Fraud within global healthcare systems is rife. Health insurance providers attempt to combat this through multi-modal, time consuming, often manual fraud-detection processes. The complexities of checks and verifications is further compounded when international healthcare providers are considered. Many insurance providers also rely on third-party verification services that cost in excess of USD150 per claim review. Ultimately, the need to complete these extensive checks on every claim, in the event that a minority may be fraudulent, results in extended processing times and increased costs. Both of which are passed through to consumers.
Health insurance claims can take upwards of six months to process
Health system related fraud in the U.S. alone was estimated at USD272 billion in 2014.[1] The perpetrators of medical fraud are multi-faceted and include individual consumers, organised gangs, clinics, pharmacies and individual medical professionals. Identity theft has spawned a costly offshoot: medical identity theft. Thieves steal a consumer’s personal information to lodge fraudulent claims against the victim’s health policy. Medical thieves can heist health-insurance numbers and other personally identifiable information. [2], [3]
Three unique properties of blockchain allow business to become less susceptible to fraud.[4] Fundamentally, all blockchains are distributed digital ledgers. The lack of a central administrator or instance eliminates a single point of failure. The distributed nature improves transparency and demands that any tampering require majority control of the network. Secondly, transactions recorded on blockchain are immutable because they cannot be deleted or changed. The process of consensus ensures that platform participants must agree on the validity of the transaction before a ‘block’ can be appended to the blockchain. Finally, the Health FX blockchain is permissioned through cryptographically validated membership which govern access and identity management. Even permissioned blockchains require consensus and encryption prevents record tampering.
The beneficial impact of Health FX using blockchain technology to health insurance providers is ground-breaking. With intrinsic resistance to fraud and precisely accessible data, insurance claims processing times can be reduced dramatically. The derived efficiencies also reduce cost and these savings can then be passed back to consumers.
[1] Healthcare Fraud. The $272 billion swindle. The Economist, May 2014
[2] Ponemon Institute, February 2015
[3] http://www.fraud-magazine.com/article.aspx?id=4294999161
[4] https://www.ibm.com/blogs/blockchain/2017/09/three-features-of-blockchain-that-help-prevent-fraud/
