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Red Flags Fly, Bad Debt Shrinks

Karen Minich-Pourshadi, for HealthLeaders Media, November 2, 2009

Consider this; Berry recounts a story of one facility he worked with in which a patient presented in need of a gall bladder operation. Unbeknownst to the facility, the patient provided them with her sister's Medicare card to have the procedure done. In this instance, an astute physician happened to recognize the name of the patient as an individual that he had already operated on for the same procedure. So, the facility was able to catch the fraud prior to performing the surgery. However, had the physician not recognized the name, the facility would've been left footing the bill when Medicare rejected the claim. The physician saved the day by luck, but with the Red Flags Rule the patient may have been screened before things made it that far.

"It's critical if you are billing through Medicare and Medicaid that you are doing your due diligence," says Berry. Perhaps the simplest way of heading off potential losses (of identity and profits) is to ask for a driver's license when the patient provides their insurance card — and photocopy both cards for your files.

"When an identity has been stolen and that individual has obtained medical care that comes at a cost to the patient and the healthcare provider. Asking for a driver's license is an easy thing to do," Berry adds.

The areas to concentrate your Red Flag Rule training on are the billing and admissions departments. Seemingly simple information requests may actually be the ones that cause problems, such as a change of address request. Hospital bills and insurance information are diverted to the fraudulent patient, leaving the victim of identity theft unaware that anything is taking place. When a change is made, facilities could also send a letter to the previous address announcing the change. A few minor tweaks in the regular processes can add up to cost savings over time. Additionally, after completing the training, staying in compliance with the rules should only add a few extra minutes of per day to your team's plate.

Unfortunately there are no hard numbers as to how much financial loss this Rule may prevent for hospitals, but if you put the Red Flags Rule into action and your hospital decreases the number of rejected and unpaid claims, you will most assuredly see a dip in your bad debt. Don't wait for the legislation to formally take effect before you take action; your hospital only stands to gain ground (and money) by implementing these preventative measures as soon as possible.


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Karen Minich-Pourshadi is a Senior Editor with HealthLeaders Media.
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