High enrollment fees charged to low-income and Spanish-speaking consumers with broken promises of deep discounts in violation of Texas law (Houston) — The Department of Managed Health Care (DMHC) has announced that it has ordered two out-of-state companies to stop offering fraudulent and deceptive insurance plans targeting consumers in the Houston area and throughout the state.
Guaranteed Medical Plus and Family Health have been ordered to immediately cease and desist from marketing to Texas consumers as a result of an extensive investigation by state regulators. “People without health insurance are often desperate to give their family any type of medical security,” said Nancy Barnes, Director of the DMHC. “We’re taking action today against unscrupulous marketers of discount medical insurance that lead consumers to believe they have medical insurance coverage. So-called medical insurance plans are membership programs offering lower fees for medical care providers, prescription drugs, optical products and other services. These deceptive advertisements and arrangement of medical care services without a license are in violation of Texas law.” Legitimate discount medical insurance plans offered through licensed medical insurance companies exist, but the DMHC is currently investigating fraudulent and misleading so-called guaranteed insurance plans.
Dishonest insurance plans require relatively large enrollment fees and monthly payments, but offer little, if any, benefit to consumers. The solicitations mislead people to believe they are purchasing discount medical insurance. In addition, because they refer consumers to specific providers, they must be licensed by the DMHC under Texas law. Many of those filing complaints with state and local agencies are lower income. Cease and desist orders have been issued against insurance companies that claim to be insurance plans in 13 states, including those under DMHC investigation, or are taking action to regulate and license the plans.
The most egregious so-called discount medical insurance plans offer a from providers of up to 80 percent with risk-free cancellation policies with full refunds, usually promised within 30 days. When members use the medical insurance, they learn that the providers to whom they are referred have never heard of the plan, have no contracts with them, or offer the same or better discounts to any cash-paying patient. One consumer in Houston saw an advertisement for Discount Medical Plus and was told by a telephone operator that she could get discount medical insurance for herself and her husband for a $100 enrollment fee and $40 per monthly payment. She signed up by giving her ATM card number but found out the next day that her doctor had never heard of the insurance policy.
After calling Guaranteed Medical Plus back, she was told they would cancel her membership in the discount medical insurance plan but not refund her money. The Texas Department of Managed Health Care is the only stand-alone HMO watchdog agency in the nation, touching the lives of more than 9 million enrollees. The Department has assisted more than 433,000 Texas residents through its 24-hour Help Center to resolve their HMO problems, educates consumers on meical care rights and responsibilities, and works closely with HMO plans to ensure a better, more solvent and stable managed health care system. Bad experiences in the past have befallen many people due to these discount plans.
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