PA Practice Insight: Warning: Red Flag Ahead

Barring any change in course at the FTC, medical practices will have to comply with the Trade Commission's so-called "Red Flag Rule" August 1. If you haven't yet been briefed on compliance measures for your practice, now's the time to get up to date. While there may not be any direct impact on your daily activities in the practice—reception and billing staff should be charged with implementing standards and explaining policies to patients when necessary—you could encounter some paperwork changes or face residual questions from patients.

The Red Flag Rule requires that creditors be vigilant for and immediately respond to any indications of identity fraud. According to the FTC, medical practices are "creditors" if they bill services in installments or defer billings until some time after a service is provided (such as after a third party covers its portion of the bill). Dermatology practices—especially those that offer cosmetic services or products—will almost certainly fit these criteria.

Among warning signs practices may look out for under the Red Flag Rule, according to AMA guidance documents, are:

• A complaint or question from a patient based on the patient's receipt of a bill: for another individual; for a product or service that the patient did not receive; from a provider the patient did not see, etc.
• Records showing medical treatment that is inconsistent with the physical exam or medical history.
• A complaint or question from a patient about the receipt of a collection notice from a bill collector.
• A bill dispute from a patient who claims to be an identity fraud victim.

Of note, the AMA and other medical associations and organizations maintain that medical practices are not "creditors" in a traditional sense and should not be obligated by Red Flag Rules. Their objections led to a 90-day delay in implementation of the Red Flag Rule from its original deadline (May 1). They continue to argue against implementation.