:~:;~~
s. 
DEPARTMENT OF HEALTH AND HUMAN 
SERVICES 
OFFICE OF INSPECTOR GENERAL 
INTERNATIONAL MEDICAL CENTERS

SERVICE DELIVERY EVALUATION

OFFICE OF

ANALYSIS AND INSPECTIONS

1. "  INTERNATIONAL MEDICAL CENTERS

SERVICE DELIVERY EVALUATION

RICHARD P. KUSSEROW  DATE OF INSPECTION 
INSPECTOR GENERAL  MACH 1987 
12-86-00096 
CONTROL iOAI- Off ice of Inspector General

The mission of the Office of Inspector General (OIG) is to 
promote the efficiency, effectiveness and integrity 
programs in the United States Department of Health and Human
Services 
(HHS). It does this by developing methods to 
detect and prevent fraud, waste and abuse. Created by 
statute in 1976, the Inspector General keeps both the

Secretary and the Congress fully and currently informed

about programs or management problems and recommends

corrective action. The OIG performs its mission by

conducting audits, investigations and inspections with
approximately 1, 200 staff strategically located around the 
country. 
Off ice of Ana1ysis and Inspections

This report is produced by the Office of Analysis and

Inspections 
(OAI), one of the three major offices within the
OIG. The other two are the Off ice of Audit and the Off ice 
of Investigations. OAI conducts inspections which are

typically, short-term studies designed to determine program

effectiveness, efficiency and vulnerability to fraud or

abuse. 
This Report

Enti t1ed " International Medical Centers Service Delivery
Evaluation, " this study was conducted at the Health Care
Financing Administration  s (HCFA) request to obtain, in an 
objecti ve way, Medicare enrollee attitudes about services 
and medical care received from and through International

(IMC). 
Medical Centers  IMC is the largest Medicare HMO in
the nation. 
The report was prepared by the Office of Analysis and 
Inspections, Reg ion IX and Headquarters, Health Care Branch. 
people: 
Participating in this project were the following 
Headquarters 
San Francisco Region	
Thomas purvis (project Leader)	 Mary Hogan (project Leader) 
Karen Reynolds 
Atlanta Region Staff
 TABLE OF CONTENTS 
SECTION  PAGE 
Executive Summary. 
Background 
II.  purpose. . 
III. 
Methodology. . 
IV.  Findings 
Plan. . 
A. Overall Satisfaction with the 
B. Enrollment. 
C. Explanation of Benefits 
D. Disenrollment . 
E. Utilization of Services 
F. Choice of Physician 
Conclusion 
VI.  Appendices 
A. profiles of IMC' s Medicare Enrollment 
B. Analysis of Telephoned and 
Not Telephoned Groups 
C. HCFA Comments on OIG Draft Report  EXECUTIVE SUMMARY

Since 1982, risk-based health maintenance organizations (HMOs) 
have grown to be maj or providers of health care to Medicare 
beneficiaries. The Health Care Financing Administration (HCFA) 
pays these HMOs on a capitation basis, in which an HMO receives a
. fixed 
amount for each Medicare beneficiary it enrolls, in return 
for the provision of all covered health care services to these
people. 
While an incentive for efficiency, this arrangement also
. creates the potential for 
diminished quality of care if the HMO 
costs. 
sacrifices services in order to cut  The Office of 
Inspector General (OIG) conducted this evaluation to determine, in 
an objective way, Medicare enrollee attitudes about the services 
and medical care they had received from International Medical
Centers (IMC). 
This was one of many OIG initiatives to examine 
s interest in 
various aspects of IMC in response to the Department' 
resolving numerous complaints about IMC' s services to
beneficiaries. 
In order to gain experience with the concept of risk-based con
tracting with HMOs for Medicare services, HCFA selected 32 HMOs 
Effective 
(including IMC) to serve as demonstration projects. 
August 1982 , IMC began enrolling Medicare beneficiaries under 
these provisions and quickly achieved rapid growth in their 
strategies. 
numbers through a variety of aggressive marketing 
These included: intense media coverage featuring endorsements from 
celebri ties, bounty payments to members to facilitate word-of
ups by friends 
mouth endorsements and sign- , and personal appeals 
gatherings. 
at senior centers and other such  IMC has grown to 
have the largest Medicare beneficiary enrollment of any risk 
contract HMO in the nation, with 137 814 Medicare beneficiaries 
1986. 
enrolled as of May  These people represent about one-fifth 
of the total national Medicare beneficiary enrollment in risk-
based HMOs. 
, Florida area. Its 
IMC' s initial operations were in the Miami
rapid growth was accommodated through expansion to a highly 
decentralized network model of 186 affiliated provider groups 
covering five Florida counties. Seven of these affiliates were 
wholly-owned by IMC, but the remaining 179 were private entities 
IMC. 
under contract to  The sizes and financial viability of the 
affiliates varied, and the per capita reimbursement paid by IMC to 
each of them was substantially less than the amount IMC received
from HCFA. In addition , most of these affiliates exceeded the 
statutory limit (presumed to prevent quality of care problems) 
that no more than 50 percent of their membership be Medicare and 
(In April  year 
Medicaid enrollees.  1985, HCFA had granted IMC a 3-
exemption from this requirement, in an extension of one of its

- terms as a demonstration proj ect. 
In mid-1986, a random sample of 351 current and former IMC

Medicare beneficiary members was selected from HCFA records to be

interviewed. OIG was able to complete interviews (by telephone

and/or mail) with 290 (83 percent) of the sampled beneficiaries.
 These beneficiaries were asked to summarize their overall
satisfaction with IMC. Major findings included: 
Almost two-thirds of the people contacted (188 of the 290) 
expressed some level of satisfaction with IMC. 
Those members (23 percent) who expressed dissatisfaction 
complained about difficulties in getting specialist care 
care that did not meet their expectations, problems with drug
prescriptions 
, their assignment of physician, and
difficul ties 
with payment for services received outside the 
geographic area served by IMC. 
Of the 17 percent who were very dissatisfied (50 people out 
of the 290 contacted), most (36 people) had already 
terminated their IMC membership. 
Through adverse publicity, reported investigations, and high 
staff turnover, members were aware that problems existed with
IMC. 
They were concerned about the effects this situation 
might have on what most considered to be a satisfactory 
heal th care arrangement. 
IMC members used fewer services and were hospitalized at a

much lower rate than the Medicare population in general.
This indicates that the capitation payment which HCFA makes 
to IMC may have been set higher than appropriate. 
Some beneficiaries claimed that IMC affiliates sometimes

refused to provide certain services covered by Medicare, and

in two reported cases, openly encouraged beneficiaries to

cancel their memberships just long enougp to have Medicare

pay for those services. 
Most beneficiaries interviewed by telephone (152 out of 189) 
recalled receiving information on how to use IMC' s services 
(usually in the form of a brochure). However, about a third 
of these beneficiaries indicated that there were aspects of 
IMC' s medical coverage that they did not fully understand. 
For many beneficiaries, saving money through their enrollment

in IMC was more important than any perceived shortcomings in

the quality of care they received.

