No. 29875 (Amendment): R590-152. Medical Discount Program Rule

DAR File No.: 29875
Filed: 04/27/2007, 08:50
Received by: NL

RULE ANALYSIS

Purpose of the rule or reason for the change:

This rule is being changed due to a code change resulting from the passage, in 2005, of H.B. 70. (DAR NOTE: H.B. 70 (2005) is found at Chapter 58, Laws of Utah 2005, and was effective 09/01/2005.)

Summary of the rule or change:

The changes to this rule set filing and licensing requirements for medical health discount programs and set prohibitions on using health insurance terms in marketing and product information. The changes also clarify to health insurers that value added benefits do not fall under this law and rule.

State statutory or constitutional authorization for this rule:

Section 31A-8a-210

Anticipated cost or savings to:

the state budget:

The changes to this rule will have a positive impact on the state budget. Due to the new licensing requirements, health discount programs will need to pay $302 for the initial license and $252 for their annual renewal. Currently, there are 50 health discount programs in Utah. This would bring $15,100 into the general fund for new licenses and $12,600 for renewal licenses. Discount programs will also be required to file their forms with the department at the time of licensure. There will be some additional work for department licensing and rate and form specialists but it will not require the hiring of additional employees. The licensing requirements and forms to be filed are very simple.

local governments:

The changes to this rule will not affect local governments since they only deal with the relationship between the department and their licensees.

other persons:

Discount programs will need to be licensed and pay an initial fee of $302 and an annual renewal fee of $252. Currently, there are 50 health discount programs in Utah. This would bring $15,100 into the general fund for new licenses and $12,600 for renewal licenses. All can be done electronically which should minimize time, effort, and expense. The requirement for these plans to be licensed will provide the department with regulatory control of these plans and those who sell them, providing a safeguard for consumers.

Compliance costs for affected persons:

Discount programs will need to be licensed and pay an initial fee of $302 and an annual renewal fee of $252. All can be done electronically which should minimize time, effort, and expense. The requirement for these plans to be licensed will provide the department with regulatory control of these plans and those who sell them, providing a safeguard for consumers.

Comments by the department head on the fiscal impact the rule may have on businesses:

Due to the new requirement to be licensed, medical health discount programs will be required to pay a licensing fee each year. D. Kent Michie, Commissioner

The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:

Insurance
Administration
Room 3110 STATE OFFICE BLDG
450 N MAIN ST
SALT LAKE CITY UT 84114-1201

Direct questions regarding this rule to:

Jilene Whitby at the above address, by phone at 801-538-3803, by FAX at 801-538-3829, or by Internet E-mail at [e-mail]

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

06/14/2007

Interested persons may attend a public hearing regarding this rule:

6/06/2007 at 10:00 AM, State Office Building, Room 3112, Salt Lake City, UT

This rule may become effective on:

06/21/2007

Authorized by:

Jilene Whitby, Information Specialist

RULE TEXT

R590. Insurance, Administration.

R590-152. [Medical]Health Discount [Programs]Programs and Value Added Benefit Rule.

R590-152-1. Authority.

This rule is promulgated by the commissioner under31A-8a-210 which authorizes the commissioner to enforce Chapter 8a and protect the public interest[and adopted pursuant to Subsection 31A-1-103(3)(d) and Section 31A-2-201].

 

R590-152-2. Purpose and Scope.

(1) The purpose of this rule is to describe initial and renewal license procedures, fees, and other authorized charges, required and prohibited practices, advertising and marketing activity, disclosure requirements, provider agreements, dispute resolution, and record keeping[exempt providers of certain medical discount programs from regulation under Chapter 8 of Title 31A and to define those so exempted].

(2) This rule applies to health discount programs, health discount program operators, health discount plan marketers, and a value added benefit provided by a person licensed under Title 31A, Chapters 7 or 8.

 

R590-152-3. Definitions.

For the purposes of this rule, the commissioner adopts the definitions in Sections 31A-1-301 and 31A-8a-102 and the following[ definition shall apply]:

(1) "Administration of the health discount plan" means the process used by the health discount program to solicit members, enroll members, maintain the membership, resolve disputes with members, disenroll members, and collect or refund fees and other authorized charges.

