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Blockchain technology has the potential to
assist organizations using alternative payment
models in developing IT platforms that would
help link quality and value. Differing from
traditional IT databases and models,
blockchains seek to create a “single source of
truth” which can be securely accessed by its
members. The likely use cases for blockchain
will be focused on ACOs because of the lack of
ACO specific software and lack of legacy
applications. Blockchain will not be a panacea
for interoperability issues, but will provide a
robust platform to help advanced alternative
payment models if used in the right application.
Blockchain technology (hereafter referred to as
blockchain) has had increasing news coverage
as the technology behind Bitcoin, a digital
payment network that has had a revolutionizing
effect on many industries, particularly finance.
The hype behind the technology has increased
proportionally to the news stories inspired by
Bitcoin and its associated alt-coin community.
From the shutdown of Silk Road to the heist of
Ether from the Decentralized Autonomous
Organization, each news story spreads
awareness of Bitcoin and the far-reaching
effects the technology behind Bitcoin can have
on multiple industries. Healthcare has been
targeted by many blockchain startups and
enthusiasts, but many of the possibilities
presented to the public seem to be a solution in
search of a problem.
This whitepaper will seek primarily to address
how blockchain technology can effectively
enable or assist alternative payment models
(APMs) as our current information technology
infrastructure tend to be insufficient in terms of
speed or scope for APM to succeed. This paper
assumes a basic understanding of encryption.
Blockchain is the underlying technology behind
Bitcoin, a famous cryptocurrency that has
surged in popularity and has been touted as a
currency that retains relative anonymity while
being accessible anywhere with Internet
connectivity. At its core, blockchain is a
distributed database secured by cryptography
that ensures only people with the right key
have access to the amount of currency over
which they have authorized control. An
alternative way to think about blockchain is
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that it is a protocol for solving the Byzantine
Generals’ Problem, a famous computer science
problem that aims to achieve consensus with a
decentralized system. Blockchain’s potential
applications go far beyond Bitcoin. Bitcoin is an
application specific instance of the technology,
whose very value is determined by the
limitations set by its founder. By setting
limitations such as fifteen million Bitcoins as
the maximum amount of Bitcoins ever possible
to be in existence, there is an artificial
constraint on the Bitcoin supply. This limitation
preserves its value as a currency, but it is not
useful if the blockchain framework is used as
anything other than a currency system.
At its most simplistic level, blockchain
technology is a distributed database secured by
cryptography. In traditional databases,
authority and access is governed by a
centralized authentication system. Unless you
have the right credentials given by this
centralized authentication system, you will be
unable to even access the database in any
capacity. In blockchains, data is secured
primarily by encryption. All transactions are
encrypted into blocks by the relevant
encryption and added to the front of the chain
of blocks (hence the name “blockchain”).
Ownership of the encryption key is the
authority to access certain records. Rather than
having a central authority, blockchains rely on
the encryption system to maintain trust. A
more detailed technical description of how
blockchains work is beyond the scope of this
whitepaper as this paper intends to describe
the applications of blockchain rather than the
technical architecture. However, for those
readers proficient in programming, a
blockchain can be thought of as a database
created as a linked list of encrypted
transactions that uses a hash rather than a
pointer.
A comparison between a traditional database
and a blockchain can be found by imagining a
room full of records and how it might be
secured. A traditional database is similar to a
room filled with filing cabinets with few to no
locks, all “secured” by a clerk staffing the room
and its filing cabinets at all times and adding,
updating, and eliminating records as well as
checking the credentials of anyone making any
requests to do the same. A blockchain instead
replaces the clerk with a series of security
deposit boxes and anyone with the right key
will be able to open a particular safety deposit
box and edit the record inside of that box
deposit box. In this way, blockchains create
trust in lieu of the clerk by using encryption.
The main benefit of blockchain technology is
that there is no central authority, yet the
database can still represent a single source of
truth. Unlike conventional database technology
which requires a central keeper of information
to verify whether the information being placed
into the database is valid, blockchains spread
the processing of the database over different
nodes, or processing units, and trust is
maintained through encryption and the power
of the network. Conflicting database
transactions are negated through the
blockchain architecture, and there is a high cost
to revoke any transaction. This allows the
blockchain to remain a source of truth that can
be accessed by multiple individuals as long as
each has the right encryption key.
While there are other benefits of blockchain,
such benefits are application specific and less
applicable to all situations relating to
healthcare.
