Nossaman Prepares First Discount Fee Plan License Application Under Knox-Keene Act

Nossaman News Release

SAN FRANCISCO (March 1, 2006) - Nossaman's Healthcare Practice Group today announced preparation of the first application for the licensure of a discount fee plan. The license application was filed on behalf of client First Dental Health under the Knox-Keene Health Care Service Plan Act of 1975, California's regulatory code for HMO's. The application was filed with the California Department of Managed Health Care on February 7, 2006.

Discount fee plans provide access to networks of providers who have agreed contractually to charge reduced fees for their services. Participants or "subscribers" pay a nominal fee to join the plan, allowing them to obtain medical treatment at reduced rates.

"Discount fee plans are an emerging element in our ever-changing healthcare delivery system. They fill a void in healthcare and are of most benefit to employees or independent contractors who are not eligible for health insurance, have a high-deductible plan, a Health Savings Account ("HSA"), cannot afford traditional insurance, or who are on a work probationary period and would like access to discount outpatient medical services without high out-of-pocket expenses. Discount plans will become more prevalent, now in greatly improved forms under the regulatory direction of the Department of Managed Health Care," said Nossaman Partner and Healthcare Practice Group leader Richard Spohn.

In December 2005, the Department of Managed Health Care declared that discount fee plans are subject to the Knox-Keene Act and therefore must become licensed. The Department has launched scores of investigations and filed a number of enforcement actions against unlicensed discount fee plans. However, First Dental Health is not among them, having voluntarily decided in August, 2005 to seek licensure as a sound business decision.

For many years Nossaman has assisted applicants for both full service and specialized plan licensure, large and small, private and public, and expertly serves them following licensure. Our partner John T. Knox was the co-author of the Knox-Keene Act. Over the years we have worked closely with clients in conceptualizing and structuring many innovations under the Act. Now the firm is once again at the forefront of a major healthcare industry development, discount fee plans and Knox-Keene licensure for them.

We have worked closely with the Department counsel and staff in preparing this prototype discount fee licensure application and have a solid understanding of what they are expecting. The just-filed application is a carefully tailored adaptation of the format in the regulations designed for the standard pre-payment, risk-bearing model. The recent application entails requests for various waivers and numerous Department-encouraged assertions of "not applicable." It is a nuanced application, distinctly crafted for discount plans by Nossaman's experienced lawyers.

Nossaman is prepared to assist other applicants for licensure as discount fee plans. The Department's campaign to bring unlicensed discount fee plans into regulatory compliance is well underway. Nossaman is applying its many years of skilled and insightful representation of health care service plans to the service of this new generation of applicants.

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