Instead of continuing to add fixes on top of a broken system, healthcare needs to create a new, better system—a system built with a new kind of interoperability.
The annual cost of administrative and process inefficiencies in the U.S. healthcare system has reached into the billions, with billing, coding, physician administrative activities, and insurance administration being the primary drivers. Provider organizations spend approximately $39 billion each year and dedicate an average of 59 FTEs just to comply with hundreds of administrative regulations and requirements.
Think of the progress we could make in improving the lives of our patients, the investments we could make in state-of-the-art equipment and facilities, and how greatly we could expand access to care if we could redirect the billions spent each year on administrative waste towards innovation and direct patient care.
According to an article in HFMA Magazine, the top use cases for costly waste and inefficiency include:
These are all costs that could be significantly reduced through more effective interoperability. But how do we create an environment that addresses these inefficiencies while developing an interconnected infrastructure for the benefit of payers, providers, and innovators?
Certainly, FHIR gives us a good opportunity to work from a common protocol and set of standards when we talk about the payload of transactions on a network. However, FHIR itself does not translate into interoperability. FHIR is just the payload; it’s what’s inside the envelope when we exchange data. How an envelope moves through the enterprise and across the industry, and how it’s kept updated is based on the ability to create a dynamic, interoperable network.
We’re currently spending way too much energy creating point-to-point interactions across a mesh of an ecosystem and not enough energy creating a shared environment where we’re all—payers, providers, and innovators—working from the same platform of knowledge.
One of the biggest issues with today’s EDI transactions, according to the director of revenue cycle management at a large health system, is a lack of consensus. “EDI transactions, the 270/271 especially, have been out there for 20 years or more, yet we know there are limitations with their use as a vehicle to support the exchange of information between parties.”
We have a unique problem that is very well positioned to be solved by a decentralized peer-to-peer network in that there are multiple stakeholders who are part of the insurance coverage determination process. In other words, all participants on the network would be able to work within the same system using the same set of requirements—as if they were all the same organization—through a consensus-based network.
Consider eligibility verification and prior authorizations. According to the 2022 CAQH Index , each manual eligibility verification transaction costs $12.86 and each manual prior authorization transaction costs $14.52. And this doesn’t even include the cost of gathering information for the transaction or for follow-up. Since 569 million manual eligibility transactions and 66 million manual prior authorizations are conducted each year, the impact on the bottom line is staggering.
Instead, providers and payers could leverage an application built on a decentralized, peer-to-peer network to conduct eligibility verifications and prior authorizations—without the need for time-consuming back and forth faxes, emails, and phone calls. With this type of network, the entity conducting the inquiry receives the most up-to-date information based on a number of data elements that are relevant to them.
For example, a primary care provider, a specialist, and a hospital would all receive information based on data elements that are specific to their specific scenario. This would be based on the type of provider, the kind of procedure, the type of facility, the patient’s remaining deductible, and the patient’s out-of-pocket responsibility, and more. It’s basically an “if/then” inquiry. If the inquirer is a surgeon, and if the procedure is covered in the patient’s benefit plan, and if the patient’s deductible has been met, and if the provider is in network, and if all prior authorization requirements are met, then this is what the provider will be paid and what the patient will owe.
The senior director of revenue cycle transformation at a large, multispecialty academic medical center believes that we have a misconception that patients don’t want to be bothered with the financial impact of a service at the time the service is rendered. “In the past we thought we were doing patients a favor by not approaching them about their financial responsibility. Then the patient receives a bill several months later and tries to remember even having the service and then figure out if the bill is legitimate.”
By giving patients an accurate amount that they will owe at or before the time of service, patients have the information they need to make more informed decisions about how to pay for their care. It also enables providers to collect on bills or set up payment plans, which can help reduce the cost to collect and write-offs, as well as surprise bills for the patient.
Coordination of benefits (COB) is another process fraught with administrative waste and inefficiencies that could benefit from a decentralized, peer-to-peer network. COB processes often cause cogs in the revenue cycle on the back end that can lead to delays in reimbursement and excessive rework. Because of the latency of data, there can be a long lag in getting updated information on multiple coverages or changes in coverage status. COB works better if all parties have full insight into multiple enrollments. With a peer-to-peer network, updated enrollment information on each participating member/patient is already in the system and can be accessed by all participants on the network.
Imagine a decentralized, peer-to-peer network that allows payers to co-develop processes to streamline coordination of benefits. Working together, payers can develop the rules, processes, and the analytics that provide greater standardization and insight into primary, secondary, and tertiary coverage for network participants. Today, what is a heavy administrative burden that can result in costly, labor-intensive denials, instead becomes a simple network inquiry that facilitates faster, more accurate claims.
The foundational benefit of a decentralized, peer-to-peer network is the concept of connecting once to many instead of one to one. Instead of having to build and maintain separate connections to a myriad of different services, trading partners, and counterparties within the industry, all network participants have access to a shared base of knowledge.
In the network, payers and providers submit data to the cloud where it becomes discoverable based on permissions that are set by each participating organization. Users connect to the network via the cloud, where the ID keychain and master index locate the information requested, match it to the data available, and then deliver it to the requestor. The network design provides certification, cybersecurity, and compliance.
No one could have imagined Amazon before the Internet was invented. With a decentralized, peer-to-peer network, the sky’s the limit in terms of innovation in healthcare. The use cases discussed in this blog are just the tip of the iceberg. We’re now at the point where we need to look beyond just transactions. Working in partnership with payers, providers, vendors, banks, innovators and other stakeholders will allow us to see the full potential of a network from a different lens—one that enables us to truly optimize the patient/member experience.
The more organizations we add to the network, the value grows exponentially because the connections grow exponentially. It’s not 0 to 10 growth; it’s 10 squared. The more connections you have, the more chances for innovation. And the more innovation you have, the more chances there are to achieve true transformation and “eureka” moments.
Advancing administrative interoperability is the only way we will ever reduce the cost of healthcare and achieve long-term revenue improvements. We have to ask ourselves what value we could generate if we weren’t spending billions of dollars on administrative waste and how that would enable us to make things better for the patient. A secure, decentralized, peer-to-peer blockchain-enabled network provides the infrastructure that can make that happen.
The real challenge that we’re trying to solve is how to accomplish this in a decentralized, shared manner. Anyone can build a walled garden. We could say, here’s all the perfect use cases we want to tackle and then set about building proprietary, closed technology that everyone has to connect into. In this scenario we’d never hit the point where we reach mass adoption because not everyone wants to work within another organization’s walled garden.
Instead, we must build an ecosystem where everyone can participate and get equal access to the information they need when they need it with permission—all on a single, secure network. As the revenue cycle director at one healthcare system said, “When you start looking at what this type of network allows you to do, it is really a transformational approach to sharing data. And it’s going to fundamentally change the way payers and providers interact going forward.”
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