Bill Text: PA HB847 | 2011-2012 | Regular Session | Introduced

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Bill Title: Providing for registration of discount plan organizations; and imposing penalties.

Spectrum: Partisan Bill (Democrat 15-0)

Status: (Introduced - Dead) 2011-02-28 - Referred to INSURANCE [HB847 Detail]

Download: Pennsylvania-2011-HB847-Introduced.html

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PRINTER'S NO. 876
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No. 847 Session of2011
INTRODUCED BY BARBIN, DeLUCA, FABRIZIO, PASHINSKI, KOTIK, MATZIE, V. BROWN, CALTAGIRONE, GOODMAN, JOSEPHS, KORTZ, KULA, PRESTON, READSHAW AND STABACK, FEBRUARY 28, 2011
REFERRED TO COMMITTEE ON INSURANCE, FEBRUARY 28, 2011
AN ACT
Providing for registration of discount plan organizations; and
imposing penalties.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Table of Contents
Section 1. Short title.
Section 2. Purpose.
Section 3. Definitions.
Section 4. Scope and applicability.
Section 5. Registration requirements.
Section 6. Minimum capital requirements.
Section 7. Surety bond or deposit requirements.
Section 8. Examinations and investigations.
Section 9. Charges and fees, refund requirements and bundling
of services.
Section 10. Charge and form filing requirements.
Section 11. Provider agreements and provider listing
requirements.
Section 12. Marketing requirements.
Section 13. Marketing restrictions and disclosure requirements.
Section 14. Notice of change in name or address.
Section 15. Annual reports.
Section 16. Compliance officer.
Section 17. Penalties.
Section 18. Injunctions.
Section 38. Regulations.
Section 39. Applicability.
Section 40. Effective date.
Section 1. Short title.
This act shall be known and may be cited as the Discount Plan
Organization Act.
Section 2. Purpose.
The purpose of this act is to promote the public interest by
establishing standards for discount medical plan and discount
prescription drug plan organizations to protect consumers from
unfair or deceptive marketing, sales or enrollment practices and
to facilitate consumer understanding of the role and function of
discount medical plan organizations in providing access to
medical or ancillary services and the role and function of
discount prescription drug plan organizations in providing
access to pharmacy services.
Section 3. Definitions.
The following words and phrases when used in this act shall
have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Affiliate." A person that directly or indirectly, through
one or more intermediaries, controls, is controlled by or is
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under common control with the person specified.
"Ancillary services." Services that include, but are not
limited to, audiology, dental, vision, mental health, substance
abuse, chiropractic and podiatry services. The term does not
include pharmacy services.
"Applicant." A person or entity applying to do business in
this State as a discount plan organization.
"Commissioner." The Insurance Commissioner of the
Commonwealth.
"Control," "controlled by" or "under common control with."
The terms shall have the meanings given in section 1401 of the
act of May 17, 1921 (P.L.682, No.284), known as The Insurance
Company Law of 1921.
"Department." The Insurance Department of the Commonwealth.
"Discount medical plan." A business arrangement or contract
in which a person, in exchange for fees, dues, charges or other
consideration, offers or purports to offer access for plan
members to providers of medical or ancillary services and the
right to receive discounts on medical or ancillary services from
those providers. The term does not include:
(1) a plan that does not charge a membership or other
fee to use the plan's discount medical card; or
(2) any product otherwise regulated under the laws of
this Commonwealth regulating health insurers.
"Discount medical plan organization." An entity that, in
exchange for fees, dues, charges or other consideration, offers
or purports to offer a discount medical plan to plan members and
that contracts with a provider, a provider network or another
discount medical plan organization to offer the discount medical
plan and determines the charge to plan members.
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"Discount plan." A discount medical plan or a discount
prescription drug plan.
"Discount plan organization." A discount medical plan
organization or a discount prescription drug plan organization.
"Discount prescription drug plan." A business arrangement or
contract in which a person, in exchange for fees, dues, charges
or other consideration, offers or purports to offer access for
plan members to providers of pharmacy services and the right to
receive discounts on pharmacy services from those providers.
