If 2006 was the year consumer directed health plans began to pick up steam, 2007 may be the year that all-in-one "smart" cards, designed to automate the payment process, grab the public spotlight.
Such cards promise to eliminate the revenue cycle management woes of healthcare providers, eliminate much of the manual claims verification for payers and simplify the medical financial management for consumers.
"The use of smart cards in healthcare is gaining momentum," said Randy Vanderhoof, executive director of the SmartCard Alliance, upon the release of a 2006 white paper on the topic. "In the long run, the data carried by smart health cards can not only save lives, but can also save the healthcare industry billions of dollars."
But to make good on those promises, these cards will have to be very smart. One example: Given the burgeoning popularity of flexible savings accounts, health reimbursement accounts, medical spending accounts and health savings accounts, new consumer directed healthcare plans and the multiplicity of benefits attached to standard products, conforming to IRS autosubstantiation rules will be complex.
Cards will also have to facilitate eligibility verification, conformity with a range of benefit levels, oftentimes among multiple payers, and actually draw down from HSAs or other consumer accounts.
Those in the industry maintain that most of the technical hurdles have already been solved.
"Payment at the point of care," says Robyn Bartlett, president of First Data's healthcare services, "is not a problem of technology, but a problem of [current] healthcare markets and change management."
Industry analysts agree. Keith Campbell, speaking on behalf of First Consulting Group (no relation to First Data), said thanks to empowered consumers, "providers must adjust their methods of working with health plans and patients, change management techniques in accounts receivable, and pay closer attention to what competing providers are doing to attract new patients and keep current patients satisfied."
Bartlett says the company's expertise in other vertical markets - First Data has been providing payment processing services for more than three decades - has positioned it to bring new automation to healthcare. But healthcare's admittedly quirky third-party payer structure and regulatory environment have so far limited its application.
"Since consumer directed health plans are at the beginning of the growth curve, there's not a lot of adoption - yet," Bartlett said. But as CDHP enrollment rises, consumers and providers will begin to clamor for real-time eligibility verification, claims adjudication and debit accounts.
"This is going to happen one step at a time," Bartlett predicts.
A recent report from DiamondCluster gave a hint of the market forces that may drive demand for healthcare financial smartcards. It found that over the last two years, HSA custodians have opened more than 1 million accounts, and the number is increasing by more than 50,000 accounts each month.
"By 2010, we expect 15-25 million HSA accounts holding $75 billion in assets," the report concludes.
Empowering millions of patients to participate in a payment system that is already criticized for long delays and complex rules will require consumer-friendly automation, Bartlett said, which is why First Data is investing heavily in healthcare.