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Smart Cards Would Significantly Reduce Medicare Fraud, Newly Released GAO Report Finds

On Monday the Government Accountability Office (GAO) confirmed that smart cards would significantly reduce fraud in the Medicare program as detailed in the newly-released reportHealth Care Fraud: Information on Most Common Schemes and the Likely Effect of Smart Cards. "This report represents another addition to the growing body of evidence that smart cards are not only an effective means of ensuring program integrity, but also a critical tool for administering benefits in a healthcare setting," said Kelli Emerick, Executive Director of the Secure ID Coalition.

The GAO report found that, of the Medicare fraud cases it reviewed, nearly one-quarter (22 percent) would have been prevented by requiring a smart card. This is particularly noteworthy in light of GAO's 2015 report, which found that of the $125 billion in improper payments distributed across the government in 2014, nearly half—$60 billion—came from one federal program: Medicare. If we follow the data, it becomes clear that something has to change in terms of how we authenticate Medicare transactions, protect beneficiary information, and safeguard taxpayer dollars.

It is important to note that the GAO report only looked at cases of Medicare fraud that were successfully prosecuted by the federal government in 2010. Since most Medicare fraud occurs entirely under the government's radar, the data reviewed represent only a fraction of the thousands upon thousands of cases of Medicare fraud that occur annually. Therefore, while the report is an important step forward in acknowledging the pervasiveness of fraud in the Medicare system, it almost certainly dramatically understates the impact of a smart card in reducing Medicare fraud.

Medicare fraud is not just a problem for Medicare. As GAO notes, "many different federal programs and private insurers were affected by fraud schemes in the cases we reviewed." Medicare fraud ripples throughout the entire economy. Additionally, it is clear from the report that a Medicare smart card would stop fraud in a wide variety of cases. The authors list six different types of fraud schemes that would be prevented by smart card authentication at the point of care:

  1. Billing for services that were never actually provided;
  2. Misusing a provider's identification information to bill fraudulently;
  3. Misusing a beneficiary's identification information to bill fraudulently;
  4. Billing more than once for the same service (known as duplicate billing) by altering a small portion of the claim;
  5. Providing services to ineligible individuals; and
  6. Falsifying a substantial part of the records to indicate that beneficiaries or providers were present at the point of care.

There is now clear evidence that a Medicare smart card would significantly reduce the amount of fraud in the Medicare system and move the government's outdated program integrity efforts into the digital age. Yesterday's GAO report is yet another clear example of the dramatic impact that a Medicare smart card would have toward cutting fraud, safeguarding taxpayer dollars, and ensuring that the program is around for generations to come.

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