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Department of Health and Human Services 
OFFICE OF 
INSPECTOR GENERAL 
MARKETING PRACTICES OF 
SOUTH FLORIDA HMOs SERVING 
MEDICARE BEN EFICIARI ES 
VlCES 
Richard P. Kusserow 
INSPECTOR GENERAL 
NOVEMBER 1~1  #' 
;; 
Department of Health and Human Services 
OFFICE OF 
INSPECTO R GENERAL 
MARKETING PRACTICES OF 
SOUTH FLORIDA HMOs SERVING 
MEDICARE BENEFICIARIES 
V1CF3 
Richard P. Kusserow 
INSPECTOR GENERAL 
'.t 
OEI-04-91-00630 
~claa  EXECUTIVE  SUMMAR Y

PURPOSE 
This report describes marketing practices of risk-contracted health maintenance 
organizations (HMOs) serving Medicare beneficiaries in South Florida. 
BACKGROUND 
In most geographic areas, Medicare beneficiaries obtain medical care through a fee-
for-service program. However, in some places, beneficiaries may obtain Medicare 
covered medical care in two ways. 
Regular Fee-for-Service Medicare Program - Beneficiaries choose each of their own 
health care providers. Medicare payments are based on each allowed service the 
beneficiary receives. 
Prepaid Health Plans - Beneficiaries enroll in health organizations which manage their 
medical care. Under these plans, Medicare pays a predetermined amount per 
beneficiary enrollee. 
The most common types of prepaid health plans are risk-contracted HMOs. Such 
HMOs are considered "at financial risk" because they agree to provide a beneficiary 
total medical care for a set amount each month. Beneficiaries are required to obtain 
all their medical care through providers affiliated with an HMO, except during (1) an 
emergency, and (2) periods when care is urgently needed and the beneficiary is out of 
the HMO 
service area. 
In the fall of 1990, newspapers in South Florida ran articles alleging marketing abuses 
by HMOs. The articles indicated Medicare beneficiaries are sometimes 
inappropriately enrolled and not adequately informed of the requirement that all 
medical care must be received from HMO-affiliated providers. Concerned about the 
situations described in these articles, the Administrator of the Health Care Financing 
Administration (HCFA) requested the Inspector General to examine the marketing 
practices and enrollment patterns of South Florida HMOs. This 
report deals with 
marketing practices. Enrollment patterns are described in a separate report 
(OEI-04-91-00640). 
To analyze marketing practices, we relied on data collected from sampled beneficiaries 
who enrolled in one of the six South Florida HMOs in 1990, HMO marketing 
materials, and HMO officials.  FINDINGS 
On the positive side, we found that: 
Almost three-fourths of the beneficiaries themselves initiate contact with the 
HMO and ask about joining. However, this number varies by HMO. 
Few beneficiaries feel pressured by sales staff. 
Most of the beneficiaries know they are enrolling in an HMO and can only use 
providers affiliated with the HMO. However, this number also varies by HMO. 
On the other hand, some instances of inappropriate marketing practices do occur. 
Some HMOs fail to adequately monitor sales staff, leaving beneficiaries vulnerable to 
inappropriate marketing practices. We found that: 
Eight percent of the beneficiaries say salespersons made unannounced visits to 
their homes asking them to enroll in an HMO. 
Nine percent of the beneficiaries say they had not known they were enrolling in 
an HMO when they signed the application. Another 10 beneficiaries could not 
be interviewed because they maintained they had not been in an HMO. 
Ten percent of the beneficiaries were unaware they could only use HMO 
providers. 
Seventeen percent of the beneficiaries were unaware they could "back-out" if 
they changed their minds after signing the application. 
Some beneficiaries have been vulnerable to unethical sales practices. 
RECOMMENDATIONS 
The following recommendations target Medicare prepaid health care program 
vulnerabilities, as well as addressing troublesome situations encountered during this 
inspection of South Florida HMOs. 
The HCFA should establish standards for sales force training and monitoring, 
and hold HMOs accountable for maintaining those standards. 
The HCFA should establish a policy limiting enrollment to one "
open season 
(opportunity to enroll) per year. 
Tfhree HCqF Au sheoulnd etsta belishn anr oon-lilnle msysteem tno idte ntcifyh anda renviewg caeses. o f
 In the three-county Miami service area, HCF A should test the efficacy of a 
third party handling HMO enrollment actions. 
The HCF A should impose a "cooling off' period allowing beneficiaries to 
reconsider HMO enrollment decisions before enrollment applications are 
processed. 
COMMENTS 
Comments on the draft report were received from HCF A and the Assistant Secretary 
for Planning and Evaluation (ASPE). Both agencies agree that HCFA should identify 
and review frequent enrollment changes, and HCFA believes they now have that 
capability. While ASPE supported the concept of a "cooling off' period for Medicare 
enrollees, HCF A thinks a "cooling off' period is not needed. 
Neither agency concurred with the other recommendations. We will defer our 
comments on their responses until the OIG completes its national study on HMO 
disenrollments (OEI-06-91-00730). 
The comments of HCF A and ASPE can be found in appendix E. Where appropriate 
we made the technical changes they suggested. 
III  .. . . .. ..  . . . . .. 
. . . . . . . . . . . . . . . . . . . ..  ..  ..  ..  ..  ..  ..  .. ..  ..  . . . . . . 
TABLE OF CONTENTS 
EXECUTIVE SUMMARY 
IN1RODUCfION ................................................

Scope .

Purpose ..................................................... 

Background ..................................................

...................................................... 4

Methods .....................................................

FINDINGS ...................................................... 6 
Most Beneficiaries Initiate Contact with the HMO to Enroll.

However, the Percent Varies by HMO .............................. 6

Few Beneficiaries Feel Pressured 
bySalesStaff .................................................

Most Beneficiaries Understand HMO 
Requirements Before They Enroll.

However, this Varies by HMO ...................................

Some HMOs Fail to Adequately Monitor Sales 
Staff, Leaving Beneficiaries Vulnerable to 
Inappropriate Marketing Practices .................................

Some Beneficiaries Have Been Vulnerable 
to Unethical Sales Practices .....................................

RECOMMENDATIONS 
APPEND !XES 
Appendix A: Methods and Sample Selection  ....................... A-
Appendix B: Responses to Telephone 
Survey of Beneficiaries ................................... B-

