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Featured in: Insurance Dispatch
So-called medical discount cards can be a boon, or a big bad bust. Unscrupulous salesfolk and anxious consumers make for a bad combination.“If a person walks into a doctor's office without health insurance, they will pay more for their care than someone with insurance. That's because the insurance companies are big and powerful and can negotiate lower rates. If I ask for that rate for myself, I'd get laughed out of there.
So why don't all of the uninsured people band together into some sort of membership organization? Kind of like how AAA or AARP can negotiate lower rates for hotels. Neither is in the hotel business, but they have enough clout to get discounts.
Would this organization, which is not in the insurance business, be able to negotiate rates for its members? (The members could, of course, go somewhere else if an office refuses to negotiate. You would end up with "in club" and "out of club" providers.) Would this violate the contract doctors sign with insurer networks?
Of course, this would be a ridiculously huge undertaking. But is it theoretically possible?
”So asked one of my loyal (?) readers. Actually, what he proposed is not new: there are many "provider discount plans" on the market (e.g. CareEntree, etc) which purport to accomplish that stated goal.
For folks who are truly uninsurable (and they represent but a very small fraction of those who are uninsured), these plans can be a big help, but they are not without drawbacks.
For example, such plans usually require the member to pay the entire cost either upfront or within a very short timeframe (10-30 days, max). For a relatively inexpensive procedure (setting a broken finger, for example) this would be no problem. But for a substantial claim (surgery, MRI, etc) how many folks have thousands of dollars in ready cash?
Another problem with such plans is that they are often sold by unscrupulous folks who gloss over the fact that it is NOT insurance, and so the consumer unwittingly believes that he is insured when, in fact, he is not.
Finally, in looking at such plans myself (in the event that I wanted to market one), I've noticed a large discrepancy in prices; some plans cost hundreds of dollars a year for what is, essentially, a modest service.
The ostensible point of these plans is to encourage folks to seek medical attention, and in some way soften the financial hardship of doing so. While admirable in theory, like so many such endeavors this one is fraught with peril.
As mentioned, such plans are often wrongly sold as alternatives to insurance, or even as insurance products (which they are not). This is dangerous because it may give the purchaser a false sense of security.
And I’m not alone in my concern. According to my co-blogger, “(t)he Illinois Attorney General has sued an Arlington company accused of marketing health care discount cards that misled consumers into thinking they were getting insurance cards.
Illinois Attorney General Lisa Madigan's suit charges the International Association of Benefits, which has operated under several names including IAB, with violations of the Illinois Consumer Fraud and Deceptive Business Practices Act.
”And IAB is facing similar charges in Texas, where the Lone Star State's "Attorney General Greg Abbott...obtained a court order correcting the fraudulent business practices of International Association of Benefits (IAB) of Richardson, which falsely promised consumers that its health care “discount cards” could reap significant savings.”
The problem is, some folks are so concerned about the cost of health insurance that they fall prey to such unscrupulous practices. While we all sympathize with their dilemna, it’s also important to remember that sometimes a deal is too good to be true.
Be well.
Henry Stern, LUTCF is an independent insurance agent in Dayton, OH. A licensed Continuing Education instructor for Ohio and Kentucky, he has well over 20 years of experience in “the biz.” He blogs every day (or so it seems) at InsureBlog.
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This week's column is up. We discuss how so-called medical discount cards can be a boon, or a big bad bust.
Comments (7)
My co-blogger is in the Atlanta area (and yeah, it's a long story); think I'll give him a head's up on your idea.
BTW, it was my correspondent who characterized doc's "laughing folks off;" I just glommed onto his email as a jumping-off point.
As I wrote, my primary beef with these plans is that they are marketed as insurance-substitutes when, in fact, they are not.
I'm very interested in the fact that you were "recruited" (best I could do) as a participating provider without your knowledge or consent. Is there some agency to which you could report this? I wonder, too, how many other providers were so "recuited."
Thanks for the feedback.
