What is the purpose of the Red Flags Rule?

This rule is intended to add protections for consumers and creditors due to increasing identity theft, which often includes medical identity theft. Medical identity theft sometimes has serious consequences caused by incorrect information included in a patient’s history, including diagnoses and treatments that the patient never had, wrong blood type, or incorrect allergy information. It also can lead to exhaustion of medical benefits by the impostor(s). It is often an onerous task for the patient, physicians and other providers, and health benefit plans to untangle correct patient medical and financial history from that added by an impostor.

Implementation of the required program under this rule may protect not only patients but physicians and their staff. Many instances of identity and medical identity theft begin with an insider who either purposefully or inadvertently releases information that is then used in fraudulent activities, such as seeking care under another person’s name and insurance plan or, in the case of a physician’s identity, to order services or drugs that are not appropriate or necessary. Without evaluating areas of risk and incorporating policies and procedures to safeguard against improper disclosures and/or provision of treatment to a person using a false identity, a practice may unwittingly become entangled in a criminal case or worse, inadvertently treat a patient based on inaccurate information.

Your Red Flags program may also detect instances where one person is willingly sharing their identity with another who does not have health insurance benefits. While the act of providing a family member or friend with access to care may be well-intended, this practice is not only fraudulent but can lead to adverse medical events due to incorrect patient information.