State regulators have lifted a cease and desist order against Platinum Health Plus three months after cracking down on it and other discount health plans, maintaining some are fraudulent.
Regulators with the state Department of Managed Health Care say that the Miami-based company, which bills itself as the largest discount health plan in the nation, has “significantly changed its business practices and advertising” and is being allowed to operate under several conditions.
The company will have to get approval for all its advertising and marketing scripts, and also will be required to register with the department by July 31.
Discount health plans offer consumers lower prices on doctors’ visits, drugs and other health care services in exchange for a fee. However, they are not like traditional insurance because consumers still bear all the risk for any treatment or drugs they need.
Regulators maintained that many consumers who signed up did not understand they were not traditional insurance plans, and that some plans even offered bogus provider networks with doctors who hadn’t agreed to offer discounts.
Officials with Platinum Health Plus, who had bristled at being linked with bogus operators but had pledged to work with the department, issued a statement praising the department for lifting the cease and desist order.
“We responded to every request from the regulatory staff,” said company President Michael Garcia in the statement. “They now recognize PHP as a bona fide pro-consumer medical discount program.”
The department had received 78 complaints against PHP, but the company maintained that they were only allowed to examine two, which were found to be meritless. Company officials also said the complaints only represented one-fifth of one percent of its 35,000 California customers.
Despite lifting the cease and desist order against PHP, the department is continuing its crackdown against the plans, and is currently investigating 13 other companies. It also has not lifted a cease and desist order against Family Health Plan, a Houston-based company.
“The Department of Managed Health Care and this Administration will not tolerate discount health care companies that deceive consumers,” said DMHC Director Cindy Ehnes in a prepared statement.
Companies are complaining that so far they are seeing little if any savings from the recent workers’ compensation reform package, but Los Angeles County could save up to $8 million from one aspect of the reforms alone.
The Board of Supervisors voted last week to form a network of medical providers that employees will have to visit when they are injured, replacing a system that gave employees far more latitude in choosing their own doctors.
The networks were created as part of the reform package as a way of giving employers more control over the doctors who treat workers, with the intent of reducing unnecessary treatment and fraud and thereby reducing cost.
The county expects that the new networks will save it from $6 million to $8 million.
Here and There
Amgen Inc. joined other major corporations in making a major contribution to aid the South Asia tsunami victims with an initial $1 million cash contribution. It also will match employee contributions dollar for dollar. Pfizer Inc. is contributing $35 million in cash and pharmaceuticals.
Staff reporter Laurence Darmiento can be reached at (323) 549-5225, ext. 237, or at