Posted on 10/25/2012, by Jeremy Edsall
Avoid Bogus “Medical Discount Plans”
The Federal Trade Commission, State Attorneys General and Insurance Commissioners cracking down on plans offered to the uninsured, uninsurable, and unemployed.
A federal-state coalition of law enforcement agencies in 24 states have filed a total of 54 lawsuits and regulatory actions against companies fraudulently marketing “medical discount plans” as health insurance. The marketing scams targeted people who did not have health insurance, primarily those uninsured, unemployed or uninsurable.
“With so many Americans struggling to deal with the costs of health care, these medical discount benefit plans sound appealing because they masquerade as health insurance,” said David Vladeck, Director of the FTC’s Bureau of Consumer Protection. “But they are not insurance. They don’t offer the benefits of health insurance, and victims don’t know they’ve been ripped off until after they’ve tried to use the service and paid their bill.”
The FTC filed three cases charging companies with deceptively marketing medical discount plans.
Consumers targeted sought information on the Internet about major medical health insurance plans. When they were contacted by telephone, telemarketers allegedly pitched consumers with a long list of false claims, including:
• that they worked closely with major medical insurers;
• that the discount plan was widely accepted by doctors, pharmacies, and other health care facilities;
• that the plan would save consumers up to 85 percent on medical expenses;
• that CHBA’s plan was accepted wherever Blue Cross Blue Shield was accepted; and
• that consumers could use their medical discount card with any health care provider that accepts insurance.
Consumers paid between $29 and $280 in enrollment fees before they received written information about the plan. When they tried to use the plan with physicians indicated as “participating providers,” the providers said they did not accept the plan. One consumer who tried to use the plan to buy prescription medicine discovered the “discounted” price was higher than the price she had paid without the medical discount plan.
Companies also misrepresented refund policies and that typically, consumers received refunds only after they threatened to complain to consumer protection agencies.
Source: ftc.gov Visit