Transforming legacy systems into a modern health insurance experience | Oscar Rx | hioscar Blog | Oscar
Transforming legacy systems into a modern health insurance experience
Building a modern insurance operations tech stack and process is a huge undertaking. We're doing it anyway.
Behind the ScenesOur Culture
7 min read
Jesse Horowitz
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Technology is tightly woven into the fabric of our daily lives. We use it to hail rides, order food, check weather forecasts, pay our credit cards, and stream TV shows to our smartphones. But even something as simple as updating your own mailing address is challenging in today’s health care system.
The problem is that the technology powering health insurance is, for the most part, old and outdated, and it wasn’t built to play nicely with other systems. In the case of updating an address, for instance, a member’s online profile page may not talk to the insurer’s member database, and the member database may not talk to the claims processing system. In that case, someone has to manually update each location to reflect the new information, which is time consuming and provides ample room for errors to creep in.
This less-than-ideal user experience has remained the status quo in health care for years. Before web-based products went mainstream, consumers just called their insurance company for help, so there was no pressing need to fix system integration issues. Now, we can access bits and pieces of our health information online—test results in a lab’s portal, prescriptions in a pharmacy portal, and claims in an insurance portal—but they’re all disconnected, leaving it up to us to tie everything together. This isn’t the seamless web experience we've come to expect.
To catch up, the industry has to transition to modern, flexible, integrated technology. But the only way this can happen is if it’s built from the ground up, using the latest programming standards, replicating all of the complex rules and workflows currently in place, and developing strong connective tissue between each part.
It’s not surprising that insurers have stuck with old systems for so long. Rebuilding the entire insurance tech infrastructure is an enormous, complicated—some might even say impossible— undertaking. But for Oscar, it’s an imperative.
Since day one, Oscar has had an ambitious vision for what the health care experience should be: easy, streamlined, and transparent. The end goal has always been to “own the stack”—meaning the team would build and maintain its own end-to-end system that powers all parts of the insurance operations ecosystem to provide a seamless experience for members.
Jesse Horowitz, VP of Claims Technology and Operations at Oscar, explains it this way:
“Oscar was founded to provide a connected, consumer-driven health care experience. It can’t deliver on that promise without building its own systems from the ground up. We need to own the technology from end-to-end so we can deeply analyze our workflows and make rapid changes when necessary. So that’s what we’re doing.”
The team is about three years into the process. It’s been a long road to get where they are today, and they still have a long way to go, but they’re committed for the long haul.
Although the team wanted to build their own insurance system from the start, delaying a product launch until after developing, testing, and deploying a totally new insurance infrastructure wasn’t feasible. Early on, Oscar contracted external vendors to manage insurance operations, which included everything from claims processing (opens in new tab) to payments to benefits adjudication to provider and member data verification. This isn’t an unusual setup—many health care companies (and tech startups, for that matter) use vendors for similar types of operational tasks to get up and running quickly.
Working with vendors in the beginning was beneficial in a number of ways. Thorsten Wirkes, VP of Insurance Operations at Oscar, says, “The company couldn’t have gone to market when it did, or grown to the stage it’s reached today, without our vendors’ initial support.”
With over 30 years of operational experience and industry knowledge under their belt, these vendors provided Oscar with deep insight into how to run an insurance operations engine. This freed up the team to focus on developing its consumer technology (opens in new tab), plans, network contracts, and customer support infrastructure prior to open enrollment for the 2014 plan year.
Even so, the team knew that outsourcing was only a short-term solution. From the beginning, they encountered operational challenges that could potentially cause problems down the line. The biggest issue was scale: With only a small team in place, the vendors struggled to keep up with the increasing volume of requests to support Oscar’s evolving products and rapidly-growing member base.
This led Oscar to phase two of its approach: Insourced operations using existing technology.
