How Magellan Health Migrated to Voice Over IP

At Magellan Health Services, the nation’s largest managed behavioral health-care company, our goal is to provide our nearly 60 million members with fast, efficient and expert service that connects them with the behavioral health-care help they need. Magellan covers one in four Americans, including health-plan enrollees, corporate employees and their dependents, and Medicaid and Medicare enrollees. Members receive a range of services, including employee assistance programs to help with the complexities of contemporary life, inpatient and outpatient mental-health services, substance abuse services and new services such as weight management. With 15 call centers that support clients across the country, technology plays a critical role in fulfilling our mission. When you are entrusted with managing people’s sensitive behavioral health issues, missing a call or putting someone on hold is not an option.

In 2004, Magellan embarked on a large-scale financial turnaround. One part of that effort was a Chapter 11 filing to reduce the substantial debt Magellan had accumulated several years prior to that. In less than nine months, Magellan emerged from Chapter 11 a financially strong company. A second part of the turnaround involved redesigning the company’s call-center operations to merge more than 30 locations into 15 call centers with five of our largest locations designated as Care Management Centers.

This consolidation significantly reduced operating expenses but placed a larger burden on the remaining call centers, making stability and promptness in answering members’ calls even more important. We had to ensure that we would answer calls within 30 seconds. Magellan call centers nationwide handle an average of 30,000 calls per day, so we knew this would be no easy feat.

How did we achieve this tall order?

We knew that there were pockets of time throughout the day, across time zones, where a portion of our staff was less utilized and therefore free to accept incoming calls. So to operate more efficiently, we searched for a technology that would enable us to better balance calls across geographical boundaries and reroute calls to those service associates who could respond immediately without incurring additional interstate toll charges. We also needed a way to reduce the total cost of supporting our telecommunications infrastructure. Our solution was voice over IP, or VoIP.

The immediate benefits of VoIP were clear. We would:

n Eliminate the high cost of intrastate long distance and inbound toll-free calls. VoIP routes calls digitally over Magellan’s WAN rather than over conventional telephone lines, bypassing that expense. Moreover, because the calls are sent over our WAN, they are independent of the geographical limitations of conventional telephone lines.

n Eliminate the cost of interoffice call transfers.

n Reduce the number of voice circuits needed to support the calls in our call centers.

n Greatly reduce the number of PBXs (expensive conventional telephone switches) needed to support our business operations.

The Encryption Bugaboo

Implementing VoIP, however, turned out be a challenge. To begin with, we needed a product that provided an incoming automated call distribution (ACD) system. We wanted the ACD to facilitate our need for live answers within 30 seconds, while also providing a streamlined, user-friendly manner to track telephonic activity and report on a monthly basis to the employers who purchase our services. After carefully reviewing several options, we decided to partner with Avaya to implement our VoIP solution.

While the selection process was relatively straightforward, what followed was anything but.

In early 2003, we began by first implementing a VoIP configuration in our test labs and then quickly progressed to a pilot implementation using Magellan employees as the test population. We converted all of the interoffice calls made by IT operations management to VoIP. Then we did the same for IT operations staff in our two largest call centers. Next, we rolled out VoIP to non-call-center staff in both of these call centers so that any problems encountered would not affect our critical customer-facing business operations. When we were confident of the VoIP infrastructure, we opened it up to all traffic between the two largest call centers (but only for calls between Magellan employees) and then included a third major call center for which we rerouted calls to eliminate intrastate toll charges. Today, two of our call centers are using VoIP to handle member calls.

To add further complexity to this endeavor, Magellan is now required by privacy statutes to use network encryption in order to protect the confidentiality of the extremely sensitive member information that we handle every day. Because voice traffic cannot handle much delay, VoIP requires that information be prioritized to meet its quality of service (QoS) requirements. But encryption makes that prioritization difficult because it hides the contents of the packets, and as a result the QoS software can’t tell which packet should have the higher priority.

Indeed, early in the implementation, the resulting poor call quality caused us to shut down the VoIP links for short periods while we resolved the latency issues. We have worked with both Cisco and Avaya to configure the routers and switches to improve QoS to ensure fast transport and throughput for VoIP packets. Now that we have solved the latency problem, we will be moving all of our call centers to VoIP for all calls, including member calls, by the middle of this year.

We have already seen significant ROI. Using VoIP for interoffice calls has saved Magellan an average of $3,000 per month. The elimination of intrastate calls by rerouting them into interstate calls will provide an additional savings of $2,000 to $3,000 per month in each office. In fact, one Magellan office serving a Medicare contract has achieved a savings of $5,000 per month.

With VoIP, we have also been able to better leverage remote personnel without increasing operating costs. In addition, VoIP allows Magellan to consolidate PBXs without having to consolidate offices, enabling us to retain our staff in geographically dispersed locations. The PBX consolidation enables Magellan to reduce by almost 30 percent the recurring cost of multiple voice T1 lines and eliminate the need to pay for a long-distance carrier to forward calls to our after-hours call centers. Once we implement VoIP for all member calls, Magellan will also eliminate the high cost of toll-free call-routing features.

The initial impetus for Magellan to implement VoIP was to ensure that we answer member calls within 30 seconds while reducing operating costs. We have achieved that goal. Ultimately, VoIP will permit Magellan employees to be completely independent of physical PBXs and other telephony devices. With VoIP, we can make or take telephone calls wherever there is an Internet connection.