PRINTER'S NO.  3894

  

THE GENERAL ASSEMBLY OF PENNSYLVANIA

  

HOUSE BILL

 

No.

2573

Session of

2010

  

  

INTRODUCED BY BARBIN, DeLUCA, KORTZ, MURPHY, MATZIE, PASHINSKI, SIPTROTH, STABACK, HANNA, BURNS, KOTIK, CARROLL, BELFANTI, BRADFORD AND SOLOBAY, JUNE 10, 2010

  

  

REFERRED TO COMMITTEE ON INSURANCE, JUNE 10, 2010  

  

  

  

AN ACT

  

1

Providing for registration of discount plan organizations; and

2

imposing penalties.

3

The General Assembly of the Commonwealth of Pennsylvania

4

hereby enacts as follows:

5

Table of Contents

6

Section 1.  Short title.

7

Section 2.  Purpose.

8

Section 3.  Definitions.

9

Section 4.  Scope and applicability.

10

Section 5.  Registration requirements.

11

Section 6.  Minimum capital requirements.

12

Section 7.  Surety bond or deposit requirements.

13

Section 8.  Examinations and investigations.

14

Section 9.  Charges and fees, refund requirements and bundling

15

of services.

16

Section 10.  Charge and form filing requirements.

17

Section 11.  Provider agreements and provider listing

 


1

requirements.

2

Section 12.  Marketing requirements.

3

Section 13.  Marketing restrictions and disclosure requirements.

4

Section 14.  Notice of change in name or address.

5

Section 15.  Annual reports.

6

Section 16.  Compliance officer.

7

Section 17.  Penalties.

8

Section 18.  Injunctions.

9

Section 19.  Regulations.

10

Section 20.  Applicability.

11

Section 21.  Effective date.

12

Section 1.  Short title.

13

This act shall be known and may be cited as the Discount Plan

14

Organization Act.

15

Section 2.  Purpose.

16

The purpose of this act is to promote the public interest by

17

establishing standards for discount medical plan and discount

18

prescription drug plan organizations to protect consumers from

19

unfair or deceptive marketing, sales or enrollment practices and

20

to facilitate consumer understanding of the role and function of

21

discount medical plan organizations in providing access to

22

medical or ancillary services and the role and function of

23

discount prescription drug plan organizations in providing

24

access to pharmacy services.

25

Section 3.  Definitions.

26

The following words and phrases when used in this act shall

27

have the meanings given to them in this section unless the

28

context clearly indicates otherwise:

29

"Affiliate."  A person that directly or indirectly, through

30

one or more intermediaries, controls, is controlled by or is

- 2 -

 


1

under common control with the person specified.

2

"Ancillary services."  Services that include, but are not

3

limited to, audiology, dental, vision, mental health, substance

4

abuse, chiropractic and podiatry services. The term does not

5

include pharmacy services.

6

"Applicant."  A person or entity applying to do business in

7

this State as a discount plan organization.

8

"Commissioner."  The Insurance Commissioner of the

9

Commonwealth.

10

"Control," "controlled by" or "under common control with."

11

The terms shall have the meanings given in section 1401 of the

12

act of May 17, 1921 (P.L.682, No.284), known as The Insurance

13

Company Law of 1921.

14

"Department."  The Insurance Department of the Commonwealth.

15

"Discount medical plan."  A business arrangement or contract

16

in which a person, in exchange for fees, dues, charges or other

17

consideration, offers or purports to offer access for plan

18

members to providers of medical or ancillary services and the

19

right to receive discounts on medical or ancillary services from

20

those providers. The term does not include:

21

(1)  a plan that does not charge a membership or other

22

fee to use the plan's discount medical card; or

23

(2)  any product otherwise regulated under the laws of

24

this Commonwealth regulating health insurers.

25

"Discount medical plan organization."  An entity that, in

26

exchange for fees, dues, charges or other consideration, offers

27

or purports to offer a discount medical plan to plan members and

28

that contracts with a provider, a provider network or another

29

discount medical plan organization to offer the discount medical

30

plan and determines the charge to plan members.

- 3 -

 


1

"Discount plan."  A discount medical plan or a discount

2

prescription drug plan.

3

"Discount plan organization."  A discount medical plan

4

organization or a discount prescription drug plan organization.

5

"Discount prescription drug plan."  A business arrangement or

6

contract in which a person, in exchange for fees, dues, charges

7

or other consideration, offers or purports to offer access for

8

plan members to providers of pharmacy services and the right to

9

receive discounts on pharmacy services from those providers. 

