June 1 - Red Flag Warning!

May 27th, 2010

For over a year, we've been told by major medical associations that Red Flag Rules shouldn't apply to medical practices.  After all, most medical practices aren't very aggressive with their collection practices.  How often have you known a doctor to put a lien against someone's home because of an unpaid claim?  Thus why should a medical office be grouped with financial institutions as a purveyor of credit.

Still, identity theft is REAL in a medical office setting.  The oddity in a medical practice is that the theft is frequently done to the provider; not by him.

Physicians and other providers run the very real risk of their identity being stolen.  Most providers have encountered their DEA numbers being fraudulently used to obtain prescriptions.  Also most providers have experienced treating a patient for which Medicare already has a date of death.

It has long been a rule by many Medicaid carriers that a provider's office should verify identity BEFORE rendering treatment.  The use of Medicaid cards by those other than the patient covered is a major problem for most state plans.

A provider's office should have HIPAA policies in place that will go far to satisfying the Red Flag Rules.  Adding procedures such as obtaining a picture i.d. or reasonable substitute thereof will likely protect the provider more than it will the patient.

Free resources are available online to help prepare the required written policies.  The FTC itself has an online template for low risk businesses available at:  http://www.ftc.gov/bcp/edu/microsites/redflagsrule/RedFlags_forLowRiskBusinesses.pdf.

The American Medical Association also has a template available.  If you are a member, you can access a Word document that may be easily modified.  Everyone can access a pdf version.  See  http://www.ama-assn.org/ama1/pub/upload/mm/368/red-flags-rule-policy.pdf

The American Medical Association and others have filed a lawsuit to prevent the Red Flag Rules from applying to medical offices.  To read about the lawsuit, visit:  http://www.ama-assn.org/ama/pub/news/news/lawsuit-red-flags-rule.shtml.

But honestly, with all the tools available, why not waive the white flag and comply. 

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