Choose plastic for convenience, flexibility

The health care card is debit card, a credit card and a stored value card, and its convenience and flexibility is paving the way for new health care products and increased program participation.

Forget paper. Think plastic.

For years, health care was built on the receipt and reimbursement model. Patients who enrolled in their employers’ cafeteria plans and opened flexible spending accounts would estimate their annual medical expenses; have that estimate parceled from their paycheck, before taxes, into their FSA; pay their doctors, dentists or pharmacists; save their medical receipts; verify their medical bills with their explanation of benefits; mail or fax the explanation of benefits and their receipts to their plan administrators; and then wait for those receipts to be adjudicated and for their reimbursement check to be mailed.

For consumers, that added up to a lot of hassle, especially with the threat that they might lose what they don’t use.

For employers, it meant underwhelming participation in their FSA programs.

With one swipe, the health care card cuts through the paper trail – for doctors, consumers and employers. It reduces a multistep adjudication and reimbursement process to one step at the point of care. And it turns a cumbersome process into a convenient one.

Both debit and credit

For banks, the health care card is familiar territory. The card itself is modeled after a combination of debit and credit, and the programs it accesses, FSAs, health reimbursement arrangements, and health savings accounts, function, in turn, as checking, savings, and for HSAs, investment accounts.

What’s exciting about the health care card, however, is not the ground it was built on, but the ground that it’s breaking. One piece of plastic can be an insurance identification card that carries eligibility requirements and plan information, a debit card that deducts medical expenses from an employer-sponsored FSA and/or HSA, and a credit card that advances a line of credit.

Moreover, with its multipursing and selective authorization functions, the card can sort transactions by merchant codes into the right pocket, deducting funds from the “child care” or “medical” purse, for example.

Anti-fraud tool

The card can even reject ineligible purchases and ineligible merchants, an effective fraud tool, especially for FSAs, which also can prevent employees from squandering their medical funds at the gas station.

Even HSA cards, which access accounts that are owned by employees, frequently include such features as selective authorization. Employers who open these accounts for employees may impose such restrictions in an effort to encourage employees to think about how they spend their health dollars.

With newer initiatives by companies like First Data Corp., the largest processor of electronic transactions, these cards will become even more attractive to employees, subsequently increasing participation in employers’ health care plans. With auto-substantiation, for example, health care constituents can be connected in a real-time network. With a single swipe, doctors can determine how much to charge at the point of care, determine eligibility and deductibles, and receive payment. Administrators can adjudicate claims in real-time. Pharmacists can apply payments to the card for bona fide health care purchases, such as Band-aids, and reject others such as a carton of milk or box of tissues.

What makes the health care card landscape so fertile is that legislators and regulators alike have made the intentional decision not to over-regulate these products in the hopes of encouraging their development. The good news, for example: Banks and health care administrators can reinterpret account statements, allowing employees to track their FSA purses, even though they’re not attached to an individual account.

Card benefits

With its innovations and initiatives, convenience and efficiency, the card already is a powerful tool in the health care marketplace. Employers are seeing improved participation in their FSA programs, in some cases an increase from 10 percent to 25 percent in participation. Employees find that the cards make FSAs easier to use and feel that they’re less likely to throw away money at the end of the year. HSA accounts, implemented at the end of 2003, are debuting with the card already in place. Moreover, with data management and integration capabilities, the card allows banks and plan administrators to further refine and enhance the employee’s experience.

Perhaps the most powerful benefit of the card is yet to come: the ability to recast the health care image as a model of efficiency, reliability, information and innovative partnerships.

Dennis Triplett is president of UMB Healthcare Services, a division of UMB Financial Corp., which has its headquarters in Kansas City. He can be reached at dennis.triplett@umb.com.