10

The term does not include:

11

(1)  a plan that does not charge a membership or other

12

fee to use the plan's discount prescription drug card;

13

(2)  a patient access program; or

14

(3)  a Medicare prescription drug plan or the PACE and

15

PACENET program established under Chapters 5 and 7 of the act

16

of August 26, 1971 (P.L.351, No.91), known as the State

17

Lottery Law.

18

"Discount prescription drug plan organization."  An entity

19

that, in exchange for fees, dues, charges or other

20

consideration, offers or purports to offer access for plan

21

members to providers of pharmacy services and the right to

22

receive pharmacy services from those providers at a discount and

23

that contracts with a provider, a pharmacy network or another

24

discount prescription drug plan organization to offer the

25

discount prescription drug plan and determines the charge to

26

plan members.

27

"Facility."  An institution providing medical or ancillary

28

services in a health care setting. The term includes, but is not

29

limited to:

30

(1)  a hospital or other licensed inpatient center;

- 4 -

 


1

(2)  an ambulatory surgical or treatment center;

2

(3)  a skilled nursing center;

3

(4)  a residential treatment center;

4

(5)  a rehabilitation center; and

5

(6)  a diagnostic, laboratory or imaging center.

6

"Health care professional."  A physician, pharmacist or other

7

health care practitioner who is licensed, accredited or

8

certified to perform specified medical or ancillary services or

9

pharmacy services within the scope of his or her license,

10

accreditation, certification or other appropriate authority and

11

consistent with State law.

12

"Health insurer."  A company or health insurance entity

13

licensed in this Commonwealth to issue an individual or group

14

health, sickness or accident policy or subscriber contract or

15

certificate or plan that provides medical or health care

16

coverage by a health care facility or licensed health care

17

provider that is offered or governed under any of the following:

18

(1)   The act of May 17, 1921, (P.L.682, No.284), known

19

as The Insurance Company Law of 1921.

20

(2)  The act of December 29, 1972 (P.L.1701, No.364),

21

known as the Health Maintenance Organization Act.

22

(3)  The act of May 18, 1976 (P.L.123, No.54), known as

23

the Individual Accident and Sickness Insurance Minimum

24

Standards Act.

25

(4)  40 Pa.C.S. Ch. 61 (relating to hospital plan

26

corporations) or Ch. 63 (relating to professional health

27

services plan corporations).

28

"Marketer."  A person or entity that markets, promotes, sells

29

or distributes a discount plan, including a private label entity

30

that places its name on and markets or distributes a discount

- 5 -

 


1

plan pursuant to a marketing agreement with a discount plan

2

organization.

3

"Medical services."  Maintenance care of or preventive care

4

for the human body or care, service or treatment of an illness

5

or dysfunction of or injury to the human body. The term

6

includes, but is not limited to, physician care, inpatient care,

7

hospital surgical services, emergency services, ambulance

8

services, laboratory services and medical equipment and

9

supplies. The term does not include pharmacy services or

10

ancillary services.

11

"Medicare prescription drug plan."  A plan that provides a

12

Medicare Part D prescription drug benefit in accordance with the

13

requirements of the Medicare Prescription Drug, Improvement, and

14

Modernization Act of 2003 (Public Law 108-172, 117 Stat. 2066)

15

and the Medicare Improvements for Patients and Providers Act of

16

2008 (Public Law 110-275, 122 Stat. 2494).

17

"Member."  An individual who pays fees, dues, charges or

18

other consideration in exchange for the right to receive the

19

benefits of a discount plan. The term does not include any

20

individual who enrolls in a patient access program.

21

"Patient access program."  A voluntary program sponsored by a

22

pharmaceutical manufacturer, or a consortium of pharmaceutical

23

manufacturers, that provides free or discounted health care

24

products directly to low-income or uninsured individuals either

25

through a discount card or direct shipment.

26

"Person."  An individual, a corporation, a partnership, an

27

association, a joint venture, a joint stock company, a trust, an

28

unincorporated organization, any similar entity or any

29

combination of the foregoing.

30

"Pharmacy services."  Pharmaceutical supplies and

- 6 -

 


1

prescription drugs.

2

"Provider."  A health care professional or facility that has

3

contracted, directly or indirectly, with a discount medical plan

4

organization to provide medical or ancillary services to members

5

or with a discount prescription drug plan organization to

6

provide pharmacy services to members.

7

"Provider network."  An entity that negotiates directly or

8

indirectly with a discount medical plan organization on behalf

9

of more than one provider to provide medical or ancillary

10

services to members or with a discount prescription drug plan

11

organization on behalf of more than one provider to provide

12

pharmacy services to members.

