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Beyond bitcoin: Five possible uses for blockchain in health care

Health Care Current | April 3, 2018

This weekly series explores breaking news and developments in the US health care industry, examines key issues facing life sciences and health care companies and provides updates and insights on policy, regulatory, and legislative changes.

My Take

Beyond bitcoin: Five possible uses for blockchain in health care

By Greg Reh, Vice Chairman, US and Global Life Sciences Leader, Deloitte Consulting LLP

When I bring up blockchain in client meetings, or in dinner conversations, people tend to have one of two reactions. Either they see it as being synonymous with bitcoin and other digital currencies, or they see blockchain as an overhyped technology.

I agree there is a lot of hype swirling around blockchain, and I also agree that this technology likely isn’t going to turn health care on its head. We might still be five or 10 years from realizing the potential of blockchain. But I do think it could help life sciences and health care organizations streamline and improve some of their processes.

What is blockchain? Where did it come from?
Blockchain is essentially a living list of linked digital records. Each transaction is verified and stored by each network participant based on a set of previously agreed-upon rules—and without a governing central authority. While information can be added, it can’t be copied or deleted. As a result, multiple groups—health plans, physicians, hospital systems, and even patients—can add to and share information through a secure system.

During a recent Dbriefs webcast, my colleague Ravi Kalakota equated blockchain to the pages of a book. Each page contains information about that book (e.g., the title, chapter headings, page numbers, author). Collectively, the text on these pages tell the story. In a blockchain, each block contains some of the same information and a digital fingerprint called hash of the data. The contents of each block reflects unique information about a transaction and is linked to the previous block. These links create the chain of blocks.

Although the concept of blockchain goes back to the 1950s, it wasn’t until 1991 that it was used with digital timestamps. In late 2008, Satoshi Nakamoto (the pseudonym for a person or group of people) released a white paper describing the concept of digital currency. In early 2009, Nakamoto released the first bitcoin software.1 This coincided with the financial crisis. But it wasn’t until 2014 that we started to look at other blockchain applications beyond cryptocurrency.

New kids on the block chain
Several industries, such as banking, are investing heavily in blockchain. A year ago, The Harvard Business Review predicted that blockchain would revolutionize banking in the same way the internet changed media.Many manufacturers are looking to link the technology to smart contracts that can be digitally verified and enforced. Some groups are even eyeing it for use in fantasy sports and dating apps.

While health care might be a step or two behind other sectors, there is interest. In a survey last fall, about 70 percent of health plan and health system IT executives said blockchain holds significant promise for health care interoperability.The Deloitte Center for Health Solutions came to a similar conclusion when our researchers examined the potential use of blockchain for health plans – outlining six use cases where this emerging technology could be applied by insurers to improve current standard operating procedures while enhancing the customer experience. More recently, in another crowdsourcing exercise, we discussed blockchain’s potential impact on hospitals and health systems in our hospital of the future research.

A challenge for health care stakeholders is to determine where to apply the technology. Rather than adopting blockchain and searching for an application, life sciences and health care organizations should identify a challenge first, and then think about how it might be solved in a transformative way. Here are five areas where blockchain might be useful in health care:

Supply chains: Most biopharmaceutical companies are at least exploring ways that blockchain could be used to monitor and track products. Along with following the flow of products, other bits of information could be included, too. Certain biologics, for example, might need to be kept at a precise temperature. Sensors included in a shipment could transmit temperature data to the blockchain. The technology might be helpful in guarding against counterfeit or substandard products. Blockchain also could be used by biopharma manufacturers to capture and record interactions with regulators.

Clinical trials: Using blockchain, companies can securely share data generated by clinical trials, such as patient demographics and information about adverse reactions. Interim results could be shared with sponsors and regulators. The technology also can help manage and track informed consent across multiple sites, systems, and protocols. Blockchain could be used to collect, build upon, and share patient data profiles across multiple trial sites—even virtual trial sites as they are developed. If applied to consent management, blockchain could give the patient control to grant access to other researchers who might access their data in the future.

