How blockchain speeds up the insurance process
By Corinne MacMillan
Imagine the following scenario: you’re on a business trip in Brazil. Everything is going well, until you slip and fall. You’re in a lot of pain. You immediately call your travel insurance provider and ask for the nearest hospital in their network.
You go through the admissions process, but it’s taking a long time to see a doctor. An administrator informs you they haven’t been able to confirm payment and, unfortunately, they can’t provide treatment until they do. You’re now stuck at the hospital in an unfamiliar country, dealing with an injury and wondering why your insurance isn’t helping.
Globalization is sending workers to far-flung locations, and that is creating unique challenges for benefits providers and international insurance companies. The ability to transfer money in a timely and accurate manner, the lack of transparency into payment status, heavy intermediary fees and failed or returned transactions are common headaches. But new technologies are helping insurers make quicker and more accurate payments – getting their clients the help they need, when they need it.
Take blockchain as an example. In the media, blockchain has become synonymous with cryptocurrencies like Bitcoin. While the crypto space is still in its infancy, companies are continuously finding new and exciting uses for its underlying technology. For those who may not know blockchain well, think of it like a ledger that’s been shared across a network of computers. This network is designed to update regularly, and companies with access can provide payment statuses and get updates in real time. For the example above in Brazil, when the payment is executed, both parties can see updates at every stage of the payment lifecycle and can view its progress in real time. This makes blockchain-based payment rails an ideal way for insurance companies to send international payments to healthcare providers. It’s fast and transparent.
Speed of delivery, accuracy and transparency are the most important factors in the payments process. Currently, payments are requested by a healthcare provider and approved or denied by the insurance company before being sent. Healthcare providers are waiting for confirmation before commencing with the next step. This takes time – time that injured or ill travelers don’t have.
Globalization is sending workers to far-flung locations, and that is creating unique challenges for benefits providers and international insurance companies.
By using payment rails supported by blockchain technology, the process is sped up because the lifecycle is more transparent. Both parties can view what’s happening and proceed accordingly. That means there is less time spent on administration and patients can get the care they need faster. It also lowers costs for hospitals and insurance providers because it decreases the amount of time they spend dealing with each claim.
Another roadblock caused by older systems: the actual amount of the final payment can’t always be predicted. When the money is sent from the insurance company to the healthcare provider, it is transferred between multiple intermediary banks. And each of these banks generally takes a handling fee. These fees eat in to the amount of money that’s deposited into the healthcare provider’s bank account. And if full payment isn’t received, it can be difficult to identify and reconcile the payment, thus treatment may be delayed or withheld.
Characteristics of blockchain payment rails largely solve this problem. Payments are nearly instantaneous since the systems are more closely connected. It erases the need for the middleman, and that efficiency means the amount requested by the healthcare provider is typically received. Both parties avoid the headache of partial payment, and it drives down investigation costs for insurance companies in the long run.
A third common problem is failed and returned payments. When dealing with remote locations or developing countries, the health system may be unknown, or the insurance company may not have associated healthcare providers located there. These unknowns can lead to payments being misdirected or sent to the wrong facility or department. Either way, the money needs to be tracked down and re-sent. This brings us back to the lack of transparency in older systems, which makes it harder to track payments because each party can only see half of the conversation.
Using newer technologies, designed with a more open foundation, decreases the number of failed and returned payments because both parties have visibility to the payment lifecycle. Mistakes are caught and resolved sooner, which improves patient outcomes.
Rapidly changing technology adds another layer of complexity to the decision-making process for benefits providers. When weighing options, it’s important to choose a company that has a strong technical foundation. They should have a roadmap for integrating blockchain in to their payments ecosystem, if they haven’t done so already. They should offer a web and mobile platform that allows for innovative tracking for the payment lifecycle. Having direct access will provide real-time updates and reduce overhead costs on investigations of returned payments. That may lower the overall costs for HR departments.
By leveraging the power of blockchain, insurance companies and benefits providers save time and money on their claim payments. For healthcare professionals, it cuts down on administration time. It reduces friction between insurers, hospitals and clients by improving communication. And if you’re the person sitting in that hospital in Brazil, it gets you back on your feet – and back home – sooner.
Corinne MacMillan is the chief technology officer at Cambridge Global Payments.