13

Section 4.  Scope and applicability.

14

(a)  Scope.--This act applies to all discount plan

15

organizations doing business in this Commonwealth.

16

(b)  Applicability.--A discount plan organization that is a

17

health insurer:

18

(1)  is not required to obtain a certificate of

19

registration under section 5, except that it or any of its

20

subsidiaries or affiliates that operate as a discount plan

21

organization in this State shall obtain a certificate of

22

registration under section 5 and comply with all other

23

provisions of this act; but

24

(2)  is required to comply with sections 9, 10, 11, 12

25

and 13 and report, in the form and manner the department may

26

require, any of the information described in section 15(b)

27

(2), (3) or (4) that is not otherwise already reported.

28

Section 5.  Registration requirements.

29

(a)  General rule.--Before doing business in this

30

Commonwealth as a discount plan organization, a person shall:

- 7 -

 


1

(1)  be authorized to transact business in this

2

Commonwealth under this act; and

3

(2)  obtain a certificate of registration from the

4

department to operate as a discount plan organization.

5

(b)  Application.--An application or renewal application for

6

a certificate of registration to operate as a discount plan

7

organization shall:

8

(1)  be in a form prescribed by the department and

9

published in the Pennsylvania Bulletin;

10

(2)  be verified by an officer or authorized

11

representative of the applicant;

12

(3)  be accompanied by a fee in an amount equal to that

13

required for a license or annual renewal for a manager or

14

exclusive general agent for a domestic insurance company, as

15

specified in section 612-A(4) of the act of April 9, 1929

16

(P.L.177, No.175), known as The Administrative Code of 1929;

17

(4)  include information on whether:

18

(i)  a previous application for a certificate of

19

registration or licensure has been denied, revoked,

20

suspended or terminated for cause;

21

(ii)  the applicant is under investigation for or the

22

subject of any pending action or has been found in

23

violation of any statute or regulation in any

24

jurisdiction within the previous five years;

25

(iii)  the applicant has established an Internet

26

website to conform to the requirements of section 11(b);

27

and

28

(5)  include information, as the department may require,

29

that permits the department, after reviewing all of the

30

information submitted pursuant to this subsection, to make a

- 8 -

 


1

determination that the applicant:

2

(i)  is financially responsible;

3

(ii)  has adequate expertise or experience to operate

4

a discount plan organization; and

5

(iii)  is of good character.

6

(c)  Review of application.--After the receipt of an

7

application filed under subsection (b), the department shall

8

review the application and notify the applicant of any

9

deficiencies in the application.

10

(d)  Decision on application.--Within 90 days after the date

11

of receipt of a completed application, the department shall:

12

(1)  issue a certificate of registration if the

13

department is satisfied that the applicant:

14

(i)  met the requirements of subsection (b); and

15

(ii)  has the required minimum capital in accordance

16

with section 6; or

17

(2)  disapprove the application and state the grounds for

18

disapproval.

19

(e)  Internet website.--Prior to issuance of a certificate of

20

registration by the department, a discount plan organization

21

shall establish an Internet website in order to conform to the

22

requirements of section 11(b).

23

(f)  Certificate of registration.--

24

(1)  A certificate of registration is effective for one

25

year, unless, prior to its expiration, it is renewed in

26

accordance with this subsection or suspended or revoked in

27

accordance with subsection (g).

28

(2)  At least 90 days before a certificate of

29

registration expires, a discount plan organization shall

30

submit:

- 9 -

 


1

(i)  renewal application form; and

2

(ii)  the renewal fee.

3

(3)  The department shall renew the certificate of

4

registration of each holder that meets the requirements of

5

this act and pays the appropriate renewal fee required by

6

this act.

7

(g)  Suspension, nonrenewal and revocation.--

8

(1)  The commissioner may suspend the authority of a

9

discount plan organization to enroll new members or refuse to

10

renew or revoke a discount plan organization's certificate of

11

registration if the commissioner finds that any of the

12

following conditions exist:

13

(i)  the discount plan organization is not operating

14

in compliance with this act;

15

(ii)  the discount plan organization does not have

16

the minimum net worth as required under section 6;

17

(iii)  the discount plan organization has advertised,

18

merchandised or attempted to merchandise its services in

19

such a manner as to misrepresent its services or capacity

20

for service or has engaged in deceptive, misleading or

21

unfair practices with respect to advertising or

22

merchandising; or

23

(iv)  the continued operation of the discount plan

24

organization would be hazardous to its members.