The term does not include:
(1) a plan that does not charge a membership or other
fee to use the plan's discount prescription drug card;
(2) a patient access program; or
(3) a Medicare prescription drug plan or the PACE and
PACENET program established under Chapters 5 and 7 of the act
of August 26, 1971 (P.L.351, No.91), known as the State
Lottery Law.
"Discount prescription drug plan organization." An entity
that, in exchange for fees, dues, charges or other
consideration, offers or purports to offer access for plan
members to providers of pharmacy services and the right to
receive pharmacy services from those providers at a discount and
that contracts with a provider, a pharmacy network or another
discount prescription drug plan organization to offer the
discount prescription drug plan and determines the charge to
plan members.
"Facility." An institution providing medical or ancillary
services in a health care setting. The term includes, but is not
limited to:
(1) a hospital or other licensed inpatient center;
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(2) an ambulatory surgical or treatment center;
(3) a skilled nursing center;
(4) a residential treatment center;
(5) a rehabilitation center; and
(6) a diagnostic, laboratory or imaging center.
"Health care professional." A physician, pharmacist or other
health care practitioner who is licensed, accredited or
certified to perform specified medical or ancillary services or
pharmacy services within the scope of his or her license,
accreditation, certification or other appropriate authority and
consistent with State law.
"Health insurer." A company or health insurance entity
licensed in this Commonwealth to issue an individual or group
health, sickness or accident policy or subscriber contract or
certificate or plan that provides medical or health care
coverage by a health care facility or licensed health care
provider that is offered or governed under any of the following:
(1) Article XXIV or another provision of the act of May
17, 1921, (P.L.682, No.284), known as The Insurance Company
Law of 1921.
(2) The act of December 29, 1972 (P.L.1701, No.364),
known as the Health Maintenance Organization Act.
(3) The act of May 18, 1976 (P.L.123, No.54), known as
the Individual Accident and Sickness Insurance Minimum
Standards Act.
(4) 40 Pa.C.S. Ch. 61 (relating to hospital plan
corporations) or Ch. 63 (relating to professional health
services plan corporations).
"Marketer." A person or entity that markets, promotes, sells
or distributes a discount plan, including a private label entity
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that places its name on and markets or distributes a discount
plan pursuant to a marketing agreement with a discount plan
organization.
"Medical services." Maintenance care of or preventive care
for the human body or care, service or treatment of an illness
or dysfunction of or injury to the human body. The term
includes, but is not limited to, physician care, inpatient care,
hospital surgical services, emergency services, ambulance
services, laboratory services and medical equipment and
supplies. The term does not include pharmacy services or
ancillary services.
"Medicare prescription drug plan." A plan that provides a
Medicare Part D prescription drug benefit in accordance with the
requirements of the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003 (Public Law 108-172, 117 Stat. 2066)
and the Medicare Improvements for Patients and Providers Act of
2008 (Public Law 110-275, 122 Stat. 2494).
"Member." An individual who pays fees, dues, charges or
other consideration in exchange for the right to receive the
benefits of a discount plan. The term does not include any
individual who enrolls in a patient access program.
"Patient access program." A voluntary program sponsored by a
pharmaceutical manufacturer, or a consortium of pharmaceutical
manufacturers, that provides free or discounted health care
products directly to low-income or uninsured individuals either
through a discount card or direct shipment.
"Person." An individual, a corporation, a partnership, an
association, a joint venture, a joint stock company, a trust, an
unincorporated organization, any similar entity or any
combination of the foregoing.
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"Pharmacy services." Pharmaceutical supplies and
prescription drugs.
"Provider." A health care professional or facility that has
contracted, directly or indirectly, with a discount medical plan
organization to provide medical or ancillary services to members
or with a discount prescription drug plan organization to
provide pharmacy services to members.
