With the Dubai Blockchain Strategy, the United Arab Emirates (UAE) aims to be the first blockchain-powered government by 2020.¹ This goal was set with the intention of establishing Dubai as the happiest city in the world as well as an international leader in integrating disruptive technology to create innovative platforms a decade ahead of the world.² Programs are already being piloted for migrating key government processes, including healthcare records, to the blockchain.³

Healthcare actuaries and stakeholders need to understand the downstream effects of a blockchain-powered government. A health blockchain platform could have a far-reaching effect on the work of health actuaries in the UAE and around the globe.

Background

A blockchain is a distributed, permissioned, and secured ledger. Transactions are recorded in chronological order. Modifications cannot be made to existing records (blocks), and new information is appended at the end of the ledger (chain). A blockchain can be codified to suit different needs; a well-known application is the cryptocurrency bitcoin. Blockchain technology has the potential to be a disruptive force in any industry composed of multiple key players, each with fragmented data, and inefficient and insecure information sharing among stakeholders.

In the past few years, Dubai has invested significantly in transforming its healthcare infrastructure, including building an entire city centered on world-class healthcare, introducing mandatory health insurance for all citizens and expatriates, and implementing an Emirates-wide electronic health record (EHR) system. Transitioning to a standardized Emirates-wide EHR database will advance Dubai to a level of industry sophistication comparable with that of leading nations. While this will be a significant advancement, the current approach to EHRs has shortcomings that a blockchain can help overcome.

The blockchain is the catalyst set to overhaul the current healthcare system. While Dubai’s goal is to increase efficiency, create new industries, and emerge as a leader in technology development, using the blockchain also has the potential to control medical costs, improve quality of care, and enhance the overall health and happiness of Dubai’s residents. Once implemented, lessons from the Dubai Blockchain Strategy can also be extrapolated globally to create a more efficient worldwide healthcare economy. There are three key blockchain features that should enable healthcare stakeholders to overcome challenges of the current system. They are the distributed, permissioned, and secured properties.

Distributed

Each node in the blockchain network maintains a copy of the ledger. It eschews the traditional role of a central entity as the sole manager of records. When new transactions are added, each node updates its own copy of the ledger instantly. In healthcare, this distributed model would enable each patient’s medical record to be on a blockchain specific to the patient. Providers and payers may maintain their own nodes. Implications of distributed ledgers may include:

• Reducing reserves: The speed at which the blockchain processes information can reduce the average lag time from the date a service is incurred until it is paid, effectively adjudicating claims in near real time. In this case, incurred but not paid reserves can be held at a fraction of the current level.
• Timely care management: Care management programs can query the blockchain and scan for new patients to enroll based on a set of pre-defined eligibility requirements. This prevents cases from escalating without proper care management. It results in more efficient overall care and may help disease management programs more carefully track enrollment and patient health status.
• Real-time decision support: Providers can query a patient’s healthcare blockchain to provide real-time decision support. Having a concise and comprehensive summary of the patient’s most recent health history readily available may help doctors quickly understand a patient’s unique background. This could help caregivers avoid administering inappropriate medicines or recommending procedures that are unfit for the patient. It should help providers reduce medical errors and streamline a new patient’s onboarding process.
• Increasing resilience to security breaches: It is nearly impossible to completely shut down a blockchain. If any single node is compromised, blockchain medical records are still accessible because the system will still operate as long as one node is available. This ensures that even in the event of a security breach, there is still access to information.
• Lowering administration cost: A distributed ledger ensures safer and faster data exchanges among payers, providers, and members. Removing reliance on paperwork, third parties, and data security will possibly reduce administrative expenses.
• Near real-time adjudication: Claims adjudication will no longer rely on bills submitted electronically. Insurers may adjudicate claims as they are appended to the blockchain. This will allow members to settle their out-of-pocket cost sharing as claims are incurred. Members will have a real-time update on the total cost spent toward their deductibles and their out-of-pocket costs.

Permissioned

The blockchain is protected with an encryption program so that only those with proper permission can read and store data. Even users with read-write access cannot tamper with the blockchain because the only edit allowed is adding entries to the end of the chain. Data on the blockchain is further divided into modules, which may be granted to users on a need-to-know basis. Implications of the permissioned feature of a blockchain may include:

• Empowering patients: Patients have full access to their medical records. They may query their records at any time; this may lead to an increased awareness of their own health status and recognition of the cost of medical services, empowering them to take control over their health and comply with medication requirements and medical professionals’ instructions.
• Differentiating access in the value chain: Blockchain permissions can provide appropriate stakeholders in the healthcare value chain with secure access to the information they need. This secure transfer of data improves consumer safety by granting stakeholders access to only the specific information they need and nothing more. Differentiating access definitions segments sensitive patient information so no single entity can access all data.
• Streamlining gatekeeper functionality: Service referrals and preauthorizations may be time-consuming and involve review from multiple parties. Blockchain contracts can be coded to automatically adjudicate these requests, and can verify a valid medical need for a referral based on the patient’s medical history.
• Integrating with other sources: A blockchain is interoperable, so it can integrate data from multiple sources. A medical blockchain may incorporate data from nontraditional sources, such as fitness trackers and food journals. This data would provide a more holistic perspective of the patient’s health. Furthermore, by being able to account for more external factors, actuaries may begin finding concrete ways to measure return on investment from sources traditionally difficult to quantify and obtain.