The following OIG recommendations were made to HCFA: 
Since many beneficiaries indicated that there are aspects of

IMC' s medical coverage that they do not understand, HCFA
should develop standards for disclosure by IMC of the 1 imi ts 
and exclusions to its coverage. 
HCFA agreed in principle with this recommendation, noting

that they had strengthened the notice of enrollment to new
 HMO members. However, due to the provisions of the 
Consolidated Omnibus Budget Reconciliation Act of 1985, which 
requires HCFA to review all HMO marketing material , they felt 
time. 
that additional changes were unnecessary at this 
HCFA should revise its lock-in notice to new enrollees to 
advise them that Medicare is making a monthly payment to the 
HMO on their behalf, and to remind beneficiaries of their 
care. 
right to complain if they receive inferior 
HCFA concurred with this recommendation.

In light of the number of IMC members who spend more than 60 
days each year away from the IMC service area, HCFA should 
plan services. 
re-examine its current policy for HMO out-of-
HCFA did not concur with this recommendation, noting that 
concept.
the lock-in provision is a basic premise of the HMO 
Furthermore , since HMOs are an alternative to the fee-for
service system, Medicare beneficiaries who are disadvantaged 
by this provision have the choice not to enroll in an HMO.  BACKGROUND 
International Medical Centers (IMC) began business initially

ida, area. 
in the Miami, F10r  In 1981, it began enrolling 
Medicare beneficiaries under a Medicare cost reimbursement 
contract. 
In 1982, it was selected as one of several HCFA 
HMO risk-sharing demonstration projects. As a risk 
contractor, IMC was guaranteed a steannrdoarldle mdo.n thly payment 
Another
for every Medicare beneficiary it 
I S waiver 
of the
important feature of this project was HCFA 
I S Medicare
statutory requirement that the percentage of IMC 

beneficiary enrollment could not exceed 50 percent of the

total membership. This requirement is perceived as "a  will 
quali ty assurance measure since " commercial clients
not enroll or stay in a poor-quality plan.

Risk contract operations began in August 1982 with about

000 members. This number grew to 18, 000 by July 1983 and 
in the following year quadrupled to 78, 000 by July 1984. 
In the months of January and February of 1984, approximately 
30, 000 new beneficiaries enrolled. As of May 1, 1986, IMC' 
Medicare enrollment was 137, 814, down from a high of 139, 120 
1986. 
in January  IMC had expected to enroll about 202, 400 
1988. 
Medicare beneficiaries by March  However, IMC capped 
its Medicare enrollment at mid-1986 levels in response to

criticism it received for not actively working towards the

Miatrsch  31, 1986 deadline that no more than 50 percent of

iciar ies. 
enrollment be compr ised of Medicare benef 
According to HCFA records, IMC Medicare enrollment

represents about one-fifth of the total national Medicare

enrollment in risk contract HMO I

The following graph, using data developed by OIG, illustrates

the growth in IMC I S Medicare beneficiary membership.

140

130

120

110

100
 ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
More detailed profile information of IMC can be found in

Appendix A. 
IMC became highly decentralized, providing services through
a " 
network" model of affiliated groups of physicians and 
hospi ta1s. Seven of these 186 aff i1iates were wholly-owned 
by IMC, and the other 179 were under contract. 
Under these contract arrangements, IMC is to pay a Part B 
capitation amount and a Part A supplemental capitation rate 
to each affiliate every month. These amounts vary by
aff iliate, but average $69. 75 for the Part B capitation 
rate, and $17. 69 for the Part A supplemental rate, a total
($87. 44) which is substantially less than the amount that 
IMC receives from HCFA (approximately $300). However, this 
amount only covers the nonhospita1 care which the affiliate 
must provide, either directly or by contract to a third 
party provider ; hospital costs are shared between the 
affiliate and IMC. 
The following table shows the number of contract affiliates 
in each IMC Flor ida county, and the average rate received by
i1 of 1986. 
the aff  These 
iliates from IMC for Part B in Apr 
were obtained from the Office of Health Maintenance 
Organizations I Part B reimbursement report. 
Number of  Part B  Part A 
County  Contract  Capi tation  Supplemental
Aff i1iates  Rate  Rate 
Broward  $75.  $25. 
Dade  $92.  $23. 
Hillsborough  $56.  $12. 
$74.  $14. 
Palm Beach 
Pasco  $50.  $12. 
inel1as  $12. 
$53. 77 
All counties  179  $69.  $17. 
In the past 2 to 3 years, an ever-growing number of

complaints have been submitted by IMC Medicare members,

affiliated group physicians and outside providers serving

IMC members. These complaints highlight major problems and 
have put IMC under close scrutiny by Federal and State 
agencies. The complaints and allegations concern IMC 
isk-shar ing with 
practices in such areas as marketing, r  care, 
providers, claims payments and the delivery of medical 
and have been subject to high congressional and media
interest. 
II. 
PURPOSE 
The purpose of this evaluation was to determine, in an 
objective way, enrollee attitudes about services and medical 
IMC. In light 
of the many 
care received from and through 
complaints received about IMC, this evaluation was 
undertaken to determine (1) whether complaints received

about IMC reflect widespread and pervasive dissatisfaction

among the general IMC membership, (2) the extent to which

and, 
IMC operations may have adversely affected its members 
(3) areas where additional HHS action may be needed.