Blockchain is traditionally difficult to apply to
the healthcare setting because of the opposite
emphasis of transparency and privacy. While
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the blockchain can be secured with encryption,
the idea of having an entire encrypted database
downloadable by anyone may be seen as
anathema by most healthcare organizations.
Healthcare organizations would rather have
everything secured behind firewalls with
limited access because of regulations and the
public’s perception and insistence on absolute
security of their healthcare records. As such,
blockchain will not likely to be deployed in
healthcare unless there are limitations to how a
user can access the blockchain.
The other main drawback is that blockchains
are highly dependent on their encryption keys.
If a user’s private encryption keys are lost,
there is no way to recover them. This is
especially complicated with healthcare data
because the value of healthcare data is not only
transactional but also longitudinal. If a person’s
medical record is partly missing, it is
exponentially less valuable. Tracking a patient
through multiple records across different
organizations is already difficult, but the threat
of losing a key is large enough that it is unlikely
blockchain applications for healthcare will
involve patient involvement initially. Lastly, if
an user’s private encryption key were to be
hacked or stolen, the hacker would have all the
information ever stored by the original user.
While there are security measures for
encryption keys such as interface software (.
wallets), the interface software adds additional
attack vector for hackers and increase security
concerns for blockchain implementers.
Blockchain setups can be classified first into
two main types depending on the level of
access to the blockchain. Blockchains can then
be classified further by the differing levels of
control each node has over the blockchain.
Public blockchains are totally open to the public
and can be accessed by the public. The only
protection is provided by encryption.
Private blockchains are blockchains that only
certain participants have access to. There are
varying levels of control of who can access the
data, who can modify the data, and who
ultimately has authority in the system.
The issue with public blockchains is that the
public is not yet ready to use this technology.
As the large number of hacks on Bitcoin
exchanges have shown, loss of control is
possible and losses are usually all or nothing.
Since private encryption keys do not change,
any hack or loss of the key represents a security
hole that is not reversible and the victim of the
hack or loss must start over with new accounts.
Additionally, since public blockchains are, by
definition, publically available, there will be no
future protection against technological
progress in decryption methods unless
additional security measures are regularly
patched to the entire blockchain network. A
hacked key in the Bitcoin blockchain has the
limited downside of an individual losing all of
his or her Bitcoins, which is not personal in
nature. A hacked or stolen encryption key in a
public blockchain designed for healthcare
would expose healthcare data that is unique
and personal.
Private blockchains, with some level of control
over access, would likely be the norm in
healthcare settings. Many of the issues of
healthcare IT have less to do with technical
interoperability and more to do with business
agreements and bureaucracy. Private
blockchains can be designed to follow the rules
and authority laid out by business agreements.
The mix of security and flexibility is more suited
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towards healthcare than the militant
transparency in a public blockchain.
Ethereum is advertised as a “decentralized
platform for applications that run exactly as
programmed without any chance of fraud,
censorship or third-party interference.”1
Ethereum can be considered a more advanced
platform than the blockchain technology used
to power the Bitcoin system. Among Ethereum
features is the smart contracts feature, which
allows the blockchain to execute small
computer applications as part of the blockchain
process. This feature allows the blockchain to
be more than a simple database of information
– it becomes a distributed computer system
with a database. Essentially, a blockchain
powered by Ethereum is like a one-stop shop
for running a host of applications with an
emphasis on transparency and without any
chance of fraud or interference by malicious
parties.
For these reasons, some startups focusing on
healthcare, like Gem Health, are using
Ethereum as their blockchain framework.
Smart contracts act as small applications that
can automatically affect the data in the
blockchain without the need for any external
applications. While it is possible to do the same
thing as smart contracts through external
means, having the process automated through
smart contracts preserves transparency and
removes the possibility of human error as it is
triggered by conditions set ahead of time in the
smart contract and the code in the smart
contract is made public.
1 Ethereum Project, retrieved 1 August 2016 from
Some sample use cases for smart contracts that
affect alternative payment models or
Accountable Care Organizations (ACOs) are
simple applications for pre-authorizations, or
more complicated use cases such as real-time
HEDIS measures reporting.
Gas is another feature of Ethereum that makes
it ideal for healthcare in a private blockchain
network. Gas is a feature that is used to
prevent smart contract applications from
running forever on the blockchain because of
coding or scope issues. A side benefit of this
architecture is that gas is a good measure of
usage and can be used to divide the cost of
running the blockchain infrastructure equitably
amongst participants.
