News / 

Stay out of state, two health card firms told



This archived news story is available only for your personal, non-commercial use. Information in the story may be outdated or superseded by additional information. Reading or replaying the story in its archived form does not constitute a republication of the story.

The state Department of Managed Health Care on Thursday ordered two companies to stop selling what it called "fraudulent and deceptive" health discount cards to Californians.

Platinum Health Plus, based in Florida, and Family Health Plan, headquartered in Texas, broke California law by charging premiums for cards that were supposed to save patients money on bills at a specific network of doctors, when in fact the physicians had no contract with the companies and did not accept the discount cards, state officials said.

"People without health insurance are often desperate to give their family any type of health security," said Cindy Ehnes, director of DMHC. "We're taking action today against unscrupulous marketers of discount health plans that lead consumers to believe they have insurance."

The trouble with discount health cards is that they can seem a lot like health insurance, regulators said. For an enrollment fee, the cards promise savings at various healthcare providers, including doctors, hospitals and dentists.

When the cards are fraudulent, patients often discover the swindle only after they get care and try to collect on their advertised discount. Some patients learn their doctors don't accept the card, although they were referred to the doctors by the health card firm. And many physicians offer discounts to all uninsured patients who ask for them - discounts that are similar to or better than those promised by the cards.

"The deceptive advertisements and arrangement of health care services without a license are in violation of California law," Ehnes said.

Regulators said the fraud investigation into Platinum Health Plus and Family Health Plan has only uncovered specific problems in the network of physicians patients are supposed to use. State officials said the probe is ongoing.

The two companies could not be reached for comment Thursday.

State regulators said they launched a fraud investigation into discount health plans because a growing number of poor and uninsured patients have been duped by misleading marketing campaigns in California, particularly in Spanish-speaking communities.

Nationwide, as health costs have soared and the rolls of the uninsured have grown, fake discount health plan cards have become a bigger and bigger problem, said James Quiggle, spokesman for the Coalition Against Insurance Fraud, a Washington, D.C., nonprofit group made up of representatives from consumer organizations, the insurance industry and the regulatory area.

"Scams are very widespread," Quiggle said. "It's a perfect time for medical discount cards to spring up because there are so many people with such pressing need for some way to make their medical bills more affordable."

In many states, insurance regulators are unsure whether they have the authority to crack down on the discount cards because they are not traditional insurance products.

In California, DMHC officials said that even though that agency regulates HMOs, the discount plans fall within its jurisdiction because they act like HMOs by charging an enrollment fee similar to insurance premiums and then refer patients to a specific network of doctors and hospitals.

Currently, 13 other states have either taken steps to halt sales of fraudulent discount health cards or to tighten regulation and licensing of these plans.

To see more of the Sacramento Bee, or to subscribe, go to http://www.sacbee.com

Copyright 2004 Sacramento Bee. All Rights Reserved.

SIGN UP FOR THE KSL.COM NEWSLETTER

Catch up on the top news and features from KSL.com, sent weekly.
By subscribing, you acknowledge and agree to KSL.com's Terms of Use and Privacy Policy.

KSL Weather Forecast