Swipe cards reduce errors but cost payers more to produce

January 1, 2011

As legislation requiring standardized member identification cards is considered in New Jersey, proponents view the cards as a step toward reducing administrative costs

NATIONAL REPORTS-As legislation requiring standardized member identification cards is considered in New Jersey and other states, proponents view the cards as a significant step toward reducing administrative costs in the healthcare system.

The Medical Group Management Assn.'s (MGMA) ProjectSwipeIT is part of an ongoing effort to encourage the widespread adoption of identification cards with machine-readable information, such as barcodes or magnetic strips.

"The standards exist for swipe cards but the question is getting health vendors to produce the technology to support the cards and the medical groups to purchase the technology that allows them to swipe the card," says Robert Tennant, senior policy advisor.

Tennant estimates that swipe cards could reduce some administrative errors, which cost medical groups and hospitals $2.2 billion per year, in addition to the costs of re-adjudicating claims.

In addition to reducing human error when collecting and documenting patient information, swipe cards allow providers to confirm eligibility, required co-pay levels and other point-of-care transactional information, according to MGMA. Questions about coverage can be resolved for the patient and the provider before services are rendered.

"Real-time eligibility confirmation leads to real-time claim adjudication," says Tennant.

He would like to see insurance companies issuing cards with magnetic strips or barcodes, however, they are costly to issue and update. Further, customizing the cards for each sponsor's plan-for example, by including an employer's logo-could be even more costly.

"Every time you mandate something, it goes on the card. Plans would have to reissue the cards," says Ward Sanders, president of the New Jersey Association of Health Plans in Trenton, N.J. "It costs over $1 per card, and there are legal requirements and reprogramming costs."

While there is widespread support to reduce administrative costs and errors in transactions, some advocate standardizing patient ID cards on the state level. If the bill is passed in New Jersey, that could create momentum for other states to introduce similar legislation. In addition, Sanders is unclear whether states have the power to require such identification cards for self-insured plans.

"One of the concerns, especially for national plans, is the possibility of having 50 different state requirements for patient identification cards," says Sanders. "I think that most would rather see national standards than a state-by-state standard."

The Patient Protection and Affordable Care Act calls for the development of a single set of operating rules for a range of administrative tasks, including eligibility verification. Forthcoming rules could have a significant impact on patient identification cards, the data they contain and the level of required standardization. However, New Jersey's model, if implemented quickly, could become a benchmark.