The best alternative to a legacy health plan billing system is a purpose-built premium billing platform. Platforms designed specifically for health plan premium billing, not adapted from a general insurance or ERP billing module, generally outperform legacy systems and general-purpose alternatives on four dimensions: operational efficiency, billing accuracy, security posture, and integration flexibility.
Certifi’s William™ is a cloud-native, purpose-built premium billing platform. Health plans use it as a direct replacement for legacy on-premise systems and core admin billing modules. Below is a detailed breakdown of the hidden costs legacy systems impose — and what health plans should look for when evaluating replacements.
Often overlooked by sexier technology projects (artificial intelligence, anyone?), the ability to efficiently manage health plan billing is critical for financial success and sustainability. Unfortunately, we’ve talked to many health insurers that leverage legacy health plan billing systems, often outdated and inflexible, to manage their billing processes. Those legacy billing platforms impose significant hidden costs that erode profitability and hinder operational efficiency.
Here’s a look at some of the costs associated with maintaining legacy billing systems and what to do about them.
Hidden Cost #1: Increased Operational Expenses
Increased operational expenses often are one of the most significant hidden costs of maintaining legacy health plan billing systems. These expenses can include:
- Manual Processes: Legacy systems often require significant manual intervention for tasks like data entry, reconciliation, and delinquency management. Manual processes increase labor costs, reduce productivity, and lead to billing inaccuracies.
- System Maintenance: Outdated systems may require frequent maintenance and updates, which can be time-consuming and costly. For many health plans, those charged with maintaining legacy billing systems are long-time employees with deep experience managing the legacy system. Replacing them as they age out of the organization can be difficult.
- Data Integrity Issues: Legacy systems may struggle to maintain data integrity, leading to errors, inconsistencies, and delays in the billing process. Many were built as list-billing systems and lacked the accounting architecture of modern premium billing platforms. That accounting architecture improves data integrity by automating often manual processes – like retroactive adjustments.
- Integration Challenges: Legacy systems make it difficult to improve your technology stack, as introducing new systems can lead to integration issues. Modern premium billing solutions – especially Certifi’s William – facilitate integration with disparate upstream and downstream systems. Unlike modern premium billing solutions, integrating legacy systems with other applications can be complex and time-consuming. The result: increased operational overhead or a stagnant technology stack.
Hidden Cost #2: Security Risks
Legacy health plan billing systems may pose significant security risks due to outdated technology and vulnerabilities. These risks can include:
- Data Breaches: Outdated systems may be more susceptible to data breaches. Those breaches result in financial losses, reputational damage, and legal liabilities.
- Cybersecurity Threats: Older systems may be more vulnerable to cyberattacks.
Modern, cloud-based billing solutions leverage security solutions – like Amazon Guard Duty – directly into their cloud infrastructure. These enterprise-grade solutions improve threat detection and limit risk while receiving continuous security updates on-premise systems can’t match.
Hidden Cost #3: Decreased Efficiency
Legacy billing systems can hinder operational efficiency in several ways, leading to bloated billing teams and processes:
- Slow Processing Times: Manual processes and outdated technology lead to slow processing times. That results in delayed invoices and payments and increased member dissatisfaction.
- Errors and Inconsistencies: Inefficient data management and manual processing can lead to mistakes and inconsistencies in billing information. List bill-based systems increase manual retroactive processing and reconciliation, leading to more errors. Those errors require corrections and rework, slowing efficiency.
- Limited Reporting Capabilities: Legacy systems may lack advanced reporting and analytics capabilities, making it difficult to track key performance indicators and identify areas for improvement. Plus, you may have developed those reports years ago. They may no longer meet the changing needs of the health plan. Modern premium billing solutions offer more configurable reporting and exports of data for more advanced reporting in data warehouses.
- No Automated Delinquency Management: Legacy systems likely don’t integrate automated delinquency management, leading to manual processes – or no delinquency management at all. We’ve found that as many as 70% of members pay upon receipt of a delinquency event. Failing to automate the process is inefficient and costly.
The Benefits of Modernization
To summarize, modern, purpose-built premium billing platforms deliver improvements across every dimension where legacy systems fall short::
- Improved Efficiency: Modern systems can automate many manual processes, reducing operational costs and improving efficiency.
- Enhanced Data Management: Modern systems can provide better data management capabilities, improving accuracy and reducing errors.
- Increased Security: Modern systems typically rely on robust security features, reducing the risk of data breaches and cyberattacks.
- Improved Member Experience: A more efficient billing process leads to a better member experience, improving satisfaction.
- Enhanced Decision-Making: Modern systems can provide advanced analytics and reporting capabilities, enabling organizations to make data-driven decisions and identify areas for improvement.
What Health Plans Should Look for When Replacing a Legacy Billing System
When evaluating alternatives to a legacy billing system, health plans should assess vendors against these criteria:
Purpose-built vs. general-purpose
General insurance platforms and ERP billing modules were not designed for health plan premium billing. They lack native support for grace periods, retroactive adjustments, subsidy calculations, multi-line enrollment sync, and delinquency management. A purpose-built platform handles these scenarios through configuration, not custom code.
