Empire Adopts New IBM Claims Solution

Building on two years of front-end Internet enablement, New York-based Empire Blue Cross Blue Shield has signed a 10-year agreement with IBM (Armonk, NY) to develop a next-generation claims engine. The terms of the agreement were not disclosed. The solution, which includes IBM e-business infrastructure and software from Lexington, MA-based deNovis, will involve the replacement of legacy claims processing systems by open architecture technologies.

"We've built highly-functional transactional e-business portals for our key constituencies—providers, members, brokers and employer groups—which allow them to do virtually anything they would have by mail, fax and phone online," says Deborah Bohren, a spokesperson for Empire. "If you think of that as the front-end customer interface, you can think of this agreement with IBM as allowing us to upgrade the back-end with state-of-the-art technology."

While asserting that Empire's existing claims processing performance is among the best in the health insurance industry, Bohren says that the new solution anticipates the future demands of the marketplace. "For us, this is replacing our legacy system. We're retiring 22 million lines of code," she explains. "With the new technology we'll be able to process claims even faster and more efficiently."

Running on the IBM e-business infrastructure, deNovis' language-based claims processing software will interpret complex English-language based business rules, regulations and benefit stipulations, allowing almost all claims to be processed correctly the first time in automated fashion, according to Bohren. "With a traditional legacy system, you have to put in a request to IT" to manipulate internal system logic, she says. "The advantage of the English-language based deNovis system is it allows the different business unit owners to interact directly."

From IBM's perspective, the Empire implementation represents only the first for a service it intends to market to the health insurance industry as a whole. "We're enabling carriers to move forward with more flexibility," says Russ Ricci, MD, general manager of IBM Global Healthcare. The natural-language front end, combined with the underlying technology, will enable companies to craft more flexible policy offerings, even to the extent of offering different policy types to members of the same family, he suggests. The solution "brings flexibility without having to manipulate systems manually—you just can't do that in healthcare today, either administratively or clinically," Ricci says. From the perspective of information access and management, according to Ricci, "this is a model for insurance companies to follow in cutting their administration costs by as much as 50 percent, saving billions of dollars."

IBM will market the solution as a fully managed hosted option running on IBM's e-business infrastructure. "It's a utility model where IBM assumes capital risk to build up the infrastructure," Ricci says. The solution is the result of a strategic alliance between IBM and deNovis, through which deNovis will optimize its transaction processing applications and data warehouse infrastructure to IBM eServer pSeries on AIX and zSeries computing platforms, IBM's DB2 database software and WebSphere infrastructure software, according to IBM, whose Global Services unit will provide integration and implementation services.

As part of the Empire agreement, IBM and the health insurer will jointly develop and maintain the company's core applications, including software enhancements, fixes, testing and extensive modernization projects, IBM says. The vendor will also provide support services for Empire's data center functions and technical support help desk.

Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek Financial Services of TechWeb he has written on all areas of information ... View Full Bio