New regulations on Mass. discount health plans announced

By Nick Rees | Jan 26, 2010


BOSTON (Legal Newsline) - Regulations regarding discount health plan regulations, which became effective Friday, have been finalized, Massachusetts Attorney General Martha Coakley has announced.

Health discount plans, which are not insurance products, are not regulated by the Division of Insurance. For that reason, the new regulations have been designed to protect Massachusetts residents from unscrupulous marking claims of discounts on health products or services by discount plans.

"These regulations require companies who issue health discount plans to inform their customers how the products work and to make clear that discount plans are not a substitute for health insurance," Coakley said.

"Paying for health care can be very difficult and some companies have sought to exploit consumer anxiety and confusion for their own gain. We will not tolerate deceptive conduct and we will continue to vigorously pursue actions to halt such conduct in Massachusetts."

The regulations were issued by Coakley's office as part of a multi-pronged approach to dealing with the increasing problem of deceptive marketing of medical discount plans. In addition to the regulations, consumer education advisories have been published and law enforcement actions have been pursued to safeguard consumers from health discount scams.

Health discount plans can provide consumers, for some form of fee, with discounts on medical, dental, vision or other health care products or services from certain providers. The new regulations require the marketers of these plans in Massachusetts to clearly communicate to potential customers how the plans work.

Discount plans in Massachusetts, under terms of the new regulations, must now disclose to potential customers that they are not insurance and that the consumer is responsible for paying for any services or products they receive. Health discount plan organizations are also required to have written contracts with all participating health care providers and provide access to an up-to-date list of all participating providers to consumers.

The new consumer protection regulations were proposed by Coakley last fall and were followed by a public hearing on the regulations on Oct. 13. Some modifications were made to the final regulations based on comments made by consumer advocates and industry representatives.

In addition to the new protections, Coakley filed an agreement earlier this month in Superior Court with four companies that bars them from marketing, selling or promoting certain discount health plans to any Massachusetts resident while a lawsuit against the companies is pending.

A complaint was filed in October against the four companies - Consumer Health Benefit Association, National Benefits Consultants LLC, Guarantee Trust Life Insurance Company and Vantage America Solutions, Inc. - alleging that they unfairly and deceptively sold a discount health plan by falsely representing it as satisfying the Massachusetts law that requires all individuals have health insurance.

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