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Senators propose a smart Medicare bill

Thursday 29 September 2011

The Medicare ID has remained pretty much the same since the first one was issued almost 50 years ago, including a Social Security number printed on the front of the card. The new cards would hide this prime target of identity thieves and give the beneficiary a PIN to verify his or her identity. With new smart card based Medicare IDs, it’s been estimated that an estimated US$ 60 billion (EUR 42 billion) annually in Medicare fraud could be prevented (cf. Smart Insights Weekly #11-25).

At the same time, Secure ID Coalition, a group of four companies (XTec, Gemalto, NXP, Oberthur) that produce smart cards and other identity protection technologies said there would be a one-time cost of US$ 19 (EUR 14) per person to issue the cards and distribute readers nationwide, but that small investment would save taxpayers US$ 675 (EUR 501) per Medicare enrollee per year in reduced waste.

The new system would be based on the US Defense Department’s Common Access Card (CAC) with about 20 million CACs already issued so far (cf. SIW #10-40 and #10-42). The card’s storage would contain the Medicare identity, a digital photo, a PIN for the recipient card and a biometric fingerprint for the healthcare professional card. The smart card would use match-on-card technology so the personal information would never leave the card.

To confirm that the appointment took place at the physician’s office and that services were rendered, both ID cards would be checked and authenticated. Once confirmed, the information would be sent to the payment processor.

The bill proposes pilots in five areas with US$ 29 million (EUR 22 million) in funding from the Medicare Improvement Fund. The US Secretary of Health and Human Services will design and implement the pilots in geographic areas considered to be of high programmatic risk.

If the pilots were to prove successful after a year, the legislation would authorize distribution of smart cards to all beneficiaries of Medicare, currently about 48 million people.

Following introduction, the Medicare Common Access Card Act of 2011 will be referred to the Senate Finance Committee. Also, the Congressional Super Committee, created in the July 2011 debt limit deal, is in a position to include a package to combat waste, fraud and abuse in the Medicare system in their report to Congress, which is due on November 23, 2011.

Medicare is a social insurance program administered by the US government, providing health insurance coverage to people who are aged 65 and over, to those who are under 65 and are permanently physically disabled or who have a congenital physical disability, or to those who meet other special criteria. The Social Security Act of 1965 was signed into law on July 30, 1965 as amendments to existing Social Security legislation.