Blockchain in Health Insurance: More Accuracy, More Transparency and More Efficiency

The evolving relationship between blockchain tech and the health sector has already been thoroughly documented, yet something that's received less attention is the increasing role blockchains are set to have in the health insurance industry. This industry was worth over $600 billion in 2017 in the United States alone, while calculations suggest that as much as $375 billion is wasted every year by American insurance companies as a result of the paperwork and administrative box-ticking that comes with having a multi-payer health care system. There is, therefore, a massive opportunity for blockchain-related companies and platforms to not only claim a slice of the health-insurance pie for themselves, but to make this pie bigger by cutting down on legacy costs.

Given this opportunity, it's not surprising that an increasing number of companies are looking to bring blockchain-based technology to the health insurance sector. To some extent, many service providers were looking to digitize health insurance before they ever heard of blockchain, yet it's also clear that blockchain tech will bring some definite benefits to the provision of medical insurance. From streamlining claims processes to introducing greater transparency and enabling provider interoperability, blockchains are being increasingly sought by startups and established corporations alike as a means of pushing the industry forward, with many of the biggest names in health insurance already staking their futures on the new technology.

IBM and co.

If there were any doubt that blockchain tech is being taken seriously by the world's biggest insurance companies, it was most likely dispelled in January, when the likes of Aetna, Anthem and Health Care Service Corporation (HCSC) announced a collaboration with IBM to build a digital ecosystem for the health care industry based on the IBM Blockchain Platform. According to the press release, the parties involved aim to use IBM's blockchain to help with a range of industry challenges, from making the processing of claims and payments more efficient to enabling the "secure and frictionless" exchange of information among insurance providers (and medical facilities). As said by Aetna CTO Claus Jensen:

"We are committed to improving the healthcare consumer experience and making our healthcare system work more effectively. Through the application of blockchain technology, we'll work to improve data accuracy for providers, regulators, and other stakeholders, and give our members more control over their own data."

Of course, this all sounds good in writing, but the question remains as to how exactly IBM's blockchain will be used by these insurance service providers to improve their industry. According to Soroush Abbaspour, IBM's program director for blockchain for HCLS, one of the principal ways greater efficiency will be provided will be via the use of smart contracts. As he explains to Cointelegraph, such smart contracts will permit the automatic (i.e., cheaper) execution of claims and payment processes, and they'll permit greater transparency between those handling a patient's contract(s).

"In today’s claim processing system, especially in the case of value-based contracts, most of the process for reconciliation of the claims is manual. There is no transparency and visibility between the healthcare stakeholders who are involved in the contract associated with the patient. Blockchain can work as an authoritative source of truth for contract execution and management. It can provide a secure, transparent system of record for value-based contracts, and it can bring automatic and near real-time settlement for contracts and episode-level financial positions."

As indicated by Abbaspour, the likes of Aetna and Anthem will be using IBM's distributed ledger technology to capture and validate all incoming claims’ data, as well as the quality measures taken to ensure the compliance of claims.

"Smart contracts on blockchains can be used to implement contract terms and business rules in a trusted execution environment. The benefit of blockchain is to dramatically reduce administration costs by eliminating duplicate processing, reducing disputes, and allowing for more effective risk management through real-time visibility and provenance leading to broader adoption of value programs by providers."

Smart contracts are the secret ingredient such health insurers as Aetna and HCSC have been waiting for, even if the move toward greater digitization in the health insurance industry had been initiated years ago. Yet, Abbaspour notes that the providers collaborating with IBM have identified more potential benefits than simply the secure and transparent automation of claims.

"The founding members of the utility network have identified several use cases and plan to prioritize them," he says. "The prioritized list of use cases will be shared with the industry in the coming months."

Industry interest

While IBM hasn't yet made these additional use cases public, the fact that blockchains offer numerous advantages is indicated by the other organizations that have been turning to them over the past few months. Back in December, another alliance – formed by the likes of Humana, Multiplan, and Optum – announced the addition of two new members, Ascension and (once again) Aetna. Together, these insurers  would begin a trial of blockchain solutions intended to solve a variety of problems common to the health insurance industry.

Chief among these problems is the inaccuracy of directory data, which provides insurers with information on medical providers, info that is obviously