Provider directory management: Blockchain-based hospital and physician directories could leverage the technology’s decentralized consensus protocols to help enable providers and health plans to update listings more quickly. If a provider changes networks or if someone finds a mistake, they can initiate a correction, which can be automatically accepted or rejected by smart contracts, which would be governed by other information in the blockchain (e.g., a recently rejected claim).

Patient records: Most people have access to just a sliver of their health history, but blockchain could help pull together a lifetime of transactions from multiple health systems, pharmacies, and health plans. This information could be processed into readable information for a patient’s own use, or converted into records that can be read by a variety of electronic medical records systems. Links to detailed information about procedures, encounters, diagnoses, claims, and prescriptions could be added over time, and access to this information could be managed by the patient or the patient’s designees.

Insurance coverage, preauthorization, and claims adjudication: The ability to ensure that claims are accurate, and to spot fraudulent claims, is particularly important in Medicare and Medicaid where payments must be coordinated between payers, providers, the federal government, and banks. A smart contract could be used to show proof of adjudication. For example, the act of a patient checking in for a clinic visit, or logging into a virtual appointment online, could be confirmed by the health system’s financial or clinical systems. This transaction could be combined with others from the same clinic that day and uploaded to a blockchain that is accessible to the health plan. An employee at the health plan could see the completed transaction, and reimburse the health system accordingly. Claims review could be streamlined because encounter data would be accessible and easily verified on a blockchain. Health systems and physicians also could connect with health plans to determine information about a patient’s health coverage, or to verify patient demographics.

We might be moving beyond the hype of blockchain and into the reality of potential applications. What’s holding us back? There certainly is some fear in being a first mover. Tim Smith, who leads our health care provider technology practice, uses the first sale of a fax machine as an analogy. That technology wasn’t useful until others got on board. If health care stakeholders don’t fully adopt blockchain, the organizations that invest in it now might not see much of a return on investment. There is promise, but the technology also has limitations. Change takes time and transformations rarely follow a straight line.

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3 Black Book Market Research. “Healthcare Blockchain Interest Heats Up: Black Book Survey,” Press Release, October 3, 2017,, accessed October 9, 2017.


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In the news

Iowa legislature votes to allow sale of non-ACA-compliant plans

A bill that would permit the sale of health insurance that does not comply with the Affordable Care Act (ACA) passed in both chambers of the Iowa legislature on March 27. The bill, Senate File 2349, would let the non-profit Iowa Farm Bureau Federation offer coverage that is designed to benefit rural communities. Lawmakers determined this coverage falls outside of the definition of health insurance, and is not subject to the ACA’s requirements. Iowa governor Kim Reynolds (R) is expected to sign the bill. About 28,000 Iowans would be eligible for the Farm Bureau coverage.

The bill’s passage has drawn comparisons to developments in other states. A similar policy in Tennessee would allow coverage to be sold (with issuers) through the state’s Farm Bureau. However, some industry observers have questioned the viability of such laws, given that the federal government recently blocked Idaho from allowing non-ACA-compliant plans (see the March 13, 2018 Health Care Current).

The Iowa bill would also allow small businesses to offer association health plans (AHPs) to their employees. That part of the bill is contingent upon the Department of Labor finalizing its proposal to exempt certain small businesses and trade organizations from the ACA’s AHP requirements (see the January 9, 2018 Health Care Current).

Related: Utah Governor Gary Herbert (R) signed a bill late last month that could partially expand Medicaid. House Bill 472 calls for the state’s Department of Health to submit a waiver to the US Centers for Medicare and Medicaid Services (CMS) by January 1, 2019 requesting to make Medicaid coverage available to childless adults with annual incomes at or below 100 percent of the federal poverty level (FPL). The Medicaid expansion proposal would also require newly-eligible beneficiaries to meet work or community engagement requirements. CMS must approve the waiver before the coverage expansion can go into effect.

