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FTC, states work to stop fraudulent medical discount plans

A joint federal-state law enforcement effort is taking on companies that falsely market the benefits of their medical discount plans. The Federal Trade Commission said it has filed three complaints against operators it contends have overstated savings from discount plans, exaggerated provider participation and used other deceptive practices. In addition to the FTC cases, law enforcers have filed a total of 54 lawsuits and regulatory actions in 24 states to stop deceptive practices by discount plan operators.

The FTC alleged the discount plan operators falsely claimed the plans would yield substantial savings for consumers and be widely accepted by healthcare providers. That was not the case, and the operators made it difficult for consumers to obtain refunds, charged the FTC. The state actions address sham insurance, as well as automatic calls, fax blasting and licensing violations.

The companies targeted by the FTC and states are mostly privately owned, according to Reuters.

The FTC said such deceptive practices have grown more common following passage of the federal law requiring individuals to have health insurance, Reuters reports. There is "very fertile ground" for such scams because of uncertainty about benefits under the new federal health insurance program and the delay until it begins in 2014, an FTC official told Reuters.

The Consumer Health Alliance, which represents companies that provide discounts on health care services, issued a statement in support of the actions. Consumers must be protected from fraudulent operators, but it is important they have access to legitimate discount programs that make healthcare more affordable, the alliance said.

For more:
- read the FTC press release
- read the Reuters article
- read the Consumer Health Alliance press release

Related Articles:
Fake health plans increasing

Part D donut-hole: CMS revises plan guidance
Insurance scams could lead to unrecoverable bad debt
Justifying your managed-care discount levels

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