For Immediate Release - September 14, 2009

Attorney General Martha Coakley Proposes Regulations to Protect Consumers From Unfair and Deceptive Marketing of Medical Discount Plans

BOSTON - Today, Attorney General Martha Coakley's office filed proposed new consumer protection regulations designed to protect Massachusetts residents from unscrupulous marketing of plans that claim to offer discounts on medical products or services. The proposed regulations are part of the Attorney General's multi-pronged approach to address the increasing problem of deceptive marketing of medical discount plans. In addition to the regulations, Attorney General Coakley's Office has also published a consumer education advisory and pursued law enforcement actions to protect consumers from medical discount plan scams.

"As a result of health care reform in Massachusetts, all residents are required to have health insurance and are presented with a wide range of coverage options. It is critical that companies who offer any kind of medical coverage plans or medical discount card clearly disclose what their plans do and do not offer, and whether they fulfill the individual mandate." Attorney General Coakley said. "We have received numerous complaints from consumers who have fallen victim to these deceptive discount plan scams. The new regulations that we are proposing will complement ongoing efforts to protect consumers from these deceptive practices."

Medical discount plans claim to offer consumers discounts for specific health care products or services from certain providers in exchange for some form of fee. Under a medical discount plan, the plan member receives a discount, but is obligated to make all payments for services provided. Medical discount plans are not insurance products and are not regulated by the Division of Insurance. These plans also do not meet the minimum coverage standards as required under health care reform.

The proposed regulations filed today with the Secretary of State's Office would require organizations marketing medical discount plans for sale in Massachusetts to fully disclose how the plan works and whether the plan is limited to certain services or products from certain providers. The disclosures must make clear that the discount plan is not insurance and that the consumer will be required to pay for any services or products. In addition, the regulations will require medical discount plans to maintain lists available to consumers of any providers who have agreed to offer the plan's members discounts.

Before the regulations are permanently promulgated, the Attorney General will hold a public hearing on the proposed regulations on October 13, 2009 at 10:00 a.m. The hearing will be held at the Attorney General's Office in Conference Room C-D on the second floor of 100 Cambridge Street in Boston. Copies of the proposed regulation, the notice of hearing, and the Attorney General's fiscal effect and small business statements will be available on the Attorney General's website at, or by calling Ashley Reid at (617) 963-2488. Interested parties are encouraged to attend the hearing and provide testimony. Requests to testify should be directed to:

Office of Attorney General Martha Coakley
Health Care Division
One Ashburton Place
Boston, MA 02108
Attn: Ashley Reid

Written comments on the proposed regulations also may be sent to this address, on or before October 23, 2009.

Attorney General Coakley created the office's Health Care Division upon taking office in 2007 to place a heightened focus on promoting the interests of consumers as Massachusetts undertook its landmark health reform effort. Since its implementation, the division has taken a variety of actions aimed at protecting consumers against unfair and deceptive trade practices by health insurers and medical discount cards. For example, the office filed a lawsuit in April 2009 against three individuals and two New Jersey companies, alleging that they marketed and sold fraudulent discount health cards to hundreds of Massachusetts residents.

Consumers looking for tips on how to avoid scams and make smart health plan choices, can go to the Attorney General's website and review a joint consumer advisory issued by the Attorney General's Office and the Division of Insurance. The advisory can be viewed here: pdf format of health_advisory.pdf