Alternative payment models (APMs) is the next
step for healthcare to take to rein in spending
and control healthcare costs. In order for the
US to move away from the fee-for-service
model, there has to be a healthcare IT
infrastructure that allows organizations to link
quality, value and effectiveness of medical
interventions.
Traditional infrastructures with a central
database typically take a long time to deploy
and connect. There are issues with business
agreements about usage of data and trust
issues about exposure of healthcare data from
multiple stakeholders. Controlling access to
centralized databases are difficult enough that
the method for delivering data from one
organization to another is typically done
through extract-transform-load (ETL)
operations that typically involve large amounts
of redundant files being sent to different
stakeholders.
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By replacing traditional IT infrastructure, a
blockchain can process data in a limited parallel
capability. As well, since every node already has
a constantly updated copy of the blockchain, no
files are needed to be transferred between
organizations. As blockchains are by nature
decentralized, blockchains are fault tolerant2
and may be more reliable than onboarding a
participant in the traditional central database
model.
Accountable care organizations (ACOs),
typically lightweight organizations, are using
information technology to link organizations
together to increase quality and value. While
ACOs are the most likely organizations to adopt
blockchain as they are not hindered by legacy
infrastructure and ACO specific IT platforms
have not been fully developed, payers and
health insurance exchanges (HIEs) can use
blockchain in limited applications to increase
engagement with their healthcare partners.
Some of the ideas presented below are the
likely use cases of blockchain in the healthcare
IT space. These use cases were selected based
on the ease of development of the blockchain
towards the use case, the alignment of values
of the use case with the blockchain values, and
the marginal effectiveness of blockchain over
the existing traditional model. As mentioned
above, none of these use cases relate directly
to the patient as the technology is not yet
mature enough to allow patients direct access
to the blockchain.
Currently, claims data is one of the datasets
suitable for blockchain. Unlike clinical data
which is typically implemented in many
2 Blockchains vs centralized databases, retrieved 1
August 2016 from
vs-centralized-databases/
different ways, claims data is relatively
standardized and follows strict formatting
rules. Claims are a major part of the healthcare
revenue cycle and there is payer investment in
how services are billed and money is collected.
Typically, claims systems are the more
advanced parts of any healthcare setting
(source). Additionally, the government is a
large player in the reimbursement and claims
system, allowing a standard to be implemented
more rigidly. Lastly, the end goal is
straightforward. Claims data is used to
distribute money properly and getting paid is a
binary result – either payment is distributed
properly or improperly. Unlike treating a
patient, claims data has only enough
information to ensure getting paid properly is
the end result.
Claims IT systems are well-suited to be
powered by a blockchain. Claims IT systems are
typically robust and claims data flows through
multiple organizations. Each exchange of data
from one organization to another creates a new
need to verify that the data is correct since
each organization has personal incentives to
ensure no errors occur in their respective data.
These exchanges between different
organizations introduce costly time delays. The
typical claims period is usually one month after
the clinical event the claim actually references.
By decentralizing the system, blockchain will
allow claims information to be processed at a
much faster rate than previous and current
rates, and data will be collected into a single
location as part of the blockchain process itself.
Traditionally, claims data has taken a long time
to process as there is only a single database to
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process everything. Through blockchain
technology, claims can be added to the
database in real-time, allowing updates to
analytics that may have needed months to
collect and process. Some features that can be
part of this blockchain by using smart contracts
include real-time HEDIS reporting and
automating and making prior authorization
actions transparent because the code in smart
contracts is typically open to any user. Errors
would be fixed quickly if the users see any
discrepancies.
By placing the claims clearinghouse into a
blockchain, the real-time nature of the
blockchain allows many other applications to
exist and allow organizations that rely on claims
for analytics to have access to real-time
reporting. The possibilities of real-time claims
can power a multitude of different quality
improvement programs designed to increase
value and quality of medical interventions.
Provider directories are typically unwieldy
databases of names, locations and affiliations
that are hard to maintain because of the
arrangements different providers have with
each other and with hospitals. Add in multiple
NPI numbers, NCQA credentialing, and
different contracting requirements payers have
with their provider networks, and we have
provider directories that are typically out of
date as soon as they are generated or printed.
