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New bill calls for RFID-enabled smartcards to take a dent out of Medicare fraud

It wasn’t long ago that lawmakers at the national and state level were trying to derail RFID by proposing laws that would limit the use of the technology. Most of the concerns were due to a misunderstanding of the technology and privacy issues.

But as U.S. lawmakers learn more about the benefits of RFID, they are becoming advocates for the technology. In September, lawmakers introduced a bill that seeks to use RFID-enabled smartcards to take a dent out of Medicare fraud.

“It’s a wonderful idea,” says Kathleen Carroll, director of government relations at HID Global, noting that some reports tab Medicare fraud as a $65 billion a year problem. “But there will need to be process changes and infrastructure changes behind this.”

The federal bill calls for issuing smartcards to both beneficiaries and healthcare providers to help curtail fraud, which as been estimated as high as $80 billion, or one of every five dollars spent in the Medicare system. The bill also calls for a biometrics solution to be used by providers. A smart card pilot program would be unveiled in five regions determined to be at a high risk for fraud, waste and abuse.

The bi-partisan bill was introduced by Lamar Alexander (R-Tenn.), Mark Kirk (R-Ill.), Marco Rubio (D-Fla.), and Ron Wyden (D-Ore.). The bill came out of the Super Committee created by President Obama as a deficit watchdog group charged with cutting government spending. The bill is not expected to be debated before the end of this year. It calls for dedicating $29 million for the design, implementation, and evaluation of the pilot program.

A similar bill has been introduced in New York to address Medicaid fraud.

Smart cards for use as government health cards is not a new concept, especially in Europe, where they are very common. The goal of the U.S. pilot is to eliminate fraud when it comes to providers assigning medical supplies and equipment to beneficiaries. Frequently, a provider will bill Medicare for services claimed to be given to a patient, but in fact were never delivered. Under the smart card program, a patient and provider must both present smartcards at the time of the appointment to verify that services were provided.

“There are some concerns with the bill as currently written,” says Carroll, noting that it is not technology neutral. “Legislators see this as one way to cut Medicare fraud.”

It remains to be seen whether any privacy concerns will come out of the bill, although anything that requires biometrics is bound to raise suspicion. Even so, privacy issues have faded for many industries deploying RFID.

Consumer sentiment is changing rapidly when it comes to RFID and the “big brother is watching” reputation the technology once carried.

At last month’s RFID Forum at the University of Arkansas there was little discussion about privacy issues and negative feedback from customers as retailers roll out item level tagging en masse. The VICS Item Level RFID Initiative has a committee studying privacy issues, but the topic is not near the top of the radar screen for most retailers.

“Things are much improved, especially at the state level, where we’re not seeing the kind of activity on the legislative front that we have in the past,” says Kathleen Carroll, director of government relations at HID Global. “The industry has been very effective in educating folks at the policy level and even in the general media. Probably the biggest reason for the slowdown is that nothing bad has happened relative to RFID and privacy, which is what we’ve been saying all along.”

Several years ago I wrote a story about an RFID retail pilot being conducted by a major apparel retailer in Mexico. Soon after the pilot became public, demonstrators lined up at the store to protest the use of the technology. Occupy Wall Street might live on, but “Occupy RFID” has, for the most part, folded up the tent.

Further evidence in support that was revealed this week when an independent study found that parents in Georgia and New Jersey overwhelmingly approve of the use of RFID to track school children. Again, just a few years ago the mention of RFID on school backpacks created major backlash.

The study, conducted by TheMarketPlace Firm, revealed that 93 percent of respondents indicated they would participate in a free program that would send a message to their mobile device advising them of their child’s safe pick-up and drop-off by the school bus.

Additionally, 96 percent of respondents indicated they would support a program that requires students to wear an RFID-enabled badge that would help ensure their safety on the school bus and monitor their child’s attendance during school hours.

Of course, the educational process still needs to continue for consumers and for media that doesn’t understand the role of the technology. Case in point is a newscast that stirred up debate over Walmart’s tagging apparel goods, and consumer fears that the tags could track their whereabouts.

What has helped to turn the page on the privacy issue? For starters, consumers are beginning to better understand the role that RFID already plays in their daily lives, from windshield tags that allow commuters to cruise through highway toll booths, to work badges, and emerging applications in the medical and healthcare sector that simplify the patient experience.

The technology’s interaction with Facebook has certainly helped. RFID-enabled wrist bands allow concert goers and theme park visitors to wave their wrist band in front of a kiosk and automatically load a picture to Facebook. The use case is exploding, and has helped to drive acceptance of the technology, especially with young adults.

Suddenly, RFID is viewed as a cool enabling technology, not as a people tracking tool or a technology embroiled in government conspiracy theories.

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