Appendix C: Responses to Face-to-Face 
InterviewswithBeneficiaries ............................... C-
Appendix D: Analysis of Survey Respondents vs. Nonrespondents  ....... D-
Appendix E: Comments on the Draft Report  .... E- INTRODUCTION
PURPOSE 
This report describes marketing practices of risk-contracted health maintenance 
organizations (HMOs) serving Medicare beneficiaries in South Florida. 
BACKGROUND 
In the fall of 1990, newspapers in South Florida ran articles alleging marketing abuses 
by HMOs. The articles indicated Medicare beneficiaries are sometimes 
inappropriately enrolled and not adequately informed of the requirement that all 
medical care must be received from HMO-affiliated 
providers. Monitoring reports 
from HCF A also noted problems with marketing materials and practices of some 
South Florida HMOs. 
Responding to these concerns, the Administrator of the Health Care Financing 
Administration (HCFA) requested that the Inspector General conduct an inspection of 
marketing practices of HMOs 
serving Medicare beneficiaries in South Florida. 
inspection of beneficiaries who repeatedly change their enrollments among South 
Florida HMOs was conducted at the same time. (OEI-04-91-00640) 
The Medicare Program 
Medicare is a Federal health insurance program for individuals age 65 and older and 
for certain categories of disabled people. Authorized in 1965 by title XVIII of the 
Social Security Act, Medicare serves over 33 million beneficiaries nationwide. Within 
the Department of Health and Human Services, HCF A is responsible for 
administering the Medicare Program. 
Method of Service 
In most geographic areas, Medicare beneficiaries obtain medical care through a fee-
for-service program. However, in some places, there are two ways in which 
beneficiaries may obtain medical care covered by Medicare. 
Regular Fee-for-Service Coverage - Beneficiaries choose their own physicians 
hospitals, and other medical care providers. The beneficiary pays the Medicare 
premiums, deductibles for inpatient and outpatient care, and 20 percent of the 
allowable charge for covered physician and other outpatient services. 
Prepaid Health Plans - Beneficiaries enroll in Medicare-contracted health 
organizations which manage their medical care. Beneficiaries continue to pay 
Medicare premiums. They may also have to pay the plan a monthly premium and/or  a copayment for each service received. However, they do not pay the deductibles or 
20 percent of physician and outpatient charges required under the fee-for-service 
program. As a result, these beneficiaries do not need Medicare supplemental policies. 
A beneficiary can be in only one program at a time. He/she cannot combine fee-for-
service and prepaid health plans. 
The most common types of Medicare prepaid health plans are risk-contracted HMOs. 
These HMOs are considered "at financial risk" because they agree to provide a 
beneficiary s total medical care for a set amount paid monthly by Medicare. 
These HMOs serve beneficiaries who live within a defined geographic area. They are 
responsible for providing the full range of Medicare services. They may offer other 
benefits not covered by Medicare, such as prescription drugs. 
Mter joining an HMO, the beneficiary selects a primary care physician (PCP) 
affiliated with the plan. All medical care is managed by that PCP. The PCP either 
provides the services needed or refers the beneficiary to appropriate specialists or 
other health care providers.

The HMO network of providers may be either HMO employees working in an HMO-
owned facility or private physicians contracting with the HMO to provide services to 
the members. Some HMOs use a combination. 
Beneficiaries are required to obtain all their medical care through the providers 
affiliated with the HMO, except for emergency and out-of-area urgently needed care. 
In an emergency, beneficiaries can receive care anywhere. The HMO will pay for the 
care, even if the provider is not affiliated with the HMO. The HMO also will pay for 
urgently-needed care a beneficiary receives when out of the HMO' s service area. 
Neither the HMO nor Medicare will pay for non-emergency or non-urgent care 
obtained outside the HMO without prior approval of the HMO. The beneficiary is 
responsible for those charges. 
Uniqueness of Miami HMO Market 
The HMO market in the three-county Miami area is unique in the number of elderly 
and the number of risk-contract HMOs. 
Nationally, persons over age 65 comprise 13 percent of the population. In the three-
county Miami area, approximately 18 percent of the population is over the age of 65. 
In 2 of the 3 counties, over 20 percent of the population is over 65. Some live in  Florida full-time. Others live there only part of the year, and reside in other States 
the rest of the time. 
In most locations, only one or two HMOs are available to Medicare beneficiaries. In 
the Miami area, five risk-contract HMOs currently serve beneficiaries. Approximately 
33 percent of the elderly are enrolled in one of those HMOs. Two additional HMOs 
have applied to serve beneficiaries in the Miami area and will be granted contracts if 
they meet HCF A requirements. Since the benefits HMOs offer are quite similar 
marketing of the programs is highly competitive. 
The HMOs Serving Beneficiaries in South Florida 
Six HMOs currently serve beneficiaries in South Florida. For the purpose of this 
study, the Humana Medical Plan serving the Miami area and the plan serving the 
Tampa area were treated as two separate HMOs. Although the Humana corporate 
policies are the same for both areas, the marketing practices may differ. In Tampa 
Humana is the only risk-contracted HMO available. In Miami, Humana has 
competition from four other such plans serving Medicare beneficiaries. 
The six HMOs serving beneficiaries in South Florida are: 
Humana Medical Plan (Tampa); 
Humana Medical Plan (Miami); 
CAC-RAMSA Y; 
Av-Med Health Plan; 
Health Options of South Florida; and 
CareFlorida. 
None of these HMOs charge an HMO monthly premium. They all charge copayments 
for some services not covered by the regular Medicare program, such as dental care. 
Only two, Health Options and Av-Med, charge copayments for physician services. 
The HMOs vary in their methods of operation: 
Health Options and Av-Med provide services solely through contracted 
physicians and providers. 
Demographic data from county planning departments in Dade, Broward, and Palm Beach Counties 
and the u.S. Department of Commerce; Bureau of the Census.  CAC has a combination of HMO-owned medical centers and contracted private 
physicians. The CAC regional offices coordinate patients' care and referrals 
made by PCPs. The corporate office pays the specialists for the services they 
render. 
Humana also has a combination of HMO-owned medical centers and 
contracted private physicians and physician groups. Humana has risk contracts 
with all its contracted PCPs. The HMO provides each PCP (or PCP group) a 
set amount each month per HMO patient. The PCP controls and pays for all 
care the beneficiary receives, whether through the PCP or specialists. 
CareFlorida uses only contracted private physicians to provide care. Thirteen 
PCP groups are under a risk contract and 240 PCPs are not at risk. Some of 
those under a risk contract do their own advertising and have their own 
salespersons. Some industry people refer to this type arrangement as a "mini-
HMO. 
SCOPE 
We examined the marketing practices of the six risk-contracted HMOs serving 
Medicare beneficiaries in the counties of Dade, Broward, Palm Beach, Hillsborough 
Pinellas, and Pasco. 
Although these HMOs may serve beneficiaries in other areas, we included only the 
South Florida operations in this inspection. 
Medicare enrollment and service areas for the six HMOs currently serving 
beneficiaries in South Florida are: 
NAME  MEDICARE  COUNTIES 
ENROLlEES *  SERVED 
Humana Medical Plan  722  Pinellas, Hillsborough, Pasco (Tampa area)
Humana Medical Plan  100 503  Dade, Broward, Palm Beach (Miami area)
CAC-RAMSA Y  090  Dade, Broward

Av-Med Health Plan  138  Dade, Broward, Palm Beach
Health Options of

South Florida  300  Dade, Broward

CareFlorida  484  Dade, Broward, Palm Beach
1991  according to the HMOs.
Number of Medicare members as of February 
 METHODS 
We obtained information for this study from various sources, including: 
a review of HCFA regulations to determine Federal requirements for HMOs; 
a review of the marketing materials used by each HMO to determine if they 
meet HCF A requirements; 
discussions with officials representing each HMO to learn each company 
policies and practices; 
a telephone survey of 601 randomly selected Medicare beneficiaries to ascertain 
their experiences in joining an HMO; and 
face-to-face interviews with 22 beneficiaries who had 15 or more multiple 
enrollments in HMOs to determine their reasons for changing HMOs. 
Telephone Survey

