In an effort to improve security, America's banks and credit-card issuers will switch in the next few months from strip-based to microchip-based cards. That means healthcare providers will face another significant financial-systems conversion, in addition to the looming ICD-10 switchover.
More than half a billion of these “EMV” cards, so-named for the initials of the major card issuers that developed them—Europay, MasterCard and Visa—are expected to be issued and in use by the end of 2015.
The cards already are in use in Europe and Canada. Canada started a slow rollout of EMV cards in 2006, and now about 95% of Canadian merchants have converted to chip card readers, said Karen Cox, vice president of payments and retail solutions for Moneris Solutions, a Toronto-based provider of financial processing systems, owned by Canada's two largest banks, Royal Bank of Canada and Bank of Montreal.
According to research estimates, by October, 63% of U.S. cards and 47% of terminals used across all industries to process transactions will be converted to EMV technology, she said.
Unlike the planned, industry-wide and federally mandated Oct. 1 upgrade to ICD-10 diagnostic and procedural codes, which is creating a big lift for everyone in the healthcare claims stream, there is no federal requirement that any U.S. business, including hospitals and office-based physician practices, switch to EMV cards.
But efforts to reduce fraud will drive the conversion to chip cards, Cox said.
In the U.S., a shift in financial liability for fraudulent charges will drive merchant adoption of chip-card technology, or at least that's the intention, Cox said. The change in liability will be enforceable by the credit-card issuers through their agreements with businesses that accept credit card payments, Cox said.
“After October, if someone (a fraudster) with a chip card would hit a chip terminal, the merchant is protected from charge back,” by the card issuer, Cox said. But if the merchant, hospital or medical practice is still using an older magnetic strip reader, the liability for charge-backs falls on the business still using the older technology.
Cox says providers shouldn't worry about the expense of new card readers.
“Your typical countertop terminal is $200 to $300 for one that does everything,” Cox said. The rub more likely will come with software conversions for hospital financial and office-practice management systems, she said.
Cox says not all vendors are ready for the conversion and no one should take on the task of writing EMV interface themselves.
The Electronic Health Records Association, a trade group for EHR developers, many of which also have financial systems, declined to comment.
The linchpin for chip-card technology adoption going forward—as it has been in the past—remains with the banks, not the vendors, said Robert Tennant, senior policy advisor with the Medical Group Management Association, who recently received a smart-chipped American Express card in the mail. “The vendor's argument is, 'Why should we build in the technology when the financial vendors haven't switched over?' ” he said.
According to Tennant, the switch to chip-based technology will be “an enormous change” for the retail sector, and a somewhat of a lift for medical groups, who will have to buy and reconfigure their credit-card processing equipment and software at their pay windows. But there could be long-term benefits, too.
“Nothing is ever foolproof, but as far as it goes, I think it's significantly more security than what we have now,” Tennant said.
The MGMA also is part of a 40-member industry collaboration formed last year, and led by the Workgroup for Electronic Data Interchange, to automate the patient registration and intake process. The group is hoping to hammer out an industry consensus around the component parts of a so-called “digital clipboard” containing basic patient demographic and payer or payment information used at registration.
“On the healthcare side, it opens up a lot more opportunities for data movement,” Tennant said. “If we're going to be moving to this technology, it's a very short step toward using that technology for other purposes.”
Hopes for using smart-card technology in healthcare have risen and fallen several times over the past decade. Last month, the Government Accountability Office recommended that Medicare ought to consider issuing smart cards to beneficiaries to speed patient identification and eligibility verification.
