Medical service plan
under investigation

Officials are concerned that
the plan may be mistaken
for health insurance

By Lyn Danninger
Star-Bulletin

State insurance investigators are looking into a Texas company that has quietly begun selling discounted health care services in Hawaii.

Insurance Commissioner Wayne Metcalf said he is concerned that a plan being marketed by Care Entree may be mistaken for health insurance.

Care Entree, owned by Grand Prairie, Texas-based The Cappella Group Inc., says it has contracted with local physicians and hospitals to provide discounted medical services to its customers in exchange for a monthly fee, which ranges from $9.95 to $59.95.

Care Entree says it is not an insurance company, but the state Department of Commerce and Consumer Affairs insurance division began inquiring after seeing company marketing materials. Investigators have been unable to find physicians or hospitals participating in the plan.

The company claims to have contracted with Kuakini Medical Center, Straub Clinic and Hospital, and other dentists, pharmacies, vision specialists and physicians.

"We made inquiries," Metcalf said. "Both Straub and Kuakini deny having entered into contracts with them."

Care Entree Oahu salesperson Naomi Kockentiet said members can save 20 percent to 80 percent on most health care services when they sign up with the company and use participating providers.

Kockentiet said the company contracts for medical and surgical services, drug, dental, vision, chiropractic and alternative health care coverage. What type of services are covered depends on which of the company's five programs a customer selects, Kockentiet said.

"I tell them it's a lot like going to Costco. You pay an access fee to get in the door and then you buy your merchandise," she said. "But before you leave you have to pay, but it's at a reduced rate because you are a part of that network."

The company says the program is being used by business and individual members throughout the country who have either not been able to obtain health insurance or have high-deductible insurance policies. It also says it can offer the same negotiated rates on health care services as large insurance companies.

Kockentiet said that as far as she knows there is one other Care Entree sales representative, on the Big Island. The insurance division has found at least two more Care Entree representatives in Hawaii, Metcalf said.

Metcalf said his concern is that consumers and businesses could confuse the company's services with a health insurance plan.

"You need to know what you are getting at a discount from participating providers," Metcalf said. "For that you pay a monthly fee but you still pay full costs less any discount that might be negotiated."

Metcalf said Care Entree does not appear to be an insurance plan.

"What it appears to be is a business scheme by which you pay a monthly fee and the entity to whom you pay the fee then contracts with provider groups, who agree to take patients that are members of that business scheme and treat them at a discount rate," Metcalf said.

If Care Entree is not an insurer, the insurance division would have no authority to monitor the business, Metcalf said.

Which is what the Texas Division of Insurance found when it investigated Care Entree about two years ago to follow up complaints, said Mark Hanna, a spokesman for the Texas Division of Insurance.

"It appeared at that time to be a straight discount program and that we don't consider to be insurance," he said.

No complaints have been filed against Care Entree in Hawaii.

Until contacted by the state insurance division, Kockentiet said she was unaware of state medical insurance requirements. State law mandates that employers with at least two workers pay half the cost of a health insurance plan for employees who work more than 19 hours per week.

The Care Entree program would not comply with state law, Metcalf said.

Kockentiet said in the past three to four months about 25 small businesses and 100 individuals have signed up for the plan. She declined to release the names of these clients.

Care Entree can be used by the uninsured or to fill in gaps in insurance coverage, Kockentiet said. She concedes people she has spoken to so far about the program have initially been confused about how it works, but believes she can overcome that. "I'm not concerned people won't understand, not if I'm able to sit down specifically and present it," she said.

Care Entree and its parent company, The Capella Group Inc., have apparently done well with the program on the mainland. Capella is about to be purchased by the publicly traded Precis Smart Card Systems.

In a press release about the impending sale, Precis noted that Care Entree sales exceeded $5.6 million in 2000, a 337 percent increase over 1999. After the acquisition, Capella Group President and CEO Judith Henkels will become president and chief operating officer of Precis, as well as retaining her current positions. She did not return a telephone message.