We drew a sample of 833 beneficiaries from a universe of 37 423 beneficiaries who 
enrolled in one of the South Florida HMOs between January and October 
1990. This 
was their first, and only, enrollment in an HMO. 
The survey was conducted January 7- , 1991. A total of 601 of the 833 beneficiaries 
were interviewed
, yielding an overall response rate of 72 percent. 
Another 10 beneficiaries were contacted, but could not be interviewed. They 
maintained they had not been in an HMO and could not answer questions about 
enrollment. 
Face-to-Face Interviews 
Through their data base, the HCF A Region IV office identified 26 beneficiaries who 
had each enrolled in different HMOs 15 or more times since becoming eligible for 
Medicare. Because of HCF A' s concern about multiple enrollments, we included these 
beneficiaries in our study. Staff conducted face-to-face interviews with 22 of the 26 
during January 28- , 1991 to determine their reasons for multiple enrollments. 
Appendix A describes in greater detail the data collection methods used in this 
inspection. Appendix B contains the telephone survey instrument and response 
frequencies, by HMO. Appendix C contains the survey instrument and response 
frequencies to the face-to-face interviews with beneficiaries. The analysis of 
nonrespondents is found in appendix D.  FINDINGS
MOST BENEFICIARIES INITIATE CONTACf WITH THE HMO TO ENROLL 
HOWEVER, THE PERCENT VARIES BY HMO. 
Our interviews with 601 HMO enrollees showed that almost three-fourths (72 percent) 
of the beneficiaries say they themselves had contacted the HMO about joining. 
Although 25 percent of the beneficiaries say the HMO approached them about 
joining, the number varies widely by HMO. For example, 10 percent of the 
beneficiaries in Av-Med say the HMO contacted them, whereas 41 percent in 
CareFlorida say they were contacted by the HMO. 
Three percent of the beneficiaries do not remember who initiated the contact. 
How do the beneficiaries hear about the HMO? 
About half of the beneficiaries in the survey indicate they first heard about their 
HMOs through friends or relatives. Others learned of the HMOs through 
advertisements on television, in newspapers, and in the mail. Only a few first heard 
about their HMOs from senior citizen groups, the Social Security office, or other 
sources. Approximately 2 percent had previously been in the HMO and simply 
converted to the Medicare component when they turned 65. 
Advertising methods vary by HMO and are determined usually by the HMO' s size and 
marketing budget. All have used television, radio, and newspaper advertising at one 
time or another.