(2) "Authority to do business in this state" means to have other applicable licenses as required by statute and operating within the scope of such licenses.

(3) "Health discount program marketer" means a person or entity, including a private label entity, which places its name on and markets or distributes a health discount program but does not operate the marketed or distributed health discount program.

(4) "Private label entity" means an entity that purchases a health discount program from another entity and puts their own name or logo on the purchased health discount program.

(5) "Prominently" means not less than 14 point type or no smaller than the largest type on the page if larger than 12 point type.

[ Medical Discount Program. A program established or operated by a third person which arranges for participating medical professionals to provide medical goods or services at a discount to a subscriber.]

 

R590-152-4. General Information[Rule].

(1) The commissioner may examine, audit, or investigate the business and affairs of any health discount program or any person the commissioner believes may be operating or marketing a health discount program.

(2) If a health discount program or a health discount program operator or health discount plan marketer offer insurance benefits, then they must comply with statutes and rules pertaining to the solicitation, negotiation, and sale of insurance in Utah.[A. A medical discount program is a limited health plan as defined under 31A-8-101(6)(a) and must comply with the requirements of limited health plans unless otherwise exempted from regulation by this rule.

B. The commissioner, pursuant to 31A-1-103(3)(d), finds that medical discount programs that operate in accordance with all of the provisions of this rule, do not require regulation by the department for the protection of the interest of the residents of this state and that it would otherwise be impracticable to require compliance with the provisions of Title 31A.

C. An exempt medical discount program, pursuant to 31A-4-106 may not make any payments to providers for participation in the program or for the services performed, capitation payments, signing fees, bonuses, or other forms of compensation other than referral of the program subscribers to the provider.

D. An exempt medical discount program may provide discount or free services through its contracted providers to its subscribers in exchange for a periodic payment to the program or as a benefit in connection with membership in a particular group.

E. An exempt medical discount program must include the following disclosures in all contracts, booklets, advertising, and any presentations relating to the solicitation of the program:

(1) prominently state that the program is "Not Insurance" and that the program is a "Discount Program;"

(2) prominently state the following: "Note to Utah Residents: This contract is not protected by the Utah Life and Health Guaranty Association;" and

(3) prominently state that the program and the program administrators have no liability for providing or guaranteeing service and should state that they have no liability for the quality of service rendered.

F. A medical discount plan may not use in its title, name or description words usually associated with insurance, including "insurance," "premium," or "coverage," and may not refer to its sales representative as an "agent," "broker," "producer," or "consultant."]

 

R590-152-5. Licensing (Application, Initial, Renewal)[Department Opinion].

(1) The following must be licensed prior to offering a health discount program:

(a) a health discount program;

(b) a health discount program operator; or

(c) a health discount program marketer:

(i) if operating separately from the health discount program operator whose health discount program is being marketed by the health discount program marketer; or

(ii) if marketing health discount programs from more than one provider of health discount programs.

(2) The "Application for Health Discount Program Operator or Health Discount Program Marketer" must be completed and submitted with the appropriate fee.

(3) The commissioner may deny an application from a health discount program, a health discount program operator, or a health discount program marketer if the applicant would not be in compliance with Chapter 31A-8a because the applicant, in this or any other jurisdiction, for a matter dealing with a health discount program is:

(a) under investigation; or

(b) has been found in violation of a statute or regulation.[Any program may request an opinion from the department as to whether it complies with the provisions of this rule and would, therefore, be exempt from the requirements of Title 31A.]

 

R590-152-6. Fees and Other Authorized Charges.

(1) A health discount program may provide discounts or free services through contracted providers to subscribers in exchange for a periodic payment to the program or as a benefit in connection with membership in a particular group.

(2) A health discount program may charge:

(a) a non-refundable one-time enrollment charge; and

(b) a refundable periodic fee.

(3) A health discount program that charges fees for a time period in excess of one month must, in the event of cancellation of the membership by the health discount program or the health discount program operator, make a pro-rata refund of the periodic fees paid by the member.

 

R590-152-7. Required Practices.

(1) A health discount program must have an active toll-free telephone number for members to call.

