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Discount drug cards can hurt
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May 14, 1999: 7:51 a.m. ET
Watchdogs say health, prescription cards don't always deliver on promises
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NEW YORK (CNNfn) - You've no doubt seen the ads -- prescription drug and health care cards offering deep discounts for consumers.
Many claim they can save you 50 percent or more on out-of-pocket pharmaceutical costs -- an especially tempting proposition for senior citizens who spend huge portions of their income on prescription drugs and often get no help from insurance.
But some industry insiders say these aggressive marketing pitches aren't always what they're cracked up to be. And in some cases, they warn, consumers are getting less than you bargained for.
"There's a lot of [controversy] going on about these cards right now," said Richard Beck, executive vice president of the Arkansas Pharmacists Association, a critic of discount card programs. "These cards promote discounts of up to 60 percent and they are largely inaccurate."
How have they been getting away with it?
"Nobody's challenged them," Beck said.
The cards
For the most part, prescription discount cards target retired citizens, who no longer receive health care coverage from their employers. After age 65, many Americans rely on Medicare for their health care needs. But Medicare doesn't cover prescription drugs.
The programs are also marketed to the uninsured, and those who have cut back on all but catastrophic coverage on their existing health plans to save money.
In a sense, the discount cards are looking to pick up where traditional insurance and the federal government leave off.
Stepping back
To be fair, there are lots of discount health card programs marketed by reputable companies.
For example, Sears, Roebuck & Co. (S), some state offices of the American Automobile Association (AAA) and the American Association of Retired Persons (AARP) offer discount prescription membership clubs.
Sears charges $40, $50 and $89 a year for its discount cards, which offer a range of discounts on pharmaceuticals and dental care. Its promotional material says you can save 20 percent on brand name drugs, and up to 60 percent on generics using its cards.
But Sears spokeswoman Jan Drummond said members who call with any complaint about the program, or who simply wish to cancel their membership mid-year, get full refunds. No questions asked.
Some companies strictly offer discounts on pharmaceuticals. The need for that alone is great - the prescription drug market reached $92 billion last year.
Increasingly, though, the card programs popping up across the country offer a smorgasbord of discounts on ancillary health services, including dental, vision and chiropractic care.
Comprehensive Health Group, for example, offers two different discount card programs that include a mixture of dental, vision, pharmaceutical and chiropractic savings.
"The marketplace for these cards has grown tremendously," said Sander Slomovic, CHG's vice president of provider relations for relations. "It's not just seniors who are buying them. These cards provide all the ancillary [services] that many Americans do not have benefits for. It's kind of like a Sam's Club membership for your health care."
He noted the discounts made possible by CHG's cards vary dramatically, but can range from 10 percent to 60 percent on average. The first visit to a therapist in CHG's chiropractic network, he said, will translate into a 50 percent savings.
Likewise, the mail-order pharmacy card "offers a very high rate of savings" for consumers since the middle man, or pharmacy, is cut out of the equation.
Recently, Slomovic said, medical doctors have climbed on board. Many have agreed to treat card-carrying patients at negotiated discount rates.
CGH sells its discount card, which includes all the ancillary benefits plus the physician discounts, for $170 a year. Its card offering only ancillary benefits costs $100 a year.
The cards are good for the whole family and come with a money-back guarantee.
Warnings
Problems arise with some card companies, however, when consumers misunderstand what it is that they are paying for -- or accept the marketing pitches of these companies on blind faith.
Last summer, Iowa's Attorney General Tom Miller issued a consumer advisory to warn the public about the hazards of "discount cards."
"Be wary," it said. "The cards may cost hundreds of dollars per year, and some companies promise much more than they deliver."
It further stated that some companies promise their cards can be used for discounts of up to 40 percent at certain pharmacies. But, after paying for a card, consumers discover that their pharmacy doesn't accept it.
Moreover, some discount cards have been sold with promises that consumers can save on dental care, optometry services, and chiropractic service. But when consumers go to use them, it said, they often find that their local health-care professionals don't accept the card.
Beck, of the Arkansas Pharmacists Association, said that's been happening in his state, too. His organization, along with several senior groups, helped push through state legislation last month aimed at eliminating deceptive marketing of discount cards.
"A lot of consumers get confused and think that these are insurance cards," he said. "It's deceptive trade practices. Most [companies] promise wild, big discounts -- they just don't deliver."
Beck said repeated complaints have been filed against card companies that convince consumers their local pharmacist will honor their discount. Too often, however, those discounted rates are not available to cash-paying customers or discount cardholders. Instead, they are the rates that the pharmacist has agreed to accept from larger insurance companies.
The legislation also mandated that the cards must be able to deliver the kind of discounts they advertise.
The other side
In defense of the industry, Slomovic of CHG said his company clearly states on its membership cards and recruiting literature that the discount program is not an insurance policy.
Same goes, he said, for the 100 or so discount card companies he's had contact with.
(A call to the Governor's Office of Consumer Affairs in Georgia revealed no consumer complaints have been filed against CHG.)
"I don't really know where [these complaints in Arkansas] are coming from," Slomovic said. "We caution our customers and providers as well that they can't use these cards as insurance. It's totally separate."
Tips
If you're still thinking those discounts sound appealing, by all means look into it. But use these tips from the Iowa Attorney General as guidance:
--Never sign up for a prescription or health care discount card without finding out for certain that your pharmacy or health care providers accept it. Also, check with your health insurance company for its thoughts.
--Don't rely on sales pitches that a certain rate of pharmacies or health care providers accept the card (such as, "over 50 percent of pharmacies accept the card.") These claims may be misleading or simply false.
--Remember, senior citizens often already receive discounted prices from many pharmacies and other health providers. Check with them first, and never pay large sums in advance for a discount card.
--Lastly, call the consumer affairs or Attorney General's office in your individual state to find out if any complaints have been filed on the company offering you the card.
(You can also click here for AARP's tips on keeping drug costs affordable)
Going with a company that offers money-back guarantees can't hurt either. 
--by staff writer Shelly K. Schwartz
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