"Provider network." An entity that negotiates directly or
indirectly with a discount medical plan organization on behalf
of more than one provider to provide medical or ancillary
services to members or with a discount prescription drug plan
organization on behalf of more than one provider to provide
pharmacy services to members.
Section 4. Scope and applicability.
(a) Scope.--This act applies to all discount plan
organizations doing business in this Commonwealth.
(b) Applicability.--A discount plan organization that is a
health insurer:
(1) is not required to obtain a certificate of
registration under section 5, except that it or any of its
subsidiaries or affiliates that operate as a discount plan
organization in this State shall obtain a certificate of
registration under section 5 and comply with all other
provisions of this act; but
(2) is required to comply with sections 9, 10, 11, 12
and 13 and report, in the form and manner the department may
require, any of the information described in section 15(b)
(2), (3) or (4) that is not otherwise already reported.
Section 5. Registration requirements.
(a) General rule.--Before doing business in this
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Commonwealth as a discount plan organization, a person shall:
(1) be authorized to transact business in this
Commonwealth under this act; and
(2) obtain a certificate of registration from the
department to operate as a discount plan organization.
(b) Application.--An application or renewal application for
a certificate of registration to operate as a discount plan
organization shall:
(1) be in a form prescribed by the department and
published in the Pennsylvania Bulletin;
(2) be verified by an officer or authorized
representative of the applicant;
(3) be accompanied by a fee in an amount equal to that
required for a license or annual renewal for a manager or
exclusive general agent for a domestic insurance company, as
specified in section 612-A(4) of the act of April 9, 1929
(P.L.177, No.175), known as The Administrative Code of 1929;
(4) include information on whether:
(i) a previous application for a certificate of
registration or licensure has been denied, revoked,
suspended or terminated for cause;
(ii) the applicant is under investigation for or the
subject of any pending action or has been found in
violation of any statute or regulation in any
jurisdiction within the previous five years;
(iii) the applicant has established an Internet
website to conform to the requirements of section 11(b);
and
(5) include information, as the department may require,
that permits the department, after reviewing all of the
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information submitted pursuant to this subsection, to make a
determination that the applicant:
(i) is financially responsible;
(ii) has adequate expertise or experience to operate
a discount plan organization; and
(iii) is of good character.
(c) Review of application.--After the receipt of an
application filed under subsection (b), the department shall
review the application and notify the applicant of any
deficiencies in the application.
(d) Decision on application.--Within 90 days after the date
of receipt of a completed application, the department shall:
(1) issue a certificate of registration if the
department is satisfied that the applicant:
(i) met the requirements of subsection (b); and
(ii) has the required minimum capital in accordance
with section 6; or
(2) disapprove the application and state the grounds for
disapproval.
(e) Internet website.--Prior to issuance of a certificate of
registration by the department, a discount plan organization
shall establish an Internet website in order to conform to the
requirements of section 11(b).
(f) Certificate of registration.--
(1) A certificate of registration is effective for one
year, unless, prior to its expiration, it is renewed in
accordance with this subsection or suspended or revoked in
accordance with subsection (g).
(2) At least 90 days before a certificate of
registration expires, a discount plan organization shall
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submit:
(i) a renewal application form; and
(ii) the renewal fee.
(3) The department shall renew the certificate of
registration of each holder that meets the requirements of
this act and pays the appropriate renewal fee required by
this act.
(g) Suspension, nonrenewal and revocation.--
(1) The commissioner may suspend the authority of a
discount plan organization to enroll new members or refuse to
renew or revoke a discount plan organization's certificate of
registration if the commissioner finds that any of the
following conditions exist:
(i) the discount plan organization is not operating
in compliance with this act;
(ii) the discount plan organization does not have
the minimum net worth as required under section 6;
(iii) the discount plan organization has advertised,
merchandised or attempted to merchandise its services in
such a manner as to misrepresent its services or capacity
for service or has engaged in deceptive, misleading or
unfair practices with respect to advertising or
merchandising; or
(iv) the continued operation of the discount plan
organization would be hazardous to its members.