PTAC makes APM recommendations to HHS Secretary

The Physician-Focused Payment Model Technical Advisory Committee (PTAC) recommended new physician-focused alternative payment models (APMs) to the Secretary of Health and Human Services (HHS).

Table 1: Status of PTAC submitted models and recommendations

At its March meeting, the PTAC also voted to recommend a palliative care model for testing. It will be considering additional models at its June meeting.

Background: The PTAC was created by the Medicare Access and CHIP Reauthorization Act (MACRA) to provide guidance to HHS on new APMs. The committee is made up of APM experts. MACRA established the Quality Payment Program (QPP) which determines annual payment updates and bonuses for most Medicare Part B clinicians. Once the PTAC has submitted its recommendations, the HHS Secretary decides whether and how to implement the new APMs.

(Source: Office of the Assistant Secretary for Planning and Evaluation, “PTAC,” Available at []).

US Senate committee examines drug prices

Prices for many brand-name drugs increased at nearly ten times the cost of inflation between 2012 and 2017, according to a new report from the US Senate Homeland Security and Government Affairs Committee. The report is the latest development in congressional and administration scrutiny of drug prices. The committee’s ranking member Claire McCaskill (D-Mo.), along with other members of Congress, have introduced several bills that target drug pricing.

The committee analyzed prices for the 20 most commonly prescribed brand-name drugs under the Medicare Part D drug benefit. Specifically, the committee examined the average wholesale acquisition cost of these commonly prescribed drugs. Wholesale prices increased an average of 12 percent, according to the report. Wholesale prices do not reflect any rebates or other discounts.

While overall drug prices have increased, percentage increases have fallen in recent years, according to the Kaiser Family Foundation. Per-capita spending increased by an average of just 0.8 percent in 2016. Additionally, groups representing the pharmaceutical industry note that these wholesale prices are not what the consumer pays, and do not take negotiated rebates into consideration.

Related: Pharmaceutical companies will now be covering a higher portion (70 percent) of the Medicare drug coverage gap (the so-called doughnut hole) starting in 2019, so Medicare beneficiaries will be paying less out of pocket for drugs under Part D. Current law closes the doughnut hole gradually over time (see the March 27, 2018 Health Care Current).

(Source: Rabah Kamal and Bradley Sawyer, “How much is health spending expected to grow?” Kaiser Family Foundation, February 22, 2018)

CMS to exempt certain states from Medicaid reporting requirements

On March 22, CMS issued a proposal to exempt state Medicaid programs from certain reporting requirements related to access. States are required to conduct access analyses that assess whether the needs of Medicaid beneficiaries are being met and whether there are enough clinicians available to adequately serve them (see the March 27, 2018 Health Care Current).

The proposed rule would permit states not to report on fee-for-service access metrics if at least 85 percent of their Medicaid beneficiaries are enrolled in managed care. Access requirements for managed care are governed by separate CMS regulations. Seventeen states—including the District of Columbia—would qualify for this proposed reporting exemption (see the Deloitte Center for Health Solutions’ report, Government health plan financial trends).

If enacted, the proposed rule would also let states reduce payments to Medicaid providers by up to four percent without having to conduct a special impact analysis. CMS noted that the aim of the proposal was to alleviate the reporting burden and allow states more flexibility to administer their Medicaid programs, while ensuring beneficiaries have access to Medicaid services.

The agency proposed the changes through a notice of proposed rulemaking. Comments will be accepted until May 2018.

Maryland all-payer model saves CMS millions

Maryland is on track to meet all of the performance targets outlined in its All-Payer Hospital Model, according to a recent report from the state’s Health Services Cost Review Commission.

