Health Care and Insurance and Government and Media & Marketing

Health discount cards spark call for regulation: State insurance group leads registration push

December 5, 2005

Some health care discount programs that can leave patients stranded with large medical bills have put Indiana insurers in the strange position of asking for more government regulation.

The Indiana Association of Health Underwriters plans to lobby in the upcoming legislative session for a bill that requires companies offering health care discounts to register with the state.

That would allow regulators to investigate complaints and pursue regulatory action if troubles arise with the discounts, said Shawn Gibbons, a board member with the state association.

He said this proposal would apply only to companies not already registered with the insurance department. Insurers like Minnesota-based UnitedHealth Group Inc., which owns Indianapolis-based Golden Rule Insurance Co., offer discount programs to their policyholders and are already registered.

Those companies don't draw industry ire.

That's reserved for the barrage of unsolicited discount offers that have been faxed to offices or tacked to telephone poles around town the past couple of years, said Norm Springer, president of the Indianapolis Association of Health Underwriters, which is part of the state association.

Some of these offers never mention the word insurance, but tout "health plans" or health care "that you can afford" for a set monthly fee, according to fliers provided by Springer. These offers provide little information about the company behind them.

One promotes a free, 30-day health care plan offered by B.V.I National Council on HealthCare Reform. That plan promises access to "Doctors, Hospitals, Prescriptions, Dental, Vision & Other Benefits!"

Its flier also advertises a monthly fee of less than $50 after the 30-day offer expires. However, it provides no phone number for questions or any indication where the council is located. It simply asks anyone interested to return a fax with basic contact information.

Another flier, from American Family Health and Dental, lists a phone number, but a company operator declined to comment and hung up when contacted by IBJ.

"I'm sorry; we don't do any interviews for any media," she said. "I'm so sorry. Thank you for calling."

Springer and others in the industry say people sometimes pay the fee for these programs and then discover when a big medical bill arrives that their money went toward a discount, not actual insurance. Oftentimes, that discount applies only to a limited number of doctors and hospitals.

"It really puts a black mark on the total health insurance industry when this sort of thing occurs," Springer said. "People think, 'Well, this is the health insurance industry.'

"This is not the health insurance industry, because this is not health insurance."

Springer's association declined to provide examples of people who have been duped, citing patient privacy rules.

Consumers are drawn to these offers by the allure of saving money on health care, said one of the critics, state Rep. Dave Frizzell, R-Indianapolis.

"People sometimes, when you see a discount, don't do due diligence," he said. "Then you have a procedure and you find out you're not covered and then you're really in a world of hurt."

The state Attorney General's Office has received nearly two dozen complaints about the discount programs the past couple of years, spokeswoman Staci Schneider said. The state Department of Insurance handles a couple of calls a month on health care discount cards, mostly from people who want more information, said Bettye Foy, deputy commissioner for consumer services.

"I'm surprised that we haven't had more because I thought that would be something that would be abused or misunderstood," she said.

Frizzell plans to sponsor the bill that requires these companies to register with the state Department of Insurance. He pitched a similar bill during the last session, but it didn't make it out of the House.

That bill also required licensing. Frizzell thinks it sank because of concerns over too much bureaucracy.

Gibbons said a walkout by House Democrats that stalled the session also hurt the bill's chances. This time around, the registration plan has backing from the Indiana Association of Insurance and Financial Advisors and the state Chamber of Commerce, among other groups.

It also has a streamlined focus to address concern about excessive regulation, Frizzell said.

"Our key objective is to make sure these companies are legit, and they're providing a product accepted by the provider," he said.
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