When we talk to administrators who are prospective COBRApoint customers about their businesses and the services Benaissance provides, we often talk about the “big moving parts” of a COBRA administration business.  We know these first-hand because we ourselves ran a large scale COBRA administration business before founding Benaissance.  Several of our customers have asked recently that we write these down so that they can use this discussion themselves in conversations with large prospective clients or broker/consultant partners.  So, while we know that by doing this we’ll be teaching some basic software vendors out there things they should have known 20 years ago before they wrote their first line of code, here they are:

1.       Client and Member Service/Support – Traditional COBRA administrators on traditional COBRA administration platforms rely upon large call centers to handle all client and member service and support.  Not only is this the most inefficient and expensive way to provide service and support, it is very difficult to scale effectively and usually only provides support to clients and members during business hours.  It also perpetuates the “black box” nature of most COBRA administration where employers “throw COBRA over the fence” to their COBRA administrator and then cross their fingers hoping the COBRA administrator does a good job.  Benaissance believes that the provision of COBRA service to employers is a trust relationship which requires a fully transparent operation. So, while our administrator customers certainly do and always will run a call center to take calls from clients and members, our customers also provide 24/7 access to COBRApoint for all of their employer clients and members through secure, dedicated web portals.  Our administrator customers believe in total transparency and total service, and they manifest this belief by providing all of their clients and members with immediate access to the data they need when they need it wherever they are.  The simplest example of this is the following.  When an administrator runs a traditional COBRA operation without dedicated secure portals for each client and member, 80% of the phone calls they take from Qualified Beneficiaries are simple calls asking, “Did you get my last payment?  When is my next payment due, and how much do I owe?” However, when an administrator provides a secure web portal for each member which provides this simple information, their call volume from Qualified Beneficiaries drops over 40%.

2.       Capturing Data – Employers need to notify their COBRA administrator each time one of their employees or an employee dependent experiences a Qualifying Event and (for most employers) each time they add a new hire/new enrollee.  Traditional COBRA administrators using the “black box” approach require that their employer clients complete paper forms which they fax to the administrator which the administrator then hand-keys into their COBRA system – a process which is fraught with manual error and which is highly inefficient.  Through COBRApoint, our administrator customers provide all of their employer clients 24/7 access to a dedicated secure client portal where the client may elect to enter new hires and new qualified beneficiaries through intuitive wizards with built-in validation or by file using our hierarchical CSV import specifications with detailed success/failure reports.

3.       Reporting Data – Employers need frequent reports on their COBRA population so that they can accurately reconcile their carrier bills.  Traditional COBRA administrators print and mail paper reports to their clients at the end of every month.  Not only is this an inefficient and expensive process, but the reports are out of date the day they are mailed.  Furthermore, in some states the governing state law makes this problematic as certain protected information cannot be included on reports which are sent through the mail.  Through COBRApoint, our administrator customers provide all of their employer clients 24/7 secure web based access to both historical date ranged based and real-time reports ensuring that their clients have access to the data they need when they need it and ensuring secure, encrypted delivery of all data.

4.       Mail Fulfillment – The regulations governing COBRA still require that the official communication regarding COBRA rights to COBRA Qualified Beneficiaries be performed by first class mail (or to be more precise, the regs specifically state that first-class mail is a legitimate communication method).  Given that the timing of sending mail has strict implications on key dates in an individual Qualified Beneficiary’s life under COBRA, this is a significant scale bottleneck for most COBRA administrators.  When mail is fulfilled in-house by a typical COBRA administrator, their ability to scale is severely restricted by their capacity to generate mail in a timely fashion.  Through our Benaissance Mail Services, our administrator customers employ a combination of an enterprise scale COBRA administration system (COBRApoint) and a partnership with a highly secure ISO 9001:2008 and SAS70 Type II reviewed print/mail vendor who generates one million pieces of first class mail a day to ensure that mail fulfillment is never a scale bottleneck for them.  While our administrator customers retain detailed audit capability and the required proof-of-mail reporting, mail fulfillment is an automated, hands-off process guaranteed to generate and mail all notices same day regardless of daily volume.

5.       Payment Processing – Another significant scale bottleneck for most COBRA administrators is their ability to accurately process large payment volumes in a timely fashion.  Most COBRA administrators today still only accept paper payments by mail from Qualified Beneficiaries, and the postmark date on the envelope is the determining factor of whether or not the payment was made on time.  Outsourcing payment processing to a traditional bank lockbox therefore is not an option due to the postmark date capture requirement and the desire that late payments not be cashed. So, most COBRA administrators process payments in-house by hand – a highly inefficient and error prone operation.  The difficulty in scaling this manual operation is exasperated by the fact that the vast majority of these individual personal checks come in during the last and first weeks of every month.  Through Benaissance Payment Services, our administrator customers provide three payment channel options for their Qualified Beneficiaries – paper payments by mail; online real-time electronic payments through the secure COBRApoint Member Portal by credit card, debit card, or one-time ACH; or scheduled/recurring ACH.  For paper payments Benaissance Payment Services employs a highly efficient process which scans every payment with its postmark date, runs it through COBRApoint, and electronically (securely) deposits only the timely payments into the administrator’s custodial cash account each day.  This combination of highly efficient, highly accurate payment options not only provides Qualified Beneficiaries with the most flexible payment options available, but also ensures accuracy, efficiency, and near limitless scale for our customers.