III. 
METHODOLOG Y
HCFA I S Group Health Plan Master File served as the initial 
data source for this evaluation. This file, maintained by

the Bureau of Data Management and Strategy, contains

plans, 
beneficiaries wSho.  have participated in group health file. 
including HMO I  Two samples were drawn from this 
The first, a 20 percent sample (38, 512) of all Medicare

beneficiaries in IMC, was used to profile IMC membership.

The second was a 0. 2 percent sub-sample of 351 living 
interviewed. 
beneficiaries, who were selected to be 
Both samples were selected at random, based on the terminal

the Health Insurance Claim Number. This 
digi ts of 
methodology was used because samples drawn in this way are

weighted in the same way as the universe, and therefore

minimize the potential for drawing a biased sample based on

some preconceived notions about the universe.

Given the short time frame of this evaluation, it was

determined that the only practical way to reach these 351

sample beneficiaries, who were scattered over several

counties in Flor ida, was by telephone. In addition, a few 
had out-of-State addresses.

A discussion guide was developed for use in the telephone 
A two-phase study 
interviews and revised after a pretest. 
was then conducted. In phase one, 189 telephone interviews 
were completed.  Ini tial at tempts to reach 162 of the 351 benef iciar ies were 
unsuccessful, either because they declined telephone 
interviews or could not be contacted despite repeated
attempts. In phase- two, we followed up by sending an 
abbreviated set of questions by registered mail to these
people. 
Our findings from telephone discussions and mailed 
questionnaires are discussed below. 
We were concerned that the results from the sample might be 
biased to the telephone interviews and, therefore, conducted 
telephoned" 
an analysis of four known variables in both the "
and " not telephoned" populations. BTh.e  results of this 
analysis are outlined in Appendix  Our analysis showed 
that the distributions of these variables in the 
telephoned" and " not telephoned" groups were not 
significantly different  therefore, we do not expect that 
the basic results of the survey would have been different 
groups. 
we had asked all of the questions of both 
The following table provides a summary breakdown of the

disposition of the sample:

Percent 
Number 
Total Sample 351  100. 
Questioned by telephone 189  53. 
Ques t  101  28. 
Refusieonded  bqy mua estioning  14. 
Unable to locate

We were unable to locate 9 beneficiaries from the original

sample (less than 3 percent of the total) because they do

not live at the addresses on record with the Health Care

Financing Administration or with the Social Security

Administration. To verify the existence of these

beneficiaries, these cases have been referred to our

investigation staff for resolution.
 IV.  FINDINGS 
Overall Satisfaction with the Plan

Benef iciar ies contacted by telephone and by mail wethree iarsked

to summarize their overall satisfaction with IMC 
graph.
answers are displayed in the following table and 
Number of 
Beneficiaries  Percent
Level of Satisfaction

Very Satisfied  138  48% 
17%
Somewhat Satisfied

Somewhat Dissatisfied

Very Dissatisf ied  17% 
Not Sure

No Answer

290  100%
Tota 1

Almost two-thirds of the sample beneficiaries expressed some 
IMC. 
Of the 50 beneficiaries who 
level of satisfaction with 
36 had terminated their 
said they were very dissatisf ied, 
memberships. 
Beneficiary Satisfaction with IMC

Very Satisfied

Somewhat Satisfied

Very Dissat 1sf ied 
( n - 290 
 One of the issues the study was designed to resolve was 
whether there would be a difference in perceived 
satisfaction with services between those with extensive need 
for medical care and those who are essentially healthy, with 
history. 
little or no service utilization  This issue was 
evaluation. 
not fully resolved by this 
question, " 
The following table depicts responses to the  Have 
IMC . . . ?" 
you had a serious illness or surgery since you joined
Number of 
Response  Benef iciar ies *  Percent 
illness 
Had ser ious 
since enrolling 
25. 9 % 
Had no ser ious 
illness since 
enrolling  116  61. 
4 % 
No answer  12. 7% 
interviewees. 
This question was only asked of telephoned 
Another factor that should be considered has to do with the 
terms " serious illness 
beneficiaries I interpretation of the 
or surgery.  In most cases, beneficiaries qualified their 
yes " answers with an explanation. About two-fifths of 
these explanations indicated acute problems such as 
fractures and infections, or minor surger ies, often 
performed on an outpatient basis, such as eye surgery,
lurpectomies " or hernia operations. With this taken into 
problems or 
consideration, only 30 beneficiaries had chronic 
major surgery, including heart disease and open heart 
osurtgherey,r  pcroastnatce esurrgser.y , cerebral palsy, leukemia and
One hundred and sixty-four (of 189) beneficiaries responded to
both the " satisfaction " and "serious illness " questions. A 
below. 
cross tabulation of their responses appears 
jor Major
No ma 
illness/surgery  illness/surgery 
Satisfied 104 (78 percent) 18 (60 percent)
Dissatisfied  30 (22 percent)  12 (40 percent) 
Chi-square=3 . 12, p=O. 08  The above data suggests that healthier IMC enrolleesp eaorpel
e.
likely to be more satisfied with the HMO than sick 

is not statistically significant 
However, this difference 
p value of 0. 05 or less would indicate significance). 
One of the difficulties in measuring thei tssa stitsrfuaccttuiorne .l eSvienlcse
 
of IMc-member beneficiaries stems from 

IMC is compr ised of many aff iliate groups, we are not really

entity. As

measuring satisfaction with one medical service 
I think (satisfaction) depends 
one beneficiary commentetdo, . "I I ve 
heard some bad things, but 
on which clinic you go 
my doctor is fine.

The HMO appears, from the beneficiary viewpoint, to meet

Many
their concerns about the high cost of health care. 

beneficiaries expressed fears that bad publicity might have

a detrimental effect on what they consider to be a

satisfactory arrangement.

The interviews were conducted after and during a period when

publici ty about IMC appeared on television and in newspapers

almost every day. For example, in late May, a Tampa

part series on IMC, 
television station presented a four-
falls in quality of

highlighting numerous examples of short-
care. 
This publicity frightened many of the members we
interviewed. 
The following are representative of the many comments

volunteered by beneficiaries:

The office we go to has only one doctor - it used to 
be packed full, but with all the publicity people are 
scared, and the clinic is empty, or only one or two 
pa tients - people are going back to Medicare. 
So far we areV ha.p py, but we see a lot of bad things

We can't afford high-priced doctors. 
about it on T. are
income. We 
We are both near 80 and live on a fixed 

still healthy, so far, thank goodness.