(2) Face to face, paper, telephone, and electronic communications with clients or potential clients must state that the health discount program is a discount plan and not insurance.

(3) When a health discount program marketer or a health discount program sells a health discount program together with any other product that can be sold separately, including insured benefits, an itemized list of the fees or premiums for each individual product must be provided in writing to the client at solicitation.

(4) Information available to a health discount program member via a health discount program web page must be updated within 15 days of any change in the information.

 

R590-152-8. Value Added Benefit.

(1) Any value added benefit must actually exist and a copy of the contract verifying such existence must be available upon request to the commissioner.

(2) Prior to any offering of a value added benefit, a person licensed under Title 31A shall file with the commissioner a value added benefits list that includes the following:

(a) the insurer's name and address;

(b) the insurer's policy form number(s); and

(c) a description of the benefits offered.

 

R590-152-9. Prohibited practices.

(1) A health discount program may not make any payments to providers for:

(a) participation in the health discount program;

(b) capitation payments;

(c) signing fees;

(d) bonuses; or

(e) other forms of compensation.

(2) A health discount program may not offer any insurance benefits unless licensed as an insurance producer and contracted and appointed by the insurer providing the insurance benefits.

 

R590-152-10. Advertising and Marketing.

(1) The format and content of any advertisement shall be sufficiently complete and clear as to avoid deceiving or misleading the reader, viewer, or listener.

(2) An advertisement of any insured product or benefit must comply with applicable provisions of Subsections 31A-23a-102 (12) and (13) and Rule R590-130, Rules Governing Advertisements of Insurance.

(3) A health discount program must approve in writing all advertisements, marketing materials, brochures, and discount cards used by a health discount program marketer marketing the health discount program.

(4) All advertisements, marketing materials, brochures, and discount cards used by a health discount program marketer marketing the health discount program must be available to the commissioner upon his request.

(5) The health discount program must have an executed written agreement with a health discount program marketer prior to the health discount plan marketer marketing, promoting, selling, or distributing the health discount program.

 

R590-152-11. Disclosures.

(1) A health discount program operator must provide the disclosures required by Section 31A-8a-205.

(2) The membership card shall prominently state: "This is not health insurance."

(3) Disclosure materials provided to a purchaser or potential purchaser must include:

(a) membership materials;

(b) new enrollee information;

(c) a list of providers that have agreed by written contract with the health discount program to accept the program;

(d) a statement that "A health discount program member is responsible for the entire payment of their medical or health care bill after the discount is applied."; and

(e) the complete terms and conditions of any refund policy.

(4) A health discount program operator or marketer must:

(a) provide a purchaser a 30-day money back guarantee, which allows the purchaser to terminate the contract and receive a full refund of any periodic fee paid; and

(b) the 30-day period must commence when the purchaser receives the membership materials.

 

R590-152-12. Contracts.

(1) A provider agreement between a health discount program and a provider network shall require:

(a) the provider network to have a written agreement with each provider in the network authorizing the provider network to contract with a health discount program on behalf of the provider; and

(b) the health discount program operator to inform each provider within the contracted provider network with information about the health discount program.

(2) A provider agreement between a health discount program and another health discount program that has contracted with a provider network shall require the contract with the provider network to comply with Subsection (1).

 

R590-152-13. Dispute Resolution Procedures.

A health discount program must:

(1) file its dispute resolution procedures with the commissioner pursuant to Section 31A-8a-203; and

(2) comply with its filed dispute resolution procedures.

 

R590-152-14. Penalties.

A person found, after a hearing or other regulatory process, to be in violation of this rule shall be subject to penalties as provided under Section 31A-2-308.

 

R590-152-[6]15. Enforcement Date.

The commissioner will begin enforcing the revised provisions of this rule 45 days from the rule's effective date.

 

R590-152-[7]16. Severability.

If any provision of this rule or the application thereof to any person or circumstance is for any reason held to be invalid, the remainder of the rule and the application of such provision to other persons or circumstances shall not be affected thereby.

 

KEY: insurance, medical discount plans

Date of Enactment or Last Substantive Amendment: [July 16, 2003]2007

Notice of Continuation: November 27, 2002

Authorizing, and Implemented or Interpreted Law: 31A-1-103; 31A-2-201