NHCX and data privacy: Balancing innovation with protection

Every year, millions of insurance claims are initiated in India. According to IRDAI data, during 2022-23, insurance companies settled 2.36 crore health insurance claims and paid Rs. 70,930 crore to settle health insurance claims. Traditionally, the insurance sector relied heavily on manual paperwork to review claims and process them through multiple platforms. This lengthy process demands a lot of effort from policyholders and hospitals, delaying settlement and denying policyholders or beneficiaries timely aid. 

As a means to address this gap, the National Health Authority (NHA), in collaboration with the Insurance Regulatory and Development Authority of India (IRDAI), developed the National Health Claims Exchange (NHCX). 

The digital platform, a part of the Ayushman Bharat Digital Mission, is designed to standardize all health insurance claim processing and interactions among insureds, hospitals, and insurance providers by bringing all the stakeholders in one place. 

While NHCX extends several benefits, industry stakeholders must also acknowledge the underlying challenges. The system relies on the integration of sensitive health data into one platform, raising concerns about consumers' data privacy and security. This concern makes it important for industry leaders to devise mechanisms to balance innovation with adequate protection to safeguard consumers’ interests.

Major benefits and safety concerns of NHCX
The centralized platform digitally tracks insurance claim status to ensure transparency and visibility. NHCX’s single-window interface will be interoperable and machine-readable and is expected to reduce the volume of paperwork and repeated follow-ups, making the process more compact and easy. 

Notably, under the NHCX system, a unified digital standard format will be endorsed and used to file all insurance claims, irrespective of the insurance companies. Above all, the platform will ensure a smooth digital exchange of claim information, such as data, images, and documents, among stakeholders.

This uniform process could make the process transparent, increasing policyholders’ convenience. To elaborate, policyholders are expected to see a reduced waiting period for pre-authorization and claim approvals. The IRDAI’s recent mandate to clear cashless claims within 3 hours can become more streamlined with NHCX in place. Policyholders are also likely to pay less for claim processing. 

Since it will serve as a uniform platform for data exchange, both insurance companies and hospitals can easily access additional information without the direct involvement of the policyholder. This ability to track the claim process and gain required updates will ease policyholders’ concerns and allow them to focus more on their treatment and recovery.

On the other hand, IRDAI has urged insurance companies to onboard on the platform and support NCHX’s integration with Hospital Information Systems. This step will benefit hospital bodies by automating the manual process of entering claim data into different insurance portals. The standardization of processing will further reduce manual paperwork and streamline data submission, helping minimize room for errors and administrative burdens. 

Additionally, the data analytics capabilities of NHCX can help insurance companies understand market trends and consumer behaviour while the standardized data can facilitate faster detection of fraudulent claims.

This is why proper implementation and, more importantly, a quick transition of insurers on the platform can allow insurance companies to refine their risk management strategies and improve customer service. Now that we have explored the anticipated and targeted benefits of the centralized data feature of NHCX, it is vital to understand the data privacy and safety threats that can arise.

Health data is considered to be among the most sensitive personal information. Any unauthorized access or misuse can trigger conflicts such as identity theft or discrimination.
While the government and industry regulators prioritize consumers’ data security, challenges like cyberattacks, insider threats, and data breaches remain, especially when cases of cyberattacks are on the rise. This is why proper measures are required to curtail the chances and protect consumers’ data privacy.

Suggested measures
The regulatory bodies and industry leaders are currently onboarding network hospitals on the NHCX platform before the platform goes live for the public. As of July, 34 insurance providers and third-party administrators (TPAs) are on the platform, and over 300 hospitals are working on their process. Meanwhile, it is important to take a closer look at the potential threats to data privacy and patient safety and devise strategies accordingly.

While the single-window system will follow standard protocol and patient data will be encrypted and secured, regulators must strategize on strengthening security to prepare against cybercriminals. For instance, besides advanced security measures, including encryption, secured access control, and timely security audits, the entities should consider adding a multi-factor authentication feature to the system for an extra layer of protection. 

Such a measure would ensure that only authorized personnel can access crucial data and help respond to security gaps in real-time.

Another measure to maintain patient data safety would be drafting clear policies for processes, such as data collection, storage, use, and exchange. The platform must promote transparency in data governance and inform patients how their data is being used so they can opt out of the system if necessary. Regulatory bodies like IRDAI should also make regular transparency reports on patient data privacy and security practices mandatory and allow them to be accessed by the public for greater clarity.

However, balancing the boon of innovation with patient safety would become achievable through effective collaboration among healthcare providers, policymakers, and private-public bodies. A comprehensive strategy to address concerns related to data privacy can make NHCX more useful for consumers and encourage them to simplify their insurance experience.

-- Ravi Mathur, Co-Founder and CTO, Insurance Samadhan.