(2) If the department has cause to believe that grounds
for the nonrenewal, suspension or revocation of a certificate
of registration exists, the department shall notify the
discount plan organization in writing, specifically stating
the grounds for the refusal to renew or suspension or
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revocation and informing the discount plan organization that
it may pursue a hearing on the matter in accordance with the
provisions of 2 Pa.C.S. Ch. 5 Subch. A (relating to practice
and procedure of Commonwealth agencies).
(3) When the certificate of registration of a discount
plan organization is suspended, revoked or not renewed, the
discount plan organization shall proceed, immediately
following the effective date of the order of revocation or,
in the case of a nonrenewal, the date of expiration of the
certificate of registration, to wind up its affairs
transacted under the certificate of registration. The
discount plan organization shall not engage in any further
advertising, solicitation, collecting of fees or renewal of
contracts.
(4) (i) The commissioner shall, in his order suspending
the authority of the discount plan organization to enroll
new members, specify the period during which the
suspension is to be in effect and the conditions, if any,
that must be met by the discount plan organization prior
to reinstatement of its certificate of registration to
enroll members.
(ii) The commissioner may rescind or modify the
order of suspension prior to the expiration of the
suspension period.
(iii) The certificate of registration of a discount
plan organization shall not be reinstated unless
requested by the discount plan organization. The
commissioner shall not grant the request for
reinstatement if the commissioner finds that the
circumstances for which the suspension occurred still
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exist or are likely to recur.
(h) Penalty.--In lieu of suspending or revoking a discount
plan organization's certificate of registration under subsection
(g), whenever the discount plan organization has been found to
have violated any provision of this act, the commissioner may:
(1) issue and cause to be served upon the organization
charged with the violation a copy of the findings and an
order requiring the organization to cease and desist from
engaging in the act or practice that constitutes the
violation; and
(2) impose a monetary penalty of not more than $5,000
for each violation.
(i) Notice of action in other jurisdiction.--A discount plan
organization shall notify the department within ten days
whenever the discount plan organization's certificate of
registration, or other form of authority, to operate as a
discount plan organization in another jurisdiction is suspended,
revoked or nonrenewed in that jurisdiction.
(j) Exemption.--A provider who provides discounts to his or
her own patients without any cost or fee of any kind to the
patient for medical services or ancillary services the provider
directly provides is not required to obtain and maintain a
certificate of registration under this act as a discount medical
plan organization.
Section 6. Minimum capital requirements.
(a) Minimum capital requirement for applicant.--Before the
department issues a certificate of registration to any person
required to obtain a certificate of registration under section
5, the person seeking to operate a discount plan organization
shall have a net worth of at least $150,000.
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(b) Minimum capital requirement for registrant.--A discount
plan organization shall at all times maintain a net worth of at
least $150,000.
(c) Adjustment.--At the commissioner's discretion, the
amounts in subsections (a) and (b) may be adjusted annually for
inflation.
Section 7. Surety bond or deposit requirements.
(a) Surety bond.--A registered discount plan organization
shall maintain in force a surety bond in its own name in an
amount not less than $35,000 to be used in the discretion of the
commissioner to protect the financial interest of members. The
bond shall be issued by an insurance company licensed to do
business in this Commonwealth.
(b) Deposit.--In lieu of the bond specified in subsection
(a), a registered discount plan organization may deposit and
maintain deposited with the department, or at the discretion of
the commissioner, with any organization or trustee acceptable to
the commissioner through which a custodial or controlled account
is utilized, cash, securities or any combination of these or
other measures that are acceptable to the commissioner with at
all times having a market value of not less than $35,000.
(c) Income on deposit.--All income from a deposit made under
subsection (b) shall be an asset of the discount plan
organization.
(d) Exemption from levy.--Except for the commissioner, the
assets or securities held in this Commonwealth as a deposit
under subsection (a) or (b) shall not be subject to levy by a
judgment creditor or other claimant of the discount plan
organization.
