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Blue Cross Blue Shield of Arizona (BCBSAZ) began experiencing gridlock in its operations about five years ago. Whether adjusting rates for annual increases or developing bids for potential new accounts, the Phoenix-based group medical and dental insurer was bogged down by its legacy technology, according to Chris Matthieu, BCBSAZ's ($622 million in assets) director of e-business technologies.
Prior to annual renewals, for example, it would take several weeks to several months to develop new rates because the calculations required new coding, Matthieu relates. Delays in rate calculations also caused slowdowns in new product development and often prevented the company from bidding on new business, he adds.
To remain competitive, BCBSAZ had to automate its rating process, Matthieu relates. "IT was asked to take more control over [this] area of the business," he says, adding that the carrier began searching for a rules engine about three years ago that would automatically calculate quotes based on rules established by BCBSAZ's underwriters.
BCBSAZ tested business rules engine software from Microsoft (Redmond, Wash.) and Resolution (Austin, Texas). The carrier found that Resolution's Interactive Rules Platform (Resolution iR) was easier to use, Matthieu says, as it does not require programming knowledge. Other business rules solutions rely on formalized relational tables or logical programming code - Resolution iR, however, is set up by intuitively documenting the business rules as they currently exist, he explains. As a result, BCBSAZ decided about 18 months ago to implement Resolution iR.
Installation began in early 2005 and took about three months to complete, Matthieu relates. To support the new software, BCBSAZ - which traditionally had been a Microsoft shop - had to purchase Linux servers. Matthieu notes, however, that the insurer wanted to explore other Linux-based applications, so it likely would have added the Linux hardware eventually. The carrier's small-group line went live with Resolution iR in June.
"Resolution lets BCBSAZ centralize its business rules and knowledge-worker decisions in a single rules-based repository. As a result, BCBSAZ can respond much quicker to market changes and opportunities while reducing IT development costs," Matthieu says. "This helps us be more flexible. ... We're not bound anymore by a legacy system that can't be changed." Rather than write new code to enable rate calculations, BCBSAZ now simply needs to add new parameters to the Resolution software, which recalculates new rates.
In the first three months after the installation, BCBSAZ's small-group business line produced 20 percent more bids, which Matthieu attributes to the software's ability to develop quotes quickly. The bid-creation process takes just a few minutes, down from a couple of weeks or months, Matthieu points out. And, the quicker the software can produce the quotes, the more bids the company can prepare.
Given the success of the business rules software for BCBSAZ's small-group line, the insurer intends to extend the technology to its large-group practice, Matthieu relates. He also expects the company to further reduce the time it takes to develop quotes as users gain more experience with the Resolution software.
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Case Study Profile
COMPANY
Blue Cross Blue Shield of Arizona (Phoenix; $622 million in assets).
LINES OF BUSINESS
Group dental and medical insurance.
VENDOR/TECHNOLOGY
Resolution Software's (Austin, Texas) Interactive Rules Platform business rules engine.
CHALLENGE
Develop policy quotes quickly for renewals and new business proposals.
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