Some HMOs also conduct mass mail-outs of brochures. They purchase lists 
of elderly 
persons within a given zip code and send them information about the HMO. 
Presentations to groups of senior citizens and participation in "health fairs" are other 
marketing methods frequently used. Humana and CAC, which have HMO-owned 
centers, often have "open houses " offering free health screening tests, refreshments 
and tours of the facilities. 
Humana relies most heavily on television ads. The smaller HMOs use less expensive 
methods, such as mail-outs and presentations. Advertising by CAC is almost 
exclusively in Spanish, while the other HMOs primarily advertise to English-speaking 
audiences.  HMOs USE SEVERAL METHODS TO ADVERllSE 
Humana  Humana  Health  Care 
CAC  Av-Med 
Miami  Tampa  Options  Florida 
Television  Yes  Yes  Yes  Yes  Yes 
Radio  Yes 
Newspapers  Yes  Yes  Yes 
Mass Mailings  Yes  Yes  Yes 
Open Houses  Yes  Yes  Yes 
Phone Solicitation  Yes 
What happens after the beneficiary contacts the HMO? 
When beneficiaries call the HMO to inquire about joining, they are encouraged to let 
a salesperson come to their home and explain the program requirements. In most 
instances, that is what occurs, and the salesperson completes an application if the 
beneficiary requests to join. However, some beneficiaries prefer that the HMO mail 
them the additional information and the application, and not send a salesperson. 
Where HMOs initiate contact, how do they 
identify prospective enroUees? 
Each of the six HMOs we reviewed solicited Medicare beneficiaries through a door-to-
door process--although such solicitation violates HCF A regulation. 
Of the 601 
beneficiaries we interviewed, 150 told us an HMO salesperson had initially contacted 
them for enrollment. Thirty-four percent of the 150 said the HMO salesperson came 
to their homes, soliciting their enrollment in an HMO. Thus, about eight percent of 
the 601 we interviewed received unannounced visits from HMO salespersons asking 
them to enroll. 
Salespersons used various sources to identify potential beneficiaries for HMO 
enrollment. The sources included relatives, friends, and doctors. About 64 percent of 
the 150 beneficiaries solicited by the HMOs we reviewed said they did not know how 
the HMO salesperson obtained their names. All of the HMOs included in our 
analysis reported that their salespersons obtain leads for potential enrollees from 
current members and functions such as open houses or presentations on the HMO. 
FEW BENEFICIARIES FEEL PRESSURED BY SALES STAFF. 
Only four percent of the beneficiaries say they felt pressured to join the HMO. Most 
beneficiaries who felt pressured cite persistence of the salesperson. Some say the 
salespersons kept calling them. Other beneficiaries say the salesperson repeatedly  extolled the benefits of the plan in a poor economy. Two beneficiaries were told 
enrollment in an HMO would not affect their way of getting medical care, and one 
was told her enrollment would help the salesperson. 
Two beneficiaries say the salespersons misrepresented the agencies with which they 
were affiliated.
Who are the salespersons wlw visit beneficiaries? 
The types of salespersons who market HMOs vary by plan. Most are either (1) HMO 
employees who market only the HMO, or (2) private independent insurance 
salespersons who market the HMO in addition to other products, such as Medicare 
supplemental policies. Florida law requires that all HMO salespersons be licensed as 
insurance agents. 
In Miami, Humana has 140 salespersons employed by the HMO and 12 independent 
agents. In Tampa, Humana has a sales force of 75 employees. 
The CAC plan has a sales force of 25-30 employees. 
Health Options, which is owned by Blue CrosslBlue Shield, has contracted with 40 
senior citizens who market the HMO and sell other Blue CrosslBlue Shield products. 
CareFlorida employs six full-time salespersons. They also use 60-70 independent 
agents, although only 15 of them are said to generate significant business. Some of 
their 13 risk-contracted PCPs also have sales staffs of independent agents. 
Av-Med has 7 salespersons employed by the HMO and 15 independent agents. 
What type of training do salespersons receive? 
Although HCF A has no requirement for training salespersons, each HMO provides 
some training for new staff.
Humana has the most  Initially, each salesperson 
extensive sales force training. 
receives 30 hours of classroom training. He/she is tested and must score 72 (out of a 
possible 100) overall, and must correctly answer an essay question about "lock-
During the salesperson s first two weeks on the job, management observes five 
presentations. The salesperson is retested every six months and must score 77 overall 
and 100 on the "lock- " question. 
Lock- " refers to a requirement that all medical care must be received from HMO-affiliated 
providers.  Health Options provides eight or more hours of formal training for new salespersons 
and quarterly training for all the sales force. Health Options also tests its salespersons 
once a quarter. 
The sales staff of CAC receive two to three days of formal training. 
Both CareFlorida and Av-Med provide less formal training for their sales staffs. 
Although only Humana and Health Options have formal retraining, all HMOs have 
regular meetings with their sales staff. The meetings are scheduled as follows: 
HMO SALES STAFF MEET REGULARLY 
Weekly  Twice Monthly  Monthly 
HUMAN A MIAMI
 Yes 
HUMAN A TAMPA  Yes 
CAC  Yes 
HEALTH OPTIONS  Yes 
AV-MED  Yes 
CAREFLORIDA 
Employees  Yes 
Independent Agents 
(Includes some 
PCP-based agents)  Yes 
Independent Agents 
From 3 PCPs  Yes 
How are sales staffs paid? 
All HMOs pay salespersons a commission for each beneficiary enrolled. The amount 
per person enrolled increases with the number of enrollees per month. For example 
the HMO may pay the salesperson $60 for each of the first 20 enrollees in a month 
and $75 for additional enrollees that month. The dollar amounts vary by HMO, as do 
the commission policies. 
The CAC pays a retention fee of $2.00 for every month a beneficiary remains enrolled 
in the HMO. CAC believes this provides an incentive for sales staff to remain with 
the HMO and keep beneficiaries they have enrolled in the plan. When a salesperson 
moves to another HMO, he/she may persuade members to change to the other plan. 
Humana and Health Options pay salespersons a lump sum amount after a beneficiary 
has been enrolled a specified number of months. Humana pays $25 after a 
beneficiary has been enrolled for 13 months. Health Options pays $5 after six months.  CareFlorida staggers commission payments to its independent agents. Half is paid 
when the beneficiary enrolls. One-fourth is paid when the beneficiary has been 
enrolled three months, and the remaining fourth is paid when the beneficiary has been 
enrolled six months. CareFlorida does not pay a commission for the third time a 
beneficiary enrolls within 12 months. 
Humana, CAC, and Av-Med revoke commissions if the beneficiary disenrolls within 90 
days. 
The following chart illustrates the differences in sales staff pay structures among the 
HMOs. 
HMO COMPENSAll0N POUCIES DIFFER 
Humana  Hurnana  Health  Care Florida 
CAC  Av-Med 
Miami  Tampa  Options 
Employee  Independent 
SALES COMPENSATION 
Payment for enrolling  250  250  $1,500  662  800  875  $1,590 
30 beneficiaries
Penalty for early outs  90 Days  90 days  90 days  None  90 days  None  None 
Bonus" for longevity  Yes  Yes  Yes  Yes  Yes 
Bonus" on 30 enrol- $750  $750  080  $150  500 
lees staying 18 months
Total payment on 30  $3,000  000  $2,580  812  $1,800  875  090 
enrollees staying 18 mo. 
Quotas: Employees  None  None  None 
Indep. Agents  None  None  None  None  None  None 
How do HMOs monitor their salespersons' activities? 
The HCF A has no specific requirement for monitoring enrollment practices of HMO 
salespersons. The HMOs we reviewed, however, have several methods for identifying 
and curtailing inappropriate enrollment practices by their sales staff. Some have also 
implemented processes for discouraging and correcting improper practices. 
First, HMOs are required by Florida law to conduct an enrollment verification. 
Generally, HMO employees other than salespersons are expected to call potential 
enrollees before processing their application and ensure that they: (1) know they are 
joining and HMO and (2) understand the "lock- " concept. Potential enrollees who 
do not understand are either provided further information or referred to the  marketing department for further explanation before enrollment. One of the six 
HMOs we reviewed, Humana, also telephones beneficiaries about 10 days after their 
enrollment to answer questions and ensure that they have received membership 
materials. 
Second, each HMO receives beneficiary complaints and appeals which provide 
information on enrollment practices of salespersons. 
Third, two HMOs, Humana and CAC, kept records on salespersons who appeared to 
have provided inadequate or erroneous information to potential enrollees. Humana 
referred such cases to a private company for investigation. Where such investigations 
confirmed inappropriate practices, Humana took disciplinary action, including 
warnings, retraining, and termination. One HMO, Health Options, did not keep 
records on claims of inappropriate enrollments by salespersons, stating that such 
practices were so few, records were not warranted. 
MOST BENEFICIARIES UNDERSTAND HMO REQUIREMENTS BEFORE
THEY ENROlL. HOWEVER, TIllS VARIES BY HMO.
How do beneficiaries get information? 
In most instances, beneficiaries talk to at least two HMO representatives and receive 
written material prior to enrolling. First, salespersons explain the program and 
provide some written information. Then, the HMO calls beneficiaries to verify their 
intent to enroll and their understanding of "lock-in." Mter enrollment, members are 
mailed additional written information, usually a handbook, that describes the program 
and requirements. Humana also calls the beneficiary again after 10 days and conducts 
group meetings for new enrollees. 
The HCF A regulations require that HMOs provide prospective enrollees with written 
material which fully explains program requirements and beneficiary rights. The 
membership materials reviewed for this inspection have clear explanations of program 
requirements, particularly "lock-in. 
Do beneficiaries understand the requirements before they enroll? 
Overall, we found that most beneficiaries knew about HMO requirements before they 
joined. However, the number who understand varies by HMO. 
Ninety percent knew they were enrolling in an HMO when they signed the 
application form. Most who did not know thought they were applying for 
supplemental insurance or additional benefits. Five people did not remember 
signing an application. Eighty-nine percent knew they could only use medical providers affiliated with 
the HMO (except for emergency or urgently-needed care). 
Seventy percent knew they must pay for care incurred outside the HMO 
(except for emergency or urgently-needed care). Ten percent do not remember 
if they had known this when they enrolled. 
The proportion of beneficiaries who are knowledgeable about program requirements 
varies by HMO of enrollment. To determine if  other than the HMO of 
factors 
enrollment account for this variation, age and gender of the respondents were 
considered. The analysis showed that understanding of the "lock- " provisions of 
HMO membership did correlate with age; that is, older respondents seem not to have 
understood the "lock- " provisions as well as younger people. 
To adjust for these differences, the responses to three survey questions were 
standardized by age and gender, and the response frequencies recalculated. The 
following table shows that knowledge of "lock- " related program requirements still 
differs among enrollees in the six HMOs, even after standardization. (See page A-
for the method used to standardize for age and gender. 
BENEFICIARIES' KNOWLEDGE OF REQUIREMENTS DIFFERS BY HMO 
Human  Human  Health  Care 
CAC  Av-Med 
Miami  Tampa  Options  Florida 
When Signed Application: 
Did Not Know Enrolling in an 
HMO  15%  13%  26% 
Did Not Understand Lock- 11%  13%  17%  25% 
Did Not Know Could "Back 
Out" Prior to Enrollment 
Becoming Effective  21%  26%  14%  36% 
This table indicates that some HMOs, such as Health Options and Humana in Tampa 
have been more successful in imparting program information than others, such as 
CareFlorida. 
At the time they applied for HMO coverage, almost 90 percent of the beneficiaries 
knew when their enrollment would be effective and how to get medical services. 
Eighty-three percent knew what to do in regard to coverage for emergency treatment. 
About three-fourths knew how to see a specialist and to get other information they 
needed about the HMO. 
Although 81 percent knew they could have "backed out" prior to their date of 
enrollment, only 61 percent knew how to disenroll. The marketing materials 
inform them of their ability to disenroll and 
beneficiaries receive prior to enrolling  their right to appeal. The procedures for these actions, however, are described in the 
handbooks beneficiaries receive after enrolling. 
Enrollees of HMOs maintain their Medicare right to appeal denials of claims. They 
may appeal denials of payments for emergency and urgently needed care received 
outside the HMO. They may also appeal refusals of service. However, only 
35 percent know how to appeal these HMO decisions. 
Most beneficiaries (88 percent) say they think their salespersons gave them accurate 
information. Only five percent say they were given inaccurate information. The 
others either do not know if the information is accurate or they do not remember. 
HMOs compare in marketing approaches and operations? 
How  do the 
The chart on the following page provides a summary of HMO operations and some 
findings from the telephone survey of beneficiaries. Responses to the survey have 
been standardized to accommodate the respondents' age and gender differences 
among the HMOs.  SUMMARY OF HMO SURVEYS

Humana  Humana  CAG  Health  Av-Med  Care Florida 
Miami  Tampa  Options  Employee Independent 
HMO SURVEY

