No. 29875: R590-152. Health Discount Programs and Value Added Benefit Rule

DAR File No.: 29875
Filed: 07/23/2007, 04:02
Received by: NL

RULE ANALYSIS

Purpose of the rule or reason for the change:

Additional changes are being made to this rule to adopt suggested changes made during the comment period and hearing.

Summary of the rule or change:

Some of the changes have been made to fix grammatical and punctuation problems and to clarify statements made in the rule. Much of the clarification deals with distinguishing the health discount program marketer and operator and distinguishing between a health discount plan and program. Subsection R590-152-5(2) lists those that do not need to be licensed as a health discount program operator to notify the commissioner each time a health discount program marketer and private label entity changes. Subsection R590-152-5(6) requires the annual license renewal of the health discount program operator and health discount program marketer's license. Section R590-152-6 clarifies that the requirements of this section deal with the health discount program operator. Subsection R590-152-7(4) requires health discount program operator websites be updated at the end of each month. Changes to Section R590-152-8 clarify that those licensed under Chapters 7 and 8 of Title 31A may provide value-added benefits if they follow the requirements in Subsection R590-152-8(2)(a), including the requirement to comply with Sections R590-152-10 and R590-152-11 of this rule. Subsection R590-152-11(3)(c), under disclosure material, allows the health discount program operator to give the new member a list of providers in the form of a hard copy or access to their webpage. (DAR NOTE: This change in proposed rule has been filed to make additional changes to a proposed amendment that was published in the May 15, 2007, issue of the Utah State Bulletin, on page 74. Underlining in the rule below indicates text that has been added since the publication of the proposed rule mentioned above; strike-out indicates text that has been deleted. You must view the change in proposed rule and the proposed amendment together to understand all of the changes that will be enforceable should the agency make this rule effective.)

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 not require the department to change its staff nor will there be a change in revenues. No additional filings will need to be made to the department.

local governments:

This rule deals with the relationship between the department and its licensees and will not affect local government.

small businesses and persons other than businesses:

This rule will require health discount program operators to report changes in their marketers and private label entities. This is an electronic process that would not be done often and would not take much time. Also, allowing the health discount program operator to give the new member a website to go to in order to view their list of providers would save the operator some money in printing and postage. This savings would vary depending on the size of the provider list and the number of new members.

Compliance costs for affected persons:

This rule will require health discount program operators to report changes in their marketers and private label entities. This is an electronic process that would not be done often and would not take much time. Also, allowing the health discount program operator to give the new member a website to go to in order to view their list of providers would save the operator some money in printing and postage. This savings would vary depending on the size of the provider list and the number of new members.

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

There could be a savings as a result of these new changes and if not, a very small increase in costs, which will vary from operator to operator. 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:

09/14/2007

This rule may become effective on:

09/21/2007

Authorized by:

Jilene Whitby, Information Specialist

RULE TEXT

R590. Insurance, Administration.

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

R590-152-1. Authority.

This rule is promulgated by the commissioner under 31A-8a-210, which authorizes the commissioner to enforce Chapter 8a and protect the public interest.

 

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.

(2) This rule applies to health discount programs, health discount program operators, and health discount plan marketers.[,]

(3) This rule applies to[ 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:

(1) "Administration of the health discount [plan]program" means the processes [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]having 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]that 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]a health discount program operator and issues or markets the obtained health discount program under the private label entity's 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.

 

R590-152-4. General Information.

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

(2) [If a]A health discount program, [or ]a health discount program operator, or a health discount [plan]program marketer that offers an insurance benefit[s, then they] as part of a health discount program or in addition to a health discount program must comply with statutes and rules pertaining to the solicitation, negotiation, and sale of insurance in Utah.

 

R590-152-5. Licensing (Application, Initial, Renewal).

(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)](b) 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] that markets health discount programs from more than one [provider of health discount programs]health discount program operator.

(2) The following do not require a license as a health discount program operator or health discount program marketer:

(a) a licensee licensed under Chapters 7 or 8 if only offering a value added benefit;

(b) a health discount program marketer or private label entity issuing or selling one of more health discount programs obtained from a single health discount program operator.

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

[(3)](4) 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.

(5) A licensed health discount program operator must notify the commissioner each time a health discount program marketer or private label entity is added or deleted during the annual licensure period.

(6) Annual licensure period.

(a) A license issued under this section is for one annual period which expires each December 31st.

(b) A licensee desiring to continue to do business in this state must renew its license prior to December 31st each year by submitting an Application for Health Discount Program Operator or Health Discount Program Marketer and paying the required fee.

 

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

(1) A health discount program operator 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 operator may charge:

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

(b) a refundable periodic fee.

(3) A health discount program operator 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 operator 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]operator or a health discount program marketer 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 operator's web page must be [updated within 15 days of any change in the information]current at the end of each month.

 

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, Chapter 7 or 8, shall:

(a) file with the commissioner a value added benefits list that includes the following:

[(a)](i) the insurer's name and address;

[(b)](ii) the insurer's policy form number(s) to which the value added benefit applies; and

[(c)](iii) a description of the benefits offered.

(b) comply with Sections R590-152-10 and 11, if providing a member discount card.

 

R590-152-9. Prohibited practices.

(1) A health discount program operator 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 operator 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 operator must approve in writing all advertisements, marketing materials, brochures, and discount cards used by a health discount program marketer marketing [the]a health discount program operator's health discount program.

(4) All advertisements, marketing materials, brochures, and discount cards used by a health discount program operator and the health discount program operator's health discount program marketer and by a health discount program marketer marketing [the]more than one health discount plan operator's health discount program must be available to the commissioner upon [his ]request.

(5) The health discount program operator 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]a 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 printed list of providers, or access to the health discount program operator's web page, 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 health discount program 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 operator 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 operator and another health discount program operator 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 operator 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.

 

R590-152-15. Enforcement Date.

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

 

R590-152-16. 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: 2007

Notice of Continuation: November 27, 2002

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