Feature of the Month

Defining the Benefits of Smart Health Cards

A smart health card makes secure and portable exchange of health information possible, allowing patients to retain their personal health records at all times in a convenient and compact format. In addition to identification, demographic, and insurance information, a smart health card can store a wealth of medical information, including a list of health problems, allergies, immunizations, active medications, selected lab results, and recent healthcare interactions. Healthcare providers can read and update a smart health card with new information at the point of care. A smart health card can therefore reduce healthcare inefficiencies and the possibility of medical errors, and empower patients by making them more active partners in the management and maintenance of their healthcare.

This article reviews the benefits that a smart health card can deliver to patients, healthcare institutions, providers and payers.

Defining Benefits: Patients

In today’s medical environment, patients are the only ones who do not have access to their own medical data. Today’s systems store redundant information in many places. Records are maintained by each physician treating a patient, by every institution serving a patient, and by any insurer who covers the service. However, the patient has virtually no access to the data, no ability to determine what is in the various databases, and no way to change anything that is incorrect.

Patients see more than one provider during any course of treatment and tracking health information from all of these sources is nearly impossible. For example, the primary care physician will refer a patient to a specialist who prescribes therapy. The therapist then completes that treatment and sends the patient back to the primary care provider who most often does not have a complete and accurate record of the events documented by the other two providers. As baby boomers are growing older and living longer, they are having more complex encounters with the healthcare system requiring input by several providers for treatment or care. Baby boomers' comfort level with new technology and the Internet will drive investments and change in the healthcare system as banks, payers and providers strive to upgrade their businesses to meet patient demands for better, more efficient information access.

Health cards based on smart chip technology, combined with appropriate medical applications and data, can allow individual patients to maintain and control access to their own medical records. This health card is distinguished from other types of cards by its ability to transport confidential data securely from cardholder to practitioner and by the convenience of providing data immediately. Patient information can be accessed and controlled by the patient, using a card reader connected to the provider’s computer or to the consumer’s computer at home. Transaction audit trails tracking both card access and modification can be captured and documented. Security features restrict access to data stored on the card through the use of a password or PIN, making the smart card a more secure method of verifying a patient’s identity.

Perhaps the most significant advantage to patients will come in the form of improved medical care. The smart card’s ability to store pertinent medical records can give providers immediate access to medical histories, current conditions, and prescription drug information. The instant availability of recent lab test results can eliminate redundant testing and delays. Adding payment capabilities will give patients the ability to manage their healthcare investment accounts and services using a single integrated form factor.

Storing cardholder information, including primary physician and coverage information, on a chip can improve access to treatment when a cardholder is traveling, moving, or changing primary providers. The smart card chip can eliminate the need for transcription of medical history or insurance information and inform a provider’s office staff of the extent of coverage, thus reducing costs and streamlining service.

Defining Benefits: Healthcare Institutions and Providers

From the initial registration and admission of a patient through the processing of medical claims and billing, healthcare institutions are increasingly burdened by the cost and complexity of healthcare administration. The combination of a highly fragmented healthcare marketplace, characterized by a myriad of health plans and a variety of reimbursement models, with an ever-changing landscape of regulatory compliance, has made healthcare a difficult business.

Administrative costs are an important consideration for all healthcare institutions. They have a significant financial impact on the organization and often compete with other operational priorities. For most institutions, the revenue cycle is highly dependent on the front-end registration/admission process, which drives much of the downstream claims process.

Patient registration is the administrative step that establishes a patient’s identity, which is what links the patient to medical information gathered during the course of care. Reducing identity errors during registration greatly improves the billing and collection processes, enhancing revenue capture. Incomplete demographic or insurance information is one of the most common reasons for claim denial. Of the errors that contribute to pending and denied claims, up to 70% are attributable to the registration process. These errors can result in millions of dollars in lost or delayed revenue and necessitate the additional expense of reviewing and resubmitting old claims, which often require detailed chart reviews and contact with patients and physicians for information.

Smart health cards can provide an institution with positive visual identification of a patient (a photograph) and a direct link to the patient’s medical record number, which can be printed or included in a barcode on the face of the card. More detailed demographic and insurance information can be stored on the smart card chip, which can make registration more efficient and accurate. The integration of smart cards into the registration and admissions process should provide more reliable patient identification and more accurate and efficient links to existing medical records, improving the information gathering process.

For these reasons, the use of smart cards can greatly reduce the medical record maintenance costs associated with duplicate or overlaid patient records. (Duplicate patient records result when a new record is created for a patient who already has a record. Overlaid records are when two patient records are incorrectly combined.) It is estimated that in an average hospital, 5-15% of all patient records are duplicates. Erroneous record information is an issue for all healthcare institutions. In addition to incurring administrative costs to clean up the errors, erroneous records can have disastrous clinical and legal consequences. The presence of erroneous patient data greatly increases the risk of medical errors and adverse events. Overlaid records can represent a liability to an institution years after the error has occurred, exposing care providers and their institutions to the threat of malpractice suits.

Emergency medicine often deals with time-critical medical interventions. The rapid availability of medical information during an emergency can save a patient’s life. This is another advantage of the smart health card. Smart cards can store information about medical conditions, allergies, and current medications—information that can be critical to a successful clinical outcome but that is often unavailable in an emergency.

