Blockchain Could be the Answer to Healthcare’s Interoperability Problem

August 2017

By Patrick Pilch, Sanjay Marwaha, Chuck Pine and Greg Schu

Healthcare has an interoperability problem and it’s costing providers and payers money while leaving them open to compliance vulnerabilities. As providers are increasingly required to coordinate with partners on the care continuum or risk reimbursement penalties, they are being asked to exchange their siloed data and keep track of reimbursement information and contractual processes with more third parties. The potential for inefficiencies, inaccuracies—and data security slipups—has never been higher.

Enter blockchain.

A permanent and distributed ledger of transactions that supports many different uses, from transacting in cryptocurrencies like bitcoin, to verifying information and contractual processes between a health plan and a patient, the technology could streamline the process of sharing information.

“Take a standard health plan/provider agreement, or in risk-based relationships, provider/provider agreements, where each provides the other with a paper contract. Each entity loads the agreement into their separate systems, and it defines their relationship,” wrote Bruce Broussard, CEO of Humana, on LinkedIn Pulse. “The payor also has a contract with each person who has purchased a health plan. Using blockchain, the health plan and provider could translate the wide variety of agreements needed to contracts on the blockchain so everyone has visibility, and clarity exists for both the provider and the member. So when a transaction is processed, the blockchain checks the authorization, and everyone can view the status, history and next steps.

“This transactional payment information could also be connected with the clinical service details to provide a holistic view of the patient’s interaction. Storing the information to create this holistic view in blockchain would create a foundation that enables interoperability and innovation across the industry.”

By using blockchain, providers and payers would do more than make the reimbursement process more streamlined and secure. They would also mitigate the growing risk for false claims because every alteration of information in blockchain is automatically recorded, creating heightened levels of transparency and accountability. Moreover, as more clinical outcome information is gathered and iterated over time, effective prospective risk stratification and management can be deployed which, in turn, can improve planning.
Is there an example of applying blockchain in healthcare, practically speaking? We use the audit process as an example of how the technology could be applied across the industry more broadly.


Examples of blockchain in the audit process

Blockchain could provide a clear enhancement to several aspects of audit and compliance processes, both of which can be resource-intensive.

These processes can trigger rounds of manual reconciliations, involve data that requires significant sampling or full testing, and demand hours of often-duplicative data analysis due to a lack of systems integration.

Efforts required to validate transactions manually can drive up the cost, stretch out the process and decrease the efficiency of the audit procedure. Distributed, electronic ledgers make up the underlying structure of blockchain to maintain, in real-time, transactions that are validated and protected via encryption solutions.

What does that really mean?

A blockchain transaction could be validated when it occurs and can be reviewed for completeness and accuracy using entities that exchange transactions through a common platform. The auditor should be able to more quickly and efficiently reconcile data, amounts, assets, ownership, transactions and other detailed information across the distributed general ledger. Using the financial services industry as an example, the following is a current state overview of an audit and compliance review process. In the context of healthcare, a provider, payer or fiscal intermediary would replace the bank in the process.

In the context of healthcare, the financial exchange is made through a payer or fiscal intermediary with the delivery of care or supplies or services vendor. Essentially by leveraging blockchain for audit and compliance activities, data transparency could be improved, and the need for duplicative and manual reconciliation and validation processes between healthcare organizations and across disparate systems would be greatly reduced.

Completeness and veracity of the data are essential, and there are concerns in any industry—specifically healthcare, as payment methodology is undergoing significant redesign around clinical outcomes. The U.S. Department of Health & Human Services (HHS)’s Office of Inspector General (OIG) designated the improvement of Medicaid data as a top management challenge, creating the Transformed Medicaid Statistical Information System (T-MIS) to address it by better understanding the care delivered to Medicaid patients—a population of 70 million. In a June 26 report about the implementation status of T-MIS, though, the OIG raised a prominent level of concern regarding the “completeness and reliability” of the data coming from T-MSIS.

“Specifically, states indicate that they are unable to report data for all the T-MIS data elements,” the report noted. “Additionally, even with a revised data dictionary that provides definitions for each data element, states and CMS report concerns about states’ varying interpretations of data elements. If states do not have uniform interpretations of data elements, the data they submit for these elements will not be consistent across states, making any analysis of national trends or patterns inherently unreliable.”

Blockchain could be a solution to this challenge.

By making transactions available in real-time, blockchain technology can help reduce the potential for errors and improve the overall quality of the healthcare audit process. If the initial transaction is audited, blockchain allows for a self-auditing process and, thus, allows a greater level of assurance. With the added automation and integration of systems, blockchain has the potential to shorten the time required to perform the testing and validation of the information. Again using financial services as an example, below is a potential future state of an audit and compliance review process leveraging automated solutions such as blockchain, whereby a provider, payer or fiscal intermediary would replace the bank in the process.

Using blockchain in healthcare is still a novel idea, but the possibilities it presents to the industry are endless. Bundled payments, clinically integrated networks and risk management are additional areas for development and use.

Healthcare_Summer-2017_charts-Artboard-5.pngSource: World Economic Forum

Healthcare_Summer-2017_charts-Artboard-6.png
Source: World Economic Forum
 
To learn more about how your healthcare organization can capitalize on blockchain’s opportunities and address its challenges, please contact one of the authors of this article.

Patrick Pilch is the national co-leader of The BDO Center for Healthcare Excellence & Innovation. He can be reached at ppilch@bdo.com.

Sanjay Marwaha is a managing director and leader of BDO’s Risk Advisory Financial Services practice. He can be reached at smarwaha@bdo.com.

Chuck Pine is a managing director in BDO’s Financial Services, Investigations and Consulting practice. He can be reached at cpine@bdo.com.

Greg Schu is a partner in BDO’s Risk Advisory Services practice. He can be reached at gschu@bdo.com.


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