Background An estimated US $2.6 billion loss is attributed to health care fraud and abuse. With traditional health care claims verification and reimbursement, the health care provider submits a claim after rendering services to a patient, which is then verified and reimbursed by the payer. However, this process leaves out a critical stakeholder: the patient for whom the services are actually rendered. This lack of patient participation introduces a risk of fraud and abuse. Blockchain technology enables secure data management with transparency, which could mitigate this risk of health care fraud and abuse. Objective The aim of this study is to develop a framework using blockchain to record claims data and transactions in an immutable format and to enable the patient to act as a validating node to help detect and prevent health care fraud and abuse. Methods We developed a health care fraud and abuse blockchain technical framework and prototype using key blockchain tools and application layers including consensus algorithms, smart contracts, tokens, and governance based on digital identity on the Ethereum platform (Ethereum Foundation). Results Our technical framework maps to the claims adjudication process and focuses on Medicare claims, with the US Centers for Medicare and Medicaid Services (CMS) as the central authority. A prototype of the framework system was developed using the blockchain platform Ethereum (Ethereum Foundation), with its design features, workflow, smart contract functions, system architecture, and software implementation outlined. The software stack used to build the system consisted of a front-end user interface framework, a back-end processing server, and a blockchain network. React was used for the user interface framework, and NodeJS and an Express server were used for the back-end processing server; Solidity was the smart contract language used to interact with a local Ethereum blockchain network. Conclusions The proposed framework and the initial prototype have the potential to improve the health care claims process by using blockchain technology for secure data storage and consensus mechanisms, which make the claims adjudication process more patient-centric for the purposes of identifying and preventing health care fraud and abuse. Future work will focus on the use of synthetic or historic CMS claims data to assess the real-world viability of the framework.

BACKGROUND An estimated $2.6 billion-dollar loss is attributed to healthcare fraud and abuse. With traditional healthcare claims verification and reimbursement, the healthcare provider submits a claim after rendering services to a patient, which is then verified and reimbursed by the payor. However, this claims process leaves out a critical stakeholder: the patient, who is the one for whom services are actually rendered. This lack of patient participation introduces the risk for fraud and abuse involving false claims and kickbacks. Blockchain technology enables secure data management with transparency that could mitigate these losses from healthcare fraud and abuse. OBJECTIVE The aim of the study was to develop a framework using blockchain to record claims data and transactions in an immutable format and also enable the patient to act as a validating node in order to help prevent healthcare fraud and abuse. METHODS We developed a technical framework and prototype for using blockchain to address healthcare fraud and abuse using key blockchain tools and application layers, including consensus algorithms, smart contracts, tokens and digital identity on the Ethereum platform. RESULTS Our technical framework maps to the claims adjudication process and focuses on Medicare claims with the U.S. Centers for Medicare and Medicaid Services as the central authority. A prototype of the framework system was developed using the blockchain platform Ethereum, with its design features, workflow, smart contract functions, system architecture, and software implementation outlined. The software stack used to build the system consisted of a frontend user interface framework, a backend processing server, and a blockchain network. React was used for the user interface framework, NodeJS and an Express server were used for the backend processing server, and Solidity was the smart contract language used to interact with a local Ethereum blockchain network. CONCLUSIONS The proposed framework and the initial prototype has the potential to improve the healthcare claims process by utilizing blockchain technology for secure data storage, and consensus mechanisms that make the claims adjudication process more patient-centric for the purposes of identifying and preventing healthcare fraud and abuse. Future studies will focus using synthetic or historic CMS claims data to assess the real-world viability of the framework. CLINICALTRIAL not applicable