Healthcare insurance provider

Adding new products and reaching new markets with IBM connectivity and integration solutions

Published on 12-Sep-2012

"IBM designed the project, and worked hand-in-hand with our project team to implement the solution and transfer knowledge to the internal people to enable us to maintain it in the future. We got excellent, top-notch people from IBM to be engaged with us in this project, and it’s been a very good experience from our perspective." - Chief operations officer, healthcare insurance provider

Customer:
Healthcare insurance provider

Industry:
Healthcare, Insurance

Deployment country:
Puerto Rico

Overview

In the 1970s, the company developed its first computerized health insurance system. The system handled medical policy management, claims, membership and enrollment, and benefits. As the company grew, it updated the system in the 1980s using a siloed architecture that was common during a period when corporate semi-autonomous workgroups were acquiring their own information technology (IT) facilities.

Business need:
Healthcare insurance provider wanted to offer new products to its members and expand geographically, connecting its core systems with new products and markets.

Solution:
The company replaced its legacy health insurance system and implemented an SOA working with IBM services and IBM software to facilitate agile integration with heterogeneous components.

Benefits:
Projected three-year repayment of investment with 65 to 75 percent reuse of code and other cost savings; projected 8 to 10 percent reduction in TCO; faster customer service with real-time processing.

Case Study

A healthcare insurance provider was founded by a group of doctors and dentists and subsequently has diversified, now offering life, property and casualty coverage. The company has 800,000 members. It has evolved with a strong commitment to digital innovation.

In the 1970s, the company developed its first computerized health insurance system. The system handled medical policy management, claims, membership and enrollment, and benefits. As the company grew, it updated the system in the 1980s using a siloed architecture that was common during a period when corporate semi-autonomous workgroups were acquiring their own information technology (IT) facilities.

Connectivity becomes the issue

However, as the company continued to grow through the 1990s and the first decade of the 21st century, the siloed IT architecture reached the limit of its ability to achieve functional integration. The “accidental architecture” relied on point-to-point programming and had no reusable method of integrating the heterogeneous components and points that needed to be connected.

“Our legacy system limited our ability to move fast in responding to market demands in terms of offering different products and services to the members we serve,” says the chief operations officer. “We wanted to offer different products to our members, such as preferred networks with discounted premium solutions. This would have required a lot of modifications that had to be programmed into our core system. Then we would have had to perform modifications to the integration with the surrounding systems that would be impacted by that change.”

In addition to adding products, the insurance provider envisioned a geographical expansion. It urgently needed to formulate a plan for increasing the capabilities and agility of its IT application environment.

A plan is born

The healthcare insurance provider engaged Gartner, Inc., to provide a methodology for selecting a new core health insurance system and an integration solution that would facilitate its expansion.

Gartner evaluated the existing applications, and determined which ones should be replaced by a packaged product and which ones could be enhanced or modified, Gartner brought to the table the idea that the company should include, as part of its architecture, an enterprise service bus (ESB) and implement it in conjunction with the new core system. Gartner also suggested that the company implement a third-party solution for legacy system replacement; develop an SOA transformation strategy and select a vendor; and implement the application strategy and SOA transformation.

The company selected a third-party packaged health plan application which enables the electronic exchange of HIPAA-compliant standard transactions between a health plan and its trading partners in an SOA environment with web services. The customized solution supports batch and real-time processing for eligibility inquiries and responses, claims and claims payments, benefit enrollments and maintenance, and premium payments.

Selecting a vendor for SOA

The next step was to begin service enabling both legacy and new applications, as the company integrated with the packaged insurance plan application and began the transformation from a point-to-point solution to the beginnings of an SOA. Key to the SOA foundation process was the selection of the vendor that would lead the way with services as well as software.

In addition to IBM the company also considered Microsoft BizTalk and Software AG webMethods. The company wanted to evaluate IBM because Gartner ranks IBM in the leader’s quadrant for SOA/integration application infrastructure. In addition, the company had a long relationship with IBM and felt confident that it could rely on IBM to provide valuable assistance in implementing the SOA solution.

Proof-of-concept makes a convincing case

The healthcare insurance provider decided to keep its legacy core system running in parallel with the new system until all members could be transferred to the packaged application. This decision placed strict requirements upon the ESB and SOA solutions, because the new IT architecture had to include the capability to determine which core system would handle a new request.

