New "Discount Card" Regs Protect Consumers
On September 14, Attorney General Martha Coakley filed new proposed regulations requiring “Discount Health Plans” and “Discount Health Plan Organizations” to disclose detailed information related to their products (press statement here).
These health discount cards claim to offer discounts to their enrollees for specific health care services provided by health care providers they contract with. The AG has received reports of discount plans deceiving Massachusetts residents. These regulations are intended to protect consumers from companies who lure consumers with “unscrupulous marketing of plans that claim to offer discounts on medical products or services.” Because these are not health insurance plans, they are not required to meet any of the state's insurance regulations.
Coakley will hold a public hearing on the proposed regulation on Oct. 13 at 10 a.m. in her office’s conference room at 100 Cambridge St. Written comments on the regulations are due by 5pm on Oct. 23.
The regulation would regulate all discount plans and organizations that do business within Massachusetts, regardless of their physical location, requiring detailed disclosure in advertising, terms and conditions, and provider agreements.
More specifically, the regulations would require discount plans to disclose the following information at the time of initial contact to a potential member.
- The plan is not insurance coverage and does not meet the minimum creditable coverage requirements under state law;
- If the plan offers a range of discounts, the fact that the range of discounts for specified services will vary depending upon the type of provider and the type of services received;
- The plan does not make any payments to providers for services received. Instead, the enrollee is obligated to pay for all services provided by providers that participate in the discount plan but will receive a discount;
- Contact information for the discount health plan.
Point of initial contact includes advertisements, brochures, marketing materials, and oral communications. For written materials, discount plans would be required to write in a “clear and conspicuous manner” on the first content page of anything that is made available to the public, including any enrollment forms given to an individual. In case of oral communications, a written disclosure must be accompanied prior to any solicitation or request for payment. The written disclosure must include information describing the specific terms and conditions of the discount health plan, including any limitations or restrictions on the refund of any processing fees or periodic charges associated with the discount health plan; and the specific terms and conditions of the discount health plan.
The specific terms and conditions include
- The discounts or range of discounts provided;
- A current list of Providers or Provider Networks that provide discounts to members;
- Any fees or periodic charges associated with the discount health plan
- Any limitations, exclusions, exceptions or waiting periods;
- Procedures for obtaining discounts under the plan;
- Cancellation procedures and refund requirements, renewal, termination and cancellation terms and conditions;
- Procedures for filing complaints with the plan; and
- The name, mailing address and phone number of the discount health plan.
Regardless of the type of initial contact, all plans must provide prospective members with a provider agreement, containing a list of all providers agreeing to a discount, either the amount(s) of the discounts or, alternatively, a fee schedule that reflects the provider’s discounted rates, and a provision that prohibits the provider from charging members more than the discounted rates.
With respect to websites, discount plans would be required to maintain an up-to-date list of the names and addresses of providers where their members would be able to receive discounts. The website address would be prominently displayed on all advertisements, marketing materials, brochures and discount health plan cards.
The proposed regulation also provides for specific provisions regarding misrepresentation by discount health plans. Most importantly, discount health plans will be banned from fraudulently representing themselves as insurance plans or plans licensed or approved by the state. For example, discount health plans would be required to use the term “discount” before the words “health plan.” They would not be able to use the terms “coverage,” “copay,” “copayments,” “deductible,” “preexisting conditions,” “guaranteed issue,” “premium,” “PPO,” “preferred provider organization,” “open enrollment” or any other terms that can mislead a person to believe that the plan is a type of health insurance.
These cards often deceive people into thinking they are purchasing a valid insurance plan. We applaud the new regulations.