Medical discount cards can give ‘network’ rates to self-pay patients, but beware

A reader recently wrote in to ask whether discount cards exist for medical providers similar to the prescription drug discount cards that I’ve written about before. The answer is yes, they do, and they can save self-pay patients a lot of money. The catch is, while some medical discount card plans are legit and can offer great value, others are not.

With a medical discount card, you are basically paying to get the negotiated rate that insurers pay doctors, which is typically much less than the list price. The savings can be substantial, as anyone who has looked at a doctor’s bill and seen the difference between the ‘charged’ amount and what the insurer actually paid. For example, looking at one of my own bills from my surgery in August I see a surgeon’s fee for one procedure for $752 reduced to $404 because of the negotiated rate, for a savings of around 45%.

As a general rule, it’s far better to simply find a cash-only or at least cash-friendly doctor or facility who will treat you and charge a simple, low fee. But finding doctors and facilities like these can be a challenge, especially if you are faced with an urgent medical need that can’t wait for you to find someone or someplace that caters to self-pay patients.

For this reason, purchasing a medical discount card may make sense. As I understand it many insurers will essentially ‘rent’ their networks to other companies, allowing those companies to sell access to the lower network rates to anybody who wants to buy the cards (lots of doctors are not terribly happy about this, but that’s another story). In addition, some companies will build their own networks and set reduced prices directly with doctors and hospitals, which card holders can then get. 

Here is how Consumer Health Alliance, the trade association of the medical discount card industry, describes the products their members sell:

…Our member companies make healthcare products and services, including prescription drugs, dental, chiropractic, eye care, hearing, and laboratory services, affordable and available to millions of Americans. They do so by providing opportunities for consumers to directly purchase healthcare services and products at discounted rates. The programs they offer are not insurance…

The discount healthcare industry has grown to serve more than 45 million consumers across the U.S. because consumers seek cost-effective solutions to their basic healthcare needs…

Discount healthcare programs are NOT insurance.

Discount healthcare programs enable consumers to purchase healthcare products and services from providers at discounted prices…

CHA also sums up the key benefits of medical discount plans:

Access: Everyone can use discount programs to receive access to substantial savings on healthcare services – such as prescription drugs, eyeglasses and dental care – that they might otherwise not be able to afford.

Savings: Whether you are someone without insurance, with limited insurance, or even with full health insurance that does not cover all healthcare services, you can save money on your additional healthcare needs with a discount program.

Convenience: Some of the nation’s largest healthcare retailers, including national pharmacy and optical chains, participate in discount programs. Many companies offer discount programs that include discounted services offered by: * Pearle * LensCrafters * Medicine Shoppe * Safeway * Wal-Mart * Target

Affordability: While the cost of healthcare has risen rapidly in recent years, discount healthcare programs have kept their monthly charges virtually unchanged.

Based on all of this, the potential for medical discount plans to save self-pay patients is clearly there. A quick look at the plans offered by a couple of companies show the costs of getting a card aren’t too expensive.

For example, the Careington Total Care plan, which includes discounts for physician and hospital treatment, dental, vision, laboratory services, hearing, medical supplies, and prescription drugs, plus a telemedicine service with access to a nurse, costs $29.95 per month.  The Alliance HealthCard has a similar offering, also for $29.95, as well as a ‘Basic’ card for $19.95 that doesn’t include physicians and hospitals but does include dental, vision, chiropractic, prescription drugs, hearing, and a nurse line.

Now for the ‘caveat emptor’ part of the blog post (that’s Latin for ‘let the buyer beware’). When I Googled ‘medical discount card’ the second link goes to the site of the Coalition Against Insurance Fraud. And they have a lot to say about medical discount cards.

Discount cards have spread recently as a low-cost way to get needed medical care. But many discount cards also are fraudulent.

Here’s how honest cards generally work: Consumers typically pay a monthly fee. Plan members gain access to a large pool of primary physicians, eye doctors, pediatricians and other providers. Plan members pay the medical costs themselves, but at a discounted price.

Many discount medical cards offer legitimate, money-saving benefits. But many cards lie about benefits that don’t exist, grossly inflate the potential discounts, and impose hidden fees that can wipe out your savings. The system is rife with fraudulent or misleading discount card providers.

The list four specific areas in which these cards can be fraudulently marketed:

Pretend insurance. Discount medical plans aren’t health insurance. But their ads use insurance-like terms such as “health benefits” and “protection.” People are conned into signing up, trusting they have real health coverage.

Bogus provider list. Shady plans lie that they have large networks of medical providers willing to provide discounted services. Often the providers don’t even know their names are falsely on the list. Thus they’re unlikely to provide the advertised discounts when plan members call.

Hidden fees. Added fees are stashed in the fine print of your contract.

Fake plan. Sometimes the discount plan is totally fake, offers no services or discounts, and has no intention of making good on its promises. The plan exists only to fool people into paying fees that line the pockets of the sham operation’s masterminds.

From what I’ve seen, the biggest problem seems to be that these plans are sometimes marketed as insurance to unsuspecting customers. Here’s one tale I found

 We were looking for a conventional health ins policy, and unknowingly, sold, what appears an discount network.

