How healthcare can become more interoperable with a decentralized network

The back-office administration  of healthcare is fragmented and full of manual, inefficient processes that impact patient care, provider reimbursement, and costs. These processes are a result of our inability to connect effectively. While payers and providers have invested millions in multiple platforms and legacy systems, some still lack full integration and interoperable functionality.

The annual cost of administrative inefficiencies in the U.S. healthcare system has reached an estimated $496 billion, with billing, coding, physician administrative activities, and insurance administration being primary drivers.

An ecosystem full of obstacles

The challenges of today’s outdated interoperability architecture are significant. From a connectivity standpoint, partner connectivity and workflows require multiple vendors and system integrations. From a data management standpoint, today’s interoperability systems require multiple entities to support, which has led to a lack of traceability, control, and auditability. These third parties must aggregate, store, and repurpose data, which means they control the redistribution to payers, providers, and partners. Because of this, the stakeholders who actually use the data—payers and providers—have little control over when, where, and how they can access it.

Most healthcare organizations have invested in digital and interoperability strategies that, ultimately, have narrow potential and limited scalability. The high costs to maintain connections to multiple third parties require payers and providers to implement and maintain numerous single-use, point-to-point connections.

Regarding infrastructure, we now have a web of interconnected systems that don’t easily adapt to evolving trading partner business needs. This has resulted in a wide array of custom, proprietary integration requirements for APIs and third-party platforms—all of which further deteriorate our industry’s quest for interoperability and administrative efficiencies.

Manual transactions, administrative burdens, incomplete interoperability, and costly and ineffective legacy systems have led to increased total processing spend, provider burnout, poorer outcomes, and limited innovation.

A new kind of interoperability in healthcare

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 term interoperability has different meanings. While we can all agree that sharing data is at the heart of the definition, there are disparities in what that looks like. For example, Fast Healthcare Interoperability Resource (FHIR) has given us a common set of protocols and standards for a payload of transactions on a network. Still, alone, FHIR does not give us full interoperability.

In a truly interoperable healthcare system, data would not need to be requested, aggregated, and validated each time it is needed. Instead, it would be continuously refreshed, always current, and accessible in real time via a secure, decentralized network to those who are permissioned to access it.

What is a decentralized network?

The typical network design consists of a master server that manages all the information and activities on the network. On a decentralized network, there can be multiple servers acting as master servers. They each manage information on their own while still connecting with each other. In this way, they “balance the load and distribute the work across the system.” This helps improve network resiliency and data redundancy; if one node goes down, the others are unaffected. Likewise, because data exists in multiple locations throughout a decentralized network, it cannot be changed in one place without changing it across the network.

decentralized network

Benefits a decentralized network can deliver include:

Eliminating data silos and resolving payer-provider friction

Health systems and payers have made progress in improving data accessibility throughout their own enterprises, but remain challenged to seamlessly make data accessible between organizations. That lack of data fluidity has led to an industry with a complete lack of transparency that has led to friction, distrust, and data hoarding.

With a decentralized network, payers and providers achieve complete transparency and data fluidity, and they do it without involving third parties. This allows for enriched transactions, providing more actionable patient and procedure-level specificity and clarity. Without a third party, payers and providers require fewer transactions to support operational workflows, while improved data insight supports more effective data management strategies.

This new way of transacting healthcare is not just redesigning current processes. It’s not about just streamlining the way we currently do things. It’s about disrupting how we conduct healthcare and doing things differently. It is about reinventing the business of healthcare.

Improving innovation

Another benefit of a decentralized network is its ability to facilitate innovation and host new solutions that can go to market and implement new clients faster. Hundreds of entrepreneurs enter the healthcare industry each year with innovative ideas and solutions that could improve healthcare’s many challenges—from clinical to administrative and beyond. One of the reasons that many don’t succeed is because they aren’t prepared for our industry’s complexities. They quickly discover that there are myriads of issues that must be addressed before they can deploy their solutions, issues primarily around data connectivity. The time and effort required to establish one-to-one connections with payers, providers, and other innovators is so great that many startups fail before they ever reach the scale needed for full deployment. Thus, many brilliant ideas go unfulfilled each year, ideas that have unlimited potential.

With a decentralized network, innovators can more easily access and collaborate with industry stakeholders and other innovators. Leveraging a platform with a common set of tools and services over the network, they can streamline collaboration and develop and deploy new solutions without building individual connections to every entity. In this way, a decentralized network becomes a foundational element and our industry’s first intentional architecture for healthcare.

A new era of interoperability

While we’ve made progress on the road toward interoperability, we have to ask ourselves if our current trajectory can get us where we need to be. Avaneer Health sees a new way forward. We are building a digital ecosystem that accelerates change and enables us to reinvent how healthcare operates. Our decentralized network is now live, and we invite you to join us as we reimagine healthcare together.

