For most healthcare providers, claim denials are a common, if not frequent, occurrence.
The average claim denial rate is between 5 and 10 percent, according to an American Academy of Family Physicians (AAFP) report. While the overall percentage of denied claims appears to be small, their impact can be huge, costing hundreds of thousands or even millions of dollars each year. According to a recent analysis, an estimated $262 billion, or 9 percent, of the estimated $3 trillion in claims submitted by hospitals last year were initially denied. When you consider that the Advisory Board states that two-thirds of denials are unrecoverable, but 90 percent are preventable, the need for change becomes obvious.
For patients, this cycle can be frustrating and confusing, with the receipt of multiple explanation of benefits (EOBs) from their health insurance carrier and multiple invoices from their healthcare provider.
Meanwhile, with ever-increasing deductibles and coinsurance, patients are faced with a lack of pricing transparency and challenging financial responsibilities.
A real-time EOB would benefit both the patient and the provider at the point of service. According to a survey of healthcare consumers, more than 75 percent say it's important or very important to know their financial responsibility before treatment, and 53 percent want to discuss financing options. Given that the chance of collecting from patients with high-deductible health plans shrinks considerably once they walk out the door, it’s high time that the “best-kept secret” of smart claims administration and settlement becomes a well-known best practice within the healthcare transaction landscape.
Fortunately, new solutions that leverage advanced technologies are emerging to address these well-known challenges. By combining machine learning and blockchain approaches, claims administration and settlement processes can realize the benefits associated with both technologies. Additionally, with machine-learning algorithms applied to historical claims and payment data, providers can prospectively determine the validity of claims, isolate specific coding or documentation issues, and make corrections in real time, increasing the speed and accuracy of reimbursement.
So how does claims administration and settlement become “smart?” Enter the use of blockchain technology and smart contracts. Smart contracts allow for the performance of credible transactions without a centralized authority. In the patient point-of-service scenario, smart contracts enable the eligibility and benefits and the fee schedule components of claims administration, combined with machine learning claims validation, to price and settle the claim. What’s more, the settlement data is shared in a real-time, permission-only basis with multiple participating healthcare stakeholders (i.e., providers, patients, payers and patient financial solution providers).
The capabilities of blockchain smart contracts allow patients receiving a real-time EOB to have the ability to evaluate targeted patient financial programs to cover higher cost services. Patients have affordable options to pay and providers have the assurance of collection. Just like the consumer experience in other industries, patient financing can be secured on-site, agreed to and recorded. Conducting patient financing activities on blockchain ensures compliance with applicable reporting requirements.
There’s no doubt that smart claims administration and settlement, in the era of value-based care, is long overdue.
Lynn Carroll, chief of strategy and operations at HSBlox, is responsible for strategy and design of HSBlox blockchain-enabled solutions for value-based reimbursement, consumer engagement and alternative payment models in the healthcare ecosystem.
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