Enrollment 
Of the 290 beneficiaries who responded to our survey by

(76 percent) were still members of 
telephone or mail, 220 
IMC. 
On the average, these beneficiaries had been members
for 22 months. One hundred and seventy (170) or 59 percent  ~~~
:/' 
year, 
of the interviewees had been members for more than a 
and 11 beneficiaries had been with IMC since its inception 
in August of 1982. 
plan 
Many of the beneficiaries we questioned viewed IMC' s 
package. In fact, three 
as a comprehensive health insurance 
of them volunteered that they believed the plan covered 
catastrophic illness. One of these beneficiaries dropped 
(nursing 
out of the plan when she learned that long-term 
iciar ies are 
as not covered; the other two benef 
home) care 

still members. 
iciar ies 
In addition, about two-thirds of the benef 
interviewed stated that the financial advantages of the

health maintenance organization structure were the primary 
IMC. Its 
reason for joining  wide range of services, at no 
pocket 
cost to them, met their concerns for limiting out-of-
costs for health care.

As depicted in the following chart, about 10 percent of the

respondents joined IMC on the advice of a friend or family

member, and 4 percent joined when their personal physician

aff iliated with IMC. Slightly over 2 percent indicated that 
the HMO was close to home , and about 1 percent indicated

Florida. 
that they had recently moved to 
IMC 
Why Senef iciaries Joined 
Conveni.e.ntt It o Home

ended 
New to Florida

I..tJ  Other Reasons
Other  Doctor Joined IMC 111. 
( n - 290 
 , "

reasons, such as " everybody was 
Twelve percent gave other 
doing it"  my old HMO closed" , and "the HMO had a good 
reputation for high quality care.  Eight percent did not 
respond to this question. 
Responses of the 189 beneficiaries who were interviewed by

telephone indicated that mass advertising clearly does pay

four respondents

off in terms of attracting members. Eighty-
(44 percent) said they heard about IMC through advertising

newspapers. Five beneficiaries 
on television, radio, and in 
naming 
specifically mentioned a personality endorsement, 
such people as Glenn Ford, Barbara Mandrell, and Mike 
number of benef ic iar ies signed 
Doug 1as . The second 1arges t 
up after they heard a presentation made by IMC represen

seminar " or 
tatives, either at their door or at a special "
lecture 
One beneficiary, who disenrol1ed after 10
months, said she was enrolled by a fr iend who was paid a $50 
up. 
bounty for signing her  Both door-to-door solicitation 
and offer ing bounties as inducements to join HMO' s are pro
hibited under the risk contract: these cases have been 
resolution. 
referred to our investigation staff for 
The following table shows the var ious ways in which 
IMC: 
interviewed members stated they had heard about 
How Member s  Hear d About IMC 
Advertising 44% 
Fr iend/family 19% 
/lecture
Seminar  10% 
Door-to-door 
/c1inic
Doctor 
Other 
NA/ don  t remember  12% 
Exp1anation of Benefits 
The 189 beneficiaries interviewed by telephone were asked

services,
they had received information on how to use IMC 

including emergency care and services outside of the plan

area. 
Although 80 percent (152) responded that they did 
(usually in 
receive information on how to use IMC services 
the form of a "brochure  ), about one-third volunteered that

there were things about IMC membership they did not

understand.  The following quotes illustrate knowledge gaps existing

among enrollees:

I t 
I don  know what services are available under the 
HMO. " 
I t 
I don  understand what is covered when I am in
travel status. 
If I had had the right information about how IMC

worked, I would not have enrolled. 
explained. I 
Everything should have been better 
paid for my own drugs for a year, not realizing they
were covered. 
Disenro11ment 
Twenty-six percent (49) of the 189 beneficiaries we 
interviewed by telephone, and 21 percent (21) of the 
IMC. These 
101 we interviewed by mail had disenro11ed from 
beneficiaries averaged 9 months of IMC membership but this
distr ibution is 
skewed; the median length of membership was
about 6 months. 
Eleven beneficiaries cancelled their 
membership within 60 days of joining, and two beneficiaries 
were retroactively disenro11ed by HCFA. 
Wi th two exceptions, all of these disenrol1ments were 
initiated by the beneficiaries, without external pressure
from IMC. The 
first exception is a beneficiary who believes 
he is still enrolled, while BCFA records indicate that he 
1985. 
disenro11ed in October of  The man cannot read or 
write, but remembers signing "some papers" from IMC when he 
tali zed 
was hospi  or around that time. The second is a 
woman, listed in HCFA records as having been a member for 7
months, who was particular 
1y vehement in her denial of 
from, any HMO. Both 
either enrolling in, or disenro11ing 
investigation. 
these situations have been referred for  (52 of a total

When asked why they disenro11ed, 74 percent 
of 70) expressed their dissatisfaction with an aspect of IMC

serv ices. The following chart summar izes benef iciary

dissatisfactions: 
Percentaqes 
Number 
Quality of care did not meet
beneficiary  s expectations  35% 
for  dissatisfaction 
Other reasons 
services  25% 
wi th 
Required care  not available 
through the  plan  15% 
1nabi1ity to see a doctor,
especially specialists  13% 
12% 
Wanted personal physician 
The eighteen beneficiaries that felt the quality of care

delivered by IMC did not meet their expectations noted

complaints.
problems that ranged from minor to major 

as, "The doctors
Minor complaints included statements such 
n and "  More 
speak English  The office was dirty... 
don I t 
serious complaints were charIa sc theeriazletdh :a "s those which may
The doctor prescribed
have endangered the patient is allergic to the drug. The 
penicillin, and my husband 
" and "The doctor 
doctor never asked about drug allergies
cream. 
When I told her that the 
prescribed a dermatological 
cream made my face swell up, and my eyes puff shut, she 
The pharmacist told me it was 
wrote me another prescription. 
the exact same thing. 
Problems with referrals to specialists were cited by both

active and terminated members. One woman, who had been 
unsuccessful in getting an appointment to see a surgeon

herself. She

through IMC, sought and paid for a surgeon 
stated that this surgeon had told her that ifle sgh.e had

delayed any longer, she would have lost her 
 Eight beneficiaries mentioned that they required care which 
they were told was not  available through IMC 1 in four of

these cases, the care the benef iciary required is a covered

service under Medicare.

