Discount Card programs are making a come back in the rehab market. Discount cards are popular with consumers for services like dental and prescription drugs.  Consumers without health insurance purchase access to a network of providers who accept a discount for cash paid up front by the patient.

While this sounds like a pretty good deal - cash at the time of service, no claim forms to submit; it presents a few hurdles.  The biggest hurdle is the confusion experienced by both the consumer and the provider when the card is presented as actual insurance. More than a few fraudulent companies have come and gone, raising serious concerns regarding the potential abuse of these programs. So much so, in fact, that several states have pending legislation to regulate or at least establish ground rules for discount card organizations and their services.

The Texas Dept. of Insurance not only provides education and warnings for consumers on their web site, but they have also issued a letter outlining their concerns to the president of the American Association of Preferred Provider Organizations (AAPPO), urging PPOs to avoid working with companies whose discount programs are misleading to consumers.

States which currently have pending legislation to regulate or establish rules for discount card programs include:  AR, CA, CT, FL, KS, MD, NM, ND, RI, SD, UT.  Most require prominent disclosure that the program is NOT insurance.

If you are considering participation with a Discount Card plan, consider the following first:

PROs:

- Fits in well with the Consumer Driven Health Care (CDHC) benefit designs, which are picking up momentum.

- Often managed through an HSA or similar flexible spending account

- Provider receives cash at the time of service- No claims filing.

- The discount card supplier typically structures a participating provider directory, similar to a PPO, to "direct" consumers to providers involved in the program. Providers still verify that the "member" is eligible for a cash discount.

- The valid companies issuing discount programs clearly indicate on the card, in their manuals, and on their web site that the card IS NOT INSURANCE.

CONS:

- Purchasers may be confused, and not ready to pay at the time of services. While there are valid and ethical programs out there, some mislead consumers to believe they are purchasing traditional healthcare. Confusion may be more prevalent with non-English speaking consumers.

- Providers may be confused- if the front office isn't familiar with this concept, or are not paying attention to the card, they may overlook collecting at the point of service. Chasing cash down after the fact from patients may pose as a problem

- Funding (e.g. "medical credit cards" or other financial source) may not have real-time tracking of patient spending & limits. If a patient has maxed their available limit, the provider is left to chase the debt.