February 10, 2004

Case Studies: Benefits Admin

HR staffers now have the time to invest in areas that add business value and partner with line management to maximize productivity.

By Bruce Shutan

When PacifiCare Health Systems acquired a rival in 1997 that had more employees than in its own workforce, the growth spurt complicated benefits administration needs for the Cypress, Calif.-based managed care organization (MCO).

Disparate technology platforms from internal systems had turned benefits into a significant cost center following the acquisition of FHP, whose roughly 7,000 employees dwarfed PacifiCare's head count by about 2,000. The diverse employee population, later pared to about 7,600 in the wake of a corporate restructuring and centralization effort, is spread across eight states and Guam.

Nimble services

Pam Puetz, director of PacifiCare's employee service center, needed a service provider nimble enough to roll with the changes. "I tend to gravitate toward smaller vendors who we expect to move quickly enough to meet our organizational needs," she says.

With a seamless and comprehensive suite of technology services to manage all aspects of benefits administration from open enrollment to year-round premium and eligibility management CompanyX fit the bill and has been delivering solid results to PacifiCare for more than five years.

"They're very cost-effective and have always been willing to customize services for us," according to Puetz. One example: administering an in-house tuition-reimbursement program, which CompanyX had never done before.

Benefits enrollment is another area that evolved over the course of time based on PacifiCare's needs. After testing the waters with a multimedia enrollment that integrated both Web and voice-activated interactive voice response (IVR) capabilities for the 2002 plan involving about 100 mostly HR department staffers, CompanyX rolled out the arrangement to its entire workforce during the next two years and even added a monthly enrollment for new hires.

CompanyX's scalable systems enable the service provider to offer a total benefits administration outsourcing solution. "Beyond simplifying benefit enrollment, we do all of the hard post-enrollment work. We collect and scrub enrollment information, download it into our billing and eligibility system, send out file feeds to all appropriate carriers and then back to the company's HRMS without the client lifting a finger," notes Brian Walker, vice president of sales and marketing for CompanyX. "If someone is working with multiple health plans and carriers, on two different systems for the Web and IVR, the eligibility invariably will be incorrect and they'll have to go back and scrub the data. Since consolidating and reconciling premium billing and eligibility management is CompanyX's core competency, we have figured out how to effectively solve the data accuracy challenge. "

Expanded reach

Online capabilities were integrated with a paper-based system and IVR technology so that employees could select the arrangement with which they were most comfortable an approach that many first-time candidates for a Web-enabled application favor as a bridge to wider acceptance of technology. It's also worth noting that the process included bilingual support for Spanish-speaking employees. "We made sure to cover all the bases," Walker says.

Although many benefit managers cringe at the thought of IVR's push-button approach on a telephone keypad, CompanyX is able to assure clients that its multimedia package includes voice-activation technology a superior and easier-to-use system that adds a comfort level for employees who'd rather not fill out their choices online or on paper.

In addition, CompanyX developed a unique self-service application that enables PacifiCare employees to review their pay stubs online three days ahead of payday and as far back as seven pay periods. That means errors or omissions can be corrected before paychecks are even cut. Another key component enables employees to update their personal, family or work information.

PacifiCare is poised to use the same Web tool to roll out a service that provides line managers with electronic versions of their biweekly employee reports. "Right now, we're spending lots of time and money running hard-copy reports every two weeks that show all employee data by manager, which is a very labor-intensive effort," Puetz says, noting how it will free up staff for more pressing tasks.

The outcome

Puetz credits CompanyX's innovative, year-round life-event management capabilities with helping consolidate monthly premium billing and benefits eligibility data, as well as significantly enhancing benefits administration accuracy, process timeliness and employee service.

Such efforts also have kept PacifiCare's HR head count in check. "We have seven people in benefits now, and we'd need at least double that to handle these outsourced services," Puetz reports. An added bonus is that CompanyX staffs the call-center function so that Puetz and her staffers needn't worry about fielding employee inquiries.

The operational efficiency that CompanyX delivers allows PacifiCare's HR department to focus on strategic areas such as new-benefits development, vendor management, performance management, metrics, scorecards and service-contract negotiations. HR staffers now have the time to invest in areas that add business value and partner with line management to maximize productivity.

CompanyX's ability to rapidly deliver client-centric benefit administration solutions has reinforced Puetz's decision to hire such a nimble player in the benefits-outsourcing arena.

Posted by Craig at February 10, 2004 02:18 PM