We belong to physician organizations that negotiate for us en masse. They have a list of all the physicians on that list and sell that list to these companies. I would say the majority of physicians are on multiple lists that they have no idea of. Most of these plans charge nearly $100/month (or more) and give a discount to patients. When the physician's office is called, they usually have no idea, but the patient says "well his name is on the card," and it usually gets honored anyway. It is a scam that is, again, legal in most states.
Rob
Augusta, GA
New Websites:
Musings of a Distractible Mind
What would happen if you (or any provider) declined to honor such a card? Obviously, if it's part of an insurance contract, you'd be obligated (up to a point, but that's next week's column), but what if it's not?
I suppose the downside would be:
a) you stand to lose a patient, and
b) you'd lose that cash flow advantage (re: cash up-front)
But would there be any other effects?
I'm just seriously fascinated that a provider could be bound to a contract in which he (or she, or they) had no input. Have any providers said anything to these "physician organizations?"
#5: Silent PPOs
... is the ominous name for this phenomenon.
Medical Economics had a good article about them and also a poll about physicians' encounters with them.
"Physician Organizations"? California Medical Association (CMA) has been recently accused of running one.
Looking at the Care Card, my initial reaction is.
1) For the provider, it is a good thing. You get cash on the spot. No billing, no collections.
2) For the patient, they have access to a limited number of providers, assuming they have the cash to pay. If not, they are no better off than they would be otherwise. The card is useless outside the greater Augusta area. For a little more, around $25 - $30 per month they could have nationwide access.
3) It appears an agent is promoting this. The contact number is not showing up on a Google search. There is reference to access to an agent if you want an HSA. One wonders why you would need this card if you did have an HSA. This appears to be more of an agent prospecting tool than anything of real value. Basically the agent appears to paid to prospect. A good deal for the agent.
4) Given the recent legal issues for Care Entree & IAB, I would imagine an AG would have a few problems with the site. Some of the same verbiage that is creating problems for these companies appears on the Care Card site.
This is mainly promoted by the physicians in the local area and covers the vast majority of primary care and a large number of specialists. Since it is not insurance, it is legal for us to offer a discount in this kind of plan.
We have tried to get agents to do it, but they see no big upside (I think they just don't understand it). It is really meant to go with HSA's but does offer a cheap way for the patient to get substantial discounts. It is offered by physicians, so they know they can trust it. The advantage for HSA patients is that they pay less per visit and so are more likely to come in and use their savings for this.
We did all the legal due dillegence, and there was really nothing stopping us to offer a discount in this way as long as we made it clear that this was a discount, not insurance.
There really is little reason for patients to want nationwide access. Remember, 25-30/month amounts to $3-400/year, which is substantially more than the $80-110 for an individual/family on the care card.
Rob
Augusta, GA
New Websites:
Musings of a Distractible Mind
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Most would be surprised to find out that doctors are unwittingly signed up for these "discount cards." These people get a list of doctors from an organization such as a PHO (Physician Hospital Organization) and put doctors on the list without their knowing it. I am on numerous such lists and have never consented. It is legal in all but 2 states (Georgia being one of the, actually).
We physicians in Augusta have made our own discount card that can be found at the following website. We have no problem with accepting cash upfront and discounting for the patient. It saves us the hassle of billing. We do not "laugh them out of the office." We just cannot discount people to the negotiated rates as they all differ widely. We actually charge as much as the highest bidder and write off the difference for most plans. This discount card (and it is disclosed as such) is sold at a very cheap rate ($100/year for a family). We want to be able to legally discount people to a reasonable rate.
There is a great misunderstanding on this. It ends up looking like we want to over-charge our cash-pay patients. We do not, but have had no way of doing so until we came up with this card. It is widely accepted in Augusta by physicians - getting paid cash is a good thing. It actually has been the patients who have been slow to embrace the idea (although I have no idea why). I guess they think it sounds "too good to be true." There is no catch. We just want to be paid upfront and save ourselves the billing overhead. I am surprised other communities have not come up with this idea.
Rob
Augusta, GA
New Websites:
Musings of a Distractible Mind
Ambulatorycomputing.com