It’s time to redefine what we mean by interoperability and reimagine what it could be

Interoperability. It’s a term that’s been widely discussed in healthcare. While at its core, the term refers to connectedness between systems or products, the implications are much broader. And therein lies the opportunity. Healthcare needs a more encompassing definition of what interoperability could mean on a grander scale.

For example, we talk about interoperability within a single health system or a single geographic region or between entities. But the backbone of today’s definition of interoperability is still the traditional API. And this is an issue—a roadblock, really. Besides the lack of clarification and standardization within federal legislation and mandates, provider and payer organizations are struggling to achieve compliance via APIs, especially regarding privacy and security. Further, implementation and maintenance are proving to be a significant burden on IT leaders since each connection requires building a separate API to meet each entity’s requirements. It’s a drain on resources and finances—both in short supply right now.

Furthermore, APIs are great at establishing connectivity, but aren’t the answer for delivering comprehensive interoperability. Healthcare data, which doubles every 70 to 80 days, still exists in disparate silos among thousands of databases spread across the country, even within individual enterprises. Building individual connections isn’t the answer.

While APIs provide individual connectivity between entities, they aren’t the hoped-for conduit that finally allows us to maximize the potential of the fast-growing landmasses of data we have available.

Going beyond APIs

What healthcare needs—and APIs can’t provide—is a data exchange infrastructure that acts as a network where participants can connect once and then have access to many. Instead of one-to-one connections, a true data interchange network provides a collaborative platform through which organizations can develop joint processes that help the healthcare community communicate more efficiently.

A decentralized, peer-to-peer network makes data interchange possible. Instead of pushing and pulling data through a single gateway between two entities, a network allows access to information among all participants. The potential number of use cases in this type of network is unlimited.

How it works

A decentralized, peer-to-peer network enables all participants permissioned access to the same information through a single connection. The network provides secure, tamper-evident storage of transaction data, as well as permission-based access to stored information so that the information can be protected and more reliable and its provenance can be verifiable.

Source: istock

Payers, providers, and third-party vendors who want to participate must agree to allow the data to be discoverable. Members of the network connect via the cloud, where the ID keychain and master index will match the requested data to the available data, then locate the information and deliver it to the requestor. Certifications, cybersecurity, and compliance are all managed by an outside intermediary. Leaders from one of our founding members, Sentara Healthcare, gave their view of how decentralized networks can support transformation within healthcare organizations, read more in the article here.

Limitless benefits

A decentralized, peer-to-peer network offers unlimited opportunities to advance the quality and efficiency of healthcare delivery in our country. The term “transformative” is not hyperbole here; the potential to transform our industry goes as far as our imaginations can take us.

An accelerated path to interoperability

The broad adoption of APIs and FHIR has been essential in enabling interoperability to move forward into the 21st Century. Up to this point, it’s enabled incremental progress to move us closer to our goals. As technology evolves, we need to leverage a decentralized, peer-to-peer network to eliminate the need for multiple APIs while providing all healthcare stakeholders the ability to work together as a community to build the healthcare ecosystem of the future.

Webcast: Digital Transformation – How Automating the Back Office Delivers Consumer Trust

There’s been a lot of conversation about digital transformation, interoperability, and the rising administrative costs in healthcare. What if all three challenges could be addressed by digitizing the back office? Digitizing the back office is similar to how retailers have automated their processes and infrastructure to create experiences that are consumer-friendly and more efficient. It’s now possible in healthcare.

Join an exploration of how healthcare could work differently as the panel members challenge the way healthcare approaches data exchange today, what is meant by digitizing the back office, how the revenue cycle can be improved with automation, and how it could impact the healthcare experience. Payers, providers, and innovators are coming together to collaborate.

During the webinar, the speakers will be discussing:

How Interoperability Can Boost Revenue Cycle Results

The annual cost of administrative and process inefficiencies in the U.S. healthcare system has reached an ominous $496 billion, 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.

Current gaps in processes

 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, vendors, and patients alike?

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, patients, and vendors—working from the same platform of knowledge.

Use Cases for a Peer-to-Peer Network

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 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 2021 CAQH report, each manual eligibility verification transaction costs $16.07 and each manual prior authorization transaction costs $14.49. And this doesn’t even include the cost of gathering information for the transaction or for follow-up. Since 502 million manual eligibility transactions and 43 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 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.

How it works

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.

Where we go from here

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, 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.

Time to act is now

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 have to 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.”

What is Blockchain?

It may be hard to believe but the first blockchain-like protocol was conceived 40 years ago, in 1982 by cryptographer David Chaum. A few years later, in 1991, Stuart Haber and W. Scott Stornetta began work on a “cryptographically secured chain of blocks.” The design was improved in 2008 with the seminal paper by Nakamoto that introduced Bitcoin and its underlying blockchain technology.  It wasn’t long after that the realization hit that the underlying technology, blockchain, could be applied to other industries, like healthcare.

