Blockchain in Health Insurance

In the current scenario, getting payment from insurance companies is a big pain point for the patients and health care providers.

At the same time, it is also difficult for an insurance company to evaluate the verity of the claims submitted because of the rising Medical Insurance frauds.

The culprit for all of these issues is today’s complicated, inefficient and outdated medical and payment system. Millions of dollars and an unaccountable number of hours are wasted due to claim errors and unsettled disputes owing to the lack of transparency in the system. Whenever the medical claim is submitted to any health insurance provider, he is required to inspect and analyze a lot of information to evaluate the authenticity of the claim.

And the reason for this is the increasing number of fraudulent claims.

The whole process of claim submission and approval is very exhaustive and takes a lot of time.

The healthcare providers have to do a lot of paperwork before submitting a claim to the insurer.

This leads to an increased probability of human errors, because of which there is a good chance that some fields may not be correctly filled in the claim form and some might even be completely missing. In case of incomplete submission, the claim gets rejected by the insurer and the healthcare provider has to reinitiate the whole process.

Thus leading to a delayed payment cycle and an increased overhead cost. It may happen that a patient has an expired or outdated insurance. The current system is quite complex and the information is not readily available. Because of this, it is not always feasible for a health service to verify a patient’s insurance status before rendering the services.

Let us understand it through a real life scenario.

Steve met with an accident and got admitted to a hospital. The hospital takes good care of Steve and within a couple of days he gets discharged from the hospital.

Now the insurance claim is prepared and submitted by the hospital to Steve's health insurer.

After receiving the claim request the insurer verifies the patient's details in its database.

Upon processing the request it finds out that the policy is outdated and therefore rejects the claim.

In such a scenario the hospital contacts the patient to know about the latest health insurance company as it is required to resubmit the claim to the new insurer which again is a lengthy process. In many cases, healthcare provider and patient both are not aware of all the conditions and situations that are covered in the insurance policy of the patient.

This becomes a major pain point for both the parties involved. For hospital, it leads to wasted time and efforts on filling and submitting the claim and for a patient, for a patient it leads to an extra burden as he is liable to pay the medical bills out of his own pocket. Blockchain technology is the link which has been missing till now and can provide the required solution for this.

With the implementation of this technology, all the stakeholders involved will have access to the same information or in other words there would be a single version of the truth without any discrepancies.

The shared and distributed ledger allows all the parties to monitor and analyse the submitted claim and the services rendered against them. Through blockchain a single ledger is shared among the healthcare stakeholders and smart contracts are issued that encode all the conditions and situations in which health insurance provides medical coverage.

These smart contracts get executed when their defined conditions are fulfilled.

This leads to an improved cash flow due to faster transaction settlements, timely treatment of patients, accurate payment to the service provider.

Reduction in the overhead costs for both healthcare providers and health insurance companies. When information about patient’s health insurance is readily available on the shared ledger, it becomes easier for healthcare providers to check the patient’s current insurance status and validate the conditions and situations that companies provide coverage for. This would even cut down the unnecessary hassle of filling and submitting claims for an uninsured patient or condition and a patient can be directly asked to pay for the medical bills out of his own pocket. If a patient changes his medical insurer between visits, the health care providers can easily access this information via blockchain.

This in turn will help the health care provider to submit the medical claim for that patient to the right insurance provider, thus eliminating the need to resubmit the claim. The smart contract shared on the blockchain provides the claim and reimbursement rules of the medical insurance. Proper data format requirements are also provided so as to ensure that the claim form is correctly filled in before submitting it to the insurer.

The healthcare provider, therefore, exactly knows what information is required to be filled prior to submitting that claim. Thus eliminating the chances of claims to be returned due to missing information or nonadherence to the required format.

This in turn will save time and effort for both healthcare providers and insurers.

Let us understand it through an example.

A patient gets admitted to a hospital for his heart surgery. As the patient gets admitted,an online entry on the blockchain is initiated by the hospital for that patient.

After the surgery is done, healthcare provider submits the claim to the insurer on the blockchain. And simultaneously, patient gives access of the required information to the insurer. The insurer validates the identity of the patient and the information provided to him.

If all the predetermined conditions are met and the claim is submitted in the correct format, the smart contract gets executed which initiates the cash flow thus settling the claim readily.

The patient’s data stored with various healthcare providers and insurance companies makes it vulnerable to leaks and theft. Through blockchain technology, the patient’s data will be stored on the decentralized database where the patient will own hare data.

The tampering and stealing of data is very difficult thus making it safe and secure.

Fraud and false claims are one of the biggest challenges that this industry faces. Though insurance companies have devised various tools and techniques to avoid such situations but fraudsters still find a way to dupe these insurers.

This in turn leads to an extra due diligence by the insurer while validating a real claim as well. But with the implementation of Blockchain, a single version of the truth will be accessible to all the stakeholders involved, and as a result, verifying these claims will be a much easier task for the insurer.

Blockchain technology with its innate property of being transparent and tamper proof makes it nearly impossible for fraudsters to dupe the insurance companies. Blockchain is going to empower & make life easier for the patients.

A key role in making this a reality will be played by the smart contracts.

These contracts won’t require any manual intervention and will be completely managed through rule based operations defined in the code. Let us understand it through a real life scenario.

A person met with an accident and died on the spot. In the current scenario,to claim the insurance money his nominee needs to go through lengthy and time consuming procedures. The nominee is required to present copies of various documents to get the claim which takes several weeks?and sometimes even months.

The person is already in pain due to loss of the dear one and on top of that these insurance procedures and processes further aggravate his agony instead of supporting and helping him. A customer enrolls himself in the insurance plan in order to alleviate this pain.

But with such a complex system in place, the whole point of insuring life and health becomes useless and ironic. But with the power of smart contracts situations like these can really be simplified. Smart contracts can easily be implemented for low dispute claim settlements like in the case of the death of a policyholder, these contracts will insure an automated payout to the registered nominee.

This automated processing will reduce the effort involved in filing a claim and in turn will lead to a world-class customer experience. When new clients apply for the health insurance,the providers must collect and validate the concerned patient’s data like his name, date of birth, address, health and economic status to meet the compliance requirements such as KYC. This collection of data is a time consuming process, The person has to submit all the documents and providers must review the data to complete the verification process. Sometimes the exchange of documents and information has to be done multiple times in case any required information is missing. Through blockchain technology the whole process can be simplified.

The patient can give permissioned access to the insurer so that the necessary documentation required for verification can be easily accessed by the insurer. Thus the insurer can efficiently verify the eligibility of a new client, for a particular insurance policy in a reduced time frame.

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