The Future of Contract Communication & Pricing Alignment for Healthcare Products

Mike Hill
May 10, 2021
Blog Articles
January 31, 2024
January 31, 2024

The contracting process for healthcare products & supplies is plagued by manual processes, varying standards, and siloed systems within trading partners. One of the major limitations up until now has been technology. This article introduces the MediLedger Network as the platform for true contract alignment between manufacturers, wholesalers, and GPOs through blockchain technology.

GPO pricing contracts, negotiated with manufacturers, usually dictate which customers receive which prices for which products. Manufacturers share customer and pricing updates with wholesalers through EDI 845 or CSV compatible files, so they know how to invoice customers, but delays and misalignment cause pricing errors. Pricing inaccuracy increases operational costs for everyone involved, leads to cash flow delays, and causes revenue leakage across the industry.

For medical/surgical supplies and other high-volume healthcare products, the customer ecosystem is complex. It includes everything from large hospital systems with hundreds of “ship-to” locations to recently opened tattoo parlors. Customers can be members of different GPOs and be included in other types of non-GPO contracts. On top of customer changes, manufacturers are constantly updating product pricing to reflect market dynamics and internal priorities.

Efforts are underway to bring the industry together to adopt standards for contract communication, chargebacks, and credits through CSV files and EDI (e.g., HIDA’s Improving Pricing Accuracy Whitepaper 2020). However, as technology solutions, CSV files and EDI can only ever offer a partial solution to the problem.

Even in industries where EDI has reached mass adoption, transaction errors still occur. The issue is that EDI merely facilitates data transfer, and the receiving company is left to process data and settle transactions. For EDI 845, manufacturers send contract updates to distributors, but like in the pharmaceutical industry, manufacturers never fully align on standards. Slight variations at large volumes require manual effort for wholesalers loading contract updates. When chargebacks are submitted back to manufacturers, a cycle of dispute resolution begins when errors occur, requiring back and forth between manufacturers, wholesalers, and GPOs that is costly for everyone.

Contract Communication & Alignment through the MediLedger Network.

Manufacturers, GPOs, and Wholesalers all have a collective goal to give the right price to the right customer.

Contract Communication through the MediLedger Network replaces all EDI or alternative forms of trading partner data sharing. The solution brings each company on to a single decentralized network where customer, product, and pricing data is shared in real-time automatically. Through the MediLedger Network, contract updates from manufacturers are always unified with both wholesalers and GPOs, which means all trading partners have the same state of the contract for invoicing and rapid chargeback error resolution.

Through MediLedger, contracts are always unified in real-time between trading partners

Through blockchain, contract updates are validated before leaving the manufacturer, against basic standards and rules. This gives wholesalers predictable contract data they can immediately load in their system, keeping customer pricing accurate and up-to-date. GPOs also receive all contract updates in real-time, which means they can resolve customer eligibility discrepancies proactively rather than wait for customer complaints or add-bills.

The MediLedger Node run by each participant also enables rapid search of customer and contract data, and tracks the history of contract changes through an interactive timeline. With a unified view of current and historical contracts: chargeback errors, eligibility inquiries, and customer pricing issues can all be resolved in seconds or even eliminated entirely, creating efficiency for trading partners and improved service to customers.

Rapid contract search and contract history timelines make chargeback disputes resolution easy between trading partners

Because the MediLedger Network is decentralized, there is no need for a middleman or 3rd party. Trading partners share data directly with one another in real-time. That means manufacturers can establish customer identity rules, and the network automatically keeps trading partners updated without waiting for a centralized customer identity solution to manifest.

Contract Communication on MediLedger is only the first step in creating a unified pricing process across the industry. Contract data shared through MediLedger Network is cryptographically stored on the blockchain, which enables the validation for rapid wholesaler contract loading and the potential for the network to use that data to begin enforcing business rules on chargeback and pricing accuracy. Contract Communication is a building block to a fully automated chargeback process between trading partners across the industry.

Contact us at contact@chronicled.com to learn about the future of healthcare products today!

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