Discount medical plan organizations (DMPOs) are something that insurance professionals are encountering in the marketplace and sometimes in the questions of their customers. But what are DMPOs and what should the professional know about them?
A comment by veteran television newscaster Dan Rather is apropos here. When giving courtroom testimony some years ago, he said (and I am paraphrasing): If it has feathers like a duck, quacks like a duck and waddles like a duck, then it’s probably safe to say it is a duck.
This applies to DMPOs in the opposite: While a DMPO may remind a consumer of a medical or life insurance plan, in fact, it is not insurance.
Instead, in return for a monthly membership fee, the DMPO provides discounts for services rendered to the member. The medical providers include physicians, chiropractors, dentists, long term care facilities, hospitals, optometrists, and pharmacies–all of whom sign an agreement with the DMPO to provide the service to DMPO members at a discount.
The DMPO member is free to choose any service provider on the DMPO list. The DMPO does not direct members to any particular provider, nor pay for the service or reimburse the member for the cost. Membership in the DMPO only entitles the member to a discount.
The key: The member is responsible for paying the cost of any services.
A person who applies to be a member does not have to provide medical information. Again, since this is not insurance, the member’s health is not a consideration.
The DMPO contracts with individuals, groups and institutions to sell memberships. For example, credit card issuers and banks may have marketing agreements with a DMPO. Much of the marketing is done by direct mail and telephone solicitation, and, like any solicitation, if not done properly, has the potential for abuse.
To help ensure the integrity of the program, a DMPO may require telephone confirmation by the consumer to computer questions. But, even that is not free from potential abuse (e.g., the salesperson may dial the telephone, and prompt the consumer as to what to say and when).