Oscar 2.0: Insourced operations, legacy tech
Oscar began exploring the possibility of acquiring their primary vendor’s codebase and insourcing operations early on. However, because of the complexity of the work and the contract terms, it took awhile to iron out the details.
Operational transition
In fall 2015, Oscar’s billing and eligibility team began training onsite with the vendor as the first step in the transition process. They spent five months learning from the vendor’s staff before moving operations to Oscar headquarters in February 2016. In August 2016, claims processing, network management, and system configuration began transitioning to Oscar as well, wrapping up in January 2017.
The OG Oscar operations team, ready for onsite training.
Once operations moved in-house, the team was able to drive some immediate efficiencies by optimizing their process. Over the course of 3 months, they:
Reduced billing errors (<81 eligibility defects per 100K members).
Improved bill processing speed (99% within prompt pay term vs. 93% prior).
Turned claims around more quickly (less than 3 days of claims inventory vs. more than 7 days prior).
Reduced readjudication rates (95% of issues and escalations resolved within less than 2 days vs. over 5 days prior).
Sped up configuration of new benefits and contracts (1 day vs. over 7 days prior).
Technology transition
As operations transitioned, Oscar’s engineering team began running the vendor’s codebase on company servers. Then came months of testing to ensure Oscar’s version worked exactly like the existing system. The team also made sure their instance of the code synced with the technical workarounds they’d already built to streamline interactions between Oscar’s internal systems and the vendor’s code.
In February 2017, the team spent a white-knuckled Saturday afternoon deploying their version of the code and taking the vendor’s version offline. They held their breaths as they began to work with the live system.
The moment of truth...
Nailed it! Everything behaved as expected. The rollout was the culmination of 7 months of development work—an incredibly tight timeline for such a complex undertaking. It was a major accomplishment for the team.
Oscar 3.0: Building a modern insurance ops infrastructure
Today, the engineering team is working hard to bring Oscar’s original vision to life. They’re currently developing a brand new platform to handle claims processing workflows, benefits adjudication, and prior authorizations, slated to roll out in 2018.
In tandem with the new technical infrastructure buildout, the operations team is developing workflows that will drive additional efficiencies in the new system, including:
Autoprocessing eligibility and billing to reduce room for manual error.
Better monitoring of data sharing with partners to ensure up-to-date information.
More nuanced configuration for provider contracts and benefits to further eliminate denied or delayed claims.
Tighter fraud and abuse monitoring to prevent unnecessary bills for members.
Thorsten says, “The ultimate goal is to reduce operational variance as much as possible. The new system will anticipate how a claim should be processed. This will help the team determine which levers to pull to achieve the desired time, cost, and accuracy outcomes.”
Jesse puts it this way: “We have the opportunity to revisit what right means in the context of a complex claims system. It’s a daunting task, but also a really exciting opportunity for us.”
Once the main infrastructure goes into testing in the second half of 2017, the team will start developing new member information and eligibility databases, as well as building connections between each part of the system and the existing in-house tools so everything links up seamlessly.
This process won’t happen overnight. Every piece of the system will be extensively tested, refined, and rolled out slowly to make sure day-to-day operations remain smooth.
“I sometimes get this image in my mind of an old bridge with a new bridge alongside it. We’re going to be in that mode for awhile, driving a teeny bit of traffic over the new bridge, and then moving more traffic over it until eventually, we can get rid of the old bridge,” says Jesse.
A new foundation for consumer health insurance tools
Once these new systems and supporting processes are implemented, the team can begin to radically transform the health insurance experience for consumers. Building on this solid foundation, Oscar can give members more control over their health care data, communications, appointments, and care.
Updating an address is just one small star in a galaxy of possibilities. Imagine being able to search for a highly-rated, nearby specialist who matches your gender and language preferences, book an appointment at a convenient time, get a prior authorization for a treatment from the doctor, and view lab results and bills afterward—all in one online portal you can access from anywhere.
That’s what a health care experience built on modern technology looks like. That’s the future Oscar is striving to make a reality.
