How could blockchain fight healthcare fraud?

Clabby Analytics’ last article on blockchain technology in the healthcare field discussed how companies are using blockchain technology to become “first movers,” in their respective industry segments. We also discussed why companies that are not onboard with blockchain should be. Our message was aimed at CTO’s, CFO’s and CIO’s in the healthcare space, and we urged these executives to pay attention to how blockchain will change the way healthcare companies are doing business (this is a matter of competitive survival – those who do not adopt blockchain will find themselves at a significant competitive disadvantage).

As the world is becoming even more digital, digital fraud is on the increase. In fact, according to the National Health Care Anti-Fraud Association (NHCAA), in the fiscal year 2017, the United States Justice Department recovered over $3.7 billion in settlements and judgements related to healthcare fraud and false claims. Overall, $2.4 billion of that involved the healthcare industry! That’s not all: NHCAA, estimates healthcare fraud in the US alone accounts for $68 billion annually – so only a fraction of the amount of fraud taking place is actually prosecuted.

To combat healthcare fraud, it is necessary to consider fraud from the eyes of both healthcare providers and the customers they serve. In healthcare, fraud comes in all different shapes and sizes – and is typically committed by organized crime groups, as well as dishonest healthcare providers.

Here are some of the most common types of healthcare fraud:

● Billing for services that are never actually received through different methods, either using medical identity theft or through claims for procedures that didn’t actually happen.

● Upcoding: An example of upcoding is billing for more expensive services or procedures that were not actually provided. In 2014, EndoGastic Solutions, INC. was found guilty of advising surgeons to bill for more expensive surgery than was provided to patients. Although sometimes there are errors with billing, when doctors themselves bill for more expensive procedures that didn’t take place, that is upcoding.

● Providing medical services that are completely unnecessary aiming to collect more in insurance payments. In a 2013 article, USA Today highlighted thousands of unnecessary medical procedures that occur on a yearly basis.

● Unbundling or Fragmentation: Billing an entire procedure in different steps. (According to “intentionally unbundling or fragmenting billing codes increases a provider’s profits by billing bundled procedures separately. This results in higher reimbursement from Medicare and Medicaid.”

● Receiving bribes for patient referrals (kickbacks)

These different types of fraud are all risks to individual personal safety and security.

In this digital age, humans are constantly on the move, leaving trails of their personal lives online to be tracked and used. By leaving trails, pointers to health records become perfect candidates for identity theft.

But medical fraud is not just about hackers stealing your information, it is also about being tricked by doctors, as was discussed in the types of fraud section on page one. In an industry plagued by so many different types of fraud, sometimes fraud becomes hard to track. Early this year, the Trump Administration even announced a proposed increase in the Healthcare Fraud Budget. With the government’s involvement to recover funds and prosecute those partaking in fraudulent activities, it is apparent that the current system isn’t working. Instead of attempting to fix the issue by creating anti-fraud programs, tougher regulations will help ensure customer safety. But blockchain technology will also contribute to reducing fraud. That is what makes this blockchain revolution so timely, we finally have the right tools to fix fraud in healthcare.

What have we seen in healthcare with blockchain?

As Clabby Analytics discussed in “Blockchain is changing the way we view Healthcare,” Medicalchain, a company that uses blockchain in the healthcare industry, focuses on securely storing a patient’s medical records digitally, providing the ability to share those records with doctors, hospitals, laboratories, or even pharmacists. Medicalchain’s all-in-one platform is an example of how everything healthcare related is consolidated in one safe and secure application. Blockchain by its nature creates a more efficient, secure, and overall more productive environment for various types of transactions than other current technologies. Companies like Medicalchain are pioneers in this space. For example, instead of calling a medical provider to ask for insurance policy numbers or scrambling through a wallet to find a medical card, a mobile device stores that information for you, making it immediately accessible when entering a medical center for a procedure or checkup.

Paper records remain a hindrance for many third world countries and even here in the United States, that is still an issue. And even if current records are paperless, new and old records are not being used together to track patient’s health history overall. Blockchain can replace these paper systems, creating more transparency and ensuring that doctors don’t incorrectly enter patient results, and also have full access to a portal with diagnoses as well.

Summary Observations:

Preventing fraud in the industry is not just about security and making sure things can’t be hacked, tampered, or manipulated, but also about new systems keeping records secure. Medicalchain’s platform, for example, as well as other new start-ups focused on healthcare are using data from transactions on the blockchain platform to gather information about symptoms and diagnoses, tracking the success a particular treatment has had on past patients and using this information to correctly treat future patients, improving patient outcomes. In addition, new blockchain-focused applications will keep patients informed on during the entire treatment process. From the original diagnosis, to the treatment plan,to scheduled procedures and billing, this information is tracked and documented, making it more difficult fraud to introduce any type of fraud.

With all transactions captured in a safe, secure environment, and transactions involving payments and confidential information all on one platform, it is much more difficult for hackers to access personal information, or for identity theft to occur. In addition, with better insight into medical diagnoses and suggested procedures, patients are better informed and can identify medical fraud and fraudulent or shady billing practices.

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