(e) Adjustment.--At the commissioner's discretion, the
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amounts in subsections (a) and (b) may be adjusted annually for
inflation.
Section 8. Examinations and investigations.
(a) General rule.--The department and any of its examiners
may examine or investigate the business and affairs of any
discount plan organization to protect the interests of the
residents of this State based on the following reasons,
including, but not limited to, complaint indices, recent
complaints, information from other states or as the commissioner
deems necessary.
(b) Conduct of examinations.--An examination or
investigation conducted as provided in subsection (a) shall be
performed in accordance with the provisions of Article IX of the
act of May 17, 1921 (P.L.789, No.285), known as The Insurance
Department Act of 1921.
(c) Discovery.--The department or any of its examiners may:
(1) order any discount plan organization or applicant
that operates or any applicant that anticipates operating a
discount plan organization to produce any records, books,
files, advertising and solicitation materials or other
information; and
(2) take statements under oath to determine whether the
discount plan organization or applicant is in violation of
the law or is acting contrary to the public interest.
(d) Expenses.--A discount plan organization or applicant
that is the subject of the examination or investigation shall
pay the expenses incurred in conducting the examination or
investigation. Failure by the discount plan organization or
applicant to pay the expenses is grounds for denial of a
certificate of registration to operate as a discount plan
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organization or revocation of a certificate of registration to
operate as a discount plan organization.
Section 9. Charges and fees, refund requirements and bundling
of services.
(a) Charges and fees.--A discount plan organization may
charge a periodic charge as well as a reasonable one-time
processing fee for a discount plan.
(b) Refund requirements.--
(1) (i) If a member cancels his or her membership in a
discount plan organization within the first 30 days after
the date of receipt of the written document for the
discount plan described in section 13(d), the member
shall receive a reimbursement of all periodic charges and
the amount of any one-time processing fee that exceeds
$30 upon return of the discount plan card to the discount
plan organization.
(ii) Cancellation occurs when notice of cancellation
is given to the discount plan organization. Notice of
cancellation is deemed given when delivered by hand or
deposited in a mailbox, properly addressed and postage
prepaid to the mailing address of the discount plan
organization or e-mailed to the e-mail address of the
discount plan organization.
(iii) A discount plan organization shall return any
periodic charge charged or collected after the member has
returned the discount plan card or given the discount
plan organization notice of cancellation.
(2) If the discount plan organization cancels a
membership for any reason other than nonpayment of charges by
the member, the discount plan organization shall make a pro
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rata reimbursement of all periodic charges to the member.
(c) Bundling of services.--When a marketer or discount plan
organization sells a discount plan in conjunction with any other
products, the marketer or discount plan organization shall:
(1) provide the charges for each discount plan in
writing to the member; or
(2) reimburse the member for all periodic charges for
the discount plan and all periodic charges for any other
product if the member cancels his or her membership in
accordance with subsection (b)(1).
(d) Exemption.--Any discount plan organization that is a
health insurer that provides a discount plan product that is
incidental to an insurance product offered by the health insurer
is not subject to this section.
Section 10. Charge and form filing requirements.
(a) List of fees and charges.--A discount plan organization
shall file with the department a list of all prospective member
fees and charges associated with the discount plan.
(b) Forms.--In addition to the information required under
subsection (a), a discount plan organization shall file all
forms, including the form for the written document described
under section 13(d), to be used by a discount plan organization
with the department prior to use. Each form filed shall be
identified in the manner as may be required by the department.
Section 11. Provider agreements and provider listing
requirements.
(a) Provider agreements.--
(1) A discount medical plan organization shall have a
written provider agreement with all providers offering
medical or ancillary services to its members. A discount
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prescription drug plan organization shall have a written
provider agreement with all providers offering pharmacy
services to its members. The written provider agreement may
be entered into directly with the provider or indirectly with
a provider network to which the provider belongs.
(2) A provider agreement between a discount plan
organization and a provider shall provide the following:
(i) a list of the services to be provided at a
discount;
(ii) the amount or amounts of the discounts or,
alternatively, a fee schedule that reflects the
provider's discounted rates; and
(iii) that the provider will not charge members more
than the discounted rates.