25

(2)  If the department has cause to believe that grounds

26

for the nonrenewal, suspension or revocation of a certificate

27

of registration exists, the department shall notify the

28

discount plan organization in writing, specifically stating

29

the grounds for the refusal to renew or suspension or

30

revocation and informing the discount plan organization that

- 10 -

 


1

it may pursue a hearing on the matter in accordance with the

2

provisions of 2 Pa.C.S. Ch. 5 Subch. A (relating to practice

3

and procedure of Commonwealth agencies).

4

(3)  When the certificate of registration of a discount

5

plan organization is suspended, revoked or not renewed, the

6

discount plan organization shall proceed, immediately

7

following the effective date of the order of revocation or,

8

in the case of a nonrenewal, the date of expiration of the

9

certificate of registration, to wind up its affairs

10

transacted under the certificate of registration. The

11

discount plan organization shall not engage in any further

12

advertising, solicitation, collecting of fees or renewal of

13

contracts.

14

(4)  (i)  The commissioner shall, in his order suspending

15

the authority of the discount plan organization to enroll

16

new members, specify the period during which the

17

suspension is to be in effect and the conditions, if any,

18

that must be met by the discount plan organization prior

19

to reinstatement of its certificate of registration to

20

enroll members.

21

(ii)  The commissioner may rescind or modify the

22

order of suspension prior to the expiration of the

23

suspension period.

24

(iii)  The certificate of registration of a discount

25

plan organization shall not be reinstated unless

26

requested by the discount plan organization. The

27

commissioner shall not grant the request for

28

reinstatement if the commissioner finds that the

29

circumstances for which the suspension occurred still

30

exist or are likely to recur.

- 11 -

 


1

(h)  Penalty.--In lieu of suspending or revoking a discount

2

plan organization's certificate of registration under subsection

3

(g), whenever the discount plan organization has been found to

4

have violated any provision of this act, the commissioner may:

5

(1)  issue and cause to be served upon the organization

6

charged with the violation a copy of the findings and an

7

order requiring the organization to cease and desist from

8

engaging in the act or practice that constitutes the

9

violation; and

10

(2)  impose a monetary penalty of not more than $5,000

11

for each violation.

12

(i)  Notice of action in other jurisdiction.--A discount plan

13

organization shall notify the department within ten days

14

whenever the discount plan organization's certificate of

15

registration, or other form of authority, to operate as a

16

discount plan organization in another jurisdiction is suspended,

17

revoked or nonrenewed in that jurisdiction.

18

(j)  Exemption.--A provider who provides discounts to his or

19

her own patients without any cost or fee of any kind to the

20

patient for medical services or ancillary services the provider

21

directly provides is not required to obtain and maintain a

22

certificate of registration under this act as a discount medical

23

plan organization.

24

Section 6.  Minimum capital requirements.

25

(a)  Minimum capital requirement for applicant.--Before the

26

department issues a certificate of registration to any person

27

required to obtain a certificate of registration under section

28

5, the person seeking to operate a discount plan organization

29

shall have a net worth of at least $150,000.

30

(b)  Minimum capital requirement for registrant.--A discount

- 12 -

 


1

plan organization shall at all times maintain a net worth of at

2

least $150,000.

3

(c)  Adjustment.--At the commissioner's discretion, the

4

amounts in subsections (a) and (b) may be adjusted annually for

5

inflation.

6

Section 7.  Surety bond or deposit requirements.

7

(a)  Surety bond.--A registered discount plan organization

8

shall maintain in force a surety bond in its own name in an

9

amount not less than $35,000 to be used in the discretion of the

10

commissioner to protect the financial interest of members. The

11

bond shall be issued by an insurance company licensed to do

12

business in this Commonwealth.

13

(b)  Deposit.--In lieu of the bond specified in subsection

14

(a), a registered discount plan organization may deposit and

15

maintain deposited with the department, or at the discretion of

16

the commissioner, with any organization or trustee acceptable to

17

the commissioner through which a custodial or controlled account

18

is utilized, cash, securities or any combination of these or

19

other measures that are acceptable to the commissioner with at

20

all times having a market value of not less than $35,000.

21

(c)  Income on deposit.--All income from a deposit made under

22

subsection (b) shall be an asset of the discount plan

23

organization.

24

(d)  Exemption from levy.--Except for the commissioner, the

25

assets or securities held in this Commonwealth as a deposit

26

under subsection (a) or (b) shall not be subject to levy by a

27

judgment creditor or other claimant of the discount plan

28

organization.

29

(e)  Regulation.--The bond and deposit requirements shall

30

remain in effect unless modified by the department by

- 13 -

 


1

regulation.

