In Search of Opportunities to Leverage Blockchain and Smart Contracts in Payment Integrity

Blockchain in Payment IntegrityI recently enrolled in a fascinating course led by MIT Professional Education called Digital Transformation: From AI and IoT to Cloud, Blockchain, and Cybersecurity. As I listened to a lecture discussing blockchain and smart contracts, one potential application popped into my mind: applying blockchain and smart contracts to the claims editing and payment integrity process.

I spent some time evaluating the payment integrity vendor landscape in 2021; issued an RFI to vendor partners that yielded an Aite Matrix report; and spoke with several dozen clients at health plans’ Audit, Payment Integrity, FWA, and Special Investigation Unit teams to get the clients’ perspective and input.

My two main takeaways at the time were:

  • At the heart of the typical payment integrity process lies claims adjudication—the black box of checking the content of each claim with what each health plan policy covers, plus any compliance, state, and federal level checks.
  • A similar point can be made for the claims editing process that lies at the front end of the claims process: a first pass at incoming claims to check for minor errors or omissions.

These two key points in the payment integrity journey appear suitable to translate into a smart contract, albeit a very large contract. Using a smart contract in this context would encompass all the check list items—those  I mentioned in the first bullet above—and map them against the incoming claim from a healthcare provider. If those list items check out, the funds to the healthcare provider could be automatically issued, without the need for actual invoices and reimbursements. Payment could be automatically executed in seconds instead of weeks or months—what a revolutionary and exciting possibility!

When we think about the host of providers, and, for that matter, payers, that have consolidated over the years, and the disparate data sources that reside in potentially siloed systems, the need for a comprehensive and correct data source to get a complete picture of a patient and a claim becomes clear. So does the need for data governance, data cleansing, integration of data, and the deduplication of it. While current technologies, automation tools, and the use of AI can certainly help move the needle, blockchain may also be an option to consider down the road.

Bringing those data points together in a secure manner, and one that fully protects patients’ medical information, would go a long way in ensuring comprehensive, correct care management along with the correct and timely management of claim payments. Pulling that information on blockchain would provide traceability and transparency to audit teams as well, a bonus that can alleviate post-pay administrative efforts.

I could see this exercise putting the onus on the provider to make sure they have the i’s dotted and the t’s crossed on their claims, no doubt a frustrating and laborious exercise for them, especially at a time when their revenue streams are already crushed due to additional COVID-19-related expenses and lost revenues due to cancelled or postponed service utilization throughout most of 2020 and 2021.

On the upside though, providers may no longer need to provide bank account information to health plans—a factor that smaller providers find concerning, out of fear that the health plan may claw back a payment they previously made. In a sense, enabling payments swiftly and quickly over blockchain may make the provider itself a mini bank and speed up reimbursements.

Like many new technologies, blockchain is not without its share of concerns or challenges, the currency aspect, i.e., bitcoin and its valuation, are one example and validation of the source of funds another.

As I look to the future, I expect growth in blockchain use cases, as well as occasional volatile or dramatic moments. If you have blockchain and smart contract applications and/or are active in the payment integrity space and have use cases, I’d love to hear about that. Please contact me at [email protected].

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