VeinPages June 2009

In This Issue: Red Flag Rules Origin Red Flag Rules Defined How do Red Flags Apply FTC Compliance Consequences of Red Flag June 16, 2009

Red Flag Rules Origin Due to the rise of internet activity, identity theft has taken on a new level of importance to the federal government. The FTC began addressing identity theft in 2003 with the Fair and Accurate Credit Transactions (FACT) Act, which established the need for Red Flag Rules.  The FTC mandated creditors to establish Red Flag Rules to guard against identity theft in covered accounts.  These “Red Flags” are signals that could indicate the occurrence of identity theft.  After several delays, the FTC will begin enforcing this policy on August 1, 2009.   >>Back to top What Constitutes a Red Flag Rule? Red Flags establish some indication of possible identity theft.  The FTC gives these general guidelines for identifying Red Flags: •    Alerts, notifications or warnings from a consumer reporting agency •    Suspicious documents and/or personal identifying information, such as an      inconsistent address or nonexistent Social Security number •    Unusual use of, or suspicious activity relating to, a patient account •    Notices of possible identity theft from patients, victims of identity theft or      law enforcement authorities. Further steps should also be taken if relevant based upon the specifics of a practice's operations or the medical specialty involved. >>Back to top How do Red Flag Rules Apply to Medical Practices?   A creditor is defined as “any person who regularly extends, renews, or continues credit; any person who regularly arranges for the extension, renewal, or continuation of credit; or any assignee of an original creditor who participates in the decision to extend, renew, or continue credit.”  Medical practices fall under this umbrella, because of billing practices that allow extended and deferred payment plans.  Furthermore, any patient billing records are considered “covered” accounts under FTC policy.  Although the AMA is challenging the position that doctors qualify as creditors, another extension appears unlikely at this time.  Doctors must take steps immediately to comply with the FTC before the August 1 deadline. >>Back to top FTC Compliance Every medical practice must write out their policy and procedures regarding Red Flag Rules.  These guidelines must include: 1.    How the practice identifies a Red Flag. 2.    How the practice will detect a Red Flag. 3.    How the practice will respond to a Red Flag. 4.    The practice must periodically review their policy, and have it approved by        their board of directors (or other governing body). Make sure to fully train your staff on implementing the policies and procedures you have newly established.  For a good example of a medical practice's Red Flag Rule policy, check out the AMA’s template at: http://www.ama-assn.org/ama1/pub/upload/mm/368/red-flags-rule-policy.pdf >>Back to top Consequences of Noncompliance Penalties for not complying with FTC guidelines include fines of up to $3500 for each violation.  Because a medical practice has many patients, one breach could affect several accounts.  This would cause fines to multiply well above the standard of the single instance penalty.  In the case of repeated violations, the FTC may sue the practice as it sees fit. Beyond the risk of incurring costly penalties, compliance with the new Red Flag Rules has a practical benefit.  If you or your patient unnecessarily becomes a victim of identity theft, your practice's reputation is tarnished.  Insurance companies will rightfully deny payment for medical services rendered to a patient presenting with a stolen identity.  Being careful to protect a patient's financial identity conveys a professional and quality approach to doing business.  For all these reasons, it makes good sense to take all necessary precautions to protect your practice and patients from identity theft.   >>Back to top

Precision Vein & Vascular offers the most comprehensive and experienced vein center support in the country.  We provide a complete, customized range of services and products to new and existing vein practices, including: Marketing & Advertising Website & SEO Patient Billing & EHR Clinical Training Financial & Accounting Services IT Set-Up & Support   Upcoming Shows & Exhibits American College of Phlebology 23rd Annual Congress November 5-8 at the Desert Springs JW Marriott Resort & Spa in Palm Desert, California   Precision Vein & Vascular 689 Craig Road St. Louis, MO 63141 (314) 993-8346 www.veincenters.com   Questions? Contact Shelly Paule, Chief Operating Officer spaule@precisionpractice.com