Sales Staff

Employees  140  25+

Independent Agents  60+

Contracted  40+

Sales Compensation 
Payment For Enrolling 
30 Beneficiaries  250  $2,250  $1,500  662  800  $2,875  590 
Penalty For Early Outs  90 Days  90 Days  90 Days  NONE  90 Days  NONE  NONE 
Bonus" For Longevity  YES  YES  YES  YES  YES 
Bonus" on 30 Enrollees 
Staying 18 Months  $750  $750  $1,080  $150  500 
Total Payment On 30 
Enrollees Staying 18 Mo.  $3,000  000  580  812  $1,800  785  $3,090 
Quotas: Employees  NONE  NONE  NONE 
Indep. Agents  NONE  NONE  NONE  NONE  NONE  NONE 
Sales Staff Training 
Initial Training  30 hr  30 hr  3 Days  8+hr  Informal  Informal  Informal 
Retraining  YES  YES  YES 
Marketing Approaches 
Television  YES  YES  YES  YES  YES 
Radio  YES  YES 
Newspapers  YES  YES  YES 
Mass Mailings  YES  YES  YES 
Open Houses  YES  YES  YES  YES 
Phone Solicitation  YES 
BENEFICIARY SURVEY RESPONSES 
Aspects of Enrollment ... 
Pressured to Join  2.5% 
Not Oear Enrolling in HMO  14.5%  4.4%  12.  25. 
Unaware of Lock- 11.2%  13.  16.  24. 
Unaware of Back-Out  20.  25.  14.  36.3% 
Initiation of HMO Contact 
HMO Initiated Contact  22.  35.  28.3%  16.  40. 
Sales Rep. Visited Home  7.4%  17. 
Aspects of Services....... 
Seen MD Since Joining  81.7%  86.3%  82.  80.  78.3%  70. 
Services Found Later Not 
To be covered  16.3%  11.4%  10.  13.  16. 
Unable to See Needed 
Physician  11.2%  13.  7.4%  7.4% 
Services Worse Than 
Previous Care Source  15.  18.  11.  5.4%  13.3%  , "

SOME HMOs FAIL TO ADEQUATELY MONITOR SALES STAFF, lEAVING
BENEFICIARIES VULNERABLE TO INAPPROPRIATE MARKETING
PRACfICES.
Although HMOs have changed several policies within the last few years to better 
monitor sales staffs and curtail inappropriate practices, several HMO practices may 
still leave beneficiaries vulnerable to inappropriate enrollment. For example, HMOs 
have little or no control over salespersons attached to PCPs and clinics or independent 
agents. Further, HMOs sometimes compromise the integrity of enrollment verification 
by conducting the verification while salespersons are present in beneficiaries' homes. 
Salespersons Attached to PCPs or Clinics
The HMO has little control over salespersons attached to PCPs or clinics. 
When PCPs or clinics are financially responsible for all care provided to their 
enrollees (e.g.  ), their interest in who is enrolled and who is not may be 
at risk"
influenced by the health status of the member. Having the means to control 
enrollments and disenrollments makes it possible for PCPs to enroll 
beneficiaries while healthy, then disenroll them when sick. 
Also, a beneficiary may feel compelled to join an HMO if his doctor s agent (a 
PCP salesperson) approaches him about enrolling. Further, if he enrolls in an 
HMO because of his own primary physician s affiliation with it, he may be less 
likely to understand "lock- " as it relates to ancillary health care providers. 
CareFlorida currently uses salespersons attached to PCPs or PCP-
groups.
Use of Independent Agents

