Up to 9 million employees may have a coverage issue

Over the past two years, as we have scaled our enrollment and member-management solution, we’ve been surprised less by the data problems we have seen than by the resignation among various constituencies that such problems are inevitable and unsolvable. As an industry, we’ve institutionalized issues that undermine the protection of covered members, not to mention the great experiences that we’ve become accustomed to in other industries.

The data problems we see include incorrect identifiers (e.g. Social Security numbers), birth dates, effective dates, classes, divisions, addresses, phone numbers and more. Some of these are less critical than others, but many create coverage issues. 

How broad are these issues? Overall, we see existing problems with approximately 10% of subscribers we migrate on to the Ideon middleware platform. Importantly, we regularly see coverage issues with 8% of the lives we migrate onto the Ideon platform. The members in this 8% are either missing coverage for which they enrolled, or are still enrolled when they should have been “termed.”  Fifty-six percent of all groups we migrate on to Ideon have pre-existing, critical (coverage) errors. And substantially all large groups have such errors.

To put this into perspective: 110 million employees in the U.S. have employer sponsored health insurance and employee benefits. So if our experience holds true to the broader base, almost 9 million employees could have a coverage issue. Are we surprised? Doesn’t matter. What’s more important is that we pull on this thread to see the impacts across our ecosystem.

Let’s start with the employee, or member. Stories of arriving at the doctor only to find the coverage for yourself, or your child, is not in place are rampant. Although bad enough, this can be solved (albeit retroactively). But what about someone who dies and wasn’t properly enrolled in life insurance? Imagine the impact on the family. These are not trivial issues.

So now let’s look to the employer. Both sides of the coverage coin adversely affect the employer. If an employee is not properly terminated, the employer will continue to pay for their  coverage. Worse are instances when an employee is not covered and should be. Nothing undermines employee benefits goodwill like coverage issues. Imagine a new employee whose spouse visits the doctor with a sick child only to discover the child is not covered. 

Brokers and consultants are likewise not immune from the impact of coverage issues. Their responsibility often extends to open enrollment and making sure coverage is correct. This is exacerbated when they are the ones actually responsible for entering enrollment data into a broker portal or enrollment platform. The broker/consultant is often the first call from an angry HR manager. At the same time, incomplete enrollments may mean lower commissions. In a recent migration of one BenAdmin we found data issues preventing coverage that aggregated  more than $1 million in premium. While certainly not all with one broker, commissions on this business were absent because of these data issues.

Which brings us to the carrier. Many put the onus on insurers to fix all issues, but they simply cannot do so without the help and cooperation of all the above entities. Unfortunately, and in the absence of solving the problem, carriers have been forced to allocate substantial resources, and develop systems and processes (think member operations and customer support), to deal with the symptoms of these issues: the unhappy member, employer and/or brokers. And as noted above, the premium leakage affecting the carriers can be substantial.

The frustrating aspect of all of this is that these problems are solvable—but it takes a village.

A role for every stakeholder

Fixing our industry’s data problems will require contribution from many stakeholders. No single party can solve these issues alone. The good news is that the benefits of resolving these issues accrue to all. 

Carriers: The most important step toward resolving these issues and keeping the data clean over time is for carriers to expose group structures and censuses through some kind of repeatable digital process. With this data, the same data from the employer, through their BenAdmin, can be compared and differences surfaced. Today, very few carriers make it easy to access these data on a regular basis. This is one reason we at Ideon have written that the most important API a carrier should develop is a census API.

Middleware: The role of middleware encompasses far more than connecting carriers, BenAdmins, and other industry participants. Middleware, such as Ideon, also plays a key role in cleaning up data discrepancies and keeping employee benefit data accurate. Middleware’s role is to 1) identify discrepancies between the various parties; and 2) normalize, structure, and deliver those errors to the appropriate party to adjudicate. While the first role is obvious, the second is less so. The reality today is that each carrier describes, and delivers, the same error differently. Some may use plain language “the social security number is invalid” while others may use a code to describe that error. Many of these errors are sent by email, while some carriers send these errors in files, and a very few through APIs.

Middleware’s role of normalizing and structuring this data is critical to delivering great experiences for all of the parties who ultimately need to fix the errors. If brokers, employers and members need to parse through emails and files for errors from different carriers and/or interpret what the error is, we will never create an environment conducive to fixing these problems and keeping them fixed.

The industry-changing potential of middleware was evident in one recent migration of about 200,000 employees onto the Ideon platform, all enrolled with a large national carrier. During that migration, our technology identified errors impacting more than 16% of the employees, resulting in nearly $1 million in lost premium for the carrier—and, we expect, lost broker commissions.

In summary: we found $1 million in additional premium for the carrier, and we saved more than 30K employees from potential coverage issues. All from one migration of approximately 200,000 employees. Projected across the industry, we can safely assume carriers are leaving tens, if not hundreds of millions of dollars on the table.

