Smarter Tech Could Help Curb Medicare Fraud, Combat Opioid Crisis

What if there was a way to simultaneously reduce the stunning levels of health care fraud in the United States while also combating the opioid crisis ravaging our communities?

Well, there is.

Fraud and abuse plague many of the federal government’s largest social welfare programs. Medicare fraud, for example, costs taxpayers nearly $60 billion per year. At the same time, the opioid crisis is taking a terrible human and economic toll — as high as $504 billion annually.

Few safeguards are currently in place in the Medicare program to prevent overbilling, falsifying records or improperly obtaining controlled substances. To curb these sorts of abuses, Medicare needs to be able to securely verify those who are approved to provide services, validate those who are authorized to receive benefits, and prevent those who are unauthorized from ever entering the system.

Smart cards can achieve the above goals. Thanks to a microcomputer chip embedded into each card (similar to those already used in military IDs and passports), fraudulent and suspicious activity could be identified more reliably, bringing a greater degree of accountability to the health care billing process and allowing investigators to intervene in real time.

Patients can be confident that their data are protected when stored on a smart card. Personal information is heavily encrypted in the embedded microchip, preventing the card from being tampered with or forged and ensuring that only the card’s owner can claim its medical benefits.

Combining the smart card’s microchip with personal identification number technology widely used in bank automated teller machine cards makes it possible to harness the Europay, MasterCard and Visa banking infrastructure to identify cases of fraud while safeguarding patient records. PIN technology also allows lost or stolen cards to be remotely deactivated, removing another vulnerability.

The technology is fairly simple, but its impact would be significant. While smart cards wouldn’t stop all fraud, they could make a sizable dent in a growing problem. In 2016, a report by the Government Accountability Office found that smart cards could help prevent health care fraud in more than one-fifth of cases, and some experts are even more optimistic. GAO found that smart cards would be particularly useful in foiling fraudulent schemes involving the lack of verification of the beneficiary or provider at the point of care.

Beyond reducing fraud, smart cards could also help to fight the opioid crisis. Research has shown that opioid addiction often begins in the doctor’s office, where some physicians are willing to prescribe opioids when safer alternatives are available. To address this root problem, smart cards can be configured to store data that could recognize improper opioid prescriptions, track overdoses and medical histories, and display a real-time warning to physicians or pharmacists if a suspicious prescription request is detected.

These features could save lives and prevent further addiction. Smart cards can also facilitate detection of patients receiving opioid prescriptions from multiple providers.

A bill currently before Congress, the Medicare Common Access Card Act (H.R. 4554), would approve a three-year pilot program to evaluate the feasibility of using smart cards in the Medicare program. Recently, a coalition of prominent think tanks endorsed this legislative effort to combat Medicare fraud.

With this pilot initiative, lawmakers could take a significant step toward modernizing the current Medicare card to address the vast amounts of fraud within the program and reduce the rate of opioid addiction and overdose in the United States.

With so much at stake, we need to encourage such promising technology that has not only the potential to decrease health care costs but also helps decrease the devastating human toll and negative economic impact of the opioid crisis.


Dr. Joseph Fuhr is a professor emeritus of economics at Widener University and senior fellow at The American Consumer Institute, a nonprofit educational and research organization.

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