Again, HMOs currently exercise little control over salespersons not in their 
employ. Although these agents have signed Codes of Ethics and other 
affidavits agreeing to adhere to HCF A and HMO marketing guidelines, they 
may not be as committed to follow them as an HMO employee would be. 
They do not have as much to lose if found using inappropriate marketing 
methods. These sales agents may lose their association with the HMO, but 
they would not jeopardize their eligibility to market other products. 
The fact that these agents market products in addition to HMOs could also 
hamper a beneficiary s understanding of "lock-in." If the salesperson discusses 
several products, the beneficiary may not realize it is an HMO for which he/she 
has applied. Nine percent of the beneficiaries in the survey did not realize they 
had applied for an HMO when they signed the application. 
CareFlorida, Av-Med, and Humana in Miami currently use independent agents.  Enrollment Verification Conducted from Beneficiary s Home 
Consistent with Florida law, most HMOs telephone potential enrollees for 
verification after the salesperson has left the home and submitted the 
application for processing. However, one HMO, Humana, telephones the 
HMO from the beneficiary s home immediately after taking the application. 
The HMO interviewer completes the telephone verification at that time. 
beneficiary who has felt pressured to join or does not understand the 
requirements may not be willing to tell the interviewer while the salesperson is 
present. Making the verification call 
several days after the application is signed 
enables a beneficiary who has changed his mind to more easily "back out" 
Although Humana calls beneficiaries again 10 days after they have been 
, it is 
enrolled. 
Also, verification conducted from the beneficiary s home may make the HMO 
vulnerable to claims of fraudulent enrollments. Since the salesperson places 
the call to the HMO, the verifier has no assurance that the individual the 
salesperson has him talk to is an actual applicant. 
SOME BENEFICIARIES HAVE BEEN VULNERABLE TO UNETHICAL SALES 
PRACfICES. 
Some beneficiaries are not fully aware of their actions when enrolling in or changing 
HMOs, and may be particularly vulnerable to unethical sales practices. 
The HCF A Region IV office identified several blatant cases of abuse. According to 
their records, the five HMOs in the Miami area had enrolled 26 beneficiaries a total 
of 424 times since 1981. According to Florida newspaper articles, one of these 
beneficiaries was reported to have been unaware that she had enrolled 16 times in at 
least five HMOs since 1987. 
The HCF A records show that all 26 of these beneficiaries were enrolled in an HMO 
plan during the period of this inspection. We conducted face-to-face interviews with 
22 of them. Four could not be located. 
These beneficiaries were especially vulnerable people. Some could not read. Some 
had no transportation. Most did not have a regular physician. Many had problems 
remembering their health coverage circumstances. Some seemed unconcerned about 
these enrollment issues. Seventeen stated that they didn t know they would be 
disenrolled automatically from their current HMO if they enrolled in another one. 
The disorientation of such individuals can make them more susceptible to aggressive 
or unscrupulous sales representatives. In fact, 16 of the 22 people (over 70 percent) 
said that they had been influenced to change HMOs by sales representatives of the  HMOs. This reason had been given by only 20 percent of the beneficiaries in a survey 
of a general sample of 136 multiple enrollees. (OEI-04-91-00640). 
The enrollment records of these 26 individuals showed that virtually all of the multiple 
enrollments were in three HMOs in 1990. The table below shows these activities. 
ENROLLMENT ACllONS OF  1990 
26 BENEFICIARIES TOTALlED  86 IN 
Number of Enrollment Actions  In:  Enrollment 
Average  Length of 
CAC  88 Months 
CareFlorida  14 Months 
Humana  58 Months 
3.49 Months 
Each beneficiary was shown his/her enrollment history which identified the current and 
all previous enrollments. When these beneficiaries were asked about their reasons for 
changing, the most common answers were: 
convinced by an HMO representative; 
did not like previous HMO; and 
services were restricted or limited. 
Several of these beneficiaries described actions by HMO representatives which violate 
HCFA regulations and indicate abusive practices. 
Several beneficiaries reported that HMO representatives came to the their 
homes or communal gathering places and persuaded them to join an HMO 
while assuring them that their enrollment actions would not affect their 
Medicare coverage. 
One beneficiary said a "driver" picked him up to keep a medical appointment 
at his HMO. However, the driver took the beneficiary to a new HMO 
whereupon he was enrolled in that HMO plan. The beneficiary thought he was 
merely keeping his appointment with his current HMO. 
One beneficiary who was barely able to move said an HMO representative 
forcibly placed a pen in her hand and told her to sign the enrollment 
application. She signed. RECOMMENDA TIONS
A number of HCF A policies and HMO practices leave the Medicare prepaid health 
care program vulnerable to abuse. The following recommendations target those 
vulnerabilities, as well as addressing troublesome situations encountered during this 
inspection of South Florida HMOs. 
The HCFA should establish standards for sales force training and monitoring, and 
hold HMOs accountable for maintaining those standards. 
South Florida HMOs now engage salespersons in three ways: 
as HMO employees; 
as contracted agents marketing only that company s products; and 
as independent agents who sell a variety of insurance products in addition to 
HMO coverage. 
Training and monitoring of these salespersons vary widely by HMO and by type of 
sales agent. Medicare-contracted HMOs must be accountable for the actions and 
sales practices of their agents, regardless of the manner of employment. 
The HCF A should develop standards for the content, duration and frequency of 
training of sales agents, and should require HMOs to certify that those standards are 
being upheld. Appropriate training of new salespersons must apply equally to 
independent agents and HMO marketing staff. Periodic sales meetings should be held 
to impart information on new HCF A regulations and policies. Such 
meetings should 
also be used to correct aberrant sales practices detected by the HMOs. 
Salespersons should be tested to assure that they understand all germane Medicare 
rules, HMO services, and restrictions, as well as individual company policies. 
Salespersons should be retrained as necessary and retested periodically. The HMOs 
should maintain records of each agent' s participation in training and performance on 
tests. 
The HCF A should require that each HMO maintain records on and investigate 
enrollee complaints about sales staff. Where a determination is made that individual 
agents have been involved in inappropriate marketing and enrollment activities, such 
as "cold calls" to Medicare beneficiaries' homes , HCF A should require that disciplinary 
measures be taken.  The HCFA should establish a policy limiting enroUment to one "open season 
(opportunity to enroU) per year. 
Presently, HCF A rules allow Medicare beneficiaries to change their health insurance
coverage as frequently as every month. Disenrollment from prior coverage 
automatic when the new enrollment occurs. This policy allows beneficiaries to change
plans without thoughtful consideration of the pros and cons of their actions. The
policy also encourages an aggressive approach to sales, since it allows a new sale to
each enrollee every 30 days. 
This policy clearly undermines HCF A's commitment to managed health care. It also 
increases the likelihood of confusion among beneficiaries over coverage issues, and 
may jeopardize the well-being of those who have not made thoughtful decisions. 
Based on health insurance industry norms, HCF A should establish an annual "open 
season " so that changes in coverage may be made only once a year. The effective 
date of change should be no sooner than 30 days after a new plan/form of coverage is 
selected by the beneficiary. 
To safeguard that beneficiaries are not disadvantaged by enrollment decisions contrary 
to their best interests, HCF A should allow disenrollment "for cause" between open 
season periods. The HCFA should develop the criteria for determining whether 
sufficient "cause" is established. 
The HCFA should establish an on-line system to identify and review cases of
frequent enrollment change. 
The HCF A's automated systems are capable of identifying individual Medicare 
beneficiaries who have applied for HMO enrollment at the point each new enrollment 
begins. The agency should capitalize on this capability by: 
determining an appropriate threshold for number of changes acceptable over a 
specified period of time (e.  , two per year) or minimum time between new 
enrollments (e.g., 6 months); 
automatically scanning new enrollments for beneficiaries who exceed those
thresholds;
alerting the new HMO-of-enrollment to these cases, with adequate beneficiary
identification information; 
requiring the HMO to explain and document the circumstances surrounding the 
sale and application for enrollment; and 
developing corrective actions and penalties for HMOs found to have
inappropriately enrolled Medicare beneficiaries. We note that HCFA has already taken preliminary steps to develop such a system. 
We endorse the agency s early efforts in this regard. The refinements outlined above 
are recommended to strengthen and standardize HCF A's monitoring of excessively 
frequent HMO enrollment change. 
The system recommended here would be obviated by implementation of
Recommendation #2 above or Recommendation #4 below. 
In the three-county Miami service area, HCFA should test the efficacy of a third
party handling HMO enroUment actions.
A major vulnerability of the present system is that an HMO sales agent can sign up 
Medicare beneficiary in his/her home at the time of the sales presentation. 
Beneficiaries may not object to this practice in many instances, since it is convenient. 
However, in cases where the beneficiary is intimidated by the sales agent, he/she may 
person to leave. 
sign-up just to get the sales 
Although the HMOs included in this review do have procedures for verifying that 
beneficiaries understand certain provisions of HMO coverage, this may not be 
adequate protection against inappropriate sales practices. We note in this report that 
one HMO allows the verification call to be made while the salesperson is still present 
in the beneficiary s home. 
The best safeguard for an informed choice by the beneficiary is to ensure that the 
decision to enroll in a new HMO is made independent of the sales person and even of 
the HMO. 
We recommend that HCFA contract, on a 2 to 3 year pilot basis, with a third party to 
provide HMO enrollment services. One possible enrollment agent is the Social 
Security Administration (SSA) District Offices (DO). In each DO in the Miami area 
HCF A could fund a position or 
part of a position for a service representative to advise 
new enrollees on their decisions, and process the enrollments. An SSA service 
representative would be able to provide objective, balanced information on health 
coverage to the beneficiary, and answer applicants' questions stemming from the sales 
presentation. 
This proposal is consistent with Secretary Sullivan s Program Direction which calls for 
a more expansive role for SSA district offices in integrating SSA and other health and 
human services.
If an arrangement cannot be made with SSA, HCF A might 
contract for this service 
with a private contractor in the Miami area. Such services could possibly be provided 
under the auspices of senior citizen or other neighborhood service centers. Assuming 
proper guidelines are provided to the contractor, this recommendation would obviate 
Recommendations #2 and #3 above.  The HCFA should impose a "cooling off' period allowing beneficiaries to 
reconsider HMO enrollment decisions before enrollment applications are processed. 
Florida law now requires that, after an individual has applied to enroll in an HMO, a 
verification phone call must be made by the HMO to ascertain the applicant' 
understanding of the "lock- " feature of HMO enrollment, and assure that he/she 
affirms his enrollment decision. This consumer protection step would seem a good 
model for HCF A to adopt, with application nationally, to cover Medicare beneficiary 
enrollments in prepaid health plans. 
To further refine Florida s model, HCF A should require that enrollment verification 
take place no sooner than 72 hours after the beneficiary has signed his/her application 
to enroll. This "cooling-off' period is consistent with consumer contract protection in 
many States.  APPENDIX A
METHODS AND SAMPLE SELECfION 
Information for this inspection was obtained from: 
a review of HCFA regulations to determine Federal requirements for HMOs; 
a review of the marketing materials used by each HMO to determine if they 
meet HCF A requirements; 
discussions with officials representing each HMO to learn each company 
policies and practices; 
a telephone survey of 601 randomly selected Medicare beneficiaries to ascertain 
their experiences joining an HMO; and 
face-to-face interviews with 22 beneficiaries who had 15 or more multiple 
enrollments to determine their reasons for  frequently. 
changing  HMOs 
Review of H CF A Regulations 
The HCF A regulations relating to HMO requirements were examined to compare 
with HMO practices. Monitoring requirements for HCF A site visits and reports of 
HCF A visits to each of the HMOs were also reviewed. 
Review of HMO Marketing Requirements 
Marketing and membership materials from each HMO were examined for compliance 
with HCF A requirements. Particular attention was paid to each HMO' s explanation 
of "lock- " instructions for obtaining emergency and urgently-needed care, and 
procedures for filing complaints and appeals. 
Discussions with HMO Officials 
to verify their marketing policies and procedures. 
Site visits were made to all  HMOs 
Discussions were held with HMO officials such as Chief Operating Officers and 
Medicare Compliance Directors. In each location, Marketing Directors and Customer 
Service Managers were always included in the discussions.  Telephone Survey of Beneficiaries
The survey universe consisted of 37 423 beneficiaries who enrolled in one of the six 
selected South Florida HMOs between January and October 1990. This was their 
first, and only, enrollment in an HMO. Eighty-two percent of them were still 
members as of November 1. Eighteen percent had disenrolled and returned to the 
for-service Medicare program. 
regular fee-
A stratified sample of 839 of these beneficiaries was selected. The sample was 
reduced to 833 because 6 beneficiaries were deceased. 
The survey was conducted between January 7 and 25, 1991. A letter was sent to each 
person in the sample explaining the purpose of the survey. Each was asked to provide 
his/her telephone number by returning a postcard enclosed with the letter. Phone 
numbers were also obtained from Directory Assistance and directories that list 
telephone numbers by street addresses. 
Postcards were sent to beneficiaries for whom no telephone numbers could be found
and to beneficiaries who could not be reached after calling their homes at least three
times. Those beneficiaries were asked to call a toll-free telephone number so an
appointment to conduct the 
survey could be arranged.

