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Management Strategies

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Jay Levine Focuses BCBS of Minnesota on the Customer

Hired to be a partner to the business, SVP and CIO Jay Levine is modernizing BCBS of Minnesota's IT organization and transforming the carrier into a customer-focused enterprise.

Jay Levine
The phrase "May you live in interesting times" is intended as a curse, but that's not how Jay Levine sees it. As SVP and CIO of Blue Cross and Blue Shield of Minnesota, the state's largest health insurer with 2.7 million members, Levine is thriving in what are probably the most "interesting" times the health insurance industry ever has experienced. And to help the Eagan, Minn.-based company take advantage of the changes wrought by healthcare reform, he is leading a complete transformation of BCBS of Minnesota's IT organization that affects everything from its core systems to its sourcing models to its culture.

"It's a fairly intense job," Levine concedes. "Any time you're in a market so thoroughly undergoing change, it's a great place to be if you love change -- and I do. It's a very exciting time, in spite of, or because of, the challenges." When Blue Cross and Blue Shield of Minnesota ($2.8 billion in assets as of Dec. 31, 2009) CEO Patrick Geraghty hired Levine in November 2008, however, it was obvious to both executives that the company would need to evolve dramatically in order to respond to the looming changes in the healthcare business, and the IT organization was where much of that change would have to occur.

"Historically, CIO jobs were back-office jobs. The vision for this job was to be much more of a strategic partner," recalls Levine, who previously oversaw compliance and analytic solutions for financial services firms as EVP of product development/CTO of Wolters Kluwer (Minneapolis). "I was hired [by Geraghty] with the expectation that … I would be a full member of the executive team setting the strategy for the company, making sure our technology strategy was … part and parcel of how we deliver services and products to our customers."

This mandate meant not only addressing ongoing demands to reduce the costs of health insurance administration and IT operations, but also transforming BCBS of Minnesota into a more responsive, customer-focused organization. The result has been a multimillion-dollar legacy transformation effort "to make us more nimble and to bring us closer to a more real-time B2C [business-to-consumer] environment from what historically was a B2B, large group, batch environment," Levine reports."We really want to make sure any investments in IT … focus on the member and provider experience. Our goal is to make all transactions frictionless and really get to a world-class e-commerce environment."

According to Levine, his organization is focused on two main areas: customer-facing systems, or portals; and transactional systems, including claims. BCBS of Minnesota partnered with Atlanta-based Connecture on its portal modernization initiative, which started in 2009 with the carrier's broker/distribution and individual channels and is now about 50 percent complete. "We've had great uptake on the consumer side," Levine says. "Between 25 and 30 percent of individual transactions are done through the portal." On the provider side, he adds, the carrier is moving off of a set of proprietary portals. It has taken an equity stake in Availity (Jacksonville, Fla.), "which along with doing our clearinghouse transactions also provides portal services to … our provider community," Levine reports.

He expects both portal initiatives to be completed in 2011, while the transactions/claims modernization program is likely to run until 2014. That project includes an infrastructure upgrade to enable compliance with the HIPAA Version 5010 EDI mandate for electronic healthcare transactions that the government will impose in 2012. But, according to Levine, "The most important piece is migration off our proprietary claim system, which has been in-house about 25 years, to a set of managed application providers." NASCO (Atlanta), a Blue-owned utility, will take on BCBS of Minnesota's commercial book of business, and King of Prussia, Pa.-based TMG Health, a BPO-managed application provider, will handle the company's government book of business (Medicare, Medicaid and related programs).

"That was a build-versus-buy decision," Levine relates. "The way to get the best service and to meet the continuing [government] mandates was to partner with someone who does this on a scale basis for a living." BCBS of Minnesota will continue to handle claims adjudication and processing, but, "The systems themselves are maintained [and] managed by a third party."

Under Levine's watch BCBS of Minnesota also has embarked on some "limited" outsourcing of variable development and maintenance activities related to the legacy modernization. The company's two "strategic partners," he says, are IBM Global Services (Armonk, N.Y.) and Cognizant (Teaneck, N.J.).

The IT organization, which primarily is a Java/IBM shop, will continue to "run and support … anything that touches our members or distinguishes us," Levine emphasizes. This includes analytics and informatics, financial management, customer service, and call center and health management. According to Levine, the company primarily partners with Cary, N.C.-based SAS as its analytics tool provider and with Teradata (Dayton, Ohio) for the data warehouse infrastructure.

Eye on the Ball

Two years into his efforts to modernize IT and transform the technology leadership and culture at BCBS of Minnesota, Levine is clear about what it takes to successfully execute these kinds of initiatives. "These are massive programs, ... into the hundreds of millions of dollars. These are game-changing efforts," he points out. "You can't take your eye off the ball. I am deeply involved at a detailed level." At the same time, Levine advises, "Stay patient. Big change like this takes a long time."

Another requirement, according to Levine, is to "stay connected to the business. It is absolutely essential not to bury yourself in the back room." Accordingly, "I'm really trying to get my [IT] leadership ... to become more business managers with a technology background and a little less pure technology delivery and operations people. They really needed to step up their collaboration with their business partners," he says.

But, "With collaboration comes transparency," Levine adds. And this requires another cultural change, he notes: "[giving] people ... the sense of security that it's OK to be completely transparent so that we can get the best collaboration with our business partners possible."

Kathy OwenJay LevineMark ShowersPete AtwaterRichard ConnellKelly HallGreg SchwartzRon Boyd

Katherine Burger is Editorial Director of Bank Systems & Technology and Insurance & Technology, members of UBM TechWeb's InformationWeek Financial Services. She assumed leadership of Bank Systems & Technology in 2003 and of Insurance & Technology in 1991. In addition to ... View Full Bio

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