Of the 18 disenro11ed beneficiaries who did not express

I S 
dissatisfaction with IMC  services, eight moved away from 
Florida, five did not answer the question, three said they

error. 
never enrolled and two enrolled in 
Benef ic iar ies who were interviewed by telephone were asked 
if they requested help in resolving the problems that led to
disenro11ment. Only a few (12 of 49 who answered the
had. 
question) indicated they 
Usuallsyt atfhefi.r  complaints were 
made to the doctor or to the clinic  Most felt they 
got no help or only very limited help and this lack of 
out. 
response helped convince these members to drop 
Utilization of Services

The telephone discussion guide was designed to enable us to
determine (1) 
what services the beneficiaries were
receiving,  I general satisfaction with 
questio(2) tnhe bnenefiaciariiers e 
those services, and 
(3) whether there were any major
categories of problems. 
No specific utilization questions 
1 therefore, analysis 
were included in the mail

in this section pertains only to the beneficiaries who were

interviewed by telephone. 
represent
The 189 beneficiaries we interviewed by telephone 
(co11ecti ve1y) 3, 603 months of membership in 1MC. Fifteen 
iciar ies we interviewed had never received 
(15) of the benef 
any services from IMC, either because they are new 
enrollees, they were unable to get an appointment, or they 
dropped out of the plan after they realized what membership 
in an HMO means. These 15 beneficiaries represent 67 months 
of membership, slightly over 4 months per beneficiary. 
Another 27 beneficiaries have used IMC services only once or 
twice 
1 they represent 335 months of IMC membership, or an 
beneficiary. 
average of 12 months per 
iciar ies 
The following table shows the number of benef  who 
reported that they had received particular services, and 
services. 
whether or not they were satisfied with those  Services Received by Beneficiaries:  Number and Percenta 
Satisfied  Dissatisfied 
Type of Service  Tota 1 
Phys ical Examination  117  79%  21%  149 
Eye Examination  84%  16%  106 
prescr iption Drugs  119  88%  12%  135 
Emergency services  87%  13% 
Xrays,  lab tes ts  115  91%  126 
Specialists  59%  41% 
Hospi ta1ization  89%  11% 
Outpatient Services

Approximately eight out of 10 (79 percent) of the

beneficiaries we interviewed had received a physical

examination, and most of them were satisfied with the

examination. Beneficiaries 
quality and thoroughness of that 
who were dissatisfied usually felt that the examinations

icial. 
were superf 
Not all beneficiaries received a physical examination

Thirty-two benef iciar ies 
immedia tely upon enrollment. 
reported that they did not receive a physical examination

Only one

within the first 60 days of membership. 
beneficiary volunteered that a physical was performed prior

tfoir hsetr.  eIn rollment. ("They sent us to Miami for a physical
understand they can t do that anymore.  The scope

of this study did not lend itself to determine whether or

not IMC prescreens potential members. A much larger sample 
(at least 6, 000 members) would be required in order to

identify those kinds of patterns, including which affiliates

practice. 
might be engaging in this 
(106) had an eye

About 56 percent of the interviewees 
IMC. 
Most expressed 
examination under their coverage with 
satisfaction with the examination. Those who were 
dissatisf ied gave var ious reasons for their displeasure,

including: the glasses were " ugly  , they had specific 
problems that the doctor did not treat, and delays of up to

5 months for an appointment.

Over 70 percent (135) of the interviewees had received

prescr iption drugs through IMC; 88 percent of these were
 satisfied with what they received. Dissatisfied 
beneficiaries mentioned that the HMO only prescribes generic 
iciary
drugs, dispenses only samples, or requires the benef 
ill. 
to wait several days for a ref 
Only 45 beneficiaries reported that they had used emergency
services. 
About 13 percent of these expressed dissatisfaction, 
mentioning long waits and indicating confusion about where 
to get these services, and who should pay. 
About two-thirds of the beneficiaries (126) reported that

they had had diagnostic tests performed, either laboratory

tests or x-rays. Most benef iciar ies were satisfied with

these tests, and 82 percent (103) said that their doctor 
always explained the results of the test to them. 
Seventy-nine beneficiaries had seen a specialist at least 
dissatisfaction. 
once: 40 percent of these indicated some 
This is the highest rate of dissatisfaction we observed with 
any category of service. Difficulty in getting to see a 
specialist was the most frequently mentioned reason for

dissatisfaction. It appears that few specialists are 
members. Typical 
available for IMC  comments offered were: 
I saw a specialist once, and when I called to make a 
follow-up appointment, I learned that the specialist
was no longer wi th IMC. 
I t  I t 
I cou1dn  see a urologist because IMC didn  have 
one available. I waited more months for them to hire 
one. " 
Inpa t ien t Serv ices

Only 19 (10 percent) of the 189 beneficiaries we interviewed

by telephone had been hospitalized. In a total of 23

separate admissions, only two expressed dissatisfaction.

Since hospitalization rates are one indicator of morbidity

rates, it is important to note -that hospitalization rates in

this sample were signif icantly lower than those in the

finding indicates that 
general Medicare population. This 
the capitation payment may have been higher than

appropr ia te . 
On average, about 25 percent of the general yMeedairc.a rIef
  
population will be hospitalized in a given  IMC
 members were hospitalized at the same rate, we would expect

48 beneficiaries from our sample to indicate that they had

tali zed 
been hospi  (95 percent confidence interval is 42 to 
54 beneficiaries). However, only 19 (10 percent of the 
beneficiaries we interviewed) said they had been hospitalized. 
To complete the picture of utilization, we asked 
beneficiaries whether they had ever been denied services,
whether they had ever had to pay for services ,  and whether 
they had ever used services outside of the IMC service area. 
four 
Twenty- (16 percent) of the 155 beneficiaries who 
responded to the question concerning denied services said 
they had been told that some services were not covered, or 
were unavailable. Ten of these beneficiaries subsequently 
IMC. 
disenrolled from  Most of the denials concerned 
ferra1s to specialists, for services that are covered by
Medicare. 
In addition, one woman who required a seat-lift chair

reported that IMC told her that they did not cover the

chairs. 
She said the IMC representative suggested that she

disenroll and purchase the chair under Medicare, then

enro1l in the plan. This has been referred to our

investigation staff for resolution.