We were told, several times, that it was an PPO heath insurance policy, zero deductable, [sic] and that, when asked, our doctor, hospital, and prescriptions were covered, 100%.

The sales rep. says that he was calling from Fla, but when his phone # traced, the call came from NYC.

We received the policy, via e-mail, after money was deducted from our debit card account, for this so-called policy.

Upon reading the policy, nothing made sence, [sic] so we called our family doctor, and local hospital, and nobody heard of this company, or such policy.

We come to realize, that this plan, was nothing more than a worthless discount plan, which would pay 100%, of nothing.

We called another number, which was on the policy, and immediately cancelled, and was given a cancellation ref#. They said, that we would receive, our refund, in about 5 business days, which amounted to about getting 1/2 back.

We were given a e-mail address, of, to send, as a backup, on the cancellation, but it was kicked back.

We will find out, in about a week, if we do get our money back. Lesson learned. Do business, face to face.

Terry, Keystone, Indiana

In most of these types of cases I’ve read (and there are a lot of them at it’s an independent sales agent who wildly overstates the benefits (to put it gently), misrepresenting what the discount card does and does not do.

It was in part because of tales like this that the Consumer Health Alliance was formed, to combat fraud in the industry. They have put together a list of tips for shopping for a medical discount card:

9 Tips for Shopping for a Discount Healthcare Program.

  1. Shop around. Every program is different. Find the program that offers the benefits and services that best suit your needs at a reasonable price.
  2. Make sure the discount program has clear and understandable disclosure materials that specifically define the terms and conditions of the program.
  3. Look for programs that provide toll free numbers and/or websites where you can obtain additional information about the program’s’ benefits and the healthcare providers who are participating in them.
  4. Read the program’s complaint and refund policies carefully to determine if they are reasonable. The company should offer a 30-day refund policy for your membership fee.
  5. Make sure the program’s materials clearly state that the discount program is not insurance.
  6. Be sure the program’s benefits do not duplicate your current healthcare insurance policy or other health benefits offered by your employer.
  7. Be wary of any program that requires large up-front fees.
  8. Read all materials carefully.
  9. When in doubt about a discount healthcare program, check the company out with your local Better Business Bureau, State Insurance Department, or State Attorney General’s office.

To the last item I’d add and a site I found called Business Consumer Alliance, where I also found several complaints about medical discount cards, as places you can check out the reputation and history of each company.

The Coalition Against Insurance Fraud also offers a list of suggestions for making sure you aren’t getting scammed:

Ask the right questions before signing up…

Insurance or discount? Know the difference between health insurance and a discount card. Ask whether the card is insurance that covers your treatment, or is a discount card that still requires you to pay all bills yourself.

Slippery sales pitches. Be wary of slippery sales pitches. Here are several warning signals…

• “Save up to 60 percent on healthcare” The term “up to” is meaningless.

• “Affordable health coverage” Calling it coverage could deceive you into thinking you have real insurance.

• “Guaranteed” benefits. Could sound like insurance, and not all cards can deliver on their promises anyway (see below)

• “Longterm care” discounts. Do not mistake this for true longterm health insurance.

• Fine print. Make sure the fine print agrees with the promises in the sales pitches.

• Your treatments? Does the card offer discounts on the medicine and treatments you need? Find out exactly what medical conditions, medicine, treatments and other services are included. Even if your medicines are discounted, check to see whether generic drugs are cheaper.

• Clearly listed? Are prices clearly listed? Do they offer a clear discount over what you now pay?

• Hidden fees. Are large administrative fees hidden in the fine print? They can quickly eat up your discounts. Especially, watch for fees charged for each use of your discount card.

• Evasive pitches. Be wary if the telemarketer or other sales person seems evasive, ill-informed or is reluctant to provide you detailed material about the card. Ask specific questions, and demand specific answers.

• Credit card fraud. Avoid giving your credit card and checking account numbers to strangers selling discount cards over the phone or the Internet. Fees for the card, for example, might be charged to your credit card even if you didn’t sign up.

• Refundable? Know whether your membership fee is refundable if you cancel, whether you can cancel at any time, and the procedures for canceling.

• Contact authorities. Contact your state insurance department and Better Business Bureau if you suspect a scam. Your insurance department may not regulate the cards, but can help refer suspected fraud to the right authorities.

One final piece of advice – a lot of these companies have ‘private label’ offerings, where third parties can sell the network discounts under their own name, often bundling it with other services or adding features. There’s nothing wrong with this (I’m generally a fan of bundling services that benefit self-pay patients), but it does mean that if you’re looking at purchasing one of these cards you may want to find out what the underlying company is so you can compare what the marketing agent is telling you with what’s on the web site of the company that will actually be providing the service.

I hope this blog post doesn’t unnecessarily scare anyone away from obtaining a medical discount card, as they really can be very helpful in terms of getting access to affordable health care. But probably more so than any other product that you might consider as a self-pay patient, this is the one where it really pays to do your homework and make sure you’re getting a good deal.

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