(3) A provider agreement between a discount plan
organization and a provider network shall require that the
provider network have written agreements with its providers
that:
(i) contain the provisions described in paragraph
(2);
(ii) authorize the provider network to contract with
the discount plan organization on behalf of the provider;
and
(iii) require the provider network to maintain an
up-to-date list of its contracted providers and to
provide the list on a monthly basis to the discount plan
organization.
(4) A provider agreement between a discount plan
organization and an entity that contracts with a provider
network shall require that the entity, in its contract with
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the provider network, require the provider network to have
written agreements with its providers that comply with
paragraph (3).
(5) The discount plan organization shall maintain a copy
of each active provider agreement into which it has entered.
(b) Provider listing requirements.--
(1) A discount plan organization shall maintain on an
Internet website an up-to-date list of the names and
addresses of the providers with which it has contracted
directly or through a provider network. The Internet website
address shall be prominently displayed on all of its
advertisements, marketing materials, brochures and discount
plan cards.
(2) This subsection applies to providers that the
discount plan organization has contracted with directly as
well as providers that are members of a provider network with
which the discount plan organization has contracted.
Section 12. Marketing requirements.
(a) General rule.--A discount plan organization may market
directly or contract with other marketers for the distribution
of its product.
(b) Marketing agreement.--
(1) A discount plan organization shall have an executed
written agreement with a marketer prior to the marketer's
marketing, promoting, selling or distributing the discount
plan.
(2) An agreement between a discount plan organization
and the marketer shall prohibit a marketer from using
advertising, marketing materials, brochures and discount plan
cards without the discount plan organization's approval in
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writing.
(3) A discount plan organization shall be bound by and
responsible for the activities of a marketer that are within
the scope of the marketer's agency relationship with the
organization.
(c) Approval of marketing materials.--A discount plan
organization shall approve in writing all advertisements,
marketing materials, brochures and discount cards used by
marketers to market, promote, sell or distribute the discount
plan prior to their use.
(d) Filing requirement.--Upon request, a discount plan
organization shall submit to the commissioner all advertising,
marketing materials and brochures regarding a discount plan.
Section 13. Marketing restrictions and disclosure requirements.
(a) General rule.--
(1) All advertisements, marketing materials, brochures,
discount plan cards and any other communications of a
discount plan organization provided to prospective members
and members shall be truthful and not misleading in fact or
in implication.
(2) An advertisement, any marketing material, brochure,
discount plan card or other communication is misleading in
fact or in implication if it has a capacity or tendency to
mislead or deceive based on the overall impression that it is
reasonably expected to create within the segment of the
public to which it is directed.
(b) Restrictions.--A discount plan organization shall not:
(1) except as otherwise provided in this act or as a
disclaimer of any relationship between discount plan benefits
and insurance, or as a description of an insurance product
20110HB0847PN0876 - 19 -
connected with a discount plan, use in its advertisements,
marketing material, brochures and discount plan cards the
term "insurance";
(2) except as otherwise provided under State law,
describe or characterize the discount plan as being insurance
whenever a discount plan is bundled with an insurance product
and the insurance benefits are incidental to the discount
plan benefits;
(3) use in its advertisements, marketing material,
brochures or discount plan cards the terms "health plan,"
"coverage," "copay," "copayments," "deductible," "preexisting
conditions," "guaranteed issue," "premium," "PPO," "preferred
provider organization" or other terms in a manner that could
reasonably mislead an individual into believing that the
discount plan is health insurance;
(4) use language in its advertisements, marketing
material, brochures and discount plan cards with respect to
being registered by the department in a manner that could
reasonably mislead an individual into believing that the
discount plan is insurance or has been endorsed by the
Commonwealth;
(5) make misleading, deceptive or fraudulent
representations regarding the discount or range of discounts
offered by the discount plan card or the access to any range
of discounts offered by the discount plan card;
(6) have restrictions on access to discount plan
providers, including, except for hospital services, waiting
periods and notification periods; or
(7) pay providers any fees for services or collect or
accept money from a member to pay a provider for services
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provided under the discount plan, unless the discount plan
organization has an active certificate of authority to act as
a third party administrator under Article VIII of the act of
May 17, 1921 (P.L.789, No. 285), known as The Insurance
Department Act of 1921.
