NAIC Working Group Aims to Eliminate
 Consumer Confusion on Discount Programs

ST. LOUIS (Sept. 11, 2006) - During its Fall National Meeting today in St. Louis, the National Association of Insurance Commissioners (NAIC) adopted a new model act aimed at addressing the growing number of consumer complaints regarding discount medical plans.


The Discount Medical Plan Organization Model Act establishes a comprehensive regulatory scheme for discount medical plan organizations, enabling state regulators to track the organizations and ensure that they are legitimate and not fraudulent in their claims.


The model, crafted by the NAIC Health Insurance and Managed Care (B) Committee's Discount Plan Working Group, introduces uniform disclosure requirements to help eliminate consumer confusion about what they are buying, making it clear to consumers that the coverage is a discount program and not an insurance policy.


"With the high cost of health care, discount medical plans are becoming more prevalent," said Joel Ario, Oregon Insurance Administrator and Chair of the Health Insurance and Managed Care Committee. "State insurance regulators need to protect consumers against those who may choose to defraud or mislead the public, and this model would give states the tools they need to accomplish this goal."


The model act creates uniform marketing and advertising requirements to ensure that consumers are not subjected to high-pressure sales tactics or provided fraudulent or misleading information. Administrative actions and civil and criminal penalties may be imposed by the state against any organization that is involved in such fraudulent or deceptive practices.


In addition, the model act requires the discount plan organization to not only contract with a network of service providers, but also ensure that its network is adequate to meet the needs of consumers enrolled in its plan. The organization also must maintain a Web site with an updated list of providers under contract that accept the discounted payment.

About the NAIC

Headquartered in Kansas City, Missouri, the National Association of Insurance Commissioners (NAIC) is a voluntary organization of the chief insurance regulatory officials of the 50 states, the District of Columbia and the five U.S. territories. The NAIC's overriding objective is to assist state insurance regulators in protecting consumers and helping maintain the financial stability of the insurance industry by offering financial, actuarial, legal, computer, research, market conduct and economic expertise. Formed in 1871, the NAIC is the oldest association of state officials. For more than 135 years, state-based insurance supervision has served the needs of consumers, industry and the business of insurance at-large by ensuring hands-on, frontline protection for consumers, while providing insurers the uniform platforms and coordinated systems they need to compete effectively in an ever-changing marketplace. For more information, visit NAIC on the Web at:

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