California Regulators Issue First License to Discount Medical Plan
On Tuesday, the California Department of Managed Health Care announced that it has approved the Association Health Care Management, operating as Family Care, to receive the state's first license for a discount medical plan, the Sacramento Business Journal reports.
The license will be valid for 24 months.
Although Family Care provides discounts on certain health services, it is not health insurance.
The company's plan will offer 5% to 40% discounts for select medical services. Households can join the plan by paying a $99 enrollment fee and a monthly charge of $99.95 (Robertson, Sacramento Business Journal, 6/9).
The plan is available in most counties in the stateÂ and has a list of participating providers on its Web site.
Impetus for Licensure
Since 2003, the DMHC's Help Center has received more than 925 consumer complaints about fraudulent discount health plans. Some people claimed the companies falsely marketed themselves as health insurance and others said they could not locate doctors who participated in the programs (Rauber, San Francisco Business Times, 6/9).
Lynn Randolph, DMHC spokesperson, said complaints have increased over recent months as the recession and rising unemployment rates have left many people without health insurance (Clark, HealthLeaders Media, 6/9).
In response to such complaints, DMHC began an investigation into the discount health plan industry and issued several cease and desist orders. The department also established a licensing structure to provide oversight and protect consumers.
As a result, some discount health plans decided to pursue licenses through DMHC to prove that they met regulatory standards.
Currently, DMHC requires that licensed discount health plans include:
- Accurate advertising;
- A dispute resolution process;
- A verification of discounts; and
- Legitimate contracts with health care providers.
Plans also must inform consumers that they are not offering health insurance (Rauber, San Francisco Business Times, 6/9).
Randolph said the department plans to publish the licensing regulations and hold a public hearing. The regulations could then go into effect by the end of 2009, she said (HealthLeaders Media, 6/9).DMHC's announcement is on its Web site (.pdf). This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.