'Smart Card' Use Would Slash Medicare Fraud, Improve Care

'Smart Card' Use Would Slash Medicare Fraud, Improve Care
AP Photo/Matt Rourke
Story Stream
recent articles

Replacing the current Medicare card with a high-tech “smart card” could help prevent billions of dollars in fraud while reducing medical errors and saving lives.

Legislation has been introduced in Congress to fund a pilot program to study the feasibility of modernizing the existing Medicare card, and lawmakers should recognize the value this technology offers. Recently, a coalition of prominent think tanks has endorsed this legislative effort to combat Medicare fraud. So, what is at stake here?

Much of the fraud and abuse that exists within the Medicare program, which totals nearly $60 billion per year, is allowed to persist because of the complexity of accomplishing a seemingly simple task: knowing who is receiving services and who is providing them. Fraudsters have developed a wide variety of schemes to exploit vulnerabilities in Medicare’s billing system.

Smart cards, equipped with an embedded microchip capable of being programmed for a variety of different applications, could do a great deal to stem Medicare fraud. The microchip enables a smart card to store and exchange data securely with readers and other systems, making it difficult for criminals to steal or intercept information. Smart card technology also provides high levels of privacy protection and can securely store identity credentials, such as a PIN, photo or biometric, making it extremely difficult to forge or tamper with personal data.

The technology isn’t new — it’s been used in military IDs and passports for years — but its application to the Medicare program could have powerful effects.

In 2016, a report by the Government Accountability Office (GAO) found that smart cards would be useful in foiling fraudulent schemes in which Medicare doesn’t properly verify the identity of beneficiaries or providers at the point of care. In all, smart cards could help prevent health-care fraud in more than one-fifth of cases, GAO found. Some industry experts argue that Medicare fraud rates could be cut by up to 66 percent, saving taxpayers $37 billion annually.

In addition to closing security loopholes in Medicare’s billing infrastructure, smart cards could play a role in curbing the opioid crisis. More than 14 million Medicare recipients used opioids in 2016, including almost 70,000 people who were prescribed such extreme doses that the risk of overdose was high, according to another recent government report.

Numerous studies have noted that many cases of opioid addiction begin in the offices of doctors who are too willing to prescribe opioids instead of safer alternatives. To address this ongoing problem, smart cards could be programmed to recognize illicit opioid prescriptions, track overdose or medical histories, and trigger real-time alerts when suspicious prescription requests are detected or when doses exceed recommended limits. This would give physicians and pharmacists better information to make clinical decisions.

The ability to verify the beneficiaries and providers more securely would have other benefits as well. Each year, nearly 200,000 deaths in the U.S. are caused by medical error, of which 59 percent are due to “wrong patient” errors. Better identification mechanisms would reduce these sorts of mistakes.

Countries throughout the world have already successfully transitioned to using smart cards in their health systems. France, Belgium, Slovenia, and Spain have been using them since the late 1990s, and more than a dozen countries in Europe and Asia have since followed suit.

The bill before Congress, the Medicare Common Access Card Act (H.R. 4554), represents a small but significant step toward making our health system more secure and effective. It is a potential solution well worth pursuing.

Liam Sigaud writes for the American Consumer Institute, a nonprofit educational and research organization. For more information about the Institute, visit www.TheAmericanConsumer.Org.

Show comments Hide Comments