BenAdmins: BenAdmins play a critical role in creating a path for these errors to be addressed. While we, as middleware, can surface these problems, we cannot adjudicate many of them. As such, BenAdmins need to build into their solutions a means of directing each error to the appropriate party. A demographic error can be sent directly to the employee. But class, division and other such errors need to be addressed by the employer. Still other information may need the broker or consultant to weigh in. 

Ideon triages, classifies, and structures these errors allowing for easy and repeatable direction of errors to the responsible party.

Brokers: For some employers, especially smaller companies who may not be using a benefit administration system, the responsibility for fixing the errors falls on the broker. Once surfaced, brokers have a responsibility to fix the data discrepancies. At first this can be daunting when confronted with the sheer number of problems that need to be addressed. This is especially true as we all set on a path to clean up pre-existing problems. Fixing Social Security numbers, birth dates, effective dates and the like is self-evident.  But some may be inclined to dismiss errors in addresses, or such demographic data. But ultimately a great member experience relies on these data being right. Whether it is for receipt of plan materials, or a claim check, this often-ignored data is critical.

The good news is that once the heavy lift of cleaning-up existing problems is complete, very little ongoing work by the broker should be required to keep the data clean.

Employers: Employers too have a role to play. It is incumbent upon the employer to make sure enrollment and effective dates are corrected and to address any inconsistencies around an employee’s classification including assignments to certain divisions, departments etc.

The first step: A shift in mindset

If the above framework feels daunting — I get it. Fixing a deeply embedded, decades-long problem is always challenging, made more difficult in a complex industry with numerous stakeholders and competing priorities. But we must start somewhere.

As a starting point, I hope to see the industry to coalesce around—and be inspired by—these three convictions:

1) It’s a problem worth fixing.
2) It’s solvable.
3) It requires industry-wide collaboration.

If we as an industry can shift our mindset and unite behind these three beliefs, we’ll be on our way to eliminating inaccurate benefit data—and its harmful impact.

Leading carriers and BenTechs are finally speaking the same language

 

Why is there never a time machine when you need one?

Companies that provide HR, payroll, and benefits software certainly could use a quick way to shuttle between generations. Their customers—employers and their employees—expect the speed and data-rich experiences of the latest smartphone apps. Meanwhile, most health insurance and benefits carriers remain in the early stages of transforming their systems for the modern era, with some still relying on decades-old technology.

So it’s no surprise that communication in this ecosystem is strained, with more than a few misunderstandings and awkward silences. Communicating enrollment and employee data, in particular, is a longstanding challenge — and of critical importance.

In the benefits industry, electronic data interchange (EDI) has for years been the most common data exchange technology. But as anyone in this ecosystem can attest, EDI is far from perfect, and it certainly doesn’t deliver the speed, efficiency, and accuracy that today’s consumers expect.

At last, there’s another way. Many forward-thinking carriers and benefits platforms are adopting API-powered middleware to replace, or at least supplement, their EDI connections. Middleware translates and exchanges data between today’s real-time connected systems and the older, EDI-based systems of most insurance companies. The result: two-way, consistent communication; unprecedented scalability and data accuracy; and an enrollment experience that, finally, meets employee expectations.

To understand the challenges faced by benefits platforms as they connect to carriers, and the advantages of APIs, Michael Levin, the CEO of Ideon, recently led a webinar featuring two experts with deep industry experience:

Cory Nicks, Manager of Insurance Operations of Rippling, an HR platform that has grown rapidly in part because of an obsessive devotion to automating processes that others handle manually.

Jeff Oldham, the CEO of Informed Consulting, who has more than 25 years of experience in the employee benefits business.

In a lively and informative discussion, the three discussed the need for carrier connectivity, the insurance industry’s slow effort at modernization, and how middleware enables benefits platforms to offer better service with far less effort. 

What follows are six of the most useful insights from the session.

You can watch the entire webinar here.

1. HR and benefits platforms require connectivity to handle increased volume

Until about five years ago, Oldham explained, platforms focused only on technology to serve brokers, employers, and employees rather than direct electronic connections to carriers. “If you talked to a founder back then, the last thing they thought about was sending a file,” he said. 

As the industry grew, platforms started to bog down with manual work. “There was no sense of automation,” said Nicks, who worked for years at Zenefits, a pioneering benefits technology platform. “We had forms and faxes and carrier portals.” Ultimately, he said, “figuring out how to distribute information to carriers became really difficult.”

By contrast, people building platforms today are using technology that allows for information to be exchanged between systems electronically through application programming interfaces (APIs), the best-practice method of digital communications. That’s how they expect to communicate with carriers and benefits providers as well.

Indeed, when Nicks started at Rippling in 2019, efficiency was a priority from the start. “A main focus of ours was getting information to the carrier as efficiently as possible without having huge operational teams typing information into portals and filling out forms.”

2. Carrier connectivity is the only way to deliver the speed and accuracy that both employers and employees demand

The consequences of a mistake in an employee benefits account can be high. Health insurance is one of the largest expenses at many companies. Premiums are deducted from employee paychecks. And, of course, medical care itself is often essential. 