At its core, blockchain is a digital ledger where parties can add information that, once published, cannot be deleted or modified. Each entry of information transactions that when combined, is called a “block.” The number of transactions that can be included in a block depends on several factors and on how the blockchain is being used. Once you reach the transaction size for the block, you create a second block, then a third block, and so on. Thus, you have a chain of blocks, or a blockchain. An essential element of the blockchain is that each transaction is digitally signed by all parties, ensuring that security of sensitive information.

The role of the hash

A key aspect of blockchain is that every block has a reference to the previous block, which is referred to as a hash. A hash is created by sophisticated algorithms (cryptographic functions) that take as input the data from a block of any length and transform it into a fixed size. The algorithm only flows in one direction, which is why the output cannot be decrypted or altered. The key feature of a hashing function is that the same input will always produce the same output, but a slight change in the input will result in a drastic change to the output. Because each block contains information from the block before it via the hash, they form a cohesive chain. Once blocks are connected using the hashes, they cannot be changed without impacting the entire chain and any subsequent blocks. If something were to be changed in block, all subsequent blocks would be invalid. In other words, you are always using data from the previous block, creating a hash for it, and storing it on the current block. 

It is difficult to reverse engineer a hash function. Once a hash is generated, one cannot take that output and then get to the original input value. Existing hashing algorithms, like SHA256, provide sufficient security for more situations, and new algorithms like BLAKE have been developed that are stronger and more secure. 

Decentralized and distributed

One of the key aspects of a blockchain network is that it is both distributed and decentralized, with each participant acting as a peer node on the network. This means no single entity can control it, modify it, delete it, or change the rules for its use. Every node in the network has access to the exact same blockchain; they all have a copy of the same ledger. Once a peer node has been added to the blockchain, the other nodes are notified of the addition. 

Distributed databases and peer-to-peer networks are not a new concept. Napster was a peer-to-peer distributed network that applied many of the same concepts. 

The “decentralized” aspect of a blockchain network comes into play through consensus. Consensus in this scenario allows peers to validate transactions and guarantee their order. This means that when a new block is added but is not validated or the order is incorrect, the other nodes on the network will not add that block. In this way, it guarantees the integrity of the blockchain. The good news is that there are many ways to achieve consensus that allow peer nodes to verify the integrity of their additions before adding them. 

Some naysayers point out that there’s so much sensitive data in healthcare, making blockchain impractical for healthcare. With a decentralized and distributed network, data can exist outside of the blockchain, or “off chain.” Rather than having the actual data encoded in the chain, it can be referenced by a transaction but stored somewhere else. In this case, the block contains metadata about the actual data instead of the actual data itself. This is most useful when dealing with large documents or images that take up a great deal of storage.

Smart contracts

Smart contracts consist of if/then logic software that runs on top of the blockchain and is designed to satisfy common contractual conditions. For healthcare, this might involve exchanging patient information. When data is exchanged between two parties and the transaction is captured on the blockchain, a smart contract could execute and inspect the exchanged data. If, for example, the data contains new insurance information, the smart contract could automatically update a claims payment system to reflect that change. Another application would be in the case where a smart contract is written to look for a specific medical diagnosis or procedure in the patient’s medical record, and then trigger a workflow in the electronic health record system when found in a transaction.

The key value of smart contracts is that they minimize accidental or malicious intents from network participants engaging in a transaction. With the often-contentious relationships between payers and providers, smart contracts can take the place of trusted intermediaries, thereby streamlining workflows and reducing friction. Once written, smart contracts are visible to the entire network and are both automatic and immutable. 

Blockchain in action

Avaneer Health is launching a permissioned blockchain, where only entities invited to join have permission to view or update transactions. Each participant receives their own peer node and Avaneer Health is working with participants to incorporate their workflows and business logic into smart contracts on the blockchain. 

The bottom line  

According to the 2021 CAQH Index report, an estimated $391 billion is spent on administrative complexity in the United States healthcare system, $42 billion, or 11 percent, is spent conducting nine common transactions. Of the $42 billion, the industry can save $20 billion, or 48 percent of existing annual spend, by transitioning to fully electronic transactions. 

These costs include the labor necessary to conduct the transaction, but not the cost of gathering information for the transaction or for follow-up. Considering that payers and providers conduct 502 million manual eligibility and benefit transactions and 43 million manual prior authorizations each year, the total cost of these two transaction types alone is staggering. They represent clear opportunities to leverage blockchain. Payers and providers could save billions that could be redirected into direct patient care or invested in new equipment, facility improvements, or new revenue opportunities.

By increasing data fluidity and trust between patients, providers, payers, and vendors, blockchain stands to revolutionize the healthcare industry. While there will be pushback by those that believe it is too soon, organizations like Avaneer Health and its participants from leading organizations are moving forward, leading the way into the healthcare ecosystem of the future.

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