Summary of Bill:

A new chapter is added to Title 48 RCW requiring discount plans to obtain a license from the OIC to do business in Washington. Discount plan means a business arrangement or contract in which a person or organization provides discounts on charges by providers for health care services in exchange for fees or dues. Newly defined discount plans do not include discount plans offered by regulated insurance carriers, a Medicare prescription drug plan, or a patient access program sponsored by a pharmaceutical manufacturer that provides free or discounted products to the low-income or uninsured. Each application for a license to operate as a discount plan organization requires an application fee of $250 and business documentation including copies of contracts with providers or health care provider networks, contracts with persons or firms that will market each plan or administer any functions, a description of the marketing methods, a description of the member complaint procedures, and other information the OIC may require. Upon receipt of a complete application packet, the OIC must issue a license within 90 days if the OIC is satisfied the application conditions have been met. The license is effective for one year unless suspended or revoked. The OIC may suspend or revoke a license if the organization falls out of compliance, does not have the minimum net worth required, has misrepresented its services or engaged in deceptive, misleading, or unfair advertising, or the continued operation would be hazardous to its members. The OIC may conduct investigations to ensure discount organizations are in compliance.

Marketing standards for discount plans are established. Marketing materials must disclose all charges that a member must pay for each discount plan. If a member cancels his or her membership within the first 30 days, a full reimbursement of all charges must be provided. If notice of cancellation is made later, the discount plan must return any charges collected after the notice of cancellation. Discount organizations may market directly to consumers or contract with marketers. All advertising materials must be truthful and not misleading in fact or implication. The products may not be described as insurance nor use terms commonly associated with insurance, such as "health plan," "coverage," and "copay," etc. Each discount plan organization must have a written agreement with all health care providers for whom the discount offers services. The agreement must detail the list of services or products to be provided at a discount, the amount of the discount, and a requirement that the provider may not charge members more than the discounted rates.

In lieu of or in addition to suspending or revoking a discount plan organization's license, the OIC may issue a cease and desist order if there is cause to believe there is a violation of this act. After a hearing the OIC may impose a penalty of $100 to $10,000 per violation. A person that collects fees for membership as a discount plan but willfully fails to provide the promised benefits commits a theft and is subject to the Washington Criminal Code in Title 9A RCW.

The OIC may seek both temporary and permanent injunctive relief when a discount plan is being operated by an unlicensed person or entity, or if a discount plan has engaged in any activity prohibited by this act. The OIC may adopt rules to implement this chapter. Discount plans in operation prior to the effective date of this act have six months following the effective date to submit a substantially complete application for a license and come into compliance with requirements of this chapter.