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

“We had operated in a check-and-paper environment for many years,” explains Rick Noble, staff vice president of treasury operations for Anthem. “We rolled out new CSR [customer service representative], IVR [interactive voice response], and Web pay systems through a vendor, and 3 percent of our customers moved to this channel to pay their premiums. Across our millions of customers, that was a lot of individuals, so it was a step in the right direction. But when we looked at industry statistics, we saw that we were falling behind.” In fact, in a survey of customers who were leaving an Anthem-affiliated health plan, 31 percent cited payments as a motivation for switching insurers.

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

Finally, Anthem wasn't taking credit card payments via the Web portal. “We were only accepting credit cards over the phone, in emergency 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 the most part, these weren't emergencies; people just wanted to pay with their card.”

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

The project team decided that Anthem needed to significantly expand the premium-payment options available to consumers, and needed to roll out more—and more intuitive—self-service processes. The IT team began developing a payment hub that would streamline connectivity between consumer-facing payment systems and third parties such as banks and credit card processors.

Explains Nathan Sass, systems analyst executive advisor: “The payment hub is the logical tier that makes the functional calls to submit a payment to a vendor or retrieve billing information. It aggregates all those functions into a simple set of APIs [application programming interfaces] that any Anthem website or application 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 the business decided to add new banking partnerships—is handled through the payment hub. The change would be isolated from the user interface [UI].”

By isolating the user interface from the underlying payment technologies, Anthem was able to expand its payment options from 2 to 17, and that number is still growing. “The payment space continues to evolve,” Noble says. “The new architecture of our payment system makes it much easier for us to accommodate emerging options for premiums, such as real-time payments. We've also just introduced walk-in payments, where consumers can walk into certain retail outlets and pay in cash. Integrating information about in-person payments with the rest of our payment system was made possible by the payment hub.”

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

Anthem used to provide information to payment vendors via batch files. “The data would age,” Sass says. “If something changed with a customer's invoice, it might take 24 hours or longer to show up on the payment site. We eliminated all of that and went to real-time. Now we use API calls internally to retrieve data from the mainframe billing systems, so the information the customer sees is what our billing system shows at the moment the screen loads.”

The data sharing goes the other way as well. “When a customer makes a payment, or otherwise changes their information in our consumer portal, that feeds back into our billing mainframe,” Sass says. “Allowing consumers to update their payment preferences in the mainframe was novel. In designing the system, we developed a lot of documentation around the rules and processes within our billing and payments areas. We made sure the technology fully supported the business processes, and we vetted all the details with the enrollment and billing teams. Then we tested it for a few months. We took this very seriously, because obviously when you let a 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 own the customer experience, so we were able to design it with our look and our feel,” says Patti Cron, business change director, cash operations. “Not only can we now swap out banks or add payment options without impacting the overall customer experience, but we've been able to make our payments site much more user-friendly.” The new site makes it much easier for consumers to sign up for recurring payments, as well.

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

Since the upgrade, payment-related calls to the consumer call center have fallen by about 50 percent. Even more important, customer satisfaction has significantly improved due to the new self-serve capabilities. “Enabling consumers to enroll for automatic payments through various channels really helps with customer retention,” says Katie Holcomb, senior cash manager. “Internal studies have shown that the lapse rate on customers with recurring payments is less than half that for customers making a one-time payment each month. That has really helped stabilize our cash flows.”

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

See also:

• Treasury Transformed Through Technology
• “How to Build an Innovative Treasury Function”: On-demand webcast honoring 2018 Alexander Hamilton Overall Excellence Award winner—Microsoft
• 2018 Alexander Hamilton Awards in Liquidity Management
• 2018 Alexander Hamilton Awards in Operational Risk Management & Insurance
• 2018 Alexander Hamilton Awards in Treasury Transformation