As many of you know the BCE issued a notice in 1996 stating the following:

“As a general rule, any pre-paid plan which involves the assumption of risk may be the business of insurance. The person or organization intending to offer any pre-paid plan, whether it is a plan of prepayment for a certain number of visits, or a certain period of time, may be required to conform with the provisions of the Insurance Code and Health & Safety Code.

Prior to instituting such a program, licensees should contact the following agencies and arrange and submit to them a detailed description of the proposed plan.”

At that time the two agencies were the California Department of Insurance and Department of Corporations which later became the Department of Managed Health Care.

Many of you have attempted to do what the BCE asked of you and many never tried. Recently I attempted to help a chiropractor do what was being asked of him the Department of Insurance said to contact the Department of Managed Health Care. The Department of Managed Health Care was unable to assist in any way.

So plan B: using my affiliate membership with the California Chiropractic Association I spoke with Cris Forsyth, Governmental Affairs Director, and explained the problem. Cris met with the BCE and here is what I found out:

  • They had already pulled the 1996 notice from their website.
  • They agreed that it was poorly worded and sounded like they would discipline any DC who didn’t get a letter from DMHC or DOI.
  • Currently they don’t offer any official guidance relative to pre-paid plans.
  • They did explain that the concern for DCs is to avoid offering a plan that would qualify as an insurance product.
  • As long as the prepaid plan simply stipulates how many visits a patient receives, as opposed to a list of covered services one might need over a specific period of time, they should be ok.
  • They recommend having a prepaid plan vetted by an attorney to avoid running afoul of the insurance code regarding what constitutes an insurance product.
  • BCE doesn’t have purview over this matter. If DMHC or DOI ruled a DC was illegally offering an insurance product, they could, in addition to discipline they could levy under their authority, notify BCE.
  • BCE would then investigate and if they found it was an issue of fraud, as opposed to a simple error in how the plan was structured, they could also discipline the DC.

Lisa’s bottom line: If you are offering a pre-paid plan have it vetted by an attorney familiar with these types of plans.

If you have worked with an attorney and would like to share their information please do so.