(c) General disclosures.--
(1) A discount plan organization shall make the
following general disclosures along with any enrollment forms
given to a prospective member:
(i) that the plan is a discount plan and is not
insurance coverage;
(ii) that the range of discounts for services
provided under the plan will vary depending on the type
of provider and service received;
(iii) unless the discount plan organization has an
active certificate of authority to act as a third party
administrator as described in subsection (b)(7), that the
plan does not make payments to providers for the services
received under the discount plan;
(iv) that the plan member is obligated to pay for
all services, but will receive a discount from those
providers that have contracted with the discount plan
organization; and
(v) the toll-free telephone number and Internet
website address for the registered discount plan
organization for prospective members and members to
obtain additional information about and assistance on the
discount plan and up-to-date lists of providers
participating in the discount plan.
The disclosures shall be made in writing in not less than 12-
20110HB0847PN0876 - 21 -
point font and shall appear on the first content page of any
advertisements, marketing materials or brochures made
available to the public relating to a discount plan.
(2) If the initial contact with a prospective member is
by telephone, the disclosures required under paragraph (1)
shall be made orally and included in the initial written
materials that describe the benefits under the discount plan
provided to the prospective or new member.
(d) Additional disclosures.--
(1) In addition to the general disclosures required
under subsection (c), each discount plan organization shall
provide to:
(i) each prospective member, at a time not later
than the enrollment application form is executed by the
prospective member, information that describes the terms
and conditions of the discount plan, including any
limitations or restrictions on the refund of any
processing fees or periodic charges associated with the
discount plan; and
(ii) each new member a written document that
contains the terms and conditions of the discount plan.
(2) The document required under paragraph (1)(ii) shall
be written in simple words and with sentences as short as
possible and shall include the following information:
(i) the name of the member;
(ii) the benefits to be provided under the discount
plan;
(iii) any processing fees and periodic charges
associated with the discount plan, including any
limitations or restrictions on the refund of any
20110HB0847PN0876 - 22 -
processing fees and periodic charges;
(iv) the mode of payment of any processing fees and
periodic charges, such as monthly, quarterly, etc., and
procedures for changing the mode of payment;
(v) any limitations, exclusions or exceptions
regarding the receipt of discount plan benefits;
(vi) any waiting periods for certain services under
the discount plan;
(vii) procedures for obtaining discounts under the
discount plan, such as requiring members to contact the
discount plan organization to make an appointment with a
provider on the member's behalf or to order pharmacy
services on the member's behalf;
(viii) cancellation procedures, including
information on the member's 30-day cancellation rights
and refund requirements and procedures for obtaining
refunds;
(ix) renewal, termination and cancellation terms and
conditions;
(x) procedures for adding new members to a family
discount plan, if applicable;
(xi) procedures for filing complaints under the
discount plan organization's complaint system and
information that, if the member remains dissatisfied
after completing the organization's complaint system, the
plan member may contact the department; and
(xii) the name and mailing address of the registered
discount plan organization or other entity where the
member may make inquiries about the plan, send
cancellation notices and file complaints.
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Section 14. Notice of change in name or address.
A discount plan organization shall provide the department at
least 30 days' advance notice of any change in the discount plan
organization's name, address, principal business address or
mailing address or Internet website address.
Section 15. Annual reports.
(a) Requirements.--If the information required under
subsection (b) is not provided at the time of renewal of a
certificate of registration under section 5, a discount plan
organization shall file an annual report with the department in
the form prescribed by the department within three months after
the end of each calendar year.