2

Section 8.  Examinations and investigations.

3

(a)  General rule.--The department and any of its examiners

4

may examine or investigate the business and affairs of any

5

discount plan organization to protect the interests of the

6

residents of this State based on the following reasons,

7

including, but not limited to, complaint indices, recent

8

complaints, information from other states or as the commissioner

9

deems necessary.

10

(b)  Conduct of examinations.--An examination or

11

investigation conducted as provided in subsection (a) shall be

12

performed in accordance with the provisions of Article IX of the

13

act of May 17, 1921 (P.L.789, No.285), known as The Insurance

14

Department Act of 1921.

15

(c)  Discovery.--The department or any of its examiners may:

16

(1)  order any discount plan organization or applicant

17

that operates or any applicant that anticipates operating a

18

discount plan organization to produce any records, books,

19

files, advertising and solicitation materials or other

20

information; and

21

(2)  take statements under oath to determine whether the

22

discount plan organization or applicant is in violation of

23

the law or is acting contrary to the public interest.

24

(d)  Expenses.--A discount plan organization or applicant

25

that is the subject of the examination or investigation shall

26

pay the expenses incurred in conducting the examination or

27

investigation. Failure by the discount plan organization or

28

applicant to pay the expenses is grounds for denial of a

29

certificate of registration to operate as a discount plan

30

organization or revocation of a certificate of registration to

- 14 -

 


1

operate as a discount plan organization.

2

Section 9.  Charges and fees, refund requirements and bundling

3

of services.

4

(a)  Charges and fees.--A discount plan organization may

5

charge a periodic charge as well as a reasonable one-time

6

processing fee for a discount plan.

7

(b)  Refund requirements.--

8

(1)  (i)  If a member cancels his or her membership in a

9

discount plan organization within the first 30 days after

10

the date of receipt of the written document for the

11

discount plan described in section 13(d), the member

12

shall receive a reimbursement of all periodic charges and

13

the amount of any one-time processing fee that exceeds

14

$30 upon return of the discount plan card to the discount

15

plan organization.

16

(ii)  Cancellation occurs when notice of cancellation

17

is given to the discount plan organization. Notice of

18

cancellation is deemed given when delivered by hand or

19

deposited in a mailbox, properly addressed and postage

20

prepaid to the mailing address of the discount plan

21

organization or e-mailed to the e-mail address of the

22

discount plan organization.

23

(iii)  A discount plan organization shall return any

24

periodic charge charged or collected after the member has

25

returned the discount plan card or given the discount

26

plan organization notice of cancellation.

27

(2)  If the discount plan organization cancels a

28

membership for any reason other than nonpayment of charges by

29

the member, the discount plan organization shall make a pro

30

rata reimbursement of all periodic charges to the member.

- 15 -

 


1

(c)  Bundling of services.--When a marketer or discount plan

2

organization sells a discount plan in conjunction with any other

3

products, the marketer or discount plan organization shall:

4

(1)  provide the charges for each discount plan in

5

writing to the member; or

6

(2)  reimburse the member for all periodic charges for

7

the discount plan and all periodic charges for any other

8

product if the member cancels his or her membership in

9

accordance with subsection (b)(1).

10

(d)  Exemption.--Any discount plan organization that is a

11

health insurer that provides a discount plan product that is

12

incidental to an insurance product offered by the health insurer

13

is not subject to this section.

14

Section 10.  Charge and form filing requirements.

15

(a)  List of fees and charges.--A discount plan organization

16

shall file with the department a list of all prospective member

17

fees and charges associated with the discount plan.

18

(b)  Forms.--In addition to the information required under

19

subsection (a), a discount plan organization shall file all

20

forms, including the form for the written document described

21

under section 13(d), to be used by a discount plan organization

22

with the department prior to use. Each form filed shall be

23

identified in the manner as may be required by the department.

24

Section 11.  Provider agreements and provider listing

25

requirements.

26

(a)  Provider agreements.--

27

(1)  A discount medical plan organization shall have a

28

written provider agreement with all providers offering

29

medical or ancillary services to its members. A discount

30

prescription drug plan organization shall have a written

- 16 -

 


1

provider agreement with all providers offering pharmacy

2

services to its members. The written provider agreement may

3

be entered into directly with the provider or indirectly with

4

a provider network to which the provider belongs.

5

(2)  A provider agreement between a discount plan

6

organization and a provider shall provide the following:

7

(i)  a list of the services to be provided at a

8

discount;

9

(ii)  the amount or amounts of the discounts or,

10

alternatively, a fee schedule that reflects the

11

provider's discounted rates; and

12

(iii)  that the provider will not charge members more

13

than the discounted rates.

