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Legislators Look to Smart-Card Technology to Help Cut Medicaid Fraud

Proposed ID cards would be able to authenticate patients and providers at point of transaction

gerry gibbs

State legislators are considering a new Medicaid smart card intended to reduce the amount of fraud in the joint state and federal program.

A bill, A-4062/S-2894, released by the Assembly Health and Senior Services Committee yesterday, would create a pilot in which Medicaid recipients would have an identification card that can be inserted into a computer’s USB port, allowing healthcare providers to access their records instantly. Patient information is stored on a flash drive.

The state has explored other ID cards, but a program that used swipe cards didn't reduce fraud because doctor’s offices rarely had the equipment to read the cards.

State officials have cited Medicaid fraud as a major concern. State Comptroller Matthew Boxer’s office recovered $122.8 million in improper Medicaid spending in the fiscal year that ended in June, while the attorney general’s office has an entire unit devoted to the problem.

Bill supporters say the cards would allow more fraud to be stopped before it occurs, rather than having the state rely on investigations of improper Medicaid spending afterward.

The bill gives the state commissioner of the Department of Human Services the authority to choose a company to develop and implement the pilot program. It doesn’t specify the selection process for that company, but it does require that the smart cards authenticate the identity of both the patient and the healthcare provider at the point of transaction. That would prevent the card from being shared and the provider from submitting fraudulent bills.

While the state’s largest insurance group, the New Jersey Association of Health Plans, doesn’t oppose the measure, it has pointed out that many of the bill's backers are the same vendors pitching the potential savings of the program. Officials say that legislators should gather more information about the cards, such as whether they are likely to deliver the promised savings, before they adopt the bill. The association lobbies for the state’s health insurance companies.

One vendor supporting the bill is Pennsylvania-based TreCom Systems Group, a potential supplier of the cards.

TreCom Chief Operating Officer Phillip R. Gring said that cards currently on the market don’t allow healthcare providers to instantly track each service, and claims that his company is best positioned to meet the requirements of the proposed program.

Gring said only smart cards like those produced by his company have the ability to provide up-to-date information about the medical services that a patient has received. He believes cards should be able to provide information on how much time patients spend at a doctor’s office, as well as each instance where they used medical services, including prescriptions and medical tests.

Since the state hasn’t been able to achieve those goals with swipe cards, bill supporters say it should try smart cards and expand the pilot if the technology saves money.

Without real-time information, patients can receive services they're not eligible for, and no one -- including medical providers and state law enforcement officials -- would be the wiser until well after the money was spent, said bill supporters.

“Now you’re trying to track down either duplicate service issues, fraud issues, or people who were not eligible for services,” Gring said.

New Jersey Association of Health Plans President Wardell Sanders said his organization wants to make sure that the program will be worthwhile.

“There are lots of technology vendors out there with bright ideas about how to save the healthcare system some dollars, and some work and some don’t,” said Sanders, adding that the state needs to take the approach of “look before we leap.”

Bill sponsor Assemblyman Herb Conaway Jr. (D-Burlington), the committee chairman and a primary-care doctor, said it would be useful if the cards contained biometric data. This data, such as a person's fingerprints or retinal scans, would prevent people other than the patient from using the card and would stop the patient from giving a different name to receive services he or she isn’t eligible for.

Assemblywoman Any H. Handlin (R-Monmouth) expressed concern about the security of patients’ information if they lost their cards. Lobbyist Gerry Gibbs, representing Trecom, said the cards contain security features that prevent the information from being accessed. He said the company didn’t have any such problems when it implemented a similar pilot program in North Carolina.

The committee voted 8-0 to support the bill, with Assemblyman Erik Peterson (R-Hunterdon, Somerset and Warren) abstaining. The Senate version of the measure was introduced in June and referred to the Senate Health, Human Services and Senior Citizens Committee.

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