Practice Management & Allied Staff News & Materials
Red Flag Program Clarification Act of 2010 Signed
December 22nd, 2010
President Obama signed legislation on December 21, 2010 which limits the definition of a "creditor" under the Red Flag Rule that was passed in early 2009. The Red Flag Rule, which was disseminated under the Fair and Accurate Credit Transactions Act, called for "creditors" and "financial institutions" to address the risk of identity theft requiring all such entities that have "covered accounts" to develop and implement written identity theft prevention programs. Physicians and dentists fell under the definition of "creditor" because they generally do not collect payment at the time a service is rendered and often hold off billing patients until after insurance has paid. After months of advocating by the AMA and ADA and other physician led organizations to have physicians and dentists excluded from the burden of implementing identity theft programs, Congress passed the Red Flag Clarification Act of 2010 which limits the definition of a "creditor" to those that use "consumer reports, furnish information to consumer credit reporting agencies or advance fund to or on behalf of a person". The new law now excludes most physicians and dentists and other small businesses that "advance funds on behalf of a person for expenses incidental to a service provided by a creditor to that person." While most OMSs and other physicians are exempt from this requirement, implementing an identity theft prevention policy is voluntary and still considered good business practice. The AAOMS Red Flag Identity Theft Prevention Training Module is available at the AAOMS E-Store. Additional information concerning the Red Flag Rule may be found on the Federal Trade Commission's website.