Organized Medicine Successful in Clarifying the Red Flags Rule

This week, the U.S. House of Representatives passed S. 3987, the "Red Flag Program Clarification Act of 2010" - legislation that limits the type of creditor that must comply with the "red flags" rule. Because the U.S. Senate unanimously passed the bill on Nov. 30, it is being sent to the White House where President Obama is expected to sign it into law before the Jan. 1, 2011, deadline.

The red flags rule, originally scheduled to take effect Nov. 1, 2008, requires creditors to develop identity theft prevention and detection programs. According to the Federal Trade Commission (FTC), physicians who do not accept payment from their patients at the time of service are creditors and must comply with the rule by developing and implementing written identity theft prevention and detection programs in their practices. 

Many medical associations, including the AMCNO, wrote to Congress asking that physicians be removed from the scope of the red flag rules. In addition, the American Medical Association (AMA) worked with the FTC and Congress and is engaged in a lawsuit with other physician groups to get the FTC to permanently remove physicians from the scope of the red flags rule. There have already been five delays of the red flags rule implementation date due to the concerns of organized medicine. This legislation supports the argument that physicians are not creditors and it is hoped that the FTC will now acknowledge that the red flags rule should not apply to physicians.