A health plan administration system is the core system of a health insurer. It holds the insurer's members, its plans and its contracts with doctors and hospitals. It checks each claim against them, decides the claim and pays it. In the industry it is also called a core administrative processing system, or simply the payer core. It is sold mainly to health plans in the United States, where insurers are called payers. One of the best-known products is built largely in an engineering centre in Bengaluru.
The system keeps four kinds of record. The first is members: who is insured, under which plan, from which date, and with which family members. The second is plans: the benefits and limits of each plan, set up through health plan benefits configuration. The third is providers: every doctor and hospital in the network, with their contracts and rates. Clean data about doctors comes from provider data management. The fourth is claims: every claim received, every decision and every payment.
When a claim arrives through a healthcare clearinghouse, the core system finds the member, the plan and the provider's contract. Then claims adjudication decides the claim, and the core records the decision. Doubtful claims go to payment integrity. The core also shares member and claims data with care management software, so that care managers can see which members are in hospital.
The hardest part of this business is replacement. Many American health plans still run core systems that are thirty or forty years old, often on mainframe computers. Each change to a plan or a contract needs a programmer, and some rules exist only in old code. But the plan cannot stop paying claims while it moves to a new system.
Here is a typical case. A non-profit health plan in Madison, Wisconsin, in the United States, has 600,000 members on a core system from the 1990s. It buys a new system. For a year, its team sets up every plan and contract again in the new system. Then it runs both systems side by side on the same claims, and compares the results. Each difference is either a set-up mistake or a hidden rule in the old code. In the second year, it moves its 90,000 Medicare members first, then its employer plans, a few groups at a time. The old system is switched off only after the last group has moved. This step-by-step method is explained in core banking modernisation. Banks and insurers face the same problem.
In India, a general or health insurer's core system does a similar job. It is called an insurance core system.