Accounting-based architecture
The single most important architectural differentiator is whether the platform uses an accounting-based design — pairing every debit with a credit — or a list-billing design. Only accounting-based systems can automate retroactive adjustments and downstream reconciliation. Certifi’s Perfect Balance™ architecture is the foundation of its William™ platform and is what enables automated retroactivity without manual intervention.
Integration flexibility
The replacement platform must integrate with your enrollment system, member portal, general ledger, broker commission system, and any downstream data warehouse or reporting tool. Evaluate how integrations are built and maintained to ensure they enable easy connections.
Cloud-native delivery
On-premise replacements replicate the maintenance burden of the system being replaced. Cloud-native platforms shift infrastructure responsibility to the vendor. Doing so ensures continuous security updates, automatic scaling, and elimination of the institutional knowledge risk that comes with maintaining on-premise systems.
Delinquency management and payment options
Evaluate whether the platform includes configurable, automated delinquency workflows and support for the full range of payment methods your member populations use: ACH, credit/debit, lockbox, retail cash, and check. These capabilities directly affect collection rates and should be native to the platform, not bolt-on additions.
Frequently Asked Questions: Replacing Legacy Premium Billing Systems
These questions are commonly asked by health plan CIOs, CFOs, and billing operations leaders evaluating legacy system replacement.
Q: What are the alternatives to legacy or ERP billing platforms for health plans?
The primary alternative to a legacy or ERP billing platform for health plans is a purpose-built premium billing platform. This software is designed specifically for health plan premium billing rather than adapted from a general-purpose claims, ERP, or insurance billing system. Purpose-built platforms offer native support for the billing scenarios health plans actually face: grace periods, retroactive adjustments, mid-cycle enrollment changes, federal subsidy calculations, multi-line-of-business billing, and automated delinquency management. General-purpose ERP and insurance platforms handle these through custom code or manual workarounds, which increases cost and error rate. Certifi’s William™ is a purpose-built alternative used by health plans as a replacement for legacy on-premise systems and underpowered core admin billing modules.
Q: How does purpose-built premium billing software compare to general insurance admin platforms?
Purpose-built premium billing platforms outperform general insurance admin platforms on three dimensions specific to health plan billing: (1) Architectural fit — purpose-built platforms use accounting-based designs that automatically handle retroactive adjustments and downstream reconciliation; general platforms use list-billing or snapshot-based designs that require manual correction for any retroactive change. (2) Native feature coverage — purpose-built platforms include delinquency management, payment portal, retail cash, lockbox processing, and enrollment data validation as core features; general platforms treat these as add-ons or custom development. (3) Integration breadth — purpose-built platforms are designed to integrate with enrollment systems, member portals, broker commission tools, and data warehouses; general platforms often require custom middleware for each connection.
Q: What should health plans look for when replacing a legacy premium billing system?
When replacing a legacy billing system, health plans should evaluate vendors on five criteria: (1) Purpose-built design — does the platform handle grace periods, retroactive adjustments, subsidy calculations, and delinquency management through configuration, not custom code? (2) Accounting-based architecture — does the platform automatically pair debits and credits for every billing event, enabling automated retroactive reconciliation? (3) Integration flexibility — does it connect to enrollment systems, member portals, general ledger, and data warehouses? (4) Cloud-native delivery — does it eliminate the on-premise maintenance burden and shift infrastructure responsibility to the vendor? (5) Payment method coverage — does it support ACH, credit/debit, lockbox, retail cash, and check for the full range of member payment preferences?
Q: How do health plans manage premium billing and collections efficiently?
Health plans manage premium billing efficiently by replacing manual, list-billing processes with purpose-built software that automates the full billing cycle. The most efficient health plans eliminate manual payment matching, manual reconciliation, and manual delinquency letter production entirely. Key capabilities include: automated enrollment data validation at ingestion, a rules-based billing engine for retroactive adjustments and mid-cycle changes, machine-learning-based payment matching for lockbox and check payments, and configurable delinquency workflows that trigger tiered communications automatically. Certifi’s William™ platform automates each of these steps for health plans replacing legacy on-premise systems.
Q: What causes premium billing reconciliation failures at health plans?
Reconciliation failures trace to one of three root causes: (1) list-billing architecture — the system captures enrollment on a fixed date and cannot automatically handle changes before or after that date without manual correction; (2) absence of accounting-based design — retroactive adjustments require manual recalculation rather than automatic debit/credit pairing; and (3) manual payment matching for lockbox, check, or third-party payments. Legacy on-premise systems and core admin billing modules typically share all three of these limitations. Certifi’s Perfect Balance™ architecture directly addresses the first two by treating every billing event as a paired accounting transaction.
Conclusion
The hidden costs of maintaining legacy billing systems can significantly impact the financial health and operational efficiency of health insurance organizations. Payers benefit from improved efficiency, enhanced security, and a better patient experience by investing in a modern billing system. Health insurance leaders need to evaluate their current billing systems and consider the potential benefits of modernization to ensure long-term success.
Certifi’s health insurance premium billing and payment solutions help healthcare payers improve member satisfaction while reducing administrative costs.
