Bringing blockchain to the insurance market

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In the cryptocurrency market, blockchain has become a popular means of securing records. This latest form of data security could make its way into the healthcare industry as a way to privately secure claims data between advisers and their employer clients.

Leading this endeavor is Karrie Sullivan, founding principal of data science consultancy Culminate Strategy Group, and David Contorno, founder of benefit consulting agency M Powered Benefits, who have partnered to deliver blockchain security to their clientele not just financially but clinically as well.

The partners do not have a working blockchain solution ready for use in the healthcare space. Contorno says he is involved with one or two organizations that are entertaining the idea of using blockchain, and concedes that the healthcare is notoriously slow to adopt cutting edge innovation.

By design, a blockchain does not allow its date to be modified. It uses an open distributed ledger that can record transactions between two parties in an efficient and verifiable way.

Sullivan compares blockchain to banks or credit unions representing a trusted source of financial transactions. “Blockchain distributes trust across a database where the record is duplicated 50 or 500 times across the chain,” Sullivan says. “That data is then distributed and recorded in fragments where the only way the information can be hacked is if the hacker has the ability to simultaneously change all of those records at the same time.”

For example, if someone used Bank of America as their financial institution, using blockchain technology, that person’s banking information is then split across all other accounts within the bank. Should a hacker try to access their account they would only acquire a fragment of the account information rendering it useless to unauthorized users. Only with the account holders access information will all the fragments come together to access the full account.

Third-party administrators and brokers, like Contorno, want to utilize this technology to replace the large carriers when it comes to price negotiation and agreements with the healthcare providers.

Contorno says the fundamental underpinning of problems in the American healthcare system stems from how employers and employees pay for care.

“We pay for it in an obscure and non-transparent way leading to many opportunities for patients to be taken advantage of,” Contorno says. “Blockchain will allow people to pay for care completely different then how we do today.”

Normally when Contorno suggests paying for care in a different way, he means finding different ways to calculate how much doctors or medical facilities receive. While that is also determined within blockchain, Contorno adds that the funds would be processed through instantaneous payment to the provider.

“A lot of times we have been able to get tremendous price efficiencies for our clients with their doctors or hospitals with some sort of prompt pay provision,” he says. “This allows us to accommodate that, but the challenge with prompt pay is that it does not give the broker enough time to audit the claim allowing the provider to sneak in more charges.”

Because blockchain allows for the transacting of funds instantly, employers can still meet the prompt pay requirement and have enough time for the broker to audit the claim for unnecessary expenses.

Contorno seeks to take blockchain even further by moving outside of the financial realm and into the clinical by using the same technology used to handle money transactions and utilizing it to transfer information.

“Patients might have a partial record at one health system, another partial record at their primary care doctor’s office and another partial record at a hospital due to an emergency room visit,” Contorno says. “None of them ever talk to one another. In fact, the number one communication between doctors and hospitals is fax.”

In addition to using blockchain for financial transactions, it can also be used for monitoring a patient’s health record. Instead of the providers controlling the patient’s medical records, the patient maintains control of their records similar to using online banking; accessing their records via a database and tracking where they have received treatment, who treated them and what they were treated for.

“That is really powerful information because the amount of mistakes and inappropriate care that occurs due to payment or missing clinical information is outrageous,” Contorno says. “We can solve it all with blockchain.”

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Blockchain Insurance Adviser strategies Benefits technology