Key Proposed Uses for Electronically Readable Cards

Electronically readable cards could be implemented for a number of  different purposes in Medicare. Smart Cards Can Provide More Rigorous Authentication, but All Cards Could Electronically Convey Beneficiary Identity and Insurance Information

The type of electronically readable card most appropriate for Medicare  would depend on how the cards would be used. Three common types of  electronically readable cards that could be used to replace the current  printed Medicare card are smart cards, magnetic stripe cards, and bar  code cards. Our analysis found that smart cards could provide substantially more  rigorous authentication of the identities of Medicare beneficiaries and  providers than magnetic stripe or bar code cards (see fig. The Use of Electronically Readable Cards Would Provide Limited Benefits for Reducing Fraud, but Could Aid Administrative Processes

Using electronically readable cards to authenticate beneficiary and  provider presence at the point of care could potentially curtail certain  types of Medicare fraud, but would have limited effect since CMS has  stated that it would continue to pay claims regardless of whether a card  was used. told us that requiring cards to be used would not be feasible because of  concerns that doing so would limit beneficiaries’ access to care. According to CMS officials and stakeholders, there  are legitimate reasons why a card may not be present at the point of care,  such as when beneficiaries or providers forget their cards or during a  medical emergency. Exchanging Medical Information with Electronically Readable Cards Is Not Part of Current Health Information Exchange Initiatives, and Would Likely Present Challenges

Using electronically readable cards to store and exchange beneficiary  medical information is not part of current federal efforts to facilitate  electronic health information exchange and would likely present  challenges. Using Electronically Readable Cards to Convey Beneficiary Identity and Insurance Information Could Reduce Reimbursement Errors and Improve Medical Record Keeping

Using electronically readable cards to convey identity and insurance  information to auto-populate and retrieve information from provider IT  systems could reduce errors in the reimbursement process and improve  medical record keeping and health information exchange. CMS and Providers Could Face Challenges Implementing Cards for Authentication, but Conveying Identity and Insurance Information Would Be Less Complex

CMS would need to update its claims processing systems to use  electronically readable cards to authenticate beneficiary and provider  presence at the point of care, while using the cards to convey beneficiary  identity and insurance information might not require CMS to make IT  updates. Authentication Would Involve Costs and Updates to CMS’s IT Systems, but Conveying Identity and Insurance Information Might Not Require Updates

Using electronically readable cards to authenticate beneficiaries and  providers would require updates to CMS’s claims processing systems to  verify that the cards were swiped at the point of care. Medicare currently  does not issue cards to providers, and therefore CMS would need to  implement a new program to issue and manage provider cards and to  develop standards and procedures for card use. For example, CMS would have to disseminate  information on the different functions and features of any card and  information on what to do if the electronically readable functions of the  card are not working. Providers Could Incur Costs and Face Challenges Updating Their IT Systems to Implement Electronically Readable Cards

For all potential uses of electronically readable cards, Medicare providers  could incur costs and face challenges updating their IT systems to read  and use information from the cards. The experiences of both countries also demonstrate that the  implementation of an electronically readable card system can be a long  process. In both France and Germany, the government established independent  organizations to address stakeholders’ needs. HHS provided  technical comments, which we incorporated as appropriate. Appendix I: List of Organizations Interviewed

To examine the potential benefits and limitations associated with the use  of electronically readable cards in Medicare and the steps CMS and  Medicare providers would need to take to implement and use  electronically readable cards, we interviewed officials from the agencies  and organizations listed in table 2.
Why GAO Did This Study

Proposals have been put forward to replace the current paper Medicare cards, which display beneficiaries' Social Security numbers, with electronically readable cards, and to issue electronically readable cards to providers as well. Electronically readable cards include cards with magnetic stripes and bar codes and “smart” cards that can process data. Proponents of such cards suggest that their use would bring a number of benefits to the program and Medicare providers, including reducing fraud through the authentication of beneficiary and provider identity at the point of care, furthering electronic health information exchange, and improving provider record keeping and reimbursement processes.
GAO was asked to review the ways in which electronically readable cards could be used for Medicare. This report (1) evaluates the different functions and features of electronically readable cards, (2) examines the potential benefits and limitations associated with the use of electronically readable cards in Medicare, (3) examines the steps CMS and Medicare providers would need to take to implement and use electronically readable cards, and (4) describes the lessons learned from the implementation and use of electronically readable cards in other countries. To do this, GAO reviewed documents, interviewed stakeholders, and conducted visits to two countries with electronically readable card systems.

What GAO Found

The Centers for Medicare & Medicaid Services (CMS)—the agency that administers Medicare—could use electronically readable cards in Medicare for a number of different purposes. Three key uses include authenticating beneficiary and provider presence at the point of care, electronically exchanging beneficiary medical information, and electronically conveying beneficiary identity and insurance information to providers. The type of electronically readable card that would be most appropriate depends on how the cards would be used. 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. 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.
Using electronically readable cards to authenticate beneficiary and provider presence at the point of care could curtail certain types of Medicare fraud, but would have limited effect since CMS officials stated that Medicare would continue to pay claims regardless of whether a card was used due to legitimate reasons why a card may not be present. CMS officials and stakeholders told us that claims should still be paid even when cards are not used because they would not want to limit beneficiaries' access to care. Using electronically readable cards to exchange medical information is not part of current federal efforts to facilitate health information exchange and, if used to supplement current efforts, it would likely involve challenges with interoperability and ensuring consistency with provider records. 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.
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. 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.
The experiences of France and Germany demonstrate that an electronically readable card system can be implemented on a national scale, though implementation took years in both countries. 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. Both countries have processes in place to manage competing stakeholder needs and oversee the technical infrastructure needed for the cards.
The Department of Health and Human Services provided technical comments on a draft of this report, which GAO incorporated as appropriate.