Cards promise discounts, deliver headaches

Consumers are buying cards for discounts on physician services. Doctors could be forced to accept them, ready or not.

By Tyler Chin, amednews staff. May 19, 2003.

With increasing numbers of uninsured patients, the market has become ripe for the return of the health discount card, which offers -- for a price -- cheaper care for consumers who go to a participating physician. The problem is, physicians often don't know they're participating until a patient presents the card.

What's happening is not illegal, but it is troubling for many physicians. Doctors don't sign contracts directly with discount card firms. Instead, some PPOs have agreements with card companies or their agents that allow them to put network physicians onto the discount list. Then the PPOs include a line in the doctors' contract requiring them to accept those cards.

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Patients are told that they are getting a "discount," but what they pay physicians is either the contracted PPO rate or a rate the card companies or their agents have negotiated with the PPO. It is not known how many preferred provider organizations are participating.

Doctors aren't necessarily against the concept of discounts but would prefer that patients work out a payment plan with the practice rather than buying a card. But more important, doctors want PPOs to ask explicitly for their consent to participate in the card programs and tell them what they are accepting.

"It's kind of underhanded not to give us this information upfront and have [the cards] come as a big surprise," said Julie McCuistion, business office manager of 10-doctor Pediatric Associates of Dallas.

A growing market

A number of companies have begun offering health cards directly to uninsured consumers as well as to employers. Even some health care organizations, such as Baptist St. Anthony's Health System in Amarillo, Texas, offer the cards.

The cards are not a health insurance plan. They generally work like this: For $26.95 to $89.95 a month, cardholders and their families are promised savings of 10% to 80%, but only if they pay cash at the time of service. After a physician treats a card-holding patient, the practice must call or fax a form to the card company, then wait to find out how much the patient will pay.

Discount card membership runs from $26.95 to $89.95 a month.

Card companies claim they have hundreds of thousands of physicians participating in their programs.

But several, including family physician David O. Barbe, MD, don't know they're participating.

Dr. Barbe was surprised to learn from American Medical News that he was listed as a participant in Dr. Discount. Its Web site said he was one of more than 600,000 physicians offering discounts of up to 50% to members of the Internet-based company's health discount card club.

"It's a little bit of a mystery to me right now as to how I and some other doctors in my group got on that list," Dr. Barbe said. He said his 400-physician multispecialty group, St. John's Clinic in Springfield, Mo., doesn't directly contract with Dr. Discount and generally wouldn't contract with any card companies.

Dr. Discount doesn't recruit doctors but signed a deal with New Health Care Management, Atlanta, which in turn assembled the network of participating physicians, said Steve Mix, president and co-founder of Dr. Discount.

New Health Care Management, which describes itself as a consumer advocacy organization, said it wasn't surprised that doctors hadn't heard of Dr. Discount. John Byars, president of New Health Care, said most doctors also don't realize, for example, that they got some Blue Cross Blue Shield patients through an arrangement with some of the same networks New Health Care has relationships with.

Often doctors can't get out of accepting discount cards unless they terminate PPO contracts.

"We're either directly or indirectly contracted with every single physician listed on our site," Byars said. "Even if they haven't heard of Dr. Discount, I guarantee that in the contracts they have, there is some kind of third- or fourth-party relationship. They may have contracted with Beech Street [PPO] five years ago, and the network I have a relationship with has a relationship with Beech Street. It's perfectly legal."

Other physician groups first learned about the cards when patients started walking in with them.

"We had no clue about what they were," said Deborah Mason, billing manager of the 23-doctor Lodi (Calif.) Primary Care Medical Associates, which began seeing the cards in 2001. The practice initially declined but was forced to temporarily accept cards bearing the Private Healthcare Systems logo after it learned that its PPO contract required it to, Mason said. The group later had that requirement removed. Immediately afterward, the practice posted signs informing patients that it did not accept any discount cards.

Pediatric Associates of Dallas also rejected the cards when it first encountered them last year. But it was forced to accept some cards after Integrated Medical Systems and NPPN/Plan Vista Solution told the 10-doctor group that it was part of its contract, McCuistion said.

To drop out of the discount card programs, the group would have to terminate its PPO contracts. The group hasn't taken that step because not many patients are using the cards, McCuistion said.

Back door

Although some physicians may be forced by PPO contracts to participate in discount card programs, there may still be an out.

"If there are some physicians who didn't know what they signed for, they can opt out," said Robert Fahlman, vice president of carrier relations at eHealthInsurance Services, which launched a health discount card line in October 2002. "We don't want physicians in the program who don't want to be in the program."

Some PPOs and other networks, including Galaxy Healthcare and New Health Care, said physicians are allowed to opt out of card programs at any time. Long Beach, Calif.-based ppoNEXT Inc. did not respond to requests for comment. MultiPlan Inc., New York, declined to comment.

Some consumer groups are wary of discount card companies, saying some card firms have misled and defrauded consumers in the past. People without health insurance also could get better deals by working out an arrangement with doctors rather than paying hundreds of dollars in annual membership fees on top of whatever they would have to pay for medical services, consumer groups say.

But card companies respond that they offer a valuable service to consumers who aren't comfortable asking doctors for discounts. By signing up with them, consumers get pre-negotiated rates and someone who will approach nonparticipating physicians at the request of individual members for discounts, they say.

ADDITIONAL INFORMATION:

Are you a discounter?

If you do not want to accept health discount cards:

Carefully review your PPO contracts to determine if you are contractually bound to participate in the programs. If so, check for clauses that allow you to opt out.
Direct the PPOs and the card companies to remove your name from participating physician databases and Web sites.
Post signs in your office and on your practice's Web site informing patients about your policy.
If a card-bearing patient is in the office and you don't have time to sort it out, consider offering a one-time discount -- set by you -- as a gesture of goodwill, provided the patient pays in cash.
If patients are uninsured or have hit rough times, consider telling them you're amenable to working something out, on a case-by-case basis.

Source: Lodi (Calif.) Primary Care Medical Associates; Pediatric Associates of Dallas