By putting a provider directory in a blockchain,
it is possible to create a single interoperable
provider directory that is valid over large
geographies. Since there is no PHI involved, this
blockchain can be made public and will have
the transparency that is distinctive of public
blockchains. Automated smart contracts
controlled by payers can automatically
invalidate providers as soon as their contract
with payers expires. Providers can be trusted to
update certain parts of their own information
such as their office locations, business hours,
and whether they are accepting new patients.
Once a provider directory is on the blockchain,
the blockchain’s real-time nature will allow
further development of new features by linking
the directory to other systems. Imagine a
provider directory that is updated with reviews
in real-time or connected to the providers’
scheduling systems so that a patient can
schedule appointments as soon as the patient
confirms that the provider selected is an in-
network provider.
Accountable care organizations typically have
patient members who have standardized care
plans that help the ACOs coordinate care and
create cost savings by being more efficient.
Typically, care plans are relatively static
information that is transactional in nature – a
care plan for a patient typically is not directly
affected by a care plan that that patient had
previously. When ACO staff updates a care
plan, they usually do so in response to the
patient’s current condition. This means that the
information in the latest version of the care
plan for the patient matters, indicating that this
type of information fits well with the modular
nature of a blockchain.
By placing a patient directory into a blockchain,
there are several advantages such as being able
to quickly deploy a service for providers to
verify if an incoming patient has a care plan
from the ACO to follow. More revolutionary is
the ability to update the care plan by using
smart contracts in real time based on different
encounters that are recorded in the blockchain.
If a patient is frequently checked by ER
departments over a short period of time, smart
contracts in the blockchain may add a flag in
the care plan to ask the ER departments to
consider putting this patient into an ER
diversion program to avoid frequent ER re-
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admittance. This type of automatic program in
the blockchain may help reduce burdens of the
ER while reducing the overall cost of care for
patients in general.
Many advocates of blockchains in healthcare
have pushed for blockchain as a solution for
interoperability. By incorporating medical
records directly into the blockchain, advocates
claim that medical records can be transferred
and controlled via the blockchain (. Gem
Health). The reality is that most clinical data is
not normalized into a set standard with many
variations in how the medical record standard
is implemented. Different electronic health
record systems (EHRs) use multiple ways of
implementing fields in the medical record. The
blockchain does not provide any major
innovation to the existing query portals and
secure transport methods such as DIRECT.
While there may be minor improvements, the
interoperability issues inherent in current
health information organizations (HIOs) will
remain the same if blockchains were used
instead of current query portal and DIRECT mail
platforms.
Aside from the complicated formatting issues in
clinical data, blockchains are much better for
transactional data, which, by nature, is
comprised of data points that are independent
from each other. Blockchains allows data to be
stored independently in a modular fashion,
which fits the single block nature of information
in blockchains. Clinical data is not transactional.
The whole idea of alternative payment models
is to link quality and value of medical
interventions, which means each data point is
connected. Clinical data is longitudinal. While it
is possible to put medical records in
blockchains, there is a lot of extra data besides
the transaction that needs to be included in
order for clinical records to be useful for use as
an EHR. The more information included would
also increase the size of the record, which
would negatively affect the efficiency of the
blockchain. There are no major benefits that
offset the drawbacks of putting the medical
record on a blockchain.
The idea of using a public blockchain containing
patient demographics to be used as a patient
identification system will not be easy to
implement. While blockchain advocates may
claim that a public facing blockchain will
encourage transparency and allow patients to
update information in real time (source), access
to single accounts on blockchains by patients
may easily become unrecoverable whenever
encryption keys are lost. While a blockchain
allows for a public single source of truth for
patient ID and data, it does not have significant
advantages over existing Master Patient Index
(MPI) models which match patients to clinical
information and medical histories using a host
of different demographics in a statistical
matching model. While patients may not be
able to directly access the MPI compared to the
blockchain model, patients already indirectly
update their demographics in a MPI through
admit-discharge-transfer (ADT) messages
anytime they check into a hospital or clinic and
fill out paperwork with personal data that staff
then enter into their hospital or clinic patient ID
and data systems.
Blockchains will likely not revolutionize
healthcare immediately. Blockchain uses are
quite specific in what they can do well.
