Could electronic cards reduce Medicare fraud?

Replacing paper Medicare cards with electronically readable cards could reduce Medicare fraud, according to a recent Government Accountability Office (GAO) report.

Electronic cards could reduce fraud by enabling:

• Authentication of beneficiaries' and providers' identities at the point of care;
• Conveyance of beneficiaries' identities electronically;
• Electronic sharing of insurance information to providers; and
• Electronic exchange of medical information.

"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," according to the report. They also "could reduce reimbursement errors and improve medical record-keeping."

There are challenges to adopting an electronic card system. The Center for Medicare & Medicaid Services would probably have to update its card management process and claims processing system to authenticate beneficiary and provider identity.

Adopting electronically readable cards in the U.S. healthcare system in the past has been limited by industry and provider reluctance to invest in the necessary technology.

The report cited efforts to use electronic cards in France and Germany which produced cost savings. However, those savings resulted from using the cards to implement electronic billing which Medicare already uses.