Doctors Oppose Proposed Discount Health Plan Regulations

Companies would have to subject all marketing and sales materials to the MHC for approval, and may not use words such as "insurance," "coverage," "copay," "premium," or "HMO" in their sales pitches.

The state also would set how much of a discount the companies must offer, and that in general, it would be "at least" 20% off the full billed charge, and less than 2009 Medicare rates in the geographic area.

The company must also clearly state that the subscriber or enrollee may have to pay for all healthcare purchases at the time services are rendered in order to receive the discount, and maintain a toll-free customer call center to provide direct confirmation of provider discounts. The companies also would have to provide language interpretation services.

And the plans would be required to refund prepaid or periodic charges upon cancellation up to at least 30 days following enrollment.

Complicating the issue, however, is that five companies now operate what Ehnes considers to be legitimate, licensed discount health plan businesses in the state, providing access to less expensive healthcare services to millions. But the CMA says a 2001 opinion from then-Attorney General Bill Lockyer that such plans are illegal on their face.

Ehnes spokeswoman Lynne Randolph counters, "A 2001 opinion is seriously outdated, given the level of sophistication and the depth of fraud that unlicensed discount plans have heaped upon California consumers in the last 10 years. Their business models have evolved to the level that even an attorney has a difficult time distinguishing from a legitimate plan."

Besides, Randolph says, "There has been an administrative law judge decision in 2006 that these discount plans do provide a health service, and should be licensed by the DMHC."