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New FTC Rule Requires Doctors and Hospital to Check IDs

Elena Castro was finishing the paperwork to buy her first home when the bank called to tell her that there was a problem with her credit report, nearly $10,000 in unpaid hospital bills, that had been eating away at her credit score for years. The charges were for several ear, nose and throat procedures done at hospitals in her region, but they were not her charges. Castro soon discovered that a thief had used her personal information to obtain medical care.

Armed with as little as a stolen name, Social Security number and date of birth, an imposter can walk into a doctor’s office or hospital and receive services billed to the victim or the insurance provider. The Federal Trade Commission (FTC) reports that medical identity theft accounts for 1.3 percent to 3 percent of all identity theft crime, about 250,000 cases each year.

But, there is hope on the horizon; the FTC hopes to address a part of the problem with a new regulation called the Red Flags Rule, which is set to take effect on August 1. The rule would require physicians’ offices and hospitals, among other businesses to create a new protocol to spot the “red flags” of identify thief. These “red flags” include detecting fake or altered IDs, inconsistencies in a patient’s medical records or fraud alerts from consumer reporting agencies.

However, physicians are not happy with these changes. In nearly 100 letters to the FTC physicians argued that the rule imposes an “unjustified, unfunded mandate on physicians’” and could have “serious adverse consequences on patients’ access to health care. Dr. Ardis Hoven stated that the new regulations could “severely impact a doctor’s administrative work load.” “In my practice, patients arrive acutely ill. The last thing I want is my patient to be detained at the check-in desk when they’re having acute medical problems.”

The red flag regulation actually went into effect on November 1, 2008, but on August 1, penalties will kick in. Creditors, including doctors or hospitals will be slapped with a $3,500 fine foe each “knowing violation” of the rule.

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