PayPilot Enables ASO's Use of Electronic Payments

Many large businesses have decided to utilize a self-funded health insurance plan, administered through Administrative Services Only (ASO) from a health insurance carrier, to cover the medical expenses of their employees.  ASO plans help businesses control cost, offer flexibility and retain employees.

Many health insurance companies offer ASO plans, delivering administrative services, such as claim processing and billing, to employers.  For example, with an ASO plan the employer funds the claim payments but pays an insurance carrier to process the claims.  This provides a valuable service to the employer to control costs and improve retention of key employees.

Traditionally, ASO claim payments have been made via check.  The insurance carrier issues the claim payments on behalf of the employer in the form of a check to the provider.  Using MICR check printing technology, the insurance carrier is able to generate these checks using the employer’s bank account without having to purchase pre-printed check stock with the employer’s bank account information.

However, using checks as the method of payment can still be costly and inefficient.  As an example, checks must be printed, stuffed into envelopes and mailed.  Checks also need to be reconciled.  And sometimes, these checks must be stopped and reissued.  Or checks may need to be included in escheat (unclaimed property) reporting.  The costs of check printing are significant and the use of checks as a method of payment is declining in popularity for most demographics. Today, there are more efficient ways to make payments.

Electronic payments provide a more efficient, less expensive and more secure method of payment.  And new payment vehicles, such as single use accounts (SUA) and tokenized payments, provide additional benefits:

• SUA payments are virtual credit cards that are only good for a specified amount.  The credit card number is provided electronically to the provider.

• Tokenized payments provide the ability to make payments to email addresses and cell phone numbers.

SUA and tokenized payment methods offer the added benefit of not requiring the insurance carrier to store and maintain provider bank account information.

Unfortunately, these more efficient payment methods are difficult to implement for ASO payments.  Unlike checks, electronic payments cannot be issued by the carrier from an employer’s bank account to the providers.  And all of these modern payment methods require special accounting procedures.

PayPilot® is a software solution created by Prelude Software that addresses these issues along with many others.  PayPilot offers the flexibility and capabilities often inherently missing in carriers’ existing source systems. PayPilot can scale to work as narrow or as broad across the client’s enterprise to fill the functionality gaps in the existing payment processing workflows.  By linking your existing siloed systems to the PayPilot solution, workflows can easily be automated, from payment request to payment creation and reconciliation.  Reducing the manual steps in your payment process decreases handling costs and increases efficiency along your entire payment workflow.

For ASO payments, PayPilot automatically generates funding transactions in the form of ACH debits to transfer money from the employer’s bank account into the insurance carrier’s bank account.  These funding transactions correspond directly to the outbound payments made to providers on behalf of the employer.  PayPilot also generates the necessary general ledger transactions and reconciliation records for these payments.

ASO plans provide a great opportunity for businesses to design their own health coverage plans and control costs. And Prelude’s PayPilot software give insurance companies the ability to utilize modern payment methods to make efficient, cost-effective and secure payments.

From MICR Checks To Electronic Forms Of Payment

Recently, in the CFO Journal, a section of the Wall Street Journal, an interesting article regarding “Why Can’t We Get Rid of Checks” highlighted that U.S. businesses still pay half of their bills with paper checks.

Being a software solution company that provides outbound payment processing solutions, Prelude Software can confirm that statistic. Although Prelude’s PayPilot® solution enables far more payment method options than MICR check processing, we understand the nuances around the MICR check process that companies require. It is far more than just check layout and proper placement of the MICR line. Along with many self-service features, Prelude can help with anything a company would desire in design, layout and printing.

When people talk about real-estate, the familiar and apropos phrase is, “... the three most important things you need to care about are location, location, location”. In payment processing, we have our own mantra, “... the three most important things you need to care about are safety, security and control”.

With Prelude’s software application, PayPilot, businesses across many different industries feel they have more safety, security and control because of the features and functionality we have built in to them. As an example, user authentication, user permissions, signature authority, fraud protection (e.g. Positive Pay) and approval processing are all fully met using the best practices Prelude helps establish and administer.

Along with the stated top three things, it might be argued that flexibility would be a fourth item of equal importance. PayPilot is robust in features and functions that allow significant flexibility. One particular example of flexibility is the notion of being “agnostic.” PayPilot allows businesses to have the flexibility to bebank agnostic (add or change banks within minutes, at their discretion, with self-service capabilities) andprinter agnostic (use any printer that supports MICR toner or ink). These two examples represent amazing flexibility that businesses typically do not have on their own. By contrast, without PayPilot many companies have interfaces between their core, originating system and their bank(s) that make it difficult to add or change because of the time, resources and cost necessary. Similarly, without PayPilot, many businesses are pigeon-holed into a particular family of printers because it is all that the originating core system was enabled to handle, therefore narrowing any options for better performance and disaster recovery.

Related, Prelude’s solutions also help with all of the necessary ancillary processing like syncing with other backend systems, like general ledger or web portals, or third-party software for escheat, document management, 1099 or estimating, and the U.S.Government for OFAC scrubbing to be compliant with the U.S. Patriot Act.

As the WSJ article attested, most companies are paying up to $20 per check to process. PayPilot enables multiple ways to bring the cost down and be more effective and efficient. One way that clients benefit fromPayPilot in this regard is the ability to bulk payments. In essence, payments that are to a recurring payee, like a glass vendor or rental car company, can be aggregated and sent out as one payment instead of hundreds.  PayPilot will also send the EOP (explanation of payment) or stub info for each of the individual payments that roll up to the aggregate.

Getting back to the main point of the WSJ article, why it is difficult for businesses to get rid of paper checks, we at Prelude recognize that one of the biggest barriers is the limited payment capabilities in existing infrastructure at many companies. Many legacy applications do not include the ability to make electronic payments. Upgrading or replacing these legacy applications can be expensive and time consuming. PayPilot provides the ability to bridge this technology gap.

Prelude has tremendous experience and expertise in helping companies to migrate payments from paper check to other, more efficient and cost-effective payment options. PayPilot can help extend the life-cycle of existing core, originating systems that may be incapable of requesting more than a paper check process. As an example, the core system still thinks it is sending the payment out as a check, while PayPilot recognizes and processes payments as an electronic payment. This allows for significant cost savings and processing time savings. From ACH, debit cards, virtual ghost cards (single use accounts), to tokenized payments,PayPilot enables multiple options beyond MICR Checks for issuing payments.

PayPilot is used by savvy businesses like AAA Insurance Exchange, ConEd, Country Financial and Esurance. For more information how you can benefit from PayPilot, contact Bill Clausen at 508.650.0033 x321 or bclausen@preludesoftware.com.