6.       Custodial Cash Management and Remittance – At the end of the day, when we strip away the COBRA specifics, all COBRA administration businesses are essentially single point individual billing, custodial cash management, and remittance businesses.  Note to every other COBRA administration system vendor – if you don’t understand this, and most of you don’t, you have no business being in this business.  Eligibility management & reporting and precise administration of the COBRA regulations are certainly key and core to the operation, but large volumes of custodial cash flow through large COBRA administrators, and it is essential that a COBRA administrator understands and manages this core facet of their business precisely.  The challenge to this is that custodial cash management business are by their very nature fluid.  Payments come in; they are allocated to premiums; remittance reports are run and checks cut;…and then things change.  Payments which were part of the remitted amount come back NSF; employers tell the administrator that they forgot to tell the administrator about a severance package for a Qualified Beneficiary three months ago; employers are late in giving their COBRA administrator their plan rates for the new plan year; Qualified Beneficiaries elect to decrease their coverage or increase it due to a life changing event; etc., etc., etc.  It is absolutely critical that a COBRA administrator employ a COBRA administration platform which provides precise tracking of all custodial cash and which utilizes a core payment allocation and remittance system which is posted and adjusted using the same accounting principles employed in a general ledger system.  Remittances (whether to employer or to carrier) must be formally “posted,” and then if anything changes which impacts a previously posted and remitted premium amount, these changes need to automatically be included as adjustments on the next remittance cycle.  All of this needs to be clearly reported to the client (and/or carrier if remitting to the carrier).  COBRApoint handles all of this seamlessly and with precise accuracy.  Again, even in the midst of all of the COBRA specific eligibility and liability issues, the single worst question a COBRA administrator could ever hear from a client is, “where did the money go?”

7.       COBRA Administration – This seems like a simple one, but one of the fundamental flaws plaguing many COBRA administrators today is the ineptitude of their antiquated COBRA systems.  Many of the commercially available COBRA administration systems on the market today still track first and last day of COBRA and status (i.e. pending, enrolled, terminated) by Qualified Beneficiary.  This is not accurate and makes it impossible for a COBRA administrator to accurately administer COBRA for an employer client who may sponsor more than one plan with different benefit termination types.  It is critical that COBRA be tracked by QB Insurance Type (i.e. Medical, Dental, Vision, etc.).   Furthermore, many COBRA administration systems on the market today still calculate the end of a Qualified Beneficiary’s payment grace period as the last day of a calendar month.  Since this is not accurate (the grace period should be precisely 30 days after the due date), many COBRA administrators intentionally “lie” to their COBRA systems when they receive a payment which they know is postmarked on time, but which they know their COBRA system will not accept.  As soon as an administrator begins lying to their COBRA system, there is no way they could ever accurately defend a law suit if necessary against a plaintiff attorney with any experience.  Finally, we all know that we’re living in a regulatory world today which is marked by legislative change, and there is no reason to expect that this is not going to happen again.  If the COBRA system an administrator is running is based on a “toy” database or on one which is no longer even supported, what are the odds that the system is a modern object oriented system which can be quickly and accurately updated to reflect legislative change.  Every employer should ask their COBRA administrator one simple question, “What database is your COBRA system running on?”  If you’ve never heard of the database you get as an answer, or if you thought it was long since retired, or if you think of it is a light-weight toy, you should be looking for a different COBRA administrator.

8.       Eligibility Management & Reporting – This is perhaps one of the least universal or consistent processes across multiple COBRA administrators, and it is impacted significantly by the insurance carriers.  Many COBRA administrators report eligibility data to carriers (or TPAs) on behalf of their clients, but some do not, and some do it for some clients but not for others.  Some prefer to send daily faxes of eligibility changes.  Some send eligibility change reports by encrypted email on varying frequencies.  Some send full file eligibility files to carriers daily, some do it weekly.  For many, they do all of these depending on the varying requirements of their clients and their clients’ carriers.  Oh, and some are forced to manually log into carrier websites as if they were the client and hand key in eligibility changes.  This is currently a mess, and a huge time suck for the good administrators who try to do it well.  The absolute kicker in all of this is that even when an administrator accurately reports every single eligibility change precisely and timely, sometimes the carrier doesn’t get their system on their end updated.  The only place to catch this is when the employer client sits down every month and reconciles their carrier bill (or their enrollment report from their TPA if they’re self-insured) against the reports they have from their COBRA administrator.  Sadly, this doesn’t happen as often or as frequently or as diligently as one might hope.  The result is that months after the COBRA administrator terminates a QB for non-payment and reports this to the carrier, the employer suddenly realizes they’ve been paying the carrier all along since the carrier didn’t enter the termination on their end, and now the employer wants their money back, but the carrier won’t give it back.  So…the employer thinks the COBRA administrator should pay.  How is this even close to being fair when the only player in the whole system who did their job (the administrator) is expected to pay for the errors of the other two players?   There is not yet a perfect solution to this mess.  Congress tried to help by mandating a universal standard for electronically reporting enrollment and disenrollment to carriers under HIPAA (the 834 file specifications).  The “standard” is maintained and published  by the Washington Publishing Company (http://www.wpc-edi.com/), but just about every carrier publishes their own Companion Guide where they detail how the files they will accept differ from the “standard.”  To top it all off, many carriers will only accept 834 files for certain employers, but not for others.  Again, this is all a great big mess for administrators who are stuck in the middle.  COBRApoint does everything it can to help.  At the administrator’s option, COBRApoint will produce nightly eligibility change reports formatted for faxing or emailing; nightly eligibility reports in normalized database tables for integration with other systems; date range based eligibility change reports in many different file formats which can be retrieved by the administrator and/or their client(s); and last but certainly not least, full file eligibility files in the WPC 834 XML “standard” which administrators can map to carrier specific 834 EDI files using each carrier’s Companion Guide.  Hopefully one day the “standard” will in fact be a “standard.”  In the meantime, employers need to reconcile their carrier bills.