Under the demonstration, Maryland hospitals operate on a global budget and charge all third-party payers the same set rate. Under its agreement with CMS, the model must save Medicare at least $330 million from 2014 through 2018, and limit annual hospital revenue growth to 3.58 percent per capita. The model has already exceeded both of those goals, with $586 million in hospital expenditures saved and an average of 1.53 percent in annual revenue growth.

The model has met, or is on track to meet, its quality targets as well:

  • The state saw a 44 percent decrease in potentially preventable complications, surpassing its goal of a 30 percent reduction over five years.
  • Medicare readmissions decreased 79 percent, which is in line with the program’s goal to reduce readmissions to or below the national rate (15.65 percent in 2016).

The All-Payer Hospital Model’s contract with CMS runs through December 31, 2019. In January, CMS granted Maryland a contract extension so it can consider additional information as it develops a second, more expansive model.

(Source: “Maryland’s All-Payer Hospital Model Results (for) Performance Year Three,” Health Services Cost Review Commission, March 2018)

Breaking Boundaries

Do you know your digital phenotype?

Our reliance on smart phones and social media has spurred an emerging field—digital phenotyping (getting a composite of a person’s observable traits)—that tries to assess people’s well-being based on their interactions with digital devices. A recent article in the New York Times focused on this new field and explored how some companies might be interested in our digital footprint in order to learn more about our physical and mental health. Some researchers and technology companies are tracking users’ social media posts, calls, scrolls, clicks, and other phone behaviors to identify any changes that could potentially be linked to disease symptoms. Some of these tracking features are opt-in, although that might not be the case for all of them.

People typically touch their phones more than 2,600 times per day, according to one study. This could translate to a lot of data for researchers and companies. To date, published research has focused on identifying sleep problems through use of social media, as well as phone behaviors and depression. There is also some potential to study medication effectiveness and phone behavior.

Some behaviors might be more obvious. For example, a social person who suddenly stops texting could indicate depression, but it also could mean the person is taking a trip or has another reason to be off the phone. Mindstrong Health, a start-up that focuses on mental health, is observing smart phone usage to identify mood and memory changes linked with depression. Mindstrong has pilot studies with volunteers who let the company track their smart phone habits. The studies are tracking 1,000 different data points and have recruited 200 volunteers. Changes in keyboard accuracy and speed, correlated with similar motor skills changes that researchers can measure in lab tests, could identify clues about a person’s health.

The company is also participating in a large government-funded study of trauma patients. The study uses the Mindstrong platform to determine whether patients who develop post-traumatic stress disorder change their smartphone use.

Atlanta-based Sharecare, another digital health company, has a wellness app that analyzes stress levels during phone calls. The app uses pattern recognition technology to categorize speech. After each call, the system sends messages such as, “you seemed anxious” or “you seemed balanced.” The company says it wants to help people manage their stress by helping them become more aware of certain stressors in real time.

Analysis: As digital phenotyping gains momentum, what might it mean for employers, health plans, health systems, and governments that may want to use certain data and insights? As discussed in Deloitte’s 2016 paper, Employers Still Bullish on Wellness Programs, employers and some federal government programs are interested in using digital clues to create behavioral “nudges.” Experts in behavioral science and other disciplines are interested in learning how to translate these data into insights that could help shape both government and employer policies—from making decisions that affect health and wellness, to helping people save for retirement.

In employer wellness, one of the most popular tools for behavioral nudges is wearables. Half of US fitness band sales are to companies that incorporate the devices into fitness-related employee wellness activities. These devices typically track movement, sleep, calories, heart rate, and more. As more employers integrate wearables into their wellness programs, they will likely want to track who is using them: Is it just the fit and healthy who wear them, or do the devices have wider appeal? Are people altering habits over the long run? And, ultimately, are the devices improving health outcomes?

Beyond wearables, the next generation of wellness programs may borrow from behavioral economics, psychology, and lessons learned from outside of health care on how data identifies who is at risk, their risk factors, and to personalize the content, structure, and timing of nudges to improve health behaviors.

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