The Department of Managed Health Care (DMHC) recently proposed regulations that would regulate “discount health plans” in California. Over the years, DMHC has floated informal proposals to regulate discount health plans. However, this is the first time they’ve initiated the formal rulemaking process.

CMA has serious reservations about the legitimacy of discount health plans in California. CMA has opposed a number of legislative attempts to legitimize these illegal referral services. Not only do we believe that they are illegal, but we also remain unconvinced that DMHC has jurisdiction to regulate them. From a public policy perspective, they bring little value to consumers, as the benefit they purport to provide is illusory at best.

The California Attorney General in 2001 concluded that the discount health plan business model was illegal under California law, which prohibits a person or business from referring or recommending a person to a health care provider for any form of medical care or treatment for a profit.

CMA believes that the appropriate course of action is for DMHC to enforce the law and to stop the deceptive and illegal marketing of these discount “health plans” in California.

CMA is in the process of developing regulatory comments and has requested a public hearing on this issue. DMHC is accepting comments through February 22.

Contact: Armand Feliciano, 916/444-5532 or afeliciano@cmanet.org.