Smart healthcare cards on the rise in the US as
Medicare, the government health insurance scheme attempts to tackle
a $60 billion a year fraud problem. Duygu Tavan
reports
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Medical identity theft is a growing trend in
the US. According to the US Department of Justice, Medicare fraud
amounts to about $60bn per year. In 2010, the Office of Management
and Budget estimated the amount of what it calls “improper
payments” within Medicare to be in the region of $48bn.
This has led to what industry stakeholders
call an identity crisis: Many healthcare institutions do not have
any or appropriate assurance who their patient is.
The number one problem for the lack of
identification is the lack of smart cards in healthcare, industry
insiders argue. For instance, the UK or European financial system
is based on the chip-and-PIN card platform. The US is not, or not
yet. Now there are initiatives towards a more secure and
financially efficient healthcare system.
Now, an upgrade in the Medicare card standards
aims to curb the level of fraud and so save more than $30bn per
year from scams. The way this will work is by giving the Centres
for Medicare and Medicaid Services (CMS) the right to authenticate
and verify that the providers and recipients of healthcare services
are who they say they are, and that they have received the services
and equipment that they say they have.
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By GlobalDataIn September, the US House of Representatives
introduced the Medicare Common Access Card Act. Under this Act, an
upgraded, secure card that is similar to the identity credentials
of the Common Access Card of the Department of Defence will be
issued to senior citizens to protect them against Medicare
fraud.
The smart card includes a Medicare
identification, a digital picture of the healthcare professional, a
PIN code or a biometric feature, and Match-on-card software to
prevent against system abuse and identity fraud.
Smart healthcare cards as
ID
According to the Secure ID Coalition’s (SIDC)
executive director Kelli Emerick, this is an “innovative bill”
based on the smart card platform – “a proven, tested, and trusted
technology used throughout government”.
At the launch of the bill, Emerick said: “This
is a basic privacy protection seniors have been demanding for
years, and it’s about time they were heard.”
Gemalto’s director for business for government
and healthcare and chairman of the Smart Card Alliance Healthcare
Council, Michael Magrath, says smart cards meet or exceed the
identity and authentication requirements mandated by the
government.
So far, the hospitals that issue smart cards
store “very basic or critical information that could be used in an
emergency situation – blood type, allergies, medication,” according
to Magrath.
The new Medicare cards, however, will, he
says, have none such information, but instead will be used as an ID
card with a PIN as an authentication method.
“The chip-based or smartcard-based health ID
serves multiple benefits for different stakeholders. For the
healthcare provider, the delivery organisation, hospital or clinic,
what that will provide is accurate patient identity.
“The institutions that issue these cards are
significantly reducing claims denials. The number one reason for
claims rejections is inaccurate demographic information about the
patient. It could be as simple as a typo. With the smart card, the
information can be uploaded and integrated into the claims form
without the need for human intervention,” Magrath says.
Director strategic programs, Smart Card
Alliance, Cathy Medich points out that Medicare covers a large
portion of the US healthcare market, “so if it is successful, it
could drive the market towards chip-based smart cards,” Medich
says.
“This is one of the strongest emerging [card]
markets over the next several years,” estimating that it may take
“maybe three to five, to get the acceptance, processing
infrastructure in place.”
The cost of this implementation is obviously
higher than the existing system, but Medich points out that
healthcare providers like having there brand on the smart cards –
and that is besides the potential for fraud reduction.
“There are so many healthcare providers,
hospitals and insurers – it is hard to get everyone to agree. But
that [an agreement] is where the benefit will be,” she points
out.
“The smart healthcare card will be linked to
the insurer.”
There is still a lot to achieve in terms of
secure and efficient patient data access and exchange, she says.
“Smart cards are likely to be a large part of the answer to secure
data access.”
The White House has a strategy for theft
identity in cyberspace. Smart cards provide a strong factor of
authentication: If you had patient data stored in the system of a
healthcare organisation, then the only way an employee could access
it is with an authorised second factor authentication, which is the
smart card. This would protect that data. If a patient is storing
that data in a personal health record online then they are able to
use a smart card to access it, so stealing somebody’s username and
password would not be enough to steal their healthcare identity,
Medich explains.
A potential for bank-healthcare combo
cards?
Given the volume of unbanked citizens and the
rise of prepaid cards, is there a potential for smart healthcare
cards to be issued in co-operation with a bank, or as a payment
card? Both Magrath and Medich think that there is.
“There is a movement to that,” says Magrath
and refers to LifeNexus, which, with MasterCard, already issues a
smart healthcare card with a magnetic stripe on the back.
“They are in a fledging state, but that’s
really what the business model is: to make it a combined
healthcare-payment card,” he explains.
“As the US moves to EMV, healthcare providers
will have a POS terminal that accepts chip-and-PIN – but we have
not reached that stage yet,” Medich points out.
Magrath believes there is a “strong
likelihood” of these combination cards.
“I think it will drive adoption amongst the
health insurers in the US as you would be able to use your cards to
pay your co-payments, you would be able to store money on these
accounts. I think this will be a benefit to the health plans. What
is causing the health insurers to stay on the sidelines is the
infrastructure. A smart card is more expensive than the identity
cards they are issuing today. The key driver behind the smartcard
is fraud prevention,” he points out.
Medich refers to a hospital in New Hampshire,
US, which has reduced data entry errors from 6.8% to less than 1%
since introducing smart cards. Patient wait and desk time has
reduced from an average of 18 minutes to less than three and the
hospital saved about $300,000 in eight months.
Although the benefits are obvious and the
wheels are in motion to move towards a smart healthcare card
environment, the US healthcare system remains complex and costly.
The process of the healthcare provider exchanging patient data with
the insurer, the insurer authorising the care – it is not a
seamless process yet. Smart cards can clearly simplify this
process, while also increasing the return on investment.
