GAO: Medicare Could Benefit from Electronically Readable Cards

Medicare beneficiaries as well as providers could be issued electronically readable cards—with magnetic stripes, bar codes and “smart” cards that can process data—as replacements for the current paper-based cards which display Social Security numbers, according to the Government Accountability Office.

Such cards could help reduce certain types of Medicare fraud through the authentication of beneficiary and provider identity at the point of care, electronically exchanging beneficiary medical information, and electronically conveying beneficiary identity and insurance information to providers, argues a new GAO report.

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In particular, auditors assert that “using electronically readable cards to convey identity and insurance information to auto-populate and retrieve information from provider information technology (IT) systems could reduce reimbursement errors and improve medical record keeping.” However, at the same, the report points out that a number of obstacles would have to be overcome.

“To use electronically readable cards to authenticate beneficiaries and providers, CMS would need to update its claims processing systems to verify that the cards were swiped at the point of care,” states the GAO. “CMS would also need to update its current card management processes, including issuing provider cards and developing standards and procedures for card use. Conversely, using the cards to convey beneficiary identity and insurance information might not require updates to CMS’s IT systems or card management practices. For all potential uses, Medicare providers could incur costs and face challenges updating their IT systems to use the cards.”

While all electronically readable cards could be used to convey beneficiary identity and insurance information “since they all have adequate storage capacity to contain such information,” GAO makes that case that “smart cards could provide substantially more rigorous authentication than cards with magnetic stripes or bar codes, and provide greater security and storage capacity for exchanging medical information.”

Nonetheless, the report reveals that the use of electronically readable cards by the U.S. healthcare industry has been limited due, in part, to reluctance among the insurance industry and providers to invest in a technology that would depend on a significant investment from both parties to implement.

GAO offers France and Germany as examples of countries that have implemented electronically readable card systems on a national scale, though auditors concede that these implementations took years to achieve. But, auditors conclude that it is “unclear if the cost savings reported by both countries would be achievable for Medicare since the savings resulted from using the cards to implement electronic billing, which Medicare already uses” and that “both countries have processes in place to manage competing stakeholder needs and oversee the technical infrastructure needed for the cards.”