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HIMSS: How blockchain could transform health insurance

healthcare doctor patient

Yesterday the non-profit Healthcare Information and Management Systems Society (HIMSS) published a post detailing how the use of blockchain technology could address some of U.S. healthcare’s biggest problems.

The insurance system requires many back-office processes to clarify whether the insurer or patient pays for a service. This coordination between medical providers and insurers, each using their own systems and processes, causes delays and unnecessary admin costs, not to mention a poor experience for patients.

A telling example is a current process for getting authorization from insurers. A member of hospital staff will confirm the patient is covered by insurance, check the procedure is covered, and request authorization from the insurer, possibly rechecking multiple times.

The HIMSS post reveals that outdated systems such as fax machines and screenshots for auditing are still used in this process. Such inefficient workflows contribute to the $400 billion per year in unnecessary spending in the healthcare industry, according to a McKinsey publication. In 2011 the Journal of the American Medical Association estimated the wastage proportion of the total healthcare spend was 34%, which at 2017 spending would amount to $1.2 trillion.

Enter Smart Contracts

Rather than taking hours or days essentially to confirm trust between parties, a smart contract could take seconds to check whether a procedure is covered by insurance. If an authorization code is needed from an insurer, it could pause the process and automatically resume as soon as the insurer has entered a code.

Smart contracts executed on a blockchain based structure provide accountability and verification, thanks to the cryptography behind blockchain. Replacing manual screenshots as an audit trail with an immutable transaction history is simple, as everything is recorded by design.

Could the migration of such a widely used system realistically happen?

The HIMSS’s post claims: yes, it really could. By populating a blockchain based network with billing documents and member lists, staff can look up trusted information in seconds, rather than check and recheck with an insurer.

In fact, the entire authorization collection process above could be replaced by a smart contract. Since each piece of information is trusted, a computer can automatically confirm each step, with instant results.

By taking hospital staff away from fax machines and waiting on hold, they can be more productive and satisfied. Patients would have drastically reduced wait times and transparent cost breakdowns. Plus, this is just the beginning; it sets the stage for a tech revolution in U.S. healthcare.

The HIMSS post was written by Chris Ingrao, COO of blockchain company Lumedic. The Seattle founded startup was recently acquired by Providence St Joseph Health, a leading U.S. healthcare provider.

Earlier this year, Ledger Insights talked to Change Healthcare about other areas where blockchain shows potential.