FTC "red flag" rules delayed until next year

The Federal Trade Commission (FTC) has announced that it would delay enforcement of its "red flag" rules until May 1, 2009, six months after the original compliance date of Nov. 1. The rules require creditors—broadly interpreted by FTC staff to include physicians who accept deferred payment—to establish programs that can detect, prevent and mitigate medical identity theft. To view the FTC announcement go to: http://www.ftc.gov/opa/2008/10/redflags.shtm

The announcement states that the FTC will suspend enforcement of the new “Red Flags Rule” until May 1, 2009, to give creditors and financial institutions additional time in which to develop and implement written identity theft prevention programs.

The Red Flags Rule was developed pursuant to the Fair and Accurate Credit Transactions (FACT) Act of 2003. Under the Rule, financial institutions and creditors with covered accounts must have identity theft prevention programs to identify, detect, and respond to patterns, practices, or specific activities that could indicate identity theft.
The Rule applies to creditors and financial institutions. Federal law defines a creditor to be: any entity that regularly extends, renews, or continues credit; any entity that regularly arranges for the extension, renewal, or continuation of credit; or any assignee of an original creditor who is involved in the decision to extend, renew, or continue credit.

The regulations are somewhat vague on the issue, but it would appear that the FTC has informally interpreted the rules to include health care providers, including physicians in all practice settings. The FTC is basing this interpretation on the term “creditor” stating that a physician is a “creditor” if the patient is billed after services are rendered, instead of demanding payment in full beforehand. It would also apply if the physician bills the patient’s insurance first, but holds the patient ultimately responsible for any non-covered amount. The AMCNO will continue to follow how this rule develops and report back to our membership if there is a need for physicians to comply with this rule.