Legislation Would Narrow Red Flags Rule

Congress has passed legislation that would narrow the scope of the Federal Trade Commission’s “Red Flags Rule,” potentially exempting healthcare providers from needing to comply.

The Rule, scheduled to go into effect at the end of the year, was created to protect sensitive consumer information, requiring businesses that the FTC would classify as a creditor to establish policies and procedures on privacy protection. Healthcare providers, including nursing homes, may be classified by the FTC as creditors because they provide services that are not immediately paid for.

The recently passed legislation, which President Obama must now sign, “exempts from the rule any entity that ‘advances funds on behalf of a person for expenses incidental to a service provided by the creditor to that person,’” the American Association of Homes and Services for the Aging reported in a newsletter on Monday. “This change will exclude from the red flags rule health care providers, including AAHSA members, who bill in arrears for services rendered.”

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