State Begins Licensing Discount Health Cards
The Department of Managed Health Care on Tuesday announced that it has issued its first license to a discount health card firm and that it would require all such firms to seek licenses from the agency, the San Francisco Chronicle reports.
Companies marketing discount health cards say that the cards can offer discounts of as much as 80% on health care charges. Consumers pay monthly subscriber fees to receive the cards.
The firms often operate without state regulation because the cards do not constitute health insurance (Colliver, San Francisco Chronicle, 10/11).
DMHC regulators say a state law that permits the agency to regulate entities that offer prepaid health insurance services gives DMHC the authority to oversee discount health cards. A DMHC administrative law judge last month upheld that contention (Darcé, San Diego Union-Tribune, 10/11).
The move is intended to reduce health care fraud in California.
DMHC Director Cindy Ehnes said the agency has received about 300 complaints about discount card companies and issued at least six cease-and-desist letters to companies operating with licenses (Vesely, Oakland Tribune, 10/11).
The state currently is investigating about 100 discount health care firms (San Francisco Chronicle, 10/11).
About six million California residents hold such discount cards.
To be licensed, DMHC will require discount card providers to:
- Comply with disclosure rules;
- Document the discounts they offer (Yi, Los Angeles Times, 10/11);
- Verify participation in the discount program by physicians, dentists, pharmacists and other health care providers (San Diego Union-Tribune, 10/11).
A deadline for discount health card firms to obtain licenses has not been set.
DMHC issued its first license to San Diego-based First Dental Health, in part because the dental charge system is more transparent and was an easier subject of rules, according to agency regulators (San Diego Union-Tribune, 10/11).
The licensure process took about a year to develop, according to Ehnes (San Francisco Chronicle, 10/11).
Ehnes said, "We will be working on the physician, hospital and pharmacy context, but we're not there yet" (San Diego Union-Tribune, 10/11).
The rules will address the amount of discounts, participating providers and what information must be provided to consumers, according to the Tribune.
Two discount health card providers have applied for state licenses (Oakland Tribune, 10/11).
Possibly steering some people away from discount cards, California Medical Association CEO Jack Lewin said CMA expects to post on its Web site by the end of 2006 a list of members who will charge patients the same price for services, regardless of their insurance status (Los Angeles Times, 10/11).