DMHC licenses first ‘medical-discount’ health plan in Golden State
The California Department of Managed Health Care, the state's regulatory watchdog agency for HMOs, said Tuesday that it has approved Association Health Care Management Inc., dba "Family Care," as the Golden State's first licensed "medical discount" health plan.
The Family Care plan will offer discounted access to a range of physician, pharmacy, outpatient (such as physical therapy and mental health), laboratory, radiology and imaging, dental, chiropractic, vision and hearing-care services. The program will offer membership to a household for a $99 enrollment fee and a monthly charge of $99.95, according to DMHC, with discounts ranging from 5 to 40 percent for most services.
However, the Houston-based health plan's initial license is only valid for two years, reflecting caution on the part of the Sacramento-based agency, which previously has cracked down on various discount health-care card companies in the state.
Family Care is licensed to operate throughout Alameda, Marin, San Francisco, San Mateo, Santa Clara, Napa, Santa Cruz, Solano, Orange and San Diego counties, as well as the most populated areas of Sacramento, Los Angeles, Riverside, San Bernardino, and 41 other counties, according to the department, and a number of local providers are already listed on its www.familycarecalifornia.com web site.
The DMHC said the economic environment played a role in its decision to approve Family Care's application for a license.
Thanks to the continuing economic downturn, which has resulted in many individuals and families losing health coverage, "it is in the best interest of consumers to regulate and license legitimate discount health plans," Cindy Ehnes, the DMHC's director, said in a June 9 statement. She added that licensure will ensure that consumers will get promised discounts and "fully understand that these products are not health insurance."
In the last six years, the agency's Help Center has received more than 925 complaints from consumers who were victims of fraudulent discount health card companies, the DMHC said. Those consumers were misled into thinking they were purchasing regular health insurance or were unable to find doctors who supposedly had contracted with the discount company.
The DMHC said it has issued several Cease and Desist orders in an ongoing investigation into this growing industry, which in turn led to setting up a licensing structure to protect consumers and provide state oversight. As a result, some companies decided to seek licenses proving they met regulatory standards.
The current licensing requirements include verification of discounts offered, legitimate contracts with doctors and other health care providers, truthful advertising, and a process for consumers to resolve disputes with the plan, according to DMHC.
Plans also must prominently disclose that they are not offering insurance, but rather a discount product through which members pay providers a discounted fee, usually at the time of service. Family Care's web site displays such a statement at the bottom of each web page.
Email Chris Rauber at crauber@bizjournals.com / (415) 288-4946