Save Money: Manage Health Benefits Online - Small, Medium, Large

Workforce, Nov, 2001 by Sarah Fister Gale

Most benefits administrators spend at least half their time trying to crawl out from under mountains of paperwork. These HR professionals should be focusing on strategic planning, but are instead trapped by unpaid claims, inaccurate invoices, and illegible enrollment forms. Dealing with paperwork consumes as much as 80 percent of most HR departments' time, reports Forrester Research, a technology research firm located in Cambridge, Massachusetts. Paper-based processes are inefficient and error-ridden, and add considerably to the already high price of health care. Administration costs consume more than 20 cents of every dollar spent on health care (a higher percent than in any other industry), according to Forrester's August 2000 report "Health Claims' New Intermediaries." Claims processing is considered the primary culprit.

Benefits administrators have had enough. They are clamoring for a paperless way to manage their health-care plans, and providers are reluctantly complying by moving at least some of their processes online.

"Bringing claims-related transactions online is a priority for insurers," says Douglas Johnston, author of the Forrester report. His research shows that 60 percent of insurers are using the Web for some claims-related transactions, while 90 percent say processing is a very or extremely important element of their e-commerce strategy. Increased operational efficiency and cost savings--not customer service--were cited as the most important reasons for the move.

The early benefits processes to hit the Web are administrative tasks, such as managing open enrollment, finding a provider, and checking the status of a claim. Some larger providers, including Aetna U.S. Healthcare and Humana, are also adding interactive member tools that let customers review plan descriptions, get contact information, use health-risk-assessment tools, and comparison shop.

For HR professionals, reductions in cycle time, paperwork, and errors are the most attractive aspect of Web-based benefits tools. It allows them to shift their focus to strategic planning and other HR tasks more critical to business goals, says Mindy Kairey, e-business leader of the health-care management practice for Hewitt Associates LLC, an HR consulting firm in Lincolnshire, Illinois. The integration and availability of data is what appeals to employees, who are eager to take a more active role in choosing and overseeing their health-plan options. "The Web puts benefits information right in the hands of the people who need it," Kairey says. Employees want to track their claims, review their current coverage levels, and compare their options. "They want to take responsibility for their health plans."

Fortune 1000 companies are the first to benefit from these Web-based options. They spend the most money and have the greatest amount of paperwork, so it's crucial that they find ways to streamline health-care administration, she says. Some companies are building custom tools in-house; others are using their influence with providers to demand changes in their services.

Smaller companies will have to wait a few years for these options, because they have so little clout with providers, she adds. "It's not as feasible for smaller companies to ask their providers to put their plans online, and they can't afford to build their own tools in-house."

Regardless of a company's size, however, the true impact of the Web on health care is still several years away, says Bradford Holmes, a Forrester Research analyst. Today only 36 percent of insurers give members the ability to check claim status and look up providers online, even though these are the most highly sought-after benefits-administration tools. "It will be three to five years before these services are common," Holmes says. "And 10 years before the doctors, providers, employers, and employees are all linked into a single streamlined system for health-care management."

But it will happen eventually, Kairey says. It's not a fad. "It's the way it will be."

When Mary Theresa Fosko took over as HR administrator for Cabrini College two years ago, she was surprised to find that all of the employees' health-plan information was stored on paper. "Everything from benefits enrollment to disability insurance was done on spreadsheets."

As a result, reporting was nearly impossible, and she spent hours every day trying to manage all the data. After only two months, Fosko gave up and began searching for a way to streamline the process. "There had to be an easier way," she says.

She convinced the college to move the data to the Web through an electronic human resources service. The hosted application gathered Cabrini employee information in a centralized database, which it manages from its Web site. Fosko and employees access the information via a browser and pass code.

Fosko began the transition by moving parts of the enrollment process to the Web. With the old system, employees came to her office to go through the benefits books, then she helped them fill out the paperwork. "That's all been eliminated," she says. Employees now use a self-serve option to choose their benefits online. Their custom Web site links to the benefits packages that the organization offers, allowing employees to research plans on their own time, not Fosko's. Once they've chosen a plan from one of the two providers, they download a form that can be completed online or by hand, and deliver it to Fosko. She signs off on it and mails it to the insurance company.