COMMUNICATIONS
By: Charlie Colitre, President, Healthcare Compliance Consultants
RED FLAGS RULE
Do any of your patients have an accounts receivable balance? If the answer is “yes” then your practice is likely considered a “creditor” and falls under the Federal Trade Commission (FTC) Red Flags Rule. These rules will be enforced starting November 1, 2009, so it’s important to know how to be in compliance on that date.
The Red Flags Rule are intended to protect consumers and your patients from identity theft and perhaps equally important, Medical Identity Theft.
Under the Red Flags Rule creditors must develop a written program to identify the warning signs of identity theft. The program should be appropriate to the size and complexity of your practice.
There are four basic steps to designing a program to comply with the Red Flags Rule:
- Identify relevant Red Flags
- Detect Red Flags
- Prevent and mitigate identity theft
- Update your program periodically.
The Guidelines describe the following categories of warning signs or Red Flags that your program must identify and address:
- Alerts, notifications, or warnings from a consumer reporting agency
- Suspicious documents
- Suspicious personally identifying information
- Suspicious activity relating to an account
- Notices from patients, victims of identity theft, law enforcement authorities, or other entities about possible identity theft in connection with patient accounts.
Once you have identified the Red Flags that are relevant to your practice, you must establish policies and procedures to detect them in your day-to-day operations. For example, you may spot red flags when you verify a patient’s identity, review medical records, or verify insurance information.
Your program must include appropriate responses to your Red Flags to prevent and mitigate identity theft. These responses could include monitoring accounts, contacting the insurance carrier, changing account numbers to prevent misuse, or a combination.
Because identity theft threats change, your program must describe how you will update it to ensure that you are considering new risks and trends.
No matter how good your program looks on paper, the true test is how it works. Your program must describe how it will be administered, including how you will get the approval of your management, maintain the program, and keep it current.
According to the Rule, your program must be approved by your Board of Directors or, if your practice doesn’t have a Board, by a senior employee who also must approve any material changes to the program. Your program should include staff training as appropriate.
Healthcare providers that violate the Rule may be subject to civil monetary penalties. But there’s an even more important reason for compliance: It assures your patients and the community that you are doing your part to fight identity theft.
Charles E. Colitre, President, Healthcare Compliance Consultants, PO Box 19164, Akron, OH 44319, 330-753-6131, complianceconsultants.biz.
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