Health insurance: Online options take root

By Judith Lamont

The healthcare industry has followed the path of many businesses in using the Internet, first creating static Web sites geared toward marketing, then providing customers with information such as searchable databases of providers, and finally graduating to transactional options such as online enrollment and purchase of policies.

Several forms of online health insurance have emerged in the past few years. One is online brokerages--Web sites on which potential customers can find health plans from different companies. A second type is direct sale of plans to consumers by healthcare insurance companies. A third option is reflected in Web sites geared toward brokers, which provide the brokers with plan information from the healthcare insurance companies that they support.

The online offerings are generally for individuals or small businesses. Those two categories have proven to be a good match for online products because they have been underserved by traditional channels and are less complex than large group plans. Moreover, the quick turnaround for activating a plan is well suited to those who might need temporary insurance while unemployed.

All forms of online health insurance need to incorporate information about the healthcare plans into the functionality of the site. The business rules that determine plan selection and eligibility must also incorporate state and federal regulations. Thus, a knowledge extraction and representation process is at the heart of the development of online insurance Web sites.

Online health insurance brokerages include eHealthInsurance, Digital Insurance, and HealthInsurance.com. Visitors to those sites typically provide some basic census information about their geographic location, age and number of family members, which is used to determine which plans might be appropriate. From there, the customer could pursue the purchase of a plan by completing an application online, or print one out and mail it. Some of the brokers can complete the transaction online, including purchase, while others need a document with a written signature, often referred to in the industry as a “wet signature.” Recent changes in federal laws relating to digital signature have legitimized online signatures, but state laws and carrier acceptance vary in their level of restrictiveness.

In order to put the complex purchase process online, a considerable amount of information must be distilled from each healthcare insurance company. The software infrastructure that supports DigitalInsurance.com is provided by Healthaxis (healthaxis.com). Rusty Bealer, director of IT at Healthaxis, highlights two main requirements for launching an online offering.

“The first one is to understand how a healthcare insurance company pulls all the customer information together to arrive at a price,” he says. That process is facilitated by the experience Healthaxis has in the healthcare industry. “One thing that’s a given is that no two carriers do things the same way,” Bealer adds. “The Healthaxis tools allow us to quickly configure the majority of a carrier’s plans, and provide the flexibility to easily implement specific business rules and logic for each carrier.”

The second requirement is the development of a form that the consumer uses to fill out either a preliminary or full application. “When someone is online there is a frustration threshold, and if the process takes too long they will bail out,” he says. The form needs to guide them through the process and keep their attention. In addition, each state has different mandates for what must be included; the form also needs to match the one approved by the state’s insurance department.

What happens after the application is submitted depends on the health insurance carrier. If the carrier can deliver a certificate and electronic identification card, the entire process can be paperless. Healthaxis uses BizTalk from Microsoft to facilitate the paperless process, which can create XML data or any other data format a carrier requires.

Blue Cross & Blue Shield United of Wisconsin, (BCBSUW) was one of the first health insurance carriers to offer policies online through its own Web site. Its early entrance was no accident; Cathy Harvey, senior VP of marketing at Cobalt Corporation , the parent company for BCBS Wisconsin, spotted an opportunity and wanted BCBS to be the first to market in Wisconsin. Offering small group and individual policies, BCBS Wisconsin has been live for just a year, but online sales already represent 30% of individual sales. Harvey observes that this initiative has tapped into a new market. For one thing, with an average age of 33, online customers are about 10 years younger than those who purchase through traditional channels.

Ease of use was a primary goal of the system. Customers can get a rate after clicking through just a few screens that present basic questions. A prospective customer who is interested in applying for a policy after seeing a preliminary rate can do so online or download an application and mail it in. In-house staff at BCBSUW can assist applicants in completing online sales. The policy can be underwritten within 24 hours. At that point, a final rate is given for the policy, which the customer can then accept or decline.

According to Harvey, one of the key characteristics of the site is constant change. Changes result from new offerings of healthcare products, privacy requirements and the inclusion of additional types of security certification. Enhancements for usability are also ongoing. For example, the small group portion of the site was redesigned to achieve a better response rate.

The BCBSUW online sales capability is powered by ChannelPoint, which specializes in insurance e-business. Now providing a hosted service to about 40 carriers, the company offers two products, one for small group health insurance and the other for individual health insurance.

Tim Farnan, VP of health markets at ChannelPoint, notes that bringing a sales solution online can improve enterprise processes. “The companies end up rethinking how they are doing business, handling customers and collecting information,” says Farnan.

When customers enter data online, it is sent in XML format to the carriers. “Standards are coming about slowly,” Farnan says. “We work with the carriers to develop whatever schema they need to store the data in their legacy systems.”

Security is another key part of the infrastructure. Prior to launch, the system underwent a rigorous security audit, and several modifications were made at the recommendation of the advising firm. Also, credit card information is not stored with ChannelPoint but is sent directly to the carrier.

Blue Cross and Blue Shield of Florida also offers healthcare insurance products online but uses a different model than its Wisconsin counterpart. BCBS Florida had already outsourced its call center operation to Connextions.Net—which provides a variety of services including systems integration, contact centers and fulfillment--and wanted to develop and integrate an online sales channel into its business. Connextions.Net was familiar with the company’s culture and processes, and proposed a solution that leveraged a new implementation of Siebel’s (siebel.com) CRM platform and an Aspect Communications Customer Access Portal, which routes multichannel customer contacts.

The goal was to provide a customer with the same purchase experience whether it occurred directly through the Web site, the call center or field sales agents. Customers are guided to complete the sales process online, but if they need help they can choose a live chat or call a customer service representative (all of whom are licensed insurance agents). The CSR can see a contact history and in a collaborative manner, fill in information for the customer policy on the screen.

Developing the system was a complex undertaking because of the need to incorporate customer data, product information, state and federal regulations, and security. “The biggest challenge, though, is not the technology,” says Peter Kasavov, president and CEO of Connextions.Net, “but defining the online sales process and facilitating multidepartment agreement on the proposed solutions.” (Completing those steps requires a thorough understanding of both process and content.)

He also points out that reviewing business processes can provide significant benefits. “Mapping their processes allows the companies to streamline their business and change ways of doing things that are habit rather than deliberate decisions.” In addition, outsourcing the contact function allows the organization to focus on its core competency of managing healthcare providers rather than having to develop expertise in e-business.

Some healthcare insurance companies have chosen not to use online brokerages or direct branded sales, but instead to develop Web sites for their brokers. Such sites give brokers the tools they need to get quick quotes and other product information for prospective customers. Both Healthaxis and ChannelPoint offer brokerage products, and Connextions.Net is developing a version of the BCBSFL Web site tailored to field sales force needs.

A major benefit of online sites for brokers is that they provide a single, current source of rate information. Previously, brokers would receive a CD containing such information, but the disc could quickly become outdated. In addition, brokers can access such back-end information as their commission statements and the status of policies as they move through the approval process.

Judith Lamont is a research analyst with Zentek Corp., e-mail jlamont@sprintmail.com.