began developing standards for electronic data-sharing. Since the mid-1990s, ACORD has added data integration standards and has championed the definition of XML-based standards in the industry. ACORD now has support from more than 1,000 insurance carriers and groups and 25,000 agencies.

The Hartford, for one, uses BEA's WebLogic platform to manage transactions and follows ACORD's XML-based standards. The Hartford is aggressive in an industry that has been implementing Web services as fast as any other sector, says Hugh Anderson, assistant director of e-business technology solutions at the large insurance company.

"We feel like we are one of the leaders in the area of ACORD/XML use," Anderson says. "Clearly, we've been a leader in defining these standards and building the front-end systems into the back end, as well as allowing these standards to drive transactions processes, such as claims and billing and [issuing] personal and business issues [policies]."

"We can bring these transactions right into our environment, whether it is a request for a quote or a request for a claim," Anderson says. "With XML, we are able to allow agents to generate transactions right out of their systems and send it to The Hartford, where we can translate them so that the back-end system can respond, and the agent never has to stop using his system. It's seamless, 'once and done,' single-entry workflow, using the Internet as the transport mechanism."

John Petersen, IT director of the Heffernan Group, says his company uses University Park, Ill.-based Applied Systems, a longtime insurance-sector application integration provider. "[The application] allows the customer to access their claims," Petersen says. "We are in the process right now of deciding what we are going to let [users] see to give them a good picture of what's going on [with their insurance status]."

Applied Systems Inc., following Acord's XML-based standards, also manages agent workflow, messaging, and access to applications through the company's portal, Peterson says. The platform can automate the insurance transaction at every level of the distribution system.

Although the Heffernan Group has used Applied Systems platform for more than five years, Petersen says that in the last year rapid changes in Web services and data integration have led to a series of new offerings from the vendor.

"We're seeing major changes coming out in just the last year," he says, citing as an example Applied Systems' Inscope interface and platform, which allows the company to provide a range of information to their customers and which lets the customers to perform tasks such as verify coverage; fax, email and print certificates; and review payment and claim status. It also offers a security layer, where agents assign a separate login and password to each user that will access his or her system.

Despite the blessings of Web services integration Applied Systems provides Heffernan, there is still much work to be done by inhouse IT staff, Anderson says.

"For customer service representatives and staff, the system allows them to be more efficient. They can handle more client information and more business-related activities," Anderson says. "But it's a little more work for us because we have to continue to worry about security, preventive maintenance, and disaster recovery."

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