Are you considering having patients pay a membership fee in advance that would cover future medical or clinical services? Be careful! This could constitute the provision of an “insurance” policy or plan to patients without having the right to operate as an insurance company in your State. In many states, you can avoid this risk by complying with the below.
At issue is a pre-paid plan in which the licensed practitioner has contractually agreed to provide services at a discounted rate to patients who pay a membership fee (annual or monthly) to join the plan, concierge practice or “club”.
It generally does not constitute insurance if:
- the bundles of services included in the membership fee do not cover “fortuitous events” (discussed below);
- the fee paid by the members for rendering of a service dependent upon a fortuitous event fully covers the actual cost of delivering the service, including the reasonable overhead (including, without limitation, labor and materials); and
- Certain disclosures are made.
Those services occasioned by the happening of a fortuitous event must be offered for an additional fee-per-service which is charged at the time of the rendering of the service (which covers cost as described above), though they may be at a pre-arranged discounted rate as compared to the usual service fee which is charged to those who are not members.
Additionally, the prepaid membership fee may be inclusive of services at no or a nominal separate charge (e.g., for cost of supplies), as long as these benefits are of a non-fortuitous nature.
With respect to fee structure, the practice must avoid the assumption of the risk of incurring a loss if the cost of rendition of the fortuitous services exceeds the paid fees. The Insurance Department of the State may consider the amount of the charges for the program in its totality, as well as specific services provided, in evaluating whether the transfer of risk is too great.
Fortuitous Events
A fortuitous event is that which creates a need for care that is beyond the control of either party, including as a result of an occurrence or a failure to occur.
Fortuitous events include:
- treatment of specific problems, illness or injury
- surgery
- writing a prescription
Examples of services that are not considered fortuitous events include:
- routine periodic annual screening/preventative examination, including routine tests not triggered by a fortuitous event, including time with the physician
- preventive blood work
- flu shots and other vaccinations
- patient education services
With regard to fortuitous events, it is irrelevant whether the resultant service rendered is considered medically necessary (by insurance providers or otherwise).
Disclosures
The State Insurance Department or Attorney General may deem as insurance any agreement that is marketed in a manner that could lead the public to believe that the program is a substitute for insurance.
Advertising, marketing and contractual materials must clearly, conspicuously and unambiguously state that “the program is not insurance” and note that the program does not serve as a substitute for comprehensive health insurance coverage. Click-through agreements are discouraged – clear display is recommended.
To avoid Attorney General scrutiny for consumer protection and deceptive practices, you should also:
- Avoid false representation of savings;
- Not exaggerate the number of professionals participating in the program;
- Not fail to disclose any additional fees charges (i.e., no “hidden” fees/charges that are not indicated, such as administrative, medication dispensing and any banking/finance charges)
- Have easily understood terms and conditions
- Avoid conflicting claims including small print disclaimers (e.g., promoting preferential pricing while at the same time indicate that we cannot guarantee they will receive services at the lowest cost)
- Obtain written consent for any recurring or automatic credit card charges
You should also:
- Maintain a toll-free customer call center to assist patient members in using the program;
- Establish a formal dispute and complaint process; and
- Obtain prior written authorization to sell or lease members’ demographic information or market services to members that are unrelated to the program.
