Ceridian poses unique processing challenge

Today, Aug 2002

remittance process

case study

SERVING MORE THAN 19 MILLION U.S. EMPLOYEES OR 18 PERCENT OF THE U.S. WORKFORCE, CERIDIAN IS THE NATION'S LARGEST COBRA COMPLIANCE ADMINISTRATOR.

Automating remittance processing at Ceridian proved to be challenging due to the unique needs imposed on them by compliance regulations. The government-based COBRA program places stringent requirements on its remittance processing system.

UNIQUE PROCESSING REQUIREMENTS

The remittance processing differences begin with COBRAs "grace date", by which payments must be postmarked. If payments are not mailed by this date, COBRA continuation coverage is canceled without the opportunity to renew. This makes the envelope a critical piece in the remittance process.

Secondly, because COBRA will not accept partial payments, accommodations must be made for transactions that are put on hold. "Dealing with hold items is atypical for a remittance shop." according to Colleen O'Reilly, director of operational accounting for Ceridian.

Finally, in order to verify that payments meet COBRA qualifications, payment information must be sent to the COBRA host system for validation after the first pass. The file is then returned to remittance processing where a second pass is run to separate accepted checks that quality for encoding and remittance.

Until recently, automating the labor-intensive process was a unique challenge for Ceridian, and a solution had not been identified that was capable of meeting these specific remittance requirements. Consequently, Ceridian employed full and parttime employees to manually process the 1.8 million checks received annually from its 42,000 COBRA clients. The check, stub and envelope were routinely stapled together and then passed to individuals for manual, double entry of the data.

Next, the information was routed through the Ceridian system for validation against the participant's record to ensure the postmark and amount met COBRA requirements. Those that did were manually pulled for deposit; others were separated for holding or rejection. The cumbersome and time-consuming process made meeting daily balancing deadlines a constant challenge.

Conceding that the remittance system had "complex requirements," O'Reilly's team at Ceridian selected the multi-platform AMOS I COMPARE remittance processing solution working in conjunction with the NCR 7780 transport. The system captures images of the envelope, stub and check.

"While other transports frequently jammed, the NCR 7780 was able to send the envelope down the track," relates Mark Sferlazza, director of quality and productivity for Ceridian. "The allimportant date is now tied to the stub and check through imaging, as opposed to stapling three pieces of paper together."

However, because metered mail is often stamped in red ink, then postmarked again in black by the Post Office, the date can be difficult to read. The AMOS solution addressed this issue by building grayscale into the NCR machine. This provided better definition of the imaged postmark, making it easier for an operator to read and key.

The flexibility of the solution enables customization to extend to workflow. Queries are now made to the Ceridian COBRA computer system, then run through validation routines, which are integrated into the AMOS application. Approved checks are automatically separated in the second pass. Those that don't meet COBRA requirements are put on hold or refused and sorted out accordingly. The system handles these hold items, encoding and remitting the checks once they meet qualifications for acceptance.

"Our turnaround time has improved dramatically," said O'Reilly. "We are saving approximately 62% in yearly manual labor costs."

AUTOMATION MAKES THE DIFFERENCE

Today, Ceridian is able to handle the growing number of COBRA participant remittances with less than half the number of employees and has trimmed the time required for check processing by two full days. That's significant in light of the fact that the number of transactions processed on peak days can at times reach 50,000.

According to O'Reilly, same-day deposits have improved the "float" substantially, and have increased the annual interest. Based on these savings, Ceridian expects to see a return on investment of less than one year.

ARCHIVE AND RETRIEVAL IMAGING BENEFITS

Valuable resources have also been saved in the area of archive and retrieval. The AMOS ArchiView solution interfaces with OTG Mackin Imaging Systems for long-term storage and instantaneous access by customer service representatives to information on the desktop. Prior to imaging, response to participant inquiries was often delayed, as it required a one-day turnaround to pull paper out of physical archive. Now, information on payments received and processed, can be queried real-time and is at the fingertips of CSRs.

ENHANCING WORKFLOW MANAGEMENT

The AMOS VIP 2001 solution, a production and productivity optimizer, is scheduled for installation at Ceridian this year. Supervisors can use the Internet tool to view sites and machines real-time so as to optimize resources and make better management decisions. "VIP will provide us a sophisticated manner in which to gather statistical and performance information," said O'Reilly. "We expect to monitor individual and group performance to find opportunities for improvement of workflow management."