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November 2008 Client Newsletter


Most clients have now sent CPB a copy of the Medicare letter indicating their new EFT has been processed. That letter is the only way you know that your EFT has been properly set up so that your Medicare payments will continue after the transition to the new Medicare carrier on November 14. If you have not already done so, please be certain to send us a copy of that letter while it is still something you can find. In the event of any problems, CPB will then be able to advocate for you.

Highmark has announced “three (3) system dark days” for November 15-17 during which time providers will not be able to verify beneficiary eligibility, claim status, etc. Electronic claims will be submitted Monday morning as we usually do but will not be moved by Highmark into their processing system until Monday night, November 17th. It is possible there will be a 1 day payment delay.

FTC “Red Flag” Rules Delayed UNTIL May 1, 2009

On October 22, 2008 the Federal Trade Commission (“FTC”) announced that it will “suspend enforcement” of the “Red Flag” rules until May 1, 2009. The “Red Flag” rules require “financial institutions” and “creditors” with “covered accounts” to develop and implement a written program to detect and deal with identity theft.

The FTC’s decision to delay enforcement appears to have been the result of pressure from, among others, the American Medical Association and a consortium of other healthcare organizations. These organizations complained, quite reasonably, that they and their members had no prior reason to familiarize themselves with FTC rules to which they have historically not been subjected to. The FTC is not presently changing its position on the broad reach of the rule. “Creditors” are defined to include any service provider (such as physicians and other healthcare providers) that does not get paid at the time of service. This makes collection of copayments on the day a patient is seen even more important. A “covered account” includes any relationship which involves information, such as social security numbers, that is vulnerable to identity theft.

The Red Flag rules are important to healthcare providers & billing services because billing companies will also likely be considered to be “service providers” to their clients. Of course, third party billing companies may be directly covered by the Red Flag rules, given the breadth of the key definitions.

“Service providers” are entities who provide services to a creditor in connection with one or more covered accounts. As part of a Red Flag program, the Rule requires creditors to exercise “appropriate and effective oversight” of service provider relationships. This will almost certainly follow the general HIPAA “business associate” paradigm that third party billing companies are already familiar with, and will likely require some new internal processes for healthcare providers and third party billing companies.

Technically, this suspension of enforcement is not the same as a delay in implementation. However, the suspension was provided, according to the FTC announcement, specifically to give financial institutions and creditors “additional time in which to develop and implement written identity theft programs.” On its face, it appears that the suspension of enforcement will have, as a practical matter, the same effect as a formal delay in implementation.

You may review the FTC press release here:

CPB will continue to follow this and make the necessary operational and software adjustments. I am sure that your professional associations will be notifying you of this also if they haven’t already. If you have any questions, feel free to call me.

Financial Hardship
CPB regularly receives questions about why providers should not write off co-pays, deductibles and co-insurance balances. We are often further challenged to show why this is restricted. In 1998 the federal Office of the Inspector General published Compliance guidelines for Individual and Small Group Physician Practices which addressed this issue. Writing off co-pays, deductibles and co-insurance balances is considered an “inducement” for patients to over-utilize healthcare services. Referrals include not just physician-to-physician, but also patient self-referral.

Federal Register / Vol. 65, No. 194 / Thursday, October 5, 2000 / Notices
Subject: OIG Compliance Program for Individual and Small Group Physician Practices

"In particular, arrangements with hospitals, hospices, nursing facilities, home health agencies, durable medical equipment suppliers, pharmaceutical manufacturers and vendors are areas of potential concern. In general, the anti-kickback statute prohibits knowingly and willfully giving or receiving anything of value to induce referrals of Federal health care program business.

In addition to developing standards and procedures to address arrangements with other health care providers and suppliers, physician practices should also consider implementing measures to avoid offering inappropriate inducements to patients. Examples of such inducements include … waiving coinsurance or deductible amounts without a good faith determination that the patient is in financial need or failing to make reasonable efforts to collect the cost- sharing amount.”

CPB routinely works with patients to obtain the necessary documentation to protect our clients. Patients with financial need are cooperative. Those who are not, leave the provider with risk if patient balances are written-off inappropriately.

More next month about “Regulation Z” which adds restrictions when billing a patient more than 4 times in a payment plan.
2008 Client Newsletter Archive