In the Digital World, Health Insurance Cards Remain Analog

Perhaps the easiest way to illustrate just how much the world has changed in the past two decades is to look at the average person’s wallet.

Just about everything inside the wallet is different. Debit and credit cards now have chips in them, though a growing number of people pay for purchases using their smartphones. Store loyalty cards have been largely replaced with apps. Checkbooks have become nonessential. In some states, even driver’s licenses are being digitized.

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Yet in a world where seemingly everything is going digital, one thing remains stubbornly analog: health insurance cards.

And yet, health insurance cards today still look very much the way they have looked for decades. Though some insurers make available “virtual” ID cards, most are merely a facsimile of the paper card.

Why does it have to be that way? It doesn’t, according to according to Randy Vanderhoof, MBA, executive director of the Secure Technology Alliance, an industry group that promotes data security and privacy solutions.

He said a major upgrade of insurance cards, such as the integration of a chip similar to the ones in bank cards, is perfectly feasible.

“The technology is there,” he told Healthcare Analytics News™. “There’s nothing that has to be invented.”

David S. Brooks, MBA, founder and chairman of Medlio, a company formed five years ago in part to replace the insurance card with a more comprehensive healthcare application, agrees. Though his company’s app doesn’t require buy-in from insurers in order to work, Brooks said he’s been puzzled by insurers’ seeming unwillingness to embrace solutions like those of Medlio.

“We’ve always wanted to work with them,” he said. “The problem is that there’s a lot of lip service in the market. Insurance companies want to act as if they’re innovative and they’re supporting care, but there’s been very little proof of it.”

Insurance Cards as an App

At least two avenues of insurance card evolution are already open: replacing the card with a virtual smartphone application or replacing the paper card with a chip-enabled card.

Medlio’s product fits into the first category. It has a number of health-related features, all developed around the goal of being an all-encompassing personal health app. The “virtual insurance card” features, however, act as a direct link between the patient as a consumer and the provider’s office.

The app is designed to allow users to quickly learn whether a provider is in or out of network and book an appointment. Medlio built in a function enabling patients to find out ahead of time what the service or procedure will cost them and even pay for the appointment in advance. The cost estimate function is possible because Medlio works with a national insurance information clearinghouse, which gives them access to real-time personalized payment scenarios.

Brooks said the idea was a response to the rise of high-deductible health plans, which put more of the initial burden of healthcare spending on patients and thus encourage patients to shop around. The problem, Brooks realized, is that patients have traditionally been kept out of the loop, unable to directly access the eligibility and payment information necessary to make informed decisions.

“How do you get those pieces of information on demand?” he said. “That’s what we’ve built. We’ve built that last mile to give the patient the ability to look at different providers and make informed decisions.”

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Medlio’s ideas are backed up by survey data. A 2016 report by the professional services company Cognizant found 61 percent of patients wanted a way to pull up insurance cards online or print them, an indication not only of patient demand but also the lack of options. More than half of respondents said they wanted their insurer to provide a digital health record, and 51 percent wanted the ability to pay using their smartphones.

Because Medlio uses a national clearinghouse of insurance information, the company doesn’t need insurers to sign on for the app to work. But that doesn’t mean Medlio hasn’t tried to work with insurers.

“It’s never seemed to go anywhere,” Brooks said.

Chip Cards for Healthcare

An alternative option for insurance card innovation is the chip-enabled insurance card. Such a card would provide extra security and identity verification, protecting insurers from fraudulent claims. Now that most providers have chip card readers for taking payments, they already have the hardware required to start taking chip-enabled health insurance cards.

“[Chip card readers] are programmed specifically around the payment technology,” Vanderhoof said, “but they’re programmable devices, so a second application could be developed on that device that could then read an insurance card or some identity card on a mobile phone.”

He said it was easier for financial companies to embrace chip-enabled cards because there are only a handful of large payment networks: Visa, Mastercard, Discover and American Express. Getting a critical mass among the thousands of US health insurance companies is not such an easy proposition.

“There’s a number of benefits that could be had, in addition to reducing fraud, that would benefit the healthcare industry if they were to implement [chip cards],” he said. “But it’s hard to put a business value and monetary return on that investment without having the entire market move at the same time.”

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However, Vanderhoof said, the current situation represents a significant security vulnerability. If insurers don’t act voluntarily, outside parties might soon force a change.

“I think we’re moving closer to that day when either a significant industry leader is going to suffer a catastrophic breach and not only lose customers but have the government providing rather stiff penalties,” he said. “Or someone on the board is going to say we’re not going to allow this to happen again and charter them to start moving in that direction.”

Many European countries and some Asian countries now have smart cards that provide insurance data and extra security, along with basic health data, eliminating the need to fill out patient intake forms. Those countries tend to have single-payer or socialized healthcare systems, where government has a larger role in health insurance. Even as U.S. regulators implement more guidelines of electronic health records and patient portals, they have opted to stay away from mandating any kind of insurance card security. For instance, when the Centers for Medicare & Medicaid Services decided to remove patient social security numbers from cards, it decided against moving to a smart card and instead simply replaced the social security number with a randomized ID number.

Insurers Move Cautiously

Cathryn Donaldson, a spokesperson for the trade group America’s Health Insurance Plans, said insurance card updates are one of many areas in healthcare where innovation is taking place. She argued that insurers have taken a number of steps to embrace such innovation.

“Insurance providers recognize the importance of new, innovative tools to help streamline and make care more efficient, and many are moving toward or have already implemented new technologies to meet that goal and communicate with their members,” she said.

Donaldson noted telemedicine initiatives, secure messaging features and mobile ID cards.

However, Donaldson also said insurers need to be deliberate about such moves given the myriad concerns they face.

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“Any sort of industrywide transition, particularly in the healthcare industry — telehealth is a perfect example — takes time and thoughtful implementation (i.e., protecting privacy, ensuring confidentiality, etc.),” she said.

Vanderhoof said one unintended consequence of the delay could be that insurers might simply skip over chip cards and instead focus on secure mobile systems, similar to smartphone payment services like Apple Pay.

“We might see some innovative healthcare providers looking to do a mobile implementation before they issue new chip cards, and that would be OK too,” he said. However, such technologies would likely require buy-in from Apple. The iPhone maker controls about 15 percent of the smartphone market, and Vanderhoof said the company has been restrictive about how it allows the iPhone’s near field communication technology to be used. If Apple doesn’t allow near field communication to be used by a broad range of insurers, the idea of an Apple Pay-like insurance card could be a nonstarter.

If the change doesn’t come by regulation or pressure from an insurer’s board, it’s only a matter of time before one company takes the lead.

“I believe if we worked with a major payer who has a lot of market share in a specific geography and we demonstrated that functionality, every provider in the country would demand it,” Brooks said.

He believes the power of a truly transparent, user-friendly healthcare system would be irresistible. So far, though, insurers have only been resisting.

“All they have to do is support it, and it would fundamentally change how everybody thinks about the uncertainty of payment in healthcare,” he said. “And yet there has been zero interest and zero receptiveness.”

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