This story originally appeared in The Urban News
Healthcare reform legislation will soon begin to take effect. Some consumers will see improvements in the availability of insurance and assistance with paying for it. But there is no short-term fix for sky-rocketing premium costs. Many adults who can’t afford insurance will remain out of luck until at least 2014. But never fear. An industry exists to serve—some say prey on—them: Discount Health Card plans.
Discount health, dental and prescription drug plans market themselves by claiming to offer coverage in exchange for monthly or annual fees lower than those charged by health insurance companies. No required medical exams. No exclusions for pre-existing conditions. No forms to file. Nobody is refused. The companies commonly boast of working with tens or hundreds of thousands of care providers. Sounds great, but not so fast.
Somewhere in their advertisements, these plans admit that they aren’t insurance. Subscribers are given a card entitling them to an unspecified discount for products and services bought from providers that accept the card.
There are no forms to file because the customer is personally responsible for paying the remainder of the bill at the time of service. The discount plan doesn’t even care to know that it took place. Regardless of how much or little a subscriber uses her card, the discount company pays nothing out in claims. This is also why there are no restrictions on who can join the plan.
Consumers who drop actual health insurance in an attempt to save money with a discount plan may be in for a rude awakening if they later try to buy health insurance again. Until pre-existing condition clauses are phased out by the healthcare reform bill, insurance applicants will continue to find prior medical problems classified as pre-existing conditions, triggering waiting periods for coverage or worse.
How big is the discount for card holders? It depends, and customers may not be able to find out ahead of time. One prescription plan claims to offer savings of up to 85% on brand name and generic drugs from participating pharmacies. The new drug card Buncombe County touts, the Coast2Coast Rx Card, supposedly saves an average of 40%.
I spoke with several pharmacists and representatives of corporate drug retailers. None could tell me in advance of a purchase what discount a particular card would get me or even whether their business accepts the card. “There are hundreds of plans,” one said. The pharmacist on duty at a mom and pop drug store told me he transmits information to the card company and decides whether to accept it based on what the screen tells him he’s supposed to charge. “Most of the time it’s something reasonable and we take it.”
Healthcare providers in other lines of business quoted me card discounts in the range of 15-20%.
Some discount card companies post the names of their providers on line. I sampled several lists for local accuracy. Dentists and vision services were aware of the plans they participate in. Things were murkier for hospitals. I spoke with representatives of two listed facilities. Neither recognized the name of the plan I called about. Their hospitals are participants in the Beech Street Hospital Network or Galaxy Health Network. It turned out that the discount cards in question had contracted with one or the other of those networks. The use of Beech Street or Galaxy by third-party card issuers seemed annoying to one hospital rep. She told me, “If we don’t have a specific contract, it can get complicated.”
Physician services are, of course, central to many of these plans as well. I checked two company’s lists of family doctors in Asheville that are supposedly in the network. The lists were very short. Of these, one doc accepts the discount card as advertised. Contact information on three docs was at best out-of-date, one by as much as ten years. Two other docs remain in listed practices but no longer participate in the discount plan. Elsewhere in the United States, gross inaccuracies in advertised provider panels have led to allegations of fraud against some discount card companies.
My search to understand the problems with clarity about provider panels led me to Allen Erenbaum, a spokesperson for Careington International Corporation. Careington is a major behind-the-scenes player in this industry. Erenbaum explained that three different companies are often involved in discount card plans.
Doctors, hospitals, etc. join a “preferred provider network” such as Beech Street. Let’s call this Network A. The provider is supposed to get more referrals in return for charging lower fees to patients sent by Network A.
But Network A doesn’t have any patients to send. It gets them from a discount medical plan company such as Careington International. Careington sells access to Network A’s providers to employers, unions, or Private Label Marketers (PLM). It is the PLMs that typically sell discount cards to the general public.
This chain of business deals often results in Network A providers not recognizing their connection to a PLM, and PLM customers being unaware of Network A at the other end of the chain. PLMs try to minimize confusion by issuing booklets to customers, imprinting their discount cards with the name or logo of Network A, and by providing a toll free number for questions.
Erenbaum said people considering a discount plan should call the plan’s toll free number prior to signing up. A plan representative can check whether particular physicians actually accept the card. Online provider lists may be inaccurate, and the doctors themselves may not know.
Providers I talked to were generally unhappy to discuss discount health cards. Most declined to be named in this story. But they did want to tell me that they offer discount price plans. Most pharmacies have their own no-cost or very low cost discount cards. Walmart even dispenses with the card. Customers can learn in advance exactly what they’ll pay for their medicines.
An Asheville eye care business offers a 20% price break for a discount card, but an optician on duty told me that the store had a 50% off sale in progress. Customers could choose which of the deals they prefer.
One family practitioner’s office manager said that he’d dropped out of a card network but offers comparable or better discounts to uninsured patients who pay bills promptly. NextCare urgent care docs don’t accept outside discount cards anymore either. NextCare has its own program. An annual membership fee entitles patients to 33-55% off the regular price for office visits.
The bottom line
The North Carolina Attorney General’s office has posted a warning, “The Truth about Discount Plans” on its website. Anyone tempted to join a discount plan should read it first. Attorney General spokesperson Noelle Talley told me, “Our Consumer Protection Division has received 72 complaints about discount health cards since 2004, including 25 in 2009. We continue to recommend that consumers be skeptical of these plans, which are not a substitute for health insurance.”
It may be that some people can actually benefit from joining a discount health plan. But before signing up and giving out any credit card information, consumers should find out for sure whether their providers participate and what discounts are actually offered. Most people can probably get better deals by working directly with their doctors, pharmacists, dentists, hospitals and other healthcare professionals.
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