“When you have poor carrier connectivity, the file goes sideways, and yellow flags are thrown on the field,” Oldham said. “When the right information isn’t received, all kinds of problems occur.” 

Consumers, moreover, have come to expect that the websites and apps they use at work will be as powerful as those they use to shop, bank, and communicate.

“Customers want their benefits to work like Amazon, where you buy something and the package comes within two days,” Nicks said. “If you choose your insurance on the benefit system, you want to be able to go to the doctor the next day and not have to pay $3,000 out of pocket when you should only have a $5 copay.”

3. Current electronic connection approaches don’t meet today’s consumer expectations

For several years, benefits platforms have formed digital connections to insurance carriers. But these haven’t used APIs. Rather, most carrier systems could only communicate through EDI: according to a recent Guardian report, about two-thirds of employers say EDI is their primary method of transmitting employee enrollment data to carriers.

These connections, however, create a range of challenges for platforms and their clients, Oldham explained. “EDI is a one-way street. Data is sent once a week, and nothing is returned. So there is a lag, and the information isn’t always correct.”

When benefits platforms connect to carriers through EDI, there’s an 8-12 week setup and testing process—and sometimes longer—for each group. “Each individual carrier has a different process,” said Nicks. “It’s not scalable for us. It’s not scalable for employers. And it’s not scalable for brokers.”

EDI, moreover, isn’t any better than paper forms at preventing and rectifying data errors and discrepancies. With APIs, by contrast, every transaction can be reviewed and validated proactively, without manual intervention. “It creates much cleaner data. It allows processing to go faster. And you don’t have as many support cases coming in,” Nicks said.

EDI’s inefficiencies, the panelists said, also trickle down to employees. For example, insurance cards may be delayed and payroll deduction and billing errors may arise. These critical issues can spoil employees’ overall benefits experience. In fact, a majority of employees say a poor benefits enrollment experience could make them consider looking for another job.

4. Carriers are upgrading their technology (slowly)

Health insurance and group benefits carriers are replacing their EDI connections with APIs, but the change is part of a long-term evolution of legacy technology, Oldham said. “Of the top 20 carriers we speak to,” he explained, “all of them either have an API strategy or they are building the strategy in 2022.”

Providers of ancillary and voluntary benefits—such as dental, vision, life, and hospital indemnity insurance—are generally quicker to adapt to new market demands than medical carriers, Oldham said. He predicted that 60-75% of the ancillary carriers would move to API connections over the next five to seven years. 

Health insurance companies will be slower to change, he predicted, with national carriers and those in large markets adopting APIs before those in less competitive regions. But change is coming to all parts of the ecosystem.

5. Middleware bridges the technology gap between carriers and HR platforms. 

Benefits platforms, then, are caught between employers who want the speed and accuracy of API-powered connectivity now and carriers who will take years to fully replace their EDI connections.

For a growing number of savvy benefits technology providers, the solution is middleware—a service that integrates with the benefits platform through a single modern API, checks for errors, and then translates transactions into the format each carrier prefers, most commonly EDI.

“For a benefits administration company, middleware is real-time, secure, and scalable,” Oldham said. 

Middleware, he adds, is a ubiquitous way for businesses in every industry to simplify their workflows. Nearly every retailer, he explained, sends all their credit card charges to a single payment processor—a middleware provider that routes them to the appropriate card issuer. “Home Depot doesn’t want to create separate files to send MasterCard, Visa, and Amex,” he explained.

6. Using middleware saves time for even the most sophisticated technology teams

Most benefits platforms have built EDI connections to numerous carriers, but this turns out to be a significant drain on resources.

At Zenefits, Nicks recalled, “we were trying to be the middleware because we didn’t want to pay someone else to handle the translation.” Ultimately, this spawned “a gigantic operational function with engineers going back and forth with each carrier,” he said. “That’s not the kind of work engineers want to do, and it’s not a good ROI for a software company.”

At Rippling, Nicks looked for a different way. “We wanted to make sure that everything was automated, and everything was easy. That way our engineers could work on what was exciting to them: building new product functionality,” Nicks said.

Rippling uses Ideon (formerly Vericred) as middleware to connect to health insurance and benefits providers. “Having a middleware partner like Ideon allows our engineers to work on our product,” Nicks says. “I don’t have to build out a gigantic team to focus on each of the carriers.” Now a team of eight people handles all of Rippling’s carrier connections; without middleware, he explained, Rippling would need more than 100.

“Middleware keeps our operating costs low,” Nicks concluded, “And brokers can trust our platform to enroll groups with a multitude of different carriers without our having to build out connections to each of them.”

Want more insights on carrier connectivity trends? You can watch the entire webinar here.

 

Ideon’s API middleware: Powering fast, accurate, scalable data exchange for carriers and benefits platforms

Nobody has more experience helping benefits platforms and insurance carriers modernize their digital connectivity strategy than Ideon. Our API middleware offers speed, operational savings, scalability, format consistency, and reliability to dozens.

For more information, contact sales@ideonapi.com