DMHC Will Not Regulate Discount Health Plans, Zingale Says
The Department of Managed Health Care will not regulate a "controversial" type of health plan that allows consumers to receive discount cards from a variety of medical providers because such plans "are not a form of health insurance," according to DMHC director Daniel Zingale, the San Diego Union-Tribune reports. In an opinion on the issue, Zingale said that companies that provide discount plans "do not fall under the California law that governs managed care companies" because they "do not bear the same financial risks as health insurers." Through discount health plans, patients, not the plans, pay providers for care. But members receive discount cards that provide savings of up to 50% for services rendered by doctors, dentists, pharmacists and other providers. The Union-Tribune reports that discount health plans "appeal" to people who do not receive employer-sponsored coverage and who cannot afford monthly managed care premiums. In addition, discount plans are "popular" among people who have insurance but who "want to pay out-of-pocket for the promise of more personalized care."
Zingale's decision "reverses a state policy that has stood for almost 20 years and has largely prevented the plans from being sold in California," the Union-Tribune reports. In 1983, the Department of Corporations "decided that the discount plans constitute a form of health insurance" and began regulating them. DMHC took over regulating responsibilities last year. But consumer advocates and some physicians are concerned that the quality of patient care could "suffer" if discount plans are allowed to operate unregulated. Steven Thompson, vice president of government affairs for the California Medical Association, said that "because there is no quality control of discount plans' physician networks, they can include doctors who may have run into trouble with HMOs or medical boards." But Michael Sherman, vice president of the discount health plan HealthAllies, said that many discount plans "do as good a job of screening doctors as HMOs." Some states, including Georgia and Illinois, require discount plans to register with the state, but many states do not have laws in place to regulate such plans. Thompson said the CMA is considering challenging Zingale's decision (Fong, San Diego Union-Tribune, 6/19).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.