Case Study:
Fortune 500 Insurance Provider Automates Its Invoice Dispute Process
A Fortune 500 insurance provider is the leading writer of voluntary insurance coverage marketed at the work site in the U.S. The company insures more than 40 million people at more than 300,000 companies. Their business strategy is to continually design new policies to help fill the gaps in the existing primary insurance coverage of U.S. consumers and to grow the network of sales associates and coordinators distributing and servicing their policies. Given their huge customer base, product portfolio, and distribution network, the company has numerous different processes to manage, monitor, and improve. Key Process: Invoice Reconciliation Invoice reconciliation is an important process for the provider. Each month invoices are sent to corporations billing them for the coverage stipulated by their policy. In any given month, approximately 500,000 invoices are sent out to customers. On average, 30 percent of the invoices, or 150,000 invoices, are disputed in some way each month. The challenge for the Invoice Reconciliation team is to resolve as many of these disputes as possible before the next billing cycle—typically less than 30 days. If not, the customer will dispute the bill the next month—wasting time and frustrating customers. Key challenges faced by the Invoice Reconciliation team and Research Specialists trying to resolve invoice disputes were:
• Time-intensive manual routing. Invoices are mailed back to the insurance provider with notes and questions attached to them. Each dispute had to be reviewed and manually routed to a Research Specialist, which was not always known.
• Research inefficiencies. Research specialists collect data from various legacy systems to determine whether or not the dispute is justified; and if it is, the reasons why.
• No priorities. With so many requests for reconciliation coming in through e-mail, it was difficult for specialists to prioritize work.
• No real-time monitoring of the dispute resolution. The Invoice Reconciliation team wanted the ability to more proactively prioritize work and automatically track deadlines and generate escalations. Controlling Processes in Real Time The insurance company selected WebSphere Lombardi Teamworks to gain control over the reconciliation process in 2010. Working collaboratively with IT experts, the team implemented a process that automates routing of disputes, streamlines research timelines, and gives managers real-time control of all disputes being processed. Fortune 500 Insurance Provider Automates Its Invoice Dispute Process Key new capabilities after redesigning the dispute resolution process and implementing the BPM solution are:
• Tasks are assigned automatically. Disputed invoices are scanned and indexed by an electronic document system and then automatically routed to the appropriate Reconciliation team based on location and company assignments.
• Disputes are prioritized based on time and value. Reconciliation tasks are automatically prioritized for specialists according to invoice age and dispute amount. This ensures that the highest-priority invoices are worked on first.
• Alerts are sent. Specialists are alerted when a dispute has aged 20 days without resolution. This ensures that disputes do not slip through the cracks.
• Approval controls can be set. Reconciliation managers can set the threshold amount at which disputes can be automatically accepted—saving time spent by specialists researching small amount disputes.
• Real-time performance metrics. Managers can view real-time process performance reports in the ScoreBoard portal. Metrics include percentage of disputed invoices pending, total outstanding policy items by geography and customer, variance in dollar amount between the original invoice and the resolution, and age and status of every invoice in the system. Current and Continuous Improvements The insurance provider deployed the first version of the Invoice Reconciliation process in 90 days. It is projected that the new process of handling electronic records and automation is reducing the amount of workers’ time by 80 percent. When rolled out to all 300 users across the Client Services group, the ROI will be significant—even for the single process. The Client Services team is working the next revisions of the process that will help them automate even more of their work. Soon, enterprise BPM will be achieved and deliver ever greater benefits.
Q1. The company had an invoice dispute rate of 30 percent. How did this problem suggest the need for BPM?
Q2. Explain how the Fortune 500 insurance company reduced manual work by 80 percent.
Q3. The first process improvement—dispute resolution—was extremely successful. BPM will be rolled out across the enterprise. How important is the success of the first BPM implementation? Explain your answer.
Your answer must be typed, double-spaced, Times New Roman font (size 12), one-inch margins on all sides, APA format and also include references.