Beneficiary Payment for Services

Most beneficiaries (137, or 87 percent of those who

answered the question), indicated that they had never paid

IMC. Twenty-one

for any services while a member of 
benef iciar ies had paid for some things, often for upgrading

eyeglasses to ones with "nicer frames  Ten beneficiaries

paid for services which they sought outside of the plan when 
IMC would not provide the services, or when they could not 
get a referral, or when they questioned the treatment that 
the IMC doctor had prescribed. Examples of services 
are: 
beneficiaries stated they purchased outside the plan  surgery. I 
I had an eye problem, and it required  was 
told I would have to go to the clinic and they would

arrange for it, but I would rather go to the doctor I

know. I 
went to my doctor, and had the operation, and
paid for it myself.  I t  I t 
understand why I can 
I don 
to the doctor of my own choosing.

I have a heart condition, and I see a cardiologist 
twice a year. I pay for these visits myself because I
don  t feel the competence is there (with IMC). 
Out-of-Area Services 
Many of the complaints that HCFA and other agencies have
recei ved from IMC members concern problems wi th seeing 
physicians or obtaining hospital care while the member is 
out of the area. 
According to HCFA records, about 3.5 percent of the active 
IMC Medicare members were not Florida residents at the time 
iciar ies 
of this evaluation. Ten (or 3. 5 percent) of the benef 
in our sample ihoadd .n on-Florida addresses. Two died during
the survey per 
Of the remaining eight, five terminated 
their IMC memberships and two maintain north/south life
styles. 
Since many Medicare IMC members are retired, they frequently 
(usually sumers) 
spend part of the year  away from Florida. 
When they have to use a physician, or go in the hospital on 
an emergency basis, they are supposed to notify IMC and get 
author ization, preferably in advance. The same is true for 
thin the area. 
emergency care wi  Much confusion existed 
issue. 
around this  Beneficiaries, hospitals and physicians 
I s 
questioned the terms of the member  medical emergency 
coverage, which resulted in disputes about who was 
services. 
responsible for payment for those 
Nine of the 139 beneficiaries who responded to the question

indicated that they had received some services while outside 
Florida. 
of the IMC service area in  Four of these 
benef iciar ies had no problem in getting IMC to approve and 
pay for the care. Three beneficiaries mentioned problems 
stemming from the definition of emergency care and prior 
approval. One beneficiary disenrol1ed in order to get
services paid by Medicare: " 
IMC doesn t cover North 
Carolina, so I went back on Medicare for the 
hospi tali zation, then joined back up with IMC.  Another 
beneficiary offered the comment, "We spend a good part of 
I t 
the year in Connecticut, and the plan doesn  work well when 
you go out of state, so we disenro1led. 
 Choice of Physician

We questioned beneficiaries about several aspects of service 
s in order to determine the 
delivery which are common to HMO' iciar ies answered these
respondents I attitudes. Not all benef  I S services
questions because some had simply not used IMC 
enough to see any doctor consistently, or to be able to 
them. 
judge how well the HMO works for 
s are often set up like clinics 1 that is, the member has 
HMO' 
no choice of a physician and is seen by any available staff
doctor.  53 percent) indicated 
Most respondents (101, or 
they were not able to choose the doctor they wanted. 
Although some beneficiaries felt that their inability to 
choose their doctor was strong enough reason to disenro11,
(63, or 62

most said that this did not matter to them 

percent) . 
Even though most beneficiaries did not choose their doctor

ini tia11y, they generally continued to see the same

physician once treatment was started, thus ensuring some

consistency of care. Of the 150 beneficiaries who responded

to this question, 90 said they saw the same doctor each time

they went. Fifty-four saw any available doctor, while six

said they usually saw their primary physician, but in

situations, would go to any available

emergencies or other 
doctor. 
Beneficiaries were asked about how they arranged to see

their doctors. Of the 152 beneficiaries who responded to

this question, only 5 indicated that they do not make
 to.

clinic when they need 
appointments, but just go to the 
The remaining 147 respondents said they usually make an

(52) said that they

appointment, and about a third of these 
basis, making the next

see their doctors on a regular 
s office. The other beneficiaries

appointment at the doctor'
said that they call to schedule their appointments.

well, some

While this system seems to work reasonably 
beneficiaries expressed dissatisfaction in getting

appointments. This problem seems to be more pronounced when 
the benef iciary is trying to see a specialist, but a few
or more

(17, or 9 percent) indicated that they had to wapihty s2i
cian.
weeks for an appointment with a non-specialist 
 CONCLUSION 
All in all, most survey respondents feel that the concept 
behind IMC is a good one, and that there are bound to be 
delivery. 
problems with any new system of health care  While 
some beneficiaries have encountered problems that they 
consider serious enough to cause them to disenro11, many 
others feel that the problems are tolerable when weighed 
In particular, 
against all of the benef its of membership. 
two-thirds of those interviewed mentioned the financial 
advantages of HMO membership as their primary reason for
joining IMC. 
For many respondents, saving money was more 
important to their satisfaction with IMC than quality 

care. 
Respondents' perceptions of the quality of care they 
received from IMC varied: some found it to be consistently 
high; others found it so poor that they canceled their
memberships. A considerable number had had very little 
I S 
exposure to IMC  services, and therefore were unable to 
comment on the quality of care. The scope of this study did 
not permit cross tabu1ation of quality of care responses to 
received. 
where the services were  IMC I s structure -- a 
network of independent aff 
i1iates, as well as some 
wholly-owned by IMC -- may account for the range of opinions 
on quality of care. 
IMC Medicare enrollees appear to be healthier than the 
Medicare population as a whole. We found most respondents 
to be alert and articulate. However, although most were 
aware of the benefits they are entitled to, about a third 
did not understand one or more aspects of their HMO 
coverage. 
This situation may or may not be true for 
Medicare beneficiaries who are members of other HMO' 
Given that HMO' s are a new concept in health care coverage 
I S 
for many elderly beneficiaries, HCFA  implementation of our 
recommendations for strengthening enrollment notices may 
help to prevent future misunderstandings about coverage
provisions.  APPENDIX A

