Blockchain Technology: Increasing Efficiency in Healthcare

You may have started hearing about blockchain technology as the next generation of internet security. Many stakeholders in the healthcare industry are thinking “what is blockchain, is it real, and how will it impact my organization?”

Blockchain is a way for digital information to be distributed but not copied. It is a decentralized database within a distributed network where each transaction, or block, is linked to the previous block and updated in real-time within a digital ledger, providing transparency to the entire network. This makes that data persistent and immutable. Not only is blockchain a decentralized, distributed digital ledger, it is also lives in a state of consensus, continually reconciling, and essentially guarantees the validity of a transaction by recording it across the connected network of digital registers.

In addition, blockchain technology expedites processing by way of smart contracts. A smart contract is a computer program that defines and enforces contractual terms and conditions as the block is being created. Unlike a “paper” contract, smart contracts leverages data as input and can take appropriate actions in real-time.

Blockchain security is expected to impact the financial services industry in the very near future through real-time clearance of payments and identity verification and management. In addition to expediting and securing global payments, consumers and corporations will now have better visibility into these financial services transactions, each being a node in the network themselves.

As it relates to healthcare, there are many potential use cases for blockchain. As of April, 2017, Estonia and Dubai are leading the way in the use of blockchain technology in the healthcare industry. They are using blockchain technology to facilitate secure and reliable electronic health records, with the goal of making healthcare processes more efficient, providing transparency to patients, and improving the healthcare system.

Another valuable use case is revenue cycle management (RCM). More specifically, real-time adjudication of claims. As we know, RCM and claims adjudication involve highly complex processes. Each patient, for example, has a specific benefit plan and each benefit plan has its own coverages. Coverage for a specific test isn’t universal. Some plans will cover it while others don’t, and the reimbursement to the provider and laboratory may be different for each benefit plan.

Blockchain can simplify, expedite, and secure this process. Within the blockchain, smart contracts will provide transparency that does not exist today. It will also enable true real-time claim adjudication. By having patients, providers, and payers connected through the blockchain distributed ledger system, all parties have access to information more readily. Let’s look at a simple example with blockchain technology:

1. The patient makes an appointment to see their doctor
2. Eligibility is checked in real time
3. At the appointment, the provider recommends a specific test
4. While the patient is at the provider, the provider can confirm not only whether the test is covered under the patient’s benefit plan and whether prior authorization is required, but also what the patient’s out of pocket expense will be for the test
5. The provider also sees how much they will receive in reimbursement from the payer
6. If the patient chooses to proceed with the test, the test if performed and the patient pays any co-pay or balance due
7. The lab submits the claim, which is automatically adjudicated and reimbursement is initiated
8. The test results are returned to the physician and are visible to the patient

Providers, patients, and payers are three of the main transaction partners in most healthcare transactions. Government agreements and private benefit plans become smart contracts in a blockchain network. Smart contracts not only define the rules and penalties around an agreement in the same way that a traditional contract does, but it can also automatically enforce those obligations.

Nothing is ever out of sync between transactional partners because all parties have a copy of the same transactional ledger. This removes inefficiencies in the transactional process and by extension those administrative costs. According to Black Book Research, 70% percent of health insurance payers are planning to have blockchain technology integrated into their systems by the beginning of 2019. In the same survey they found that 98% of payers with more than 500,000 members are actively considering or in the process of deploying blockchain.

“Blockchain technology has potential to increase payment accuracy and revenue velocity, which will benefit payers, providers, and consumers themselves,” said Hyperledger’s Executive Director Brian Behlendorf in a September 25, 2017 article in Healthcare IT News. Hyperledger is an open source collaborative effort created to advance cross-industry blockchain technologies.

Blockchain seems to be here to stay. A report authored by Robert D. Boroujerdi of the Goldman Sachs Equity Research team highlights several use cases for blockchain technology, including streamlining back-office and administrative functions and regulatory reporting similar to many revenue cycle management activities. There is also a bipartisan Congressional Blockchain Caucus dedicated to the advancement of sound public policy toward blockchain-based technologies.

In short, blockchain is a digital architecture that can remove transactional inefficiencies, provide transparency, and secure the movement of items of value—be it money, healthcare data, or anything else of value, via integration across the spectrum of activities and transactional partners in the healthcare value chain.