BlueCross BlueShield of Vermont Saves a Half-Million Dollars with VUE Distribution Compensation

Executive Summary

The largest health plan in Vermont, Blue Cross and Blue Shield of Vermont (BCBSVT), outgrew its previous compensation management system when its commission payouts increased from $3 million to more than $10 million. Toward improving operational efficiency, reducing costs, and maintaining excellence in service, BCBSVT implemented VUE Distribution Compensation to replace its existing home-grown system and satisfy growth demands placed on their commission processing. This commitment to superior technology has saved BCBSVT nearly a half-million dollars within the first year on the new system, with an expectation of an additional $2 million in savings over the course of the implementation

The Case

BCBSVT’s story underscores the role of technology in empowering carriers overcome the commission payout challenges facing the health payer industry today. Like many health plans, BCBSVT had been paying broker commissions as a percentage of insurance premiums. As the company experienced significant business growth, their custom-developed commission system was unable to manage the ever-growing data to process commissions on time. Analyzing data and designing incentive programs had become a difficult task. At the same time, with health costs escalating, inflated insurance premiums increased broker commission payouts by nearly 30%. With errors creeping into the system, commission calculation process became substandard.

“Since implementation, VUE Distribution Compensation has enabled us to examine every broker compensation arrangement in place,identifying out-of-date incentive programs and recognizing cases where broker commissions were not leveraging the desired business result”, said Ellen Yakubik, Director of Product Marketing.

Customer Profile

Blue Cross and Blue Shield of Vermont (BCBSVT) is a member of the Blue Cross and Blue Shield Association, an association of independent Blue Cross and Blue Shield Plans. BCBSVT is the state’s largest health plan, covering nearly 160,000 Vermonters, almost half of the state’s privately insured population. In 2008, BCBSVT paid out more than $588 million in claims for medical services provided to their members, and the Plan returns in benefits to subscribers about 87 cents out of every subscription dollar collected, making BCBSVT second only to the federal government in the amount of money they pay for health care services in Vermont.