Blockchains will likely enter the market
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discreetly, making certain parts of the industry
more efficient. Similar to how EHRs, MPI
systems, and analytics are slowly changing
workflows by increasing the capabilities of staff
in healthcare organizations, blockchains will
enable healthcare staff to get information in a
shorter time frame without file transfers,
allowing more efficient workflows to evolve out
of existing workflows.
Below is a description of how an organization
may likely adopt blockchain into its
infrastructure. (This sample is set in the context
of a hypothetical ACO trying to adopt
blockchains for its collections of hospitals.)
Polaris, an ACO consisting of seven hospitals
and fourteen smaller clinics, realized that many
of its hospitals were using different EHR
systems that were not interconnected. As a first
step in trying to identify if patients going to the
hospital and clinics were part of the ACO,
Polaris implemented a blockchain. By setting a
blockchain with nodes at each of the hospitals
and clinics, plug-ins and interface engines were
used to connect the blockchain with the
different EHR systems at each point of care
setting.
Any time a patient is registered into a point of
care setting, the EHR system sends an ADT
message to the MPI to identify the patient if
possible. In our example, Patient A is in
registration at Sunnybrook hospital. The
following journey is illustrated in Figure 1.
1. Patient A’s ADT message is sent to the
MPI and the care plan in the blockchain
is returned when Patient A is identified
as an ACO patient.
2. Patient A is admitted and is discharged
after the hospital checkup.
3. The ADT messages are sent during the
admission time and discharge time
respectively to the blockchain.
4. The smart contracts in the blockchain
automatically updates Patient A’s care
plan.
5. The blockchain adds a recommendation
to put Patient A into an ER diversion
program after noticing that the
discharge message was for a minor
diagnoses and this has marked three ER
visits for minor diagnoses in the last
month.
Figure 1. Blockchain use by hospital for Patient A
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Meanwhile, Patient B is not a Polaris patient.
The staff checks in patient. The MPI finds no
record of patient B, suggesting patient B is not
a Polaris patient. Noticing this, staff asks if
Patient B wants to sign up and quickly enrolls
Patient B through a web interface on the
intranet that connect to the blockchain.
After noticing the success of the patient
directory, Polaris is looking to see how else the
blockchain can be used in its clinical system
setting. In order to become more analytical
about costs, they decide to put claims data
onto the blockchain and link patients and their
claims through the MPI. Each of the hospitals
and clinics of the ACO used the interface engine
to connect the claims system to the blockchain.
Through smart contracts, they were able to
make a dashboard with rolling quality measures
adapted from HEDIS scores to measure the
quality of care the ACO was providing while
tracking costs.
Certain hospitals outside the ACO were
interested in the system as well to measure
their own quality of care and costs. St. Peters
Hospital, for example, was allowed access to
the blockchain by paying a fee to the ACO,
setting up a blockchain node with lower
authority and connecting a claims feed to the
blockchain. In return, Polaris was allowed to
generate aggregate comparison reports of
quality measures of St. Peters for comparison
to its own hospitals. St. Peters knows that its
individual medical records and patients’ privacy
was maintained because of the encryption of
blockchain. St. Peters knows that only the
smart contracts can access the data in
aggregate because the coding for the smart
contracts is transparent and is readable on the
blockchain. These analytics reports help both
the Polaris ACO and St. Peters to develop better
quality care and know what areas they need to
improve on based on their own respective
quality measures.
After these successes, Polaris has a multitude
of ways to incorporate blockchain into its
workflows. While none of the applications of
the blockchains were a direct solution to
interoperability or single-handedly enabling
alternative payment models, the blockchain
was able to provide information with a single
source of truth. Future phases are expected to
be similar: incremental innovations that
eventually become indispensable because of
the programs the information enable.
Eventually, even payers and Bitcoin may be
connected to private blockchains so that people
have a one-stop shop to pay multiple doctors
and departments immediately without the
need to wait for invoices from multiple doctors
and departments.
Blockchain is not limited to just Bitcoins. While
not a pancreas for interoperability, blockchain
provides incremental improvement to existing
workflows by making a trustful system that can
be decentralized and fully automatic, increasing
speed and accuracy while reducing human
error. More importantly, blockchain may help
organizations understand where there are
barriers arising from policy, regulation or
business models as slow workflows will no
longer hide inefficiencies. Technology is only
part of the solution. But if blockchains are
utilized in the right application, they can
provide the information needed to drive
programs and process that enable alternative
payment models to achieve their aim of linking
value and quality.
