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Four reasons blockchain technology is not being adopted


The adoption of blockchain in healthcare billings and payments can bring a number of benefits to both payers and providers.

As principal players in a highly regulated and specialized market, managed healthcare payers and providers must contend with both the broad mandate to operate at peak efficiency and the specific demands around billing and payments for services that are unique to the industry. A lack of consistency and accuracy when services are first billed and payments are first made means more work on the back end. These edits can negatively impact efficiency and costs and needlessly divert operational dollars from their intended focus: providing quality care at a reasonable price. It is shocking to see how often the basic stresses from paying or getting paid correctly for claims result in a significant drag on industrywide financial results.

Is there an approach that can give both payers and providers a more efficient, streamlined, and failsafe outcome? The answer lies in addressing the problems of data interoperability and inconsistency.

Lack of standardization means leakages and burdensome fixes

Much of the current payments problem stems from the lack of standardization in healthcare, wherein ever-changing complexity continues to challenge both providers and payers. This means that, as constant changes occur in the form of updates and revisions to plan designs, federal and state benefit guidelines, contracts between payers and providers, payment policy, and other industry factors, the integrity and accuracy of claims submission, adjudication, and billing processes continue to lag behind.

One of the root causes of this lag is the absence of consistency in platforms for billing and claims adjudication. It’s not that other industries don’t face problems from multiple billing and payment transaction systems; however, high transaction volume industries, such as banking and telecom, have been able to bring about a level of standardization that significantly minimizes leakage. Today’s healthcare industry, however, primarily relies on multiple layers of pre and post facto claims reviews to detect and fix payment anomalies and leaks.

While this approach has allowed payers and providers to muddle through, it has also translated into significant dollars being directed away from the core purpose of providing affordable, high quality healthcare. 

Blockchain offers systemic solutions

It’s our belief that some of these issues can be mitigated through the widespread use of a somewhat radical, technology-based distribution system. Blockchain, which forms the basis of several new transactional modes, is a peer-to-peer distributed ledger technology that uses a distributed network to ensure accuracy in recordkeeping and transactions. The system places a high value on accuracy, consistency, and security, as its basic structure ensures that every transaction is validated by all involved parties and sealed once complete, maintaining an accurate record of past events. The distributed nature of the database means that specific details on both sides of a transaction have to match before any final action is taken.

This concept has fueled the explosive growth of controversial cryptocurrencies such as Bitcoin and Ethereum and their related ecosystems. Still in the early days of its evolution, the blockchain concept has been met with opposing views, from those who believe it is the future to those who see it as nothing more than a fad. However, there can be no doubt that more and more applications of this technology are being identified and innovated constantly-healthcare billing and payment is one such application.

In fact, some believe that blockchain could be the much-awaited systemic fix to the long-standing billing and payment transaction issues that have plagued the healthcare industry for decades. There is some cause for this optimism: blockchain seems to offer a path to secure standardization in a broad-scale peer-to-peer ecosystem, with elements of the platform helping both payers and providers avoid inaccuracies in billing and payment. Blockchain places a premium on accuracy and security, to the point where transactions that do not meet a set of pre-determined parameters cannot be processed. This means the focus will be on “get it right the first time” as opposed to post facto reviews, audits and fixes.

In small but meaningful ways, innovation through blockchain has already begun in healthcare, including some initiatives that carry state backing-an important factor in large-scale adoption in the future.

A few noteworthy projects are:

  • MedRec (MIT Media Lab and Hamalka) and Prescrypt (Deloitte Netherlands, SNS Bank, and Radboud), which manages patient data and prescriptions through blockchain

  • Factom and Tierion blockchain-manages claims, payment and other services

  • Medical Society of Delaware, Medscient, and Symbiont use blockchain to streamline prior authorizations

There are several potential benefits to using blockchain in healthcare, but because we are limiting ourselves here to those with payment integrity-related implications, the ones we choose to highlight are: reduced dependence on the middleman or clearinghouse, increased speed and accuracy of claims processing, seamless prior authorizations, and reduced operational costs through elimination or minimization of layers of pre and post facto claims reviews and reprocessing.

It's important to note that blockchain does not eliminate back-end configuration completely. Payers, providers, and regulatory authorities still have to update relevant, commonly agreed-upon information so that it aligns with the latest changes to regulations, benefits, policies, and contracts. The advantage lies in the structure of blockchain, which ensures the accuracy and consistency with which transactions are executed once these updates are made.   

Blockchain also has the potential to help the healthcare industry beyond payment integrity by allowing more relevant and rich data to be made available to peers in the network-important metrics like electronic health records, prescription data, and data from wearable health devices. This data could lead to better and more aligned preventative health management and care delivery across the healthcare value chain, resulting in improved health and quality of care while addressing spiraling healthcare costs. 

Next: Four reasons why blockchain isn't being adopted



The potential good that can come from these apparent benefits begs the question, why isn’t blockchain being adopted en masse?  We see four reasons:

  • Too new. Blockchain as a commercially viable, scalable and secure (such that it meets HIPAA and HITRUST guidelines) platform is still largely untested.

  • Consumer trust. There are questions around how comfortable we as consumers of healthcare (patients) feel about our sensitive health information being made available through a peer-to-peer network, even if it does end up meeting HIPAA and HITRUST guidelines.

  •  Scale of Adoption. Since blockchain relies on peer-to-peer networks, getting different players in the value chain-payers, providers, and regulators-to buy in at a scale large enough to make a difference is imperative. Until a scale enabling a broad peer-to-peer network is attained, blockchain is not a viable option.

  • Cost of management. There are legitimate questions around the overall administrative costs associated with managing decentralized and distributed ledgers, as opposed to the efficiencies that come from a centralized approach.

As with any new, technology-driven concept, there will always be those who think it is the panacea to all problems and those who think it is nothing but an illusion or fad that will not have any tangible impact. With blockchain for healthcare, the answer probably lies somewhere in between. The best use of blockchain can only be found by continuing dialogue and debate amongst industry players, piloting more innovative initiatives, garnering regulatory support, and most importantly, demonstrating success over a sustained period of time. However, we believe that Payers are uniquely positioned to drive this by facilitating dialogue and piloting such change, working closely with the regulators and the provider community.  Especially as we see the irreversible shift toward value-based contracting, narrow networks, vertical integration and increased data sharing, the potential for payers to be at the forefront of this disruptive change is greater than ever, It will be interesting to see if they take up this challenge and be the torchbearers to unleash the true potential of blockchain to solve the fundamental claims, configuration, and payment integrity challenges that have plagued the healthcare industry over the past several years.


Maulik Bhagat is a managing director in the healthcare practice of AArete, a global consultancy specializing in data-informed performance improvement. He can be reached at mbhagat@aarete.com

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