Secured

The blockchain is secure in that past data is immutable, all relevant parties must agree to a new ledger before it can be added, the identity of a patient can be securely confirmed, and data is stored on multiple nodes. Key parties, including the patient and caregiver, should be in consensus with the medical codes and records to be added. To write to a blockchain, the patient must unlock the blockchain through a public key, which is generated by a private key unique to the individual. Public keys are unique, time-sensitive codes mathematically derived from the permanent private key. This verification ensures trust among patients, payers, and providers. Implications of the additional security blockchain provides may include:

• Securing data transfer: A blockchain removes the need to send confidential patient information through potentially insecure channels. Users can query the blockchain for data with identifying fields de-identified. Any actions taken to the blockchain, including data viewing and downloading, are recorded. A user’s awareness that others are able to see exact actions taken may lead the user to behave with higher integrity (i.e., the sentinel effect).
• Protecting patient identity: The public and private key eliminate the need to use a patient’s resident identity number. A consumer’s public key will unlock access to the individual’s blockchain, but the public key cannot derive the private key. This maintains the confidentiality of the patient’s resident identity number and private key, which reduces the chances that an individual’s identity could be stolen. Providers also need to play a role in helping reduce medical fraud: providers should verify that the patient’s public key unlocks the blockchain to the appropriate individual.
• Reducing incorrect coding: Patients should corroborate medical records before they are appended to the blockchain. This sort of double-checking involves patients more with their health and can reduce incorrect coding and fraud as it adds an additional layer of scrutiny to ensure data accuracy.
• Streamlining claim audits: Any new record on the blockchain should be thoroughly vetted because nothing can be modified. This scrutiny serves as an algorithmic audit of each block in the chain. Immediate validation should eliminate duplicate claims and simplify data cleaning. Additionally, all claims records will leave auditable trails.

Vision 2020

Health actuaries in the UAE have an exciting opportunity to shape standards and advance actuarial techniques as a result of the emerging blockchain technology. Integrating the blockchain with existing technology, such as artificial intelligence and machine learning, may lead to insightful breakthroughs that may fundamentally change perspectives on healthcare. Furthermore, the blockchain may vastly improve healthcare industry practices through:

• Enabling value-based provider reimbursement: Providers are predominantly compensated on a fee-for-service basis by the type of service provided. The blockchain enables reimbursement by value-added and quality of care. Value can be calculated using patient health outcomes, avoided costs, patient satisfaction, resources consumed, and timeliness of provided care. Providers with consistently poor performance may have lower reimbursements and vice versa for higher- performing providers.
• Enabling value-based member cost sharing: Patient cost sharing based on metrics other than service category is possible. Payers may incentivize behavior by reducing cost sharing for patients who stay in compliance with medications and other timely checkups. It can also discourage avoidable utilization by increasing cost sharing for those who develop patterns of unnecessary office visits or whose lab results consistently prove no illness present.
• Facilitating population health analysis: With easy access to more granular longitudinal information, actuaries could discern more trends in the underlying population, and recommend care programs to implement in anticipation of the population’s needs. Furthermore, actuaries may help find ways to recommend cost-effective long-term treatment for individuals based on groups with similar characteristics.
• Refining premium calculation: New predictive methods and tools for projecting claims may be possible. This would circumvent the conventional approach of applying a broad trend factor to historical period claims, and adjusting the underlying experience to match characteristics of the projection period. Ultimately, incorporating nontraditional and real-time data from the blockchain can provide actuaries with a more precise estimate of future experience.
• Improving quality metrics: The blockchain may offer a trustable way of measuring provider quality. It contains standardized information that can be used to identify providers with lower efficiency, higher readmission rates, and higher avoidable conditions. Standardized data through the blockchain can enable provider networks to identify and help underperforming physicians, and could ultimately improve the overall quality of hospitals and all healthcare facilities.
• Improving risk adjustment accuracy: Currently risk adjustment methods can quantify the risk relativity among individuals but with limited predictive ability. They mostly rely on provider coding accuracy and the individual’s past claims experience. With access to the information stored on blockchains, actuaries may develop better algorithms and predictive models to improve accuracy in risk adjustment programs. This could enable more accurate, more confident provider risk-sharing calculations.
• Introducing new group quotes approach: Longitudinal patient history may enable insurers to incorporate the prior experience of each individual when issuing quotes for new groups. This provides much more accurate initial pricing than would otherwise be developed through traditional manual rating. Insurers could query the blockchain for each individual’s claims and provide a quote based on actual claims experience.

There is an incredible wealth of new data with the potential to disrupt current practices, and even more curiously, to solve questions previously unanswerable. A blockchain may increase efficiency, create new industries, and solidify Dubai as a leader in technology. It also has the potential to control medical costs, improve quality of care, and enhance the overall happiness of Dubai’s population. Actuaries need to closely monitor the environment as blockchain EHRs come to fruition. Actuaries also offer a unique technical perspective to help Dubai find potentially disruptive new applications to ensure all public sectors are at least a decade ahead of the rest of the world.

Limitations

The materials in this document represent the opinion of the authors and are not representative of the views of Milliman, Inc. Milliman does not certify the information, nor does it guarantee the accuracy and completeness of such information. Use of such information is voluntary and should not be relied upon unless an independent review of its accuracy and completeness has been performed. Materials may not be reproduced without the express consent of Milliman.

The contents of this paper present hypothetical situations in which blockchain-enabled technology may transform healthcare and further actuarial practices. The actual implications may differ and are contingent on a number of external forces, including but not limited to regulations imposed by Dubai Health Authority or Health Authority of Abu Dhabi, the type of blockchain implemented, the speed of network transactions, how information is stored on the blockchain, how stakeholders adapt to the new technology.