The healthcare market in the United States is one of the most heavily regulated and fractured markets in existence. Many processes between providers and insurers are redundant, and thus add unnecessary expense to all parties. These expenses are estimated to be in excess of $59B per year. This fragmented system is a result of stakeholders unwilling to assume the risk associated with designating an intermediary to handle processing of data related to healthcare services between all stakeholders. The result is a duplication of this process at every provider and payer involved in healthcare services. Moving to a central authority-or clearinghouse-for all healthcare services would dramatically reduce expenses for both insurers and providers. No concerted effort to move to a central clearinghouse has occurred yet, as the existing expense is clearly not as high as the risk of moving to a centralized intermediary. A central clearinghouse based on conventional technology systems would also require an overwhelming amount of trust. A blockchain’s distributed ledger system allows users to interact with each other without relying on trust. Every transaction is completed with absolute certainty, allowing a versatile system capable of replacing the thousands of fragmented systems which currently facilitate this process.
Removing the need for a high level of trust would open all three of these parties to a solution where the motivations of each group can be satisfied in a mutually beneficial manner. Each group has the following motivations:
Providers – 5-10% of providers’ total expense is processing claims. In 2015, the total expenditure on healthcare services was $3.2T, or $9,990 per person1 on roughly eight billion transactions per year. 20% of this expenditure was for physicians alone. Total penetration into healthcare services would impact $160M to $320M in provider spending per year. Veris will reduce this significantly, and while not reaching $0, will create free market forces driving this expense downward to a point where the market determines the added value of processing claims. Additionally, Veris will reduce the impact that late
receivables have on a provider’s cash flow, thus increasing liquidity in a business that is often asset intensive.
Insurers – Insurance providers currently process claims by comparing patient data to their privatized repositories of rules and policy data. These rules are not publicly available, yet must be used in conjunction with smart contracts to streamline the process. This can be done by also appealing to their need to control expenses as most payers are currently under shareholder pressure to produce higher returns. Additionally, the Centers for Medicare and Medicaid Services (CMS) have a vested interest in reducing the overhead of the claims process
Payers can also be further incentivized to utilize Veris as all payers on the chain will be able to view the healthcare services authorized by the provider (but not reveal individual patients who have received specific treatments). This data is real-time and transparent. This provides payers greater detail to use within their actuarial models, and should lead to better forecasting.
Banks – Financial institutions are interested in capturing and converting as much of consumer and business spending on health insurance and health-related services as possible to Healthcare Saving Accounts. Ultimately banks would prefer to persuade employers to stop buying health insurance for employees and instead make a defined contribution to an employee’s ‘HSA-like’ account where the employee will purchase their own insurance. Management of these funds provides an additional revenue stream for the bank.
Currently there is approximately $28B in HSA accounts2 with an enrollment of 20 to 22 million people. HSAs are only offered by roughly 30% of employers; of those HSAs under management, only 3% have invested any of their assets. Veris integrates payment to providers in a seamless fashion to encourage the growth of the HSA and HSA-style accounts managed by banks.