14

(3)  A provider agreement between a discount plan

15

organization and a provider network shall require that the

16

provider network have written agreements with its providers

17

that:

18

(i)  contain the provisions described in paragraph

19

(2);

20

(ii)  authorize the provider network to contract with

21

the discount plan organization on behalf of the provider;

22

and

23

(iii)  require the provider network to maintain an

24

up-to-date list of its contracted providers and to

25

provide the list on a monthly basis to the discount plan

26

organization.

27

(4)  A provider agreement between a discount plan

28

organization and an entity that contracts with a provider

29

network shall require that the entity, in its contract with

30

the provider network, require the provider network to have

- 17 -

 


1

written agreements with its providers that comply with

2

paragraph (3).

3

(5)  The discount plan organization shall maintain a copy

4

of each active provider agreement into which it has entered.

5

(b)  Provider listing requirements.--

6

(1)  A discount plan organization shall maintain on an

7

Internet website an up-to-date list of the names and

8

addresses of the providers with which it has contracted

9

directly or through a provider network. The Internet website

10

address shall be prominently displayed on all of its

11

advertisements, marketing materials, brochures and discount

12

plan cards.

13

(2)  This subsection applies to providers that the

14

discount plan organization has contracted with directly as

15

well as providers that are members of a provider network with

16

which the discount plan organization has contracted.

17

Section 12.  Marketing requirements.

18

(a)  General rule.--A discount plan organization may market

19

directly or contract with other marketers for the distribution

20

of its product.

21

(b)  Marketing agreement.--

22

(1)  A discount plan organization shall have an executed

23

written agreement with a marketer prior to the marketer's

24

marketing, promoting, selling or distributing the discount

25

plan.

26

(2)  An agreement between a discount plan organization

27

and the marketer shall prohibit a marketer from using

28

advertising, marketing materials, brochures and discount plan

29

cards without the discount plan organization's approval in

30

writing.

- 18 -

 


1

(3)  A discount plan organization shall be bound by and

2

responsible for the activities of a marketer that are within

3

the scope of the marketer's agency relationship with the

4

organization.

5

(c)  Approval of marketing materials.--A discount plan

6

organization shall approve in writing all advertisements,

7

marketing materials, brochures and discount cards used by

8

marketers to market, promote, sell or distribute the discount

9

plan prior to their use.

10

(d)  Filing requirement.--Upon request, a discount plan

11

organization shall submit to the commissioner all advertising,

12

marketing materials and brochures regarding a discount plan.

13

Section 13.  Marketing restrictions and disclosure requirements.

14

(a)  General rule.--

15

(1)  All advertisements, marketing materials, brochures,

16

discount plan cards and any other communications of a

17

discount plan organization provided to prospective members

18

and members shall be truthful and not misleading in fact or

19

in implication.

20

(2)  An advertisement, any marketing material, brochure,

21

discount plan card or other communication is misleading in

22

fact or in implication if it has a capacity or tendency to

23

mislead or deceive based on the overall impression that it is

24

reasonably expected to create within the segment of the

25

public to which it is directed.

26

(b)  Restrictions.--A discount plan organization shall not:

27

(1)  except as otherwise provided in this act or as a

28

disclaimer of any relationship between discount plan benefits

29

and insurance, or as a description of an insurance product

30

connected with a discount plan, use in its advertisements,

- 19 -

 


1

marketing material, brochures and discount plan cards the

2

term "insurance";

3

(2)  except as otherwise provided under State law,

4

describe or characterize the discount plan as being insurance

5

whenever a discount plan is bundled with an insurance product

6

and the insurance benefits are incidental to the discount

7

plan benefits;

8

(3)  use in its advertisements, marketing material,

9

brochures or discount plan cards the terms "health plan,"

10

"coverage," "copay," "copayments," "deductible," "preexisting

11

conditions," "guaranteed issue," "premium," "PPO," "preferred

12

provider organization" or other terms in a manner that could

13

reasonably mislead an individual into believing that the

14

discount plan is health insurance;

15

(4)  use language in its advertisements, marketing

16

material, brochures and discount plan cards with respect to

17

being registered by the department in a manner that could

18

reasonably mislead an individual into believing that the

19

discount plan is insurance or has been endorsed by the

20

Commonwealth;

21

(5)  make misleading, deceptive or fraudulent

22

representations regarding the discount or range of discounts

23

offered by the discount plan card or the access to any range

24

of discounts offered by the discount plan card;

25

(6)  have restrictions on access to discount plan

26

providers, including, except for hospital services, waiting

27

periods and notification periods; or

28

(7)  pay providers any fees for services or collect or

29

accept money from a member to pay a provider for services

30

provided under the discount plan, unless the discount plan

- 20 -

 


1

organization has an active certificate of authority to act as

2

a third party administrator under Article VIII of the act of

3

May 17, 1921 (P.L.789, No. 285), known as The Insurance

4

Department Act of 1921.