IBM succeeded in demonstrating this functionality during its two-day proof-of-concept using IBM® WebSphere® Process Server, which ships with the WebSphere Enterprise Service Bus. Together, they receive an eligibility request from a healthcare provider IT system, route the request to the correct core system, process the request and send a response to the provider. The company also was favorably impressed by the fact that the IBM solution utilized IBM WebSphere Transformation Extender, which the company had been using (by a previous name), to map healthcare transformations from its participating providers. This allowed reuse of existing artifacts and significantly shortened the time required to complete the Proof-of-Concept (PoC). Without utilizing WebSphere Transformation Extender to accept any type of file format and transform it into HIPAA-approved format, it would have taken weeks to complete the PoC instead of two days.

Successful SOA journey

The company chose IBM to be its partner in a four-year SOA journey that has been very successful for the company, as it now migrates the last of its plan’s member records to the new healthcare insurance system and prepares for completion.

IBM Software Services for WebSphere (ISSW) has played a significant part in this success. “We wanted this to be a turnkey project,” says the chief operations officer. “IBM designed the project, and worked hand-in-hand with our project team to implement the solution and transfer knowledge to the internal people to enable us to maintain it in the future. We got excellent, top-notch people from IBM to be engaged with us in this project, and it’s been a very good experience from our perspective.”

Connecting the pieces

In general the new solution works by reusing the existing B2B functionality provided by IBM WebSphere Transformation Extender Trading Manager. The B2B component then initiates the business process on IBM WebSphere Process Server through WebSphere MQ. The business process leverages the WebSphere Transformation Extender HIPAA Electronic Data Interchange (EDI) Pack for industry transformations. WebSphere Process Server, which orchestrates business processes, works with IBM WebSphere Enterprise Service Bus to determine whether the member has been migrated to the new system. If the answer is “yes,” WebSphere Enterprise Service Bus Server routes the request to the third-party insurance plan system via IBM WebSphere DataPower® XI50 Appliance, which mediates between differences in standards in connecting to the packaged insurance system. If the member has not been migrated to the new system, WebSphere Enterprise Service Bus routes the request to the legacy system.

Altogether the project team developed 22 business processes and exposed more than 60 web services in DataPower.

Projected payback in three years

There are some dramatic comparisons to be made between the situations before and after the IBM SOA solution. “One of the greatest benefits is that the new IBM SOA allows us the capability of real-time processing, specifically in the membership enrollment process, where changes are done immediately,” says the chief operations officer. Following a sale to a new group, the company can enter the members the same day and produce the ID cards almost instantly (as opposed to two days, which is what it took previously). “Also we can do numerous claims processes online in real time. And on some operational processes, we can integrate automated processes with human tasks for approvals, which give us better controls,” says the chief operations officer.

New enhancements and products can reach the market faster than the old system could support, because developers are reusing 65 to 75 percent of code. “Once we get all our members migrated over to the new healthcare insurance system, we should be able to repay this investment within three years by streamlining development processes and reducing costs,” says the chief operations officer. “We expect to see an 8 to 10 percent reduction in total cost of ownership. The ability to make changes to our system and add new products and new geographical territories are really the keys to our growth in the coming years and the most important benefits.”

For more information

Contact your IBM sales representative or IBM Business Partner, or visit us at the following websites:

ibm.com/software/integration/wps

ibm.com/developerworks/websphere/services

ibm.com /software/integration/wdatastagetx

Products and services used

Legal Information

© Copyright IBM Corporation 2012 IBM Corporation Software Group Route 100 Somers, New York 10589 U.S.A. Produced in the United States of America September 2012 IBM, the IBM logo, ibm.com, DataPower, and WebSphere are trademarks of International Business Machines Corp., registered in many jurisdictions worldwide. Other product and service names might be trademarks of IBM or other companies. A current list of IBM trademarks is available on the web at “Copyright and trademark information” at ibm.com/legal/copytrade.shtml This document is current as of the initial date of publication and may be changed by IBM at any time. Not all offerings are available in every country in which IBM operates. THE INFORMATION IN THIS DOCUMENT IS PROVIDED “AS IS” WITHOUT ANY WARRANTY, EXPRESS OR IMPLIED, INCLUDING WITHOUT ANY WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND ANY WARRANTY OR CONDITION OF NON-INFRINGEMENT. IBM products are warranted according to the terms and conditions of the agreements under which they are provided. WSC14387-USEN-00