READ THE CASLET ANSWER THE BELOW QUESTION

In 1999, Cigna HealthCare, one of the largest health insurers in the USA was operating with outdated IT systems. The firm used different systems for different activities like membership (enrollment), processing the medical claims and verifying customer eligibility. The customer information pertaining to medical claims was spread across 15 distinct IT systems, all of which were more than 15 years old. The eligibility database was managed by another 15-year old system. The claims and eligibility information systems were not inter-connected. Hence, separate bills were being produced for each product across each division. Customer service representatives found it difficult to process the 120 million claims per year that Cigna HealthCare received using the old and disintegrated information system. Further, a number of doctors complained that Cignas old and inefficient processing system delayed the payment of their medical benefits claims.

To rectify the problems, Cigna decided to completely re-haul the outdated existing system and replace it with a more efficient and up-to-date system. The company planned to consolidate the information residing on a number of disparate IT systems and develop an integrated system that could handle customer transactions like sales, enrollment, customer claims processing, billing, etc.

To fulfill these objectives two systems were needed one for the HMO business and another for its indemnity business. An integrated care management system (ICMS) was planned to replace the varied utilization management systems with one national Care Management Tool that would enable Cigna to provide consistent and quality healthcare services.

Cigna planned to deploy two platforms and then connect them to each other for processing. In this way, the front-end application of the claims and eligibility would be integrated with the back-end applications like banking and billing. The aim was to speed up the processing of 120 million medical claims without much human intervention.

However, the team found that they could not connect the platforms as they were quite different from each other. Hence, they had to refurbish the back-end systems completely. Also, as the migration process started, serious customer service problems came to light immediately.

One problem was that the front-end applications, used by service representatives could not retrieve data from the back-end systems easily. The back-end database was not filtered and sorted out, and even if the service representatives could retrieve, the information did not appear correctly. Customers also faced difficulties in obtaining information relating to health coverage plans.

Answer the following Questions:

A. Write in detail regarding the operational problems faced by Cigna due to out-dated information Technology (IT) systems. (7 Marks)

B. Cigna undertook the rehauling of systems with the twin objectives of integration and consolidation. With regard to case data, did the company succeed in achieving these objectives? Why/why not? (8 Marks)