Smart card plan proposed to combat Medicare fraud

Bills have been introduced in both houses of Congress to require the use of smart cards to combat Medicare fraud. What's unclear is who would pay for the technology, which might cost nearly $1 billion for 47 million Medicare beneficiaries.

Introduced by Senators Mark Kirk (R-Ill.) and Ron Wyden (D-Ore.) and Representatives Jim Gerlach (R-Pa.) and Earl Blumenauer (D-Ore.), the legislation would require the issuance to all Medicare beneficiaries of an upgraded, secure identity card--stripped of its current Social Security number identifier--that is similar to the Department of Defense's Common Access card. This "smart card" would have a computer chip embedded in it with identifying information about the patient and the patient's provider.

When Medicare patients checked out after an office visit, they'd swipe their card through a reader and then enter a PIN number. At the same time, the doctor or his representative in the office would swipe the physician's Medicare card, and also undergo biometric surveillance, either with a thumbprint or an iris scan. The purpose of the dual authentication would be to match the Medicare patient with the Medicare provider.

Medicare fraud costs the government an estimated $60 billion a year, of which about $48 billion consists of improper payments. The Centers for Medicare and Medicaid Services (CMS) makes many of these payments to people who purport to be providers, but have actually stolen provider ID numbers.

The Secure ID Coalition, an industry lobbying group that focuses on ID management issues, supports the introduction of the smart card bills. "Today's introduction of the Medicare Common Access Card Act in both the House and the Senate is an important step in Congress' fight to help save American taxpayers tens of billions in waste, fraud, and abuse in the Medicare system," Kelli Emerick, the coalition's executive director, said in a press release.

The Secure ID Coalition estimates that the use of the smart cards could eliminate $30 billion a year in Medicare fraud. Emerick told FierceHealthIT that that number is based on the experience of the European banking industry and the French healthcare industry with smart identity cards.

The proposed legislation authorizes pilots in five regions that would not cost the participants anything but would cost the government $29 million. Based on that figure, Emerick said, the coalition estimates that the smart cards and the infrastructure to support them would cost $19 per beneficiary. Translated to the Medicare universe, that means the program would cost $893 million. Of course, that doesn't include extra staff time or ongoing maintenance outlays.

Earlier this year, the Smart Card alliance proposed that smart cards be used to strengthen privacy protections in stage 2 of Meaningful Use and to protect against data breaches. However, questions have emerged about the security of smart cards in Germany.

To learn more:
- read the statement of the Secure ID Coalition
- check out this explanation of the Medicare Common Access Card (.pdf)

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