From the sample of 833 beneficiaries, 601 interviews were conducted yielding an 
overall response rate of 72 percent. 
The sample and response rate from each HMO was as follows:
HMO NUMBER IN SAMPLE  NUMBER OF  RESPONSE RA 1E 
RESPONSES 
Humana - Miami  210 135
Humana - Tampa
CAC 132
Av-Med 133
Health Options
 132 103
CareFlorida 131
833 601
To compute overall findings for the report, responses to the questionnaire were 
weighted according to each HMO' s proportion of the universe. The unweighted 
actual frequencies of responses, however, are shown in appendix B. 
A - In addition to the 601 beneficiaries interviewed, another 10 beneficiaries were 
contacted, but could not be interviewed. They maintained they had not been in an
HMO and could not answer questions about enrollment. HCF A records indicate all
10 had been in HMOs, and that, as of November 1, 1990, 5 were still enrolled. The
enrollments were distributed fairly evenly among the HMOs:
two in Humana-Miami;
one in Humana- Tampa;
two in CAC;
one in Av-Med;
two in Health Options; and
two in CareFlorida.
Standardization of Responses
Due to differences in the age and gender distribution of enrollees among the HMOs
the proportions of respondents answering each question were standardized to
eliminate differences that might be attributable solely to the age and gender of an
enrollee. Using the total population of respondents as the referent group, the direct 
method of standardization was used.! Within the two genders, three age groups were 
created: under 65 years of age, 65 to 74 years of age, and 75 years of age or older. 
The six categories, with the appropriate weights are:
Age Group  Sex  Weight 
-c::: 65 Yrs.  Male  070 
Female  073 
65-74 Yrs.  Male  297 
Female  0.347 
75 + Yrs.  Male  085 
Female  128 
The responses in tables on pages 12 and 14 present standardized proportions.
Harold A Kahn and Christopher T. Sempos  Statistical Methods in Epidemiology. Oxford
University Press , 1989 
A - Face-to-Face Interviews 
The HCF A Region IV office identified 26 beneficiaries whom HMOs had enrolled 
total of 424 times in the last 10 years. Face-to-face interviews were conducted with 
these beneficiaries. 
We interviewed 21 of the 26 beneficiaries and the spouse of a recently deceased 
beneficiary. We were unable to locate the remaining four beneficiaries. The 
interviews were performed between January 28 and 31, 1991. The response rate was 
85 percent. Appendix C contains the survey instrument and response frequencies.  APPENDIX 
RESPONSES TO TELEPHONE SURVEY 
OF BENEFICIARIES 
The answers shown below in capital letters were not read to respondents. No prompts 
of possible answers were given to respondents. 
The first number listed shows the frequency of responses for the 601 
respondents to the survey. Numbers in parenthesis reflect the unweighted 
percent of responses overall and within each HMO. The sum of the individual 
percentages may not equal 100 percent due to independent rounding. 
Not all respondents answered every question. 
Legend:(cid:1) H(M)  Humana - Miami 
H(T)  Humana - Tampa 
CAC  Comprehensive American Care 
Av-Med  Av-Med Health Plan 
Health Op 
Health Options 
CFL  CareFlorida 
How did you first hear about (Name of HMO)? 
(Respondents could mention more than one means.

FROM FRIEND OR RELATIVE: 316
H(M)  H(1)  CAC  Av-Med  Health Op  CFL
TELEVISION ADVERTISING: 96
H(M)  H(1)  CAC  Av-Med  Health Op  CFL
HMO SALESPERSON CAME TO HOME:
H(M)  H(1)  CAC  Av-Med  Health Op  CFL
NEWSPAPER ADVERTISING: 47
H(M)  H(1)  CAC  Av-Med  Health Op  CFL
ADVERTISEMENTS IN THE MAIL: 28
H(M)  H(1)  CAC  Av-Med  Health Op  CFL
FROM DOCTOR'S OFFICE: 21
H(M)  H(1)  CAC  Av-Med  Health Op  CFL RADIO ADVERTISING: 17

H(M)  H(T)  CAC  Av-Med  Health Op  CFL

AT SENIOR CITIZEN'S GROUP: 8

H(M)  H(T)  CAC  Av-Med  Health Op  CFL

FROM SOCIAL SECURITY OFFICE: 4 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
OTHER: 112 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
Did you call (Name of HMO) to get information, or did (Name of 
HMO) contact you to ask you to enroll? 
BENEFICIARY INITIAlED CONTACf:  433 (72%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
100(74%)  62(66%)  55(68%)  78(85%)  83(81 %)  55(57%) 
HMO INITIAlED CONTACf: 150 (25%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
30(22%)  31(33%)  24(30%)  9(10%)  17(17%)  39(41%) 
BENEFICIARY DOES NOT REMEMBER:  17 (3%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
5(4%)  1(1%)  1(1%)  5(5%)  3(3%)  2(2%) 
Number NCot RAesCpo nAdinvg: -1 (0. 1%) 
H(M)
 H(T)  1(1%)  Med  Health Op  CFL
How did the HMO contact you?

(Asked only of the 150 who said the HMO contacted them.

SALHESPERS(ON M) SHTOP(PETD B)Y  HCOMAE:C 57  A(38v%)-
10(33%) 10(32%) 7(29%)  Med  Health Op CFL 
2(22%)  11(65%)  17(44%) 
H(M) 
H(T) 
SALESPERSON CONTACTED  BENEFICCIAARYC BY A PHvO-NME: 51e (d34% )
Health Op 
CFL