prof iles of IMC' s Medicare Enrollment
 profiles of IMC' s Medicare Enrollment 
A random 20 percent sample of current and former members of 
file, 
IMC was selected from HCFA' s Group Health Plan Master 
to be used in developing a profile of that HMO's membership. 
Membership growth (enrollments and disenro11ments), length 
of membership, and the residence and age of members were 
examined; the results were presented in the tables that
follow. 
Table 1 shows the membership growth of IMC from August 1982 
1986. 
to January  The first three columns in this table 
enrollees, 
reflect sample counts and show the number of new 
the number of members who withdrew from IMC (through 
termination of their eligibility to Medicare benefits, as 
determined by the Social Security Administration, or through 
enrollment. 
a cancellation, or death), and a cumulative net 
The last column shows a projected cumulative net enrollment 
for IMC, as of the start of each month. 
Table 2 shows the length of membership in IMC for active and
inactive members. 
In December of 1985, about 60 percent of 
the active membership had been with IMC for more than a 
year, with the average length of membership being 15 months. 
About 6 percent of the active members had been members for 
more than 3 years. Members who cancelled generally did so 
within the first year of membership, with the average being 
around 7 mon ths . 
Table 3 shows the area of residence of the active membership
of IMC. According to HCFA records,  about 3. 5 percent of the 
active IMC members were not Florida residents in December 
1985. 
Table 4 shows a distribution of IMC active members, by age. 
The average IMC member was 72 years old, and about 80 
I s 
percent of IMC  total membership was between the ages of 60 
and 80. Only about 2 percent of the membership was 90 years 
old, or older.  ;(.. (  .)-.. ....:;-,   .' - ! '  .-(---?'- ': '_-.:_ ..'-';.:-j'.-:-   : "'.-.:--..-..- .:.,..-.,...-..,  ...-:.=. :.;,..(.-- -/.'),-' --".-'-.: :".. '  :".-.:-':':.:: :::::.....,""' .:-    .,'-  j"  ;..   :;..--: . ; :.,': .  -.."..."...--,..:-:.:,.,   --.':'.:-...::.".  ':.::--:::! -::.:::."-.':   - : ,.  ,,  ;;':    ,-.-' -(:;-':,...:;..,. .,... - ::: '.;:;..:; --:- ..(-:.:)-'
Dise1l1ts, 
Table 1:  1M Enollmts and  1982 though 1985 
( 20 Percent  File 
Sa1e 
th-: 
Dea_ 
ncel I--et  Est. 
\leloJ 
oll ees 
SSA Te  Enr-ol1 mt  TDt
:()-! 82  51E  S;' 
()9.. -_. .11 u  1 , 62t::  :0 13(; 
E:13 
Ci..::  1 '  1)  ' e. :.:' 
139 
11 '  1 (:. , 
' I .  ?9()  '1:29  12, 1'
L -
3 ; 750 
() 1  =:3  ... "7  2, 75(:' 
obb 
f;).  1 .:+ , . 
15" 
i. : "  t . 
0/1- ( 8i)  ")7  5 , E:35 
5 8:  :31  319 
1 ie, ; 5' 
-' t:  )Ij'  1 7 " / 
E::  175  ':'rti  1. E  L1
('8 f:::  18 :- E:
(."7' 83 5S'  3; 8,q-E.:  J. 7" 
. /83  13'  .:r.  9; -; i 5 
If.  513  22 . 5!. 
12).1.  .:.3.4.  ..1:"...i0 .':7  -;.1  7 , I! :7: 54   I:;; rk-:. c\j:  
l,. 
ELI  3=79  :19  1. i.) ,  ::i35 
Cj.  :::4  15()h  11; 718  5E:  S9(j 
::4  ::5t,  1.3, C)lC  t:.  z: : 
)=; :34  t21  13;; t:.  :Y'  bE.  ; (:":;5 
f)  .I.  r-=-C!  4-(;.1  1'7"1
n-- iE4  36.:1  1.5 , t:,()2  7 E.:OJ .:) 1 (i 
i)8./  c:.:l  1 (iS7  4:21  t.  , 2::E:  a 1 , 1 ::0 
()S;'  .I E; it  11 c.  .. c:..  , 12.:j :=L 
1 (  E:.:l  1191  32C?'  ; 986  8S' ., S:' 3\) 
1248  18 ; (::82 
11  oj /1! 
12/84  1..  ::81  706  530 
i 9 
\) 1 ./ 85  .t()3\)  2t..  2() , '!1-6S:'  l.  , 345 
1301  1. :.1-57  285 
i)2/ 
()3 / 85  105t:  1. c.  22  199  11 (; , S' 
(:14. / E:5  850  396  22. c:.  113, =65 
05 85  68:3  577  22, 761  8()5 
113 
()6/85 693  lIB  i)36  180 
23  11 5 
07/85 1033  ","jC.."Q ,.,  , 711  11 E: , 555 
()8l85 74-7  i!.  ; 959  795 
11 9 
09/85  564  397  :1-, 12t.  12(J  63(:1 
()6  405  2A:l  12=, 135 
1 () ,/ 
11,. 85  1072  392  25, 1 ()7  125, 535 
j5tJ  .i32  78(; 
c..-.  18117'  26 , 
1/86  1462  19'1  27 ; 82'  .139, 120  =---- -=-----=--  -=---  =---=----=---=---=---=-- -=-- =---=----=---=-- =---=-----=----=---  =----=-----=--- -=----=----=--- =------=-- -=--- =----=---- =----=----=----=----=----=----=----=----=----=----=----=----=----=----=----=----=----=----=----=----=----=----=----=----=----=------=----=----=--
---------  - - - 
Table 2: Length of Membership in IMC, Active and Inactive