5

(c)  General disclosures.--

6

(1)  A discount plan organization shall make the

7

following general disclosures along with any enrollment forms

8

given to a prospective member:

9

(i)  that the plan is a discount plan and is not

10

insurance coverage;

11

(ii)  that the range of discounts for services

12

provided under the plan will vary depending on the type

13

of provider and service received;

14

(iii)  unless the discount plan organization has an

15

active certificate of authority to act as a third party

16

administrator as described in subsection (b)(7), that the

17

plan does not make payments to providers for the services

18

received under the discount plan;

19

(iv)  that the plan member is obligated to pay for

20

all services, but will receive a discount from those

21

providers that have contracted with the discount plan

22

organization; and

23

(v)  the toll-free telephone number and Internet

24

website address for the registered discount plan

25

organization for prospective members and members to

26

obtain additional information about and assistance on the

27

discount plan and up-to-date lists of providers

28

participating in the discount plan.

29

The disclosures shall be made in writing in not less than 12-

30

point font and shall appear on the first content page of any

- 21 -

 


1

advertisements, marketing materials or brochures made

2

available to the public relating to a discount plan.

3

(2)  If the initial contact with a prospective member is

4

by telephone, the disclosures required under paragraph (1)

5

shall be made orally and included in the initial written

6

materials that describe the benefits under the discount plan

7

provided to the prospective or new member.

8

(d)  Additional disclosures.--

9

(1)  In addition to the general disclosures required

10

under subsection (c), each discount plan organization shall

11

provide to:

12

(i)  each prospective member, at a time not later

13

than the enrollment application form is executed by the

14

prospective member, information that describes the terms

15

and conditions of the discount plan, including any

16

limitations or restrictions on the refund of any

17

processing fees or periodic charges associated with the

18

discount plan; and

19

(ii)  each new member a written document that

20

contains the terms and conditions of the discount plan.

21

(2)  The document required under paragraph (1)(ii) shall

22

be written in simple words and with sentences as short as

23

possible and shall include the following information:

24

(i)  the name of the member;

25

(ii)  the benefits to be provided under the discount

26

plan;

27

(iii)  any processing fees and periodic charges

28

associated with the discount plan, including any

29

limitations or restrictions on the refund of any

30

processing fees and periodic charges;

- 22 -

 


1

(iv)  the mode of payment of any processing fees and

2

periodic charges, such as monthly, quarterly, etc., and

3

procedures for changing the mode of payment;

4

(v)  any limitations, exclusions or exceptions

5

regarding the receipt of discount plan benefits;

6

(vi)  any waiting periods for certain services under

7

the discount plan;

8

(vii)  procedures for obtaining discounts under the

9

discount plan, such as requiring members to contact the

10

discount plan organization to make an appointment with a

11

provider on the member's behalf or to order pharmacy

12

services on the member's behalf;

13

(viii)  cancellation procedures, including

14

information on the member's 30-day cancellation rights

15

and refund requirements and procedures for obtaining

16

refunds;

17

(ix)  renewal, termination and cancellation terms and

18

conditions;

19

(x)  procedures for adding new members to a family

20

discount plan, if applicable;

21

(xi)  procedures for filing complaints under the

22

discount plan organization's complaint system and

23

information that, if the member remains dissatisfied

24

after completing the organization's complaint system, the

25

plan member may contact the department; and

26

(xii)  the name and mailing address of the registered

27

discount plan organization or other entity where the

28

member may make inquiries about the plan, send

29

cancellation notices and file complaints.

30

Section 14.  Notice of change in name or address.

- 23 -

 


1

A discount plan organization shall provide the department at

2

least 30 days' advance notice of any change in the discount plan

3

organization's name, address, principal business address or

4

mailing address or Internet website address.

5

Section 15.  Annual reports.

6

(a)  Requirements.--If the information required under

7

subsection (b) is not provided at the time of renewal of a

8

certificate of registration under section 5, a discount plan

9

organization shall file an annual report with the department in

10

the form prescribed by the department within three months after

11

the end of each calendar year.

