Healthcare Analytics, Population Health Management, Healthcare Big Data

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Could Blockchain Control Population Health Management Costs?

A blockchain approach to securing individual patient risk scores could change the way payers address population health management and cost containment.

By Jennifer Bresnick

- As the healthcare industry continues its journey from volume to value, payers and providers alike are continually seeking new strategies to contain costs, improve outcomes, and rise to the challenges of population health management. 

Using blockchain to control population health management costs

Diabetes, heart failure, COPD, and obesity are simultaneously costly for providers and life-limiting for patients, producing economic ripples that sap billions of dollars from the nation each year.

Many hospital admissions, expensive emergency department visits, and intensive medication regimens are avoidable if patients receive appropriate and timely preventative care and chronic disease management services. 

But more often than not, patients still fall through gaps in the care continuum, leaving payers to pick up the financial pieces when crisis events occur.

As the Affordable Care Act continues to bring more and more patients into regular contact with the healthcare system, payers have been using their economic clout to hasten the transition to value-based care in an attempt to rein in runaway spending.

READ MORE: Population Health, Big Data Strategies Could Reduce $2B Waste

Medicare, Medicaid, and the majority of private payers have all used various methods to urge their providers to invest in sophisticated health IT applications, including electronic health records, predictive analytics, and clinical decision support, in an effort to equip providers with the tools they need to understand risk stratification – the first step for effective population health management.

Assigning a risk score to a patient based on a particular disease or combination of conditions can help providers deliver the best – and cheapest – combination of services that could forestall more costly episodes of care in the future. 

This approach not only keeps patients happier and healthier, but helps payers save money and gives providers the chance to earn incentives through accountable care organizations or other arrangements.

But big data alone might not be enough to establish this harmonious value-based environment.  Payers may need to pull some additional financial levers to bring patients and providers into compliance with a new healthcare system based on population health management, and the blockchain may be the heavyweight new innovation that insurance providers have been waiting for.

Blockchain is a way to guarantee the validity of transactions, such as a financial transfer or an update to a health record, by verifying each new action against an authoritative ledger of previous events.  Instead of being held in one single location, each member of the blockchain community holds his or her own copy of the ledger, and no new transaction can be approved unless every individual agrees that the requested action is valid.


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Read: Is Blockchain the Answer to Healthcare’s Big Data Problems?


This is important for privacy and security – it is better to have ten different checkpoints than one single gateway for sensitive data – but also holds significant potential for reconciling a patient’s disparate interactions with the healthcare system.

Blockchain can also help payers create risk adjustment strategies that are tailored to a patient’s unique health status, Scott Gottlieb, MD, Resident Fellow at the American Enterprise Institute suggested in a hearing before the House Committee on Energy and Commerce last week.

The strategy may be key to helping insurance plans design premiums and adjust for ACA subsidies that are higher for complex patients and lower for healthy ones, while keeping such sensitive information absolutely private and secure.

“Insurance is expected to pay for unexpected, random ‘bad things,’ such as a diagnosis of cancer or an accident,” Gottlieb explained during his testimony. “But as experts have noted, for chronic conditions such as diabetes (relatively low but regular costs) or Alzheimer’s (very high and regular costs), actuaries recognize that there may be a lifetime of extra expenses.”

READ MORE: Population Health Scorecard Shows Geographical Divides in Quality

The Affordable Care Act established a risk adjustment pool that allocates additional funds to payers with high proportions of chronic disease costs in an effort to offset the financial burden of this growing subset of expensive patients. 

Currently, this risk adjustment system is based on examining the severity of chronic diseases among an insurer’s patient pool, but Gottlieb believes that the blockchain may enable a more personalized approach to distributing these incentives.

“It is conceivable that risk adjustment could be enabled through a scheme that prospectively bakes some of this assistance into the tax credits provided to consumers to help them buy coverage,” he said.

“One can perhaps eventually envision a system in which consumers in a large, well-functioning pool who suffer from certain costlier conditions could have their subsidies adjusted automatically (at the time of enrollment) to reflect their higher costs. This can even provide incentive for health plans to recruit such individuals and actively manage their health and reduce the cost of care.”

However, tagging a patient with a “high risk” label presents some immediate privacy concerns.  While the ACA already prevents payers from denying coverage to patients with preexisting conditions, it cannot possibly predict the social or employment implications of a data breach that exposes such labels to unauthorized parties.

“The designations that follow individuals in such a hypothetical insurance pool, which would indicate the existence of their adjusted subsidies and thus their underlying medical condition, would need to be completely deidentified in advance of enrollment and impenetrable to disclosures,” Gottlieb stresses.

That is where blockchain may come in.  Currently used as a foundation for the cryptocurrency known as BitCoin, blockchain has already been put through its paces as a secure method of conducting very private transactions. 

Its value in the healthcare industry is as of yet unproven, but few industries have a greater need of an authoritative, communally validated record that easily integrates patient consent.  Patients included in the blockchain would have the ability to approve or deny any sharing or changes to the information about their risk status, which would help to ensure a high level of privacy and consumer control over the data.

If the blockchain could help payers address the privacy and security concerns of developing an individualized take on the financial side of population health management, it could help to alleviate some of the major criticisms leveled at the Affordable Care Act and its subsidy framework.

Healthier patients with less need for constant contact with the care continuum could receive less expensive coverage geared towards coping with major unforeseen health incidents, but payers would still be able to collect higher premiums for more costly patients in order to ease the burden of intensive chronic disease management.

Federal subsidies could subsequently be tailored to help low-income patients pay for their complex chronic disease care and balance the risk adjustment pool to maintain equity among insurance providers.

“Insurers could agree to a risk-adjustment system as a condition of participating in a state exchange,” said Gottlieb.  “The credit that the health plans receive can be adjusted prospectively, based on a defined set of health care conditions and a methodology that the insurers agree to in advance, since they are the ones who know best where the economic sensitivities are.”


Read: Identifying Care Disparities for Population Health Management


This individualized approach to population health management could help to spread spending more evenly across the distribution of patients, which would prevent healthy consumers from feeling gouged by astronomically high prices for coverage that they may not necessarily need. 

On the other end of the spectrum, patents with a record of high utilization would be able to receive more appropriate financial subsidies when purchasing coverage through a state exchange, which could help providers address issues with access to care that have produced significant inequalities in outcomes.

Blockchain may not be the only way to institute a security protocol robust enough to safeguard something as deeply private and personal as a unique risk score.  But as the methodology develops in the healthcare industry, it may become a critical component of the population health management ecosystem as providers and payers look for ways to control costs and allocate their limited resources most effectively.

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