It seems clear that having an integrated view of a patient’s current medical history allows for better care and can also reduce the incidence of unnecessary testing and unnecessary hospital admissions. However, most healthcare providers, even if they maintain medical information electronically, have no means of sharing that data with other providers, let alone assembling an integrated view. Healthcare still relies heavily on traditional modes of communication (phone, fax, and mail), as well as on using the patient as the courier of needed medical information. Very often records are simply not available. Because clinicians must then rely on a patient’s memory, they often have no recourse but to repeat tests and procedures to assess and treat patients properly.

Such scenarios are quite common and greatly increase costs and decrease continuity of care. Smart health cards can help bridge the information and communication gaps that exist between healthcare providers without the prerequisite of an EMR or integration with a data exchange. Minimal infrastructure is required to read a smart card (a reader and viewer software). Information is exchanged securely and under the control of the patient who owns the data exchange vehicle—the smart card itself.

Defining Benefits: Payers

The healthcare community, including payers, has been slow to adopt Web/Internet technology, including smart card technology. Because of the changing healthcare landscape, however, payers are currently reevaluating their role in healthcare delivery. New technologies and changing healthcare models are encouraging payers to develop an enterprise IT strategy that can provide a single business, data, and technology foundation. This strategy has two key goals—improve the health of members and improve the business. In other words, payers are poised to leverage technology to realize the administrative savings that can result from streamlined business processes and better patient care.

Smart cards have a place in a payer’s enterprise IT strategy, representing as they do a secure, portable electronic file capable of linking all entities in the healthcare community. Smart health insurance cards can improve data security and confidentiality, restricting access to sensitive healthcare information by storing access rights as keys that are used to authenticate the cardholder and control access. Managing when and where a person’s private health information is accessed and making that information more readily available to those who have the need to know it reduces administrative overhead for everyone involved, including the payer. The implementation of a smart health insurance card can automate manual tasks, from eligibility and coverage updates to claims processing, and reduce the time taken by administrative procedures such as verifying patient insurance status and eligibility.

The greatest benefit of systems integration and smart card technology is rapid access to previously unavailable information. Smart cards sustain both an accessible patient record and a hybrid approach to the creation of this record. The use of a decentralized architecture combines local autonomy with global coordination, ensuring a secure and accurate patient health record. Centralizing card management and core data functions allows cards to be replaced easily and supports usage audits to prevent fraud.

The following benefits can be realized using smart cards:

• Eligibility and coverage can be updated automatically and virtually, eliminating the administrative headache of updating employees’ booklets each month. Because physicians can have access to a patient’s entire health summary, the paperwork required for health record and lab result requests can be eliminated.
• Electronic prescriptions can be stored directly on the card, eliminating paper transactions and the potential errors associated with them, as well as the potential for fraudulent prescriptions.
• Redundant tests can be eliminated and utilization management tools can be real-time, not retrospective.
• Needed information stored on the smart card can be accessed directly, reducing or eliminating provider service calls, wait times, and postage and processing costs.
• Paper-intensive health insurance claims systems can be streamlined, eliminating paper and expediting the processing and reimbursement of claims to the insured.
• Cardholders can extend the validity or report the loss of cards themselves, using (for example) self-service terminals located throughout a community's healthcare organizations. Lost cards can be reissued by the payer and mailed to the users.
• If a cardholder wishes to change primary care physicians, the new physician can make the change on the card, which can automatically update the cardholder’s record and notify the former primary care physician of the change.

The digital storage of information and automation of paper-based processes should result in cost savings and reduce the errors associated with manual data entry and handwritten documents. A network of databases maintained by the payer and the payer’s technology project partners can link all parties involved in health insurance administration. Employers, health professionals, and insurance companies can update databases and smart cards automatically and regularly. Members can receive a smart card automatically through the network. During a patient visit, physicians or other providers can immediately view patient eligibility and coverage information and the patient’s primary care physician designation. Data pointers stored on the patient’s card can enable the physician to access patient health information stored on the card and in remote databases located elsewhere. After the patient visit, the healthcare office manager can generate electronic health insurance claims directly from the data stored on card, eliminating all paperwork previously required by such transactions.

Healthcare plans can benefit from the use of a smart health insurance card in numerous ways. For example, the card can allow plan providers to replace proprietary systems, such as legacy managed-care information systems. In addition, direct access to cardholder information means decreased provider service calls, fewer call center staff, shorter wait times, and lower postage and processing costs.

A smart health insurance card can provide accurate and complete claims submission processing, which reduces errors and the requirement for administrative staff. The card can consolidate or replace current expensive products and leverage investment in current legacy systems.

Finally, use of such a card can improve relations with member subscribers (patients) and providers through participation in cost-containment efforts.

About this Article

This article is an extract from the white paper, "Smart Cards in U.S. Healthcare: Benefits to Patients, Providers and Payers," that was developed by the Smart Card Alliance Healthcare Council. The white paper describes the challenges within the U.S. healthcare industry and the clear opportunities for the use of smart card technology to benefit all healthcare industry stakeholders. The full white paper is available on the Smart Card Alliance web site at http://www.smartcardalliance.org.

About the Healthcare Council

The Healthcare Council is one of several Smart Card Alliance Technology and Industry Councils, a focused group within the overall structure of the Alliance. The Healthcare Council brings together payers, providers, and technologists to promote the adoption of smart cards in U.S. healthcare organizations. The Healthcare Council provides a forum where all stakeholders can collaborate to educate the market on the how smart cards can be used and to work on issues inhibiting the industry.

Healthcare Council participation is open to any Smart Card Alliance member who wishes to contribute to the Council projects.

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