12

(b)  Contents.--The report shall include:

13

(1)  audited financial statements prepared in accordance

14

with generally accepted accounting principles certified by an

15

independent certified public accountant, including the

16

organization's balance sheet, income statement and statement

17

of changes in cash flow for the preceding year, except that,

18

subject to the approval of the department, an organization

19

that is an affiliate of a parent entity that is publicly

20

traded and that prepares audited financial statements

21

reflecting the consolidated operations of the parent entity

22

may submit the audited financial statement of the parent

23

entity and a written guaranty that the minimum capital

24

requirements required under section 6 will be met by the

25

parent entity instead of the audited financial statement of

26

the organization;

27

(2)  if different from the initial application for a

28

certificate of registration or at the time of renewal of a

29

certificate of registration or the last annual report, as

30

appropriate, a list of the names and residence addresses of

- 24 -

 


1

all persons responsible for the conduct of the organization's

2

affairs, together with a disclosure of the extent and nature

3

of any contracts or arrangements with these persons and the

4

discount plan organization, including any possible conflicts

5

of interest;

6

(3)  the number of discount plan members in this

7

Commonwealth; and

8

(4)  any other information relating to the performance of

9

the discount plan organization that may be required by the

10

department.

11

(c)  Penalty.--A discount plan organization that fails to

12

file an annual report in the form and within the time required

13

by this section shall:

14

(1)  pay a penalty of up to $500 each day for the first

15

ten days during which the violation continues;

16

(2)  pay a penalty of up to $1,000 each day after the

17

first ten days during which the violation continues; and

18

(3)  upon notice by the commissioner, lose its authority

19

to enroll new members or to do business in this Commonwealth

20

while the violation continues.

21

Section 16.  Compliance officer.

22

A discount plan organization shall designate and provide the

23

department with the name, address and telephone number of a

24

discount plan compliance officer responsible for ensuring

25

compliance with the provisions of this act.

26

Section 17.  Penalties.

27

(a)  Civil penalties.--In addition to the penalties and other

28

enforcement provisions of this act, any person who willfully

29

violates this act is subject to a civil penalty of not more than

30

$10,000 for each violation. Penalties imposed against an

- 25 -

 


1

individual discount plan organization under this act shall not

2

exceed $500,000 in the aggregate in any single calendar year.

3

(b)  Insurance fraud.--A person that willfully operates as or

4

aids and abets another operating as a discount plan organization

5

in violation of section 5(a) commits insurance fraud and shall

6

be subject to the penalties applicable to offenses under 18

7

Pa.C.S. § 4117 (relating to insurance fraud), as if the

8

unregistered discount plan organization were an unauthorized

9

insurer, and the fees, dues, charges or other consideration

10

collected from the members by the unregistered discount plan

11

organization or marketer were insurance premiums.

12

(c)  Theft.--A person that collects fees for purported

13

membership in a discount plan, but purposefully fails to provide

14

the promised benefits, commits a theft and upon conviction is

15

subject to the penalties applicable to offenses under 18 Pa.C.S.

16

Ch. 39 (relating to theft and related offenses). In addition,

17

upon conviction, the person shall be ordered to pay restitution

18

to persons aggrieved by the violation of this act. Restitution

19

shall be ordered in addition to a fine or imprisonment, but not

20

in lieu of a fine or imprisonment.

21

Section 18.  Injunctions.

22

(a)  Injunctive relief.--In addition to the penalties and

23

other enforcement provisions of this act, the commissioner may

24

seek both temporary and permanent injunctive relief when:

25

(1)  a discount plan is being operated by a person or

26

entity that is not registered pursuant to this act; or

27

(2)  a person, entity, discount medical plan organization

28

or discount prescription drug plan organization has engaged

29

in any activity prohibited by this act or any regulation

30

adopted pursuant to this act.

- 26 -

 


1

(b)  Venue.--The venue for any proceeding brought under this

2

section shall be in the Commonwealth Court.

3

(c)  Procedure.--The commissioner's authority to seek

4

injunctive relief is not conditioned on having conducted any

5

proceeding pursuant to the provisions of the 2 Pa.C.S. (relating

6

to administrative law and procedure).

7

Section 19.  Regulations.

8

The department may promulgate rules and regulations to

9

administer and enforce this act.

10

Section 20.  Applicability.

11

A person doing business in this Commonwealth as a discount

12

medical plan organization or a discount prescription drug plan

13

organization on or before the effective date of this act shall

14

have six months following the effective date of this act to come

15

into compliance with the requirements of this act.

16

Section 21.  Effective date.

17

This act shall take effect immediately.

- 27 -

 


See other bills
under the
same topic