Consumer Publications List

Questionable Health Discount Cards

A Maryland woman who did not have health insurance saw an advertisement for a health discount card that promised savings of “up to 80 percent” on doctors’ visits and lab tests. She paid to enroll in the card program. However, she was not able to find any doctors who accepted the discount card. She soon realized it was a waste of money.

A man who had Medicare coverage bought what he thought was a supplemental insurance plan to cover any expenses that Medicare wouldn’t. He died suddenly. Afterward, his widow was sent an expensive bill for medical expenses he had incurred that Medicare wouldn't pay. It turned out that what he had purchased was not insurance, only a health discount card that was useless for this circumstance.

If you don’t have health insurance or you have inadequate health insurance, the “health discount cards” often advertised on television, by direct mail or telemarketers sound like a solution. The ads show a card which they say you can present at hundreds of healthcare providers and receive large savings on medical and dental bills, lab tests and prescriptions.

Before deciding to enroll in one of these discount card programs, be sure that you understand what it actually offers and how it works. While some discount cards may save money for some consumers, others are a waste of money. Some are misleading or fraudulent in their promises. Worse, some consumers mistake them for insurance coverage, which they are not.

How Health Discount Cards Work
A health discount card negotiates with certain healthcare providers and gets them to agree to charge reduced fees for their members. You join the discount program by paying a membership fee, often a monthly fee. In return you receive a membership card that you can present to healthcare providers that participate. The provider will charge you a discounted price, which you have to pay at the time of service.

Problems
Consumers who have signed up for health discount cards often complain about:

Difficulty in finding providers who accept the discount card. While many discount programs claim that their card is accepted by an extensive network of thousands of providers and hospitals, in reality many consumers have found it hard to find providers who will accept it. In some cases, providers who were included on a list given by the discount program to the consumer said that they had never heard of the card.

In addition, hospitals in Maryland do not accept discount cards. Under state law, hospitals cannot offer discounted rates to groups of consumers. All hospital rates are uniformly set by the Department of Health and Mental Hygiene’s Health Services Cost Review Commission.

The savings are not as much as was advertised. When they can find a provider who accepts the discount card, many consumers find the savings often aren’t near the “up to 60 percent!” or “up to 80 percent!” that was advertised. The provider may only discount the price by 10 or 20 percent, for example. The words “up to” in the advertisements can mislead consumers into thinking that the savings are typical, when they are not.

Mistakenly believing the card was an insurance plan. The advertisements may use words like “health coverage” and show a picture of a card that looks just like a health insurance card. They might warn that the card is not insurance–but only in tiny type at the bottom of the ad or on the reverse side of the mailing.

Difficulty in canceling. Some cards offer a period in which the consumer can cancel and get their money back. However, some consumers have complained that they had 30 days in which to cancel, but they didn’t get their membership materials and a list of participating providers in time to see if the card would really work for them. When they decided that the card was not right for them, it was past the refund period.

What you should do before signing up for any health discount card:

• Don’t be pressured into enrolling. Don’t sign up before you have requested and received materials about the card. Read all the materials to be sure you understand how it works.

• Verify what providers will actually accept the card. Ask your doctor, dentist and pharmacy if they accept the discount card and what discounts they would give. If they don’t accept the card, ask the discount card company for a list of providers in your area that do. Then call some of those providers to confirm that they actually do participate and what discounts they give.

Ask not just what the discount would be, but also what the cost of a doctor visit or dental check-up would be. Merely being told that you would receive “30 percent off” is not helpful if you don’t know what the full charge would be. You may find that the discounted charges of the participating providers exceed your current provider’s charges.

• Contact the Maryland Insurance Administration if you have questions or concerns regarding health discount cards. Telephone: toll-free 1-800-492-6116. You can also check with the Attorney General’s Health Education and Advocacy Unit to see if it has received complaints about a particular discount card: toll-free 1-877-261-8807.

October 2004

Maryland Attorney General's Consumer Protection Division Consumer hotline: (410) 528-8662 or 1 (888) 743-0023 toll-free