(b) Contents.--The report shall include:
(1) audited financial statements prepared in accordance
with generally accepted accounting principles certified by an
independent certified public accountant, including the
organization's balance sheet, income statement and statement
of changes in cash flow for the preceding year, except that,
subject to the approval of the department, an organization
that is an affiliate of a parent entity that is publicly
traded and that prepares audited financial statements
reflecting the consolidated operations of the parent entity
may submit the audited financial statement of the parent
entity and a written guaranty that the minimum capital
requirements required under section 6 will be met by the
parent entity instead of the audited financial statement of
the organization;
(2) if different from the initial application for a
certificate of registration or at the time of renewal of a
certificate of registration or the last annual report, as
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appropriate, a list of the names and residence addresses of
all persons responsible for the conduct of the organization's
affairs, together with a disclosure of the extent and nature
of any contracts or arrangements with these persons and the
discount plan organization, including any possible conflicts
of interest;
(3) the number of discount plan members in this
Commonwealth; and
(4) any other information relating to the performance of
the discount plan organization that may be required by the
department.
(c) Penalty.--A discount plan organization that fails to
file an annual report in the form and within the time required
by this section shall:
(1) pay a penalty of up to $500 each day for the first
ten days during which the violation continues;
(2) pay a penalty of up to $1,000 each day after the
first ten days during which the violation continues; and
(3) upon notice by the commissioner, lose its authority
to enroll new members or to do business in this Commonwealth
while the violation continues.
Section 16. Compliance officer.
A discount plan organization shall designate and provide the
department with the name, address and telephone number of a
discount plan compliance officer responsible for ensuring
compliance with the provisions of this act.
Section 17. Penalties.
(a) Civil penalties.--In addition to the penalties and other
enforcement provisions of this act, any person who willfully
violates this act is subject to a civil penalty of not more than
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$10,000 for each violation. Penalties imposed against an
individual discount plan organization under this act shall not
exceed $500,000 in the aggregate in any single calendar year.
(b) Insurance fraud.--A person that willfully operates as or
aids and abets another operating as a discount plan organization
in violation of section 5(a) commits insurance fraud and shall
be subject to the penalties applicable to offenses under 18
Pa.C.S. § 4117 (relating to insurance fraud), as if the
unregistered discount plan organization were an unauthorized
insurer, and the fees, dues, charges or other consideration
collected from the members by the unregistered discount plan
organization or marketer were insurance premiums.
(c) Theft.--A person that collects fees for purported
membership in a discount plan, but purposefully fails to provide
the promised benefits, commits a theft and upon conviction is
subject to the penalties applicable to offenses under 18 Pa.C.S.
Ch. 39 (relating to theft and related offenses). In addition,
upon conviction, the person shall be ordered to pay restitution
to persons aggrieved by the violation of this act. Restitution
shall be ordered in addition to a fine or imprisonment, but not
in lieu of a fine or imprisonment.
Section 18. Injunctions.
(a) Injunctive relief.--In addition to the penalties and
other enforcement provisions of this act, the commissioner may
seek both temporary and permanent injunctive relief when:
(1) a discount plan is being operated by a person or
entity that is not registered pursuant to this act; or
(2) a person, entity, discount medical plan organization
or discount prescription drug plan organization has engaged
in any activity prohibited by this act or any regulation
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adopted pursuant to this act.
(b) Venue.--The venue for any proceeding brought under this
section shall be in the Commonwealth Court.
(c) Procedure.--The commissioner's authority to seek
injunctive relief is not conditioned on having conducted any
proceeding pursuant to the provisions of the 2 Pa.C.S. (relating
to administrative law and procedure).
Section 38. Regulations.
The department may promulgate rules and regulations to
administer and enforce this act.
Section 39. Applicability.
A person doing business in this Commonwealth as a discount
medical plan organization or a discount prescription drug plan
organization on or before the effective date of this act shall
have six months following the effective date of this act to come
into compliance with the requirements of this act.
Section 40. Effective date.
This act shall take effect immediately.
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