For Anthem, Inc., which provides health insurance to tens ofmillions of Americans, processing premium payments efficiently is acrucial profitability driver. Several years ago, however, paymentswere costing the company too much and causing frustration forconsumers. A broad “voice of the customer” initiative conducted bythe marketing team identified premium payments as one of the top 10areas in which Anthem could improve.

“We had operated in a check-and-paper environment for manyyears,” explains Rick Noble, staff vice president of treasuryoperations for Anthem. “We rolled out new CSR [customer servicerepresentative], IVR [interactive voice response], and Web paysystems through a vendor, and 3 percent of our customers moved tothis channel to pay their premiums. Across our millions ofcustomers, that was a lot of individuals, so it was a step in theright direction. But when we looked at industry statistics, we sawthat we were falling behind.” In fact, in a survey of customers whowere leaving an Anthem-affiliated health plan, 31 percent citedpayments as a motivation for switching insurers.

One issue was that consumers who chose to use the Web pay optionhad to log into the Anthem site to determine how much they owed andwhen payment was due, but then had to log on separately—withdifferent credentials—to a third-party vendor's site to actuallymake the payment. Another challenge was that consumers who wantedto sign up for recurring payments had to request a paper form tofill out and mail or fax in. “We didn't make that easy for peopleto sign up for,” Noble says.

Finally, Anthem wasn't taking credit card payments via the Webportal. “We were only accepting credit cards over the phone, inemergency situations,” Noble says. “But a lot of people,particularly younger people, just want to use their credit cards.As a result, nearly 90,000 consumers called us to make an'emergency payment' with their credit card every month. For themost part, these weren't emergencies; people just wanted to paywith their card.”

Anthem treasury put together a cross-functional team that alsoincluded representatives of IT and the finance operations group. Asa project team, they reconsidered all the payment methods andpayment channels that Anthem made available for customers to paytheir premiums. “We looked at payments from our perspective asconsumers ourselves,” says Jeff Hammer, staff vice president offinance operations. “We also looked at industry standards. When weintroduced a new payment option, consumers often didn't utilize itin the numbers we were expecting. So the project team delved intothe obstacles preventing them from doing so.”

The project team decided thatAnthem needed to significantly expand the premium-payment optionsavailable to consumers, and needed to roll out more—and moreintuitive—self-service processes. The IT team began developing apayment hub that would streamline connectivity betweenconsumer-facing payment systems and third parties such as banks andcredit card processors.

Explains Nathan Sass, systems analyst executive advisor: “Thepayment hub is the logical tier that makes the functional calls tosubmit a payment to a vendor or retrieve billing information. Itaggregates all those functions into a simple set of APIs[application programming interfaces] that any Anthem website orapplication can invoke. All communication with the vendor,including data exchange, is handled through the payment hub layer.This means any change to our external providers—for example, if thebusiness decided to add new banking partnerships—is handled throughthe payment hub. The change would be isolated from the userinterface [UI].”

By isolating the user interface from the underlying paymenttechnologies, Anthem was able to expand its payment options from 2to 17, and that number is still growing. “The payment spacecontinues to evolve,” Noble says. “The new architecture of ourpayment system makes it much easier for us to accommodate emergingoptions for premiums, such as real-time payments. We've also justintroduced walk-in payments, where consumers can walk into certainretail outlets and pay in cash. Integrating information aboutin-person payments with the rest of our payment system was madepossible by the payment hub.”

For consumers, the payment experience is streamlined. “Nowconsumers can make payments with us, whether they're on the mobileapp or on our site, without having to go anywhere else,” Sass says.“We handle all the communication with the vendors, and our UI iswhat the consumers interact with. We can use our data tocommunicate with our vendor, and the consumer logs on only once, toAnthem's site.” Moreover, the information customers receive fromAnthem's site is now real-time.

Anthem used to provide information to payment vendors via batchfiles. “The data would age,” Sass says. “If something changed witha customer's invoice, it might take 24 hours or longer to show upon the payment site. We eliminated all of that and went toreal-time. Now we use API calls internally to retrieve data fromthe mainframe billing systems, so the information the customer seesis what our billing system shows at the moment the screenloads.”

The data sharing goes the other way as well. “When a customermakes a payment, or otherwise changes their information in ourconsumer portal, that feeds back into our billing mainframe,” Sasssays. “Allowing consumers to update their payment preferences inthe mainframe was novel. In designing the system, we developed alot of documentation around the rules and processes within ourbilling and payments areas. We made sure the technology fullysupported the business processes, and we vetted all the detailswith the enrollment and billing teams. Then we tested it for a fewmonths. We took this very seriously, because obviously when you leta process influence your core system, you can't have mistakes.”

The resulting system provides better information to consumers,and Anthem has more control over customer satisfaction. “Now we ownthe customer experience, so we were able to design it with our lookand our feel,” says Patti Cron, business change director, cashoperations. “Not only can we now swap out banks or add paymentoptions without impacting the overall customer experience, butwe've been able to make our payments site much more user-friendly.”The new site makes it much easier for consumers to sign up forrecurring payments, as well.

One more benefit is the security of Anthem's new paymentprocesses. “We kept security and compliance top-of-mind as wedesigned the system,” Sass says. “We removed financial accountinformation from the billing system and used a tokenized process,where all the data is stored in a secure depository rather than inthe mainframe itself, so we've followed PCI best practices. Callinga person on the phone, giving them a credit card number, is muchless secure than a well-designed self-service portal. The newsystem is a big improvement.”

Since the upgrade, payment-related calls to the consumer callcenter have fallen by about 50 percent. Even more important,customer satisfaction has significantly improved due to the newself-serve capabilities. “Enabling consumers to enroll forautomatic payments through various channels really helps withcustomer retention,” says Katie Holcomb, senior cash manager.“Internal studies have shown that the lapse rate on customers withrecurring payments is less than half that for customers making aone-time payment each month. That has really helped stabilize ourcash flows.”

In fact, the project has been so successful that Anthem islooking to extend its benefits beyond just premiums. “Thisarchitecture has proven its worth where it sits, but it's alsodemonstrated a great ability to be extended and grown,” Sass says.“We're fielding all kinds of queries from different elements of thebusiness that want to get on this platform, driving toward a singlecenter of excellence on payments. All our business units need toget paid, and this project has demonstrated to other areas of thebusiness that this is the way to go.”

See also:

• Treasury Transformed Through Technology
• “How to Build an Innovative TreasuryFunction”: On-demand webcast honoring 2018 Alexander Hamilton Overall ExcellenceAward winner—Microsoft
• 2018 Alexander Hamilton Awards in LiquidityManagement
• 2018 Alexander Hamilton Awards in Operational RiskManagement & Insurance
• 2018 Alexander Hamilton Awards in TreasuryTransformation