Office Of Insurance Regulation Releases Report On Discount Medical Plan Operations In Florida
Report Follows Unsuccessful Effort Last Year to Weaken Legislative Reforms
TALLAHASSEE (12/15/2006) The Florida Office of Insurance Regulation (Office) today released a market report analyzing Discount Medical Plan Operations (DMPOs) operating in Florida. The report follows last year's veto of legislation that sought to weaken the Office's regulatory authority over the DMPO industry. The DMPO industry has indicated it will propose similar legislation in 2007.
Discount medical card programs are not insurance. That means the patient, not an insurance company, is responsible for paying the entire medical bill. Discount card programs allow members to receive a discount on a retail fee charged by a participating doctor, hospital, or other provider.
The 2004 reforms, which were aimed at preventing fraud and abuse, are seen as the strongest in the nation and precipitated a 90 percent decrease in complaints leveled against DMPOs. In 2003, Florida consumers filed over 1,000 complaints regarding their plans. The Florida law has served as a model for similar legislative reforms in Nevada, Montana, and Utah. In addition, it was used for the model law developed by the National Association of Insurance Commissioners (NAIC).
Along with improvements in consumer protections, the DMPO market appears to be flourishing. Based on annual filings from 2005, over 1.5 million Floridians are enrolled in discount card plans and have paid over $31.5 million to purchase these plans.
Last year HB 1361 sought to limit the Office's authority to regulate DMPOs by:
- Limiting the insurance commissioner's authority to examine DMPOs if there were an indication the DMPO had violated Florida law.
- Increasing the exemption or "safe harbor" exemption from rate review from $30 per month to $60 per month for DMPOs that include hospital or physician services - without providing rate justification to the Office.
- Removing the free access to hospital services and allowing waiting periods and notification periods in addition to other restrictions for such services.
- Removing the requirement for audited financial statements of DMPOs to ensure compliance of the $150,000 net worth requirement. The proposed legislation would require a parent company to show the required net worth at licensure, and the actual DMPO could certify in writing that it meets the requirement annually thereafter.
Other problems that have been reported regarding the discount cards include:
- Consumers believe or are told they are buying health insurance. The use of insurance "buzz words" such as "coverage," high prices for some cards, and the sale of cards in a package with insurance and other products (called "bundling") have contributed to this problem.
- Discounts are smaller than promised.
- Few or no participating providers where a cardholder lives.
- Problems canceling enrollment and unauthorized bank withdrawals and credit card charges.
The report, Discount Medical Plan Organizations: Past, Present, and Future in Florida and in Other States, was written and researched by Mila Kofman, J.D., of the Health Policy Institute, at Georgetown University. Click here for the full report.