Can I establish a discount program in my practice for patients, and what are the legal requirements ?
The State Department of Managed Health Care has authority to license and regulate discount health plans under the authority of the Knox-Keene Act. The kind of discount or payment assistance programs that individual dental offices consider establishing do not rise to the level of a commercial discount health plan. However, DMHC still wants to review what a dental practice has in mind for an in-office discount plan. Essentially, DMHC seeks to avoid having individual practices establishing a program that looks and functions like insurance; that is, DMHC wants to avoid dental practices establishing a program where the dentist takes on risk. Risk bearing is what insurances do. But if a discount program is established in an office which, for example, offers crowns and other services without cost for a minimal annual subscription, a dentist will quickly start losing money on such a program. DMHC has approved discount program designs which provide reasonable discounts for a limited number of dental procedures. By 'approved' this means that DMHC has determined that certain discount program designs do not incorporate the elements of a 'health care service plan' which is the type of payment entity which the department licenses.