In the April edition of the PNN newsletter, we brought forth some points to consider regarding Discount Cards. The debate continues as the push towards Consumer Driven HealthCare (CDHC) escalates, as well as the prominence of medical discount cards.

Health Savings Accounts (HSA) have been steadily increasing in popularity, and are often coupled with a High Deductible Health Plan. Consumers may turn to medical discount cards to reduce the amount due out of their own pocket before reaching the large deductible. Other consumers see discount cards as an option if they are not able to afford any insurance at all.

The concept of the discount card is simple: Consumers pay a monthly fee, (and usually an enrollment fee) to have access to providers who are willing to extend a discount to the card holder, either for cash services or to reduce coinsurance. There are no claims to file, and payment is provided up front at the time of service. It should be clear to all involved that this is not insurance.

The reality of the discount cards is complex: Because this is not insurance, companies offering discount card programs are not held to the same standards and regulations as insurance companies. This leaves the door wide open for problems, including fraudulent and misleading selling of discount card programs “posing” as insurance.

Florida has taken the most stringent action and now requires companies offering discount card programs to be licensed with the state. To verify if a company is authorized in Florida you can go to www.fldfs.com or call 800-342-2762. Other states that have considered or have passed some regulations this year include: Alaska, Arkansas, California, Connecticut, Illinois, Maryland, Montana, North Dakota, Oklahoma, South Dakota, & Utah. Some state Attorneys General have only been able to take action after the damage has been done by bringing lawsuits against companies after a pattern of complaints have been reported.

One primary concern is that patients may not understand that what they have purchased is not insurance. A person who comes to your office may believe that because they have been paying a monthly fee (which in some cases can be as high as insurance premiums) they should only be responsible for a small co-payment at the time of service. In reality, they are responsible for the entire bill (or a larger coinsurance amount) at the discounted rates.

A study providing a consumer point of view on purchasing, using, and canceling discount cards is available at www.cmwf.org, “Discount Medical Cards: Innovation or Illusion?”

Along the same line, your front office staff may not be aware that a discount card is not insurance. Therefore, your staff may not collect the entire payment at the time of service, and you may spend valuable time and resources trying to collect payment after the fact.

Another concern is that some discount card companies may list providers who are not participating providers, or who are not aware that they are listed as participating with the discount card through an established PPO contract.

Evaluating Health Plan Agreements

Each month in 2005, we are asking network members to visit our web site and complete a questionnaire on a selected health plan. Data gathered will be used internally to help PREFERRED evaluate existing health plan relationships. During the month of September, we are requesting input on Integrated Health Plan (IHP). Go to the Member Center, then to the Payor Report Card.