I would like to add a segment to my fee-for-service practice whereby I will charge $X annually and patients who enroll in this segment would receive exams and prophylaxis twice per year, and all other services will be offered at a discount. Is this legal?

Depending on how it is structured, the arrangement suggested very well may be insurance. If it is, the provider would need a license to engage in the business of insurance. It is worth noting that where the Pennsylvania Insurance Department has seen the details of similar provider arrangements, it has not been uncommon to find that the arrangement would constitute the business of insurance.

The provider may wish to consult an attorney to evaluate the specifics of the arrangement. That attorney may wish to look at the case of Korn v. Avis, 8 D. & C.3d 640 (1977) in making that evaluation, where six factors are presented to assist in determining whether an arrangement may be considered insurance:

  1. Indemnification of the insured by the insurer.
  2. Profit motive on the part of the insurer.
  3. A future occurrence of a specific, fortuitous event over which the insured and the insurer have no control and the occurrence of which triggers payment.
  4. An element of risk assumed by the insurer which is spread among a large group of insureds with similar risks at stake.
  5. Present payment by the insured of a premium to the insurer which is allocated to a general fund, maintained by the insurer to which all premiums in the same risk group contribute and from which the reimbursement payments are made by the insurer.
  6. The overall objective of the arrangement.


Answer is informational only and not intended as legal advice. Answer may contain excerpts from
 The ADA Practical Guide to Frequently Asked Legal Questions.