Wednesday, September 13, 2006

Discount Plan Crack Down

We have posted on the non-insurance discount plans before but it is one of those topics that too much cannot be said. In an effort to save money, people will buy these plans based on a smooth pitch that makes it sound like the best thing since PB&J.

Some states have outlawed the plans altogether while others are attempting to reign in the plans and provide some form of accountability. The NAIC has addressed the issue of discount plans. Here is a summary.

The Discount Medical Plan Organization Model Act establishes a comprehensive regulatory scheme for discount medical plan organizations, enabling state regulators to track the organizations and ensure that they are legitimate and not fraudulent in their claims.

The model, crafted by the NAIC Health Insurance and Managed Care (B) Committee’s Discount Plan Working Group, introduces uniform disclosure requirements to help eliminate consumer confusion about what they are buying, making it clear to consumers that the coverage is a discount program and not an insurance policy.

As it now stands, most of the attempts to regulate these plans have fallen on the A.G. in each state to prosecute as a criminal act. In some cases, the plans have been forced to make cursory disclosures in sales literature and on web sites. The problem comes more in the pitch, particularly one that is made over the phone by some fast talking salesperson in a boiler room. No waiting period, immediate coverage, no deductibles, no cap on benefits, no health questions, pre-existing conditions are covered. Sign up today before the price goes up tomorrow.

The model act creates uniform marketing and advertising requirements to ensure that consumers are not subjected to high-pressure sales tactics or provided fraudulent or misleading information. Administrative actions and civil and criminal penalties may be imposed by the state against any organization that is involved in such fraudulent or deceptive practices.

In addition, the model act requires the discount plan organization to not only contract with a network of service providers, but also ensure that its network is adequate to meet the needs of consumers enrolled in its plan. The organization also must maintain a Web site with an updated list of providers under contract that accept the discounted payment.

Nice thoughts, but as long as there are gullible people I don't expect things will change much.
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