Members 
Number of Members

Length of Membership  Acti ve  Inactive 
1 month or less  471  ( 5 . 3%)  582  (19. 6%) 
2 - 12 months  772  (35. 1%)  019  (62. 2%) 
13 - 24 months  12, 743  (45. 8%)  282  (15. 9%) 
25 - 36 months  2 , 214  (7. 95%)  164  ( 2. 0% ) 
37 months or more  633  (5. 9%)  (0. 3%) 
Total  27, 833  073  --- - -- --- -- ----  --  -- - -- --------- ----- ------ ---- ---------- ---- ----------- -------
--  --  --- ----  -  --  --  --  --  - - - - -  --  - - -  ---- -- --  - - 
Table 3:  Area of Residence (20% Sample File) 
AREA  ACTIVE  INACTIVE 
( 0) New Eng land  217  188 
325  261 
(1) New York-Pennsylvania
( 2) Atlantic Coast 
( 3) Deep South (except F10r ida) 
Flor ida  26, 849  (96. 5%)  178  (88. 9%)
( 4) KY, OH, IN, And MI  200  183 
( 5) North Central 
(6) Central

( 7) South Central 
( 8) 
Wes t 
( 9) Far 
Wes t 
Unknown 
Total  27, 833  073  (j()  -.  'j' -..:"""
Distribution  Members, 
of IMC  By Age
Rondom Sompl.
20 
Eli 
:Ie 
.. II 
100 
TD. b 1 i;? ':  Di::ti- i but". CHi 0 r  he j-i2IT,bel-::h i p b '  !-i q =-;-'i !,- Q i 
Rando  San p 1 p  . f:; 
( 2() 
:::iCt:i. \/-2 
Agc  Gt-OUP  i"lembet
:'7 
30 - 39
 154 
:lO -

.1 ,. 
5C) -
 545 
()(J2 
70 - 79
 13150 
80 - 817'
 4274
90 - 99

100 +

MODE is 67  melnbers) 
(1, 71 9

lEAN is 72 
i--
RANGE is 20 - 106
 yeat APPENDIX B

Ana1ysis of " Telephoned" and "Not Te1ephoned" Groups
 A random 0. 2 percent sample of current and former members of 
IMC (351 Medicare beneficiaries) was selected from HCFA' 
Group Health Plan Master file for this study. Of the 
original sample of 351 beneficiaries, we were able to

contact 189 by telephone.

We were concerned that the results from the telephone
interviews might be biased to the group that was contacted 
by telephone and, therefore, conducted an analysis of four 
known variables in both the "telephoned" and " not 
telephoned" groups. The results of that analysis are
outlined 
below. 
Proportion of males to females: 
Not Telephoned  Telephoned 
Male 
46%  46%

F ema 1 e  54%  102  54%

Chi-sq 
are=O. 002 p=O. 96 
Membership status and duration: 
Not Telephoned  Telephoned 
Acti ve, 
more than 1 year 60.  108  57%
Acti ve, less 
than 1 year  15.  17% 
Termina ted  24. 1 %  26% 
Chi-square=0. 
41 p-O. 82 
Age 
Not Telephoned  Telephoned 
Under 60

61-70  19. 
21. 7%

81 and over  22.  23. 
Chi-square=1. 
67 p=O. 64 
State of residence:

Not Telephoned  Telephoned 
Not FL residents 
FL residents 
155  96.  186  98. 
Fisher' 
s exact test p=O . 
The distributions of these variables in the " telephoned" and " not 
telephoned" groups are not significantly different 
1 therefore, we
do not expect that the basic results of the survey would have been 
different if we had interviewed all of the beneficiaries by
telephone.  APPENDIX C

HCFA Comments on the OIG Draft Report

(IMC)

Internationa1 Medical Centers 
Service Delivery Evaluation
 . /  - ,--"- -.--., ._----, - -------
. \  .,,
C!llh CarF.-
DEPARTo  T OF HEALTH &. Hl' '\A  SERVII  Ftnanc",y Admln.!.tratlon 
,.;t

Memorandum 
Dalf'

From
 Wiliam L. Roper, M. . t" 
D. 
Administrator LL l. 

'S:.bJect  OIG Draft Report-International Medical Centers (IMC) Service Delivery Evaluation 
(P-12-86-00096) 
The Inpector General

Office of the Secretary 
As requested, we have reviewed the draft service delivery evaluation on 
IMC and offer the following comments on the OIG's recommendations. 
HCF A should send notices to al IMC enrollees (or have IMC send notices)

to fuly disclose what IMC does not cover, and to explain I"C' s policy on

out-of-plan care

During discusions with OIG staff, we confirmed that the notices referred 
to in this recommendation are the lock-in notices sent only to new enrollees. 
We have recently revised the lock-in notice to specify clearly that beneficiaries 
should contact HCF A if they believe they have not enrolled in an HMO. 
The notice suggests that beneficiaries 
should read the written material 
provided by the health plan to make sure they understand their appeal rights.
It alo explains the lock-in provision and the out-of-plan procedues. 
Because of these recent revisions, we believe there is no need to modify 
what is not covered. Also,
athel n otice further to include a description  of 
HMO/CMP marketing material, including IMC's, wil be reviewed under 
the Consolidated Omnibus Budget Reconcilation Act (COBRA) provisions. 
In addition, information given to plan members Is reviewed during olHite

monitoring visits. If any material is misleading or confusing, both HCFA

and the State official wil require that IMC withdraw and/or revise such

material.

HCF A should revise the lock-in notice to advise the beneficiary that Medicare 
is making a monthly payment to IMC on his or her behalf. 
an wi revi th 
We cocur with th remmendation  loc-in notice

paent 
to indicate that Medcae makeS.  eaehmonth - the HMO to

cover beefits provide by th HMO. 

HCF A should re-xamine curent policies for out-of-plan servces for beneficiaries
that spend 60 days a year outside the service area. 
Managed care is the basic premise upon which the HMO  oncept was founded.

The lock-in requirement goes hand-in-hand with the idea of managed care. 
The lock-in provision and how it affects out-of-plan and out-of-area coverage
is stressed more than any other facet of the TEFRA risk progam in 
of our monitoring activities.  . , 
Page 2 - The Inspector General 
We do not believe that our policy needs to be changed. 
We recognize that
the lock-in requirement may place responsibilities upon a beneficiary that
he/she may not want to bear, and this is one of the primary 
reasns that
we indicate that  alternative to the fee-for-ervice 
HMOs/CMPs are an 
system and not necessarily the service delivery mode of choice for every 
beneficiary. 
Thank you for the opportunity to comment on this 
draft report.