12(40%)  13(42%)  8(33%)  5(56%)  3(18%)  10(26% ) 
SALESPERSON  STOPPED BY A "GROUP GArnERING PLACE" (like a Senior Citizen 
CHente(r):M 3 (2%)) H(T)  Med 
CAC Av-
1(3%) 1(3%)  Health Op CFL
1(3%)  SALHESPERS(ONM CONTACfE)D  H(T) BCY OATHCER A MEvA-NMS: 3e9 (d26 %)
7(23%) 7(23%) 9(38%) 2(22%) Health Op  CFL
3(18%)  11(28%) 
a. Do you know how the salesperson got your name? 
(Asked only of the 150 who said the HMo contacted them. 
NO: 87 (58%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
19(63%)  25(81%)  9(38%)  6(67%)  8(47%)  20(51%) 
YES: 52 (35%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
9(30)  5(16%)  10(42%)  3(33%)  7(41%)  18(46%) 
Number Not Responding: 11 (7%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
2(7%)  1(3%)  5(21%)  2(12%)  1(3%) 
b. Where? 
(Asked only of the 52 who answered YES to 3. 
H(T) 
SALHESPER(SONM GOT NA)ME   FRCOMA FCRIE NADv O-RM RELeATdIV E: 13 (25%)
3(33%) 3(60%) 1(10%) 2(67%) Health Op  CFL
2(29%)  2(11%) 
SAHLESPERS(ONM GOT NAME)   H(T)F RCOMA BCEN EAFICvIA-RMY'S eDOdcr OR: 7 (13%)
Health Op 
2(20%)  1(14%)  CFL
4(22%) 
SAHLESPERS(ONM GOT NAME)   H(T)F RCOMA MCED IACAvRE-:M 5 (1e0%d)  
2(22%) 1(20%) 2(20%)  Health Op  CFL
H(M) H(T)F ROM SOCIAL SECMURITeY:d  4  (8%)
SALESPERSON GOT NAME  CAC Av-
1(11%) 1(20%)  Health Op  CFL
2(11 %) 
SALHESPERS(ONM GOT NAME)   H(T)F RCOMA OCTH EAR SvO-UMRCEe: d23  (44%)
3(33%)  5(50%) 1(33%) Health Op  CFL
4(57%)  10(56%) 
Where did the salesperson say he or she was from? 
THHE H(MMO: 5)04  (84%)
H(T)  CAC  Av-Med  Health Op  CFL
120(89%) 
84(89%)  62(77%)  83(90%)  77(75%)  78(81 %) 
THHE G(OMVER)N MHENT(: 2T (0.3)% )
CAC  Av-Med  Health Op  CFL  1(1%)  1(1%) 
SALESPERSON DID NOT SAY: 7 (1%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
1(1%)  2(2%)  1(1 %)  3(3%) 
BENEFICIARY DOES NOT REMEMBER: 31 (5%)
H(M)  H(T)  CAC  Av-Med  Health Op  CFL
10(7%)  4(4%)  5(6%)  1(1 %)  7(7%)  4(4%)
Number Not Responding: 57 (9%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL
5(4%)  6(6%)  12(15%)  6(7%)  18(17%)  10(10%)
Who filled out the application form?
SALESPERSON: 323 (54%)
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
80(59%)  61(65%)  42(52%)  40(43%)  37(36%)  63(66%) 
BENEFICIARY: 188 (31%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
39(29%)  20(21 %)  15(19%)  40(43%)  52(50%)  22(23%) 
FRIEND OR RELATIVE:  24 (4%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL
3(2%)  4(4%)  5(6%)  4(4%)  4(4%)  4(4%)
DOCTOR'S OFFICE: 5 (1%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL
2(2%)  3(3%)
SOCIAL SECURITY OFFICE:  2 (0.3%)

H(M)  H(T)  CAC  Av-Med  Health Op  CFL
1(1 %)  1(1 %)
OTHER:  28 (5%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
5(4%)  4(4%)  11(14%)  4(4%)  2(2%)  2(2%) 
BENEFICIARY DOES NOT REMEMBER:  28 (5%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
8(6%)  5(5%)  3(4%)  3(3%)  8(8%)  1(1%) 
Number Not Responding: 3 (0.4%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL
2(2%)  1(1 %)
a. 
When you signed the application, was it clear to you that you were emolling
in a Health Maintenance Organization?
YES: 525 (87%)
H(M)  H(T)  CAC  Av-Med  Health Op  CFL
B - 4 122(90% )  88(94%)  67(83%)  80(87%)  97(94%)  71(74% ) 
NHO: 6(6M (11%)) 
H(T)  CAC  Av-Med  Health Op  CFL
13(10%) 
5(5%)  11(14%)  10(11%)  5(5%)  22(23%) 
H(T) 
BHENE(FMICIA)RY  DOES NOT REMEMBER SIGNINMG APePLdIC ATION: 5 (1%)
CAC Av-
1(1%) 1(1%) Health Op CFL
3(3%) 
H(T) 
Number Not RespoCndinAg: C5 (1  Av-
H(M)  1(1%) 2(2%)  Med  Health Op  CFL
1(1%)  1(1%) 
b. Do you recall what you thought you were signing? 
(Asked only of the 66 who answered NO to 6. 
NO: 18 (27%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
5(38%)  6(55%)  1(10%)  6(27%) 
YES: 46 (70%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
6(46%)  5(100%)  5(45%)  9(90%)  5(100%)  16(73%) 
Number Not Responding: 2 (3%)
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
2(15%) 
c. What did you think you were signing? 
(Asked only of the 46 who answered YES to 6. 
APPLICATION FOR SUPPLEMENTAL INSURANCE:  15 (33%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
1(17%)  1(20%)  2(40%)  3(33%)  3(60%)  5(31%) 
APPLICATION FOR ADDITIONAL BENEFITS: 8 (17%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
3(50%)  1(20%)  2(22%)  2(13%) 
FORM FOR MEDICARE/GOVERNMENT:  7 (15%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
1(20%)  3(60%)  2(22%)  1(6%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
1(20%)  3(60%)  2(22%) 
OTHER: 5 (11%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
1(17%)  1(20%)  3(19%) 
H(T) 
Number Not Responding: 11 (24%) 
CAC Av-
H(M)  1(20%)  Med  Health Op  CFL 
1(17%)  2(22%)  2(40%)  5(31%) 
B - 5
 When you signed the application, did you know that unless it was an
emergency, or you were outside the service area and urgently needed care, you 
could only go to (Name of HMO's) doctors, hospitals, and medical providers? 
YEs: 527 (88%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
120(89%)  88(94%)  68(84%)  78(85%)  98(95%)  75(78%) 
NO: 69 (11%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
15(11%)  6(6%)  10(12%)  13(14%)  4(4%)  21(22%) 
Number Not Responding: 5 (1%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL
3(4%)  1(1 %)  1(1%)
When enrolled in the HMO, did the salesperson ask if you:
a. Were in good health? 
YEs: 282 (47%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
76(56%)  50(53%)  31(38%)  36(39%)  45(44%)  44(46%) 
NO: 181 (30%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
31(23%)  23(24%)  39(48%)  24(26%)  33(32%)  31(32%) 
BENEFICIARY DOES NOT REMEMBER:  127 (21 %) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
28(21 %)  21(22%)  9(11%)  29(32%)  19(18%)  21(22%) 
Number Not Responding: 11 (2%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
2(2%)  3(3%)  6(6%) 
b. 
Had health problems?
YES: 246 (41%)
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
66(49%)  47(50%)  27(33%)  37(40%)  37(36%)  32(33%) 
NO: 229 (38%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
43(32%)  28(30%)  44(54%)  28(30%)  42(41%)  44(46%) 
BENEFICIARY DOES NOT REMEMBER:  117 (19%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
26(19%)  19(20%)  8(10%)  26(28%)  18(17%)  20(21 %) 
Number Not Responding: 9 (1%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL
B - 6 2(2%)  1(1%)  6(6%) 
c. 
Were being treated by a doctor? 
YEs: 252 (42%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
67(50%)  49(52%)  27(33%)  35(38%)  34(33%)  40(42%) 
NO: 201 (33%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
41(30%)  20(21%)  38(47%)  26(28%)  41(40%)  35(36%) 
BENEFICIARY DOES NOT REMEMBER:  138 (23%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
27(20%)  25(27%)  14(17%)  30(33%)  21(20%)  21(22%) 
Number Not Responding:  10 (2%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
2(2%)  1(1%)  7(7%) 
d. Needed medical services at the time? 
YES: 177 (29%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
48(36%)  30(32%)  19(23%)  23(25%)  25(24%)  32(33%) 
NO: 263 (44%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
60(44%)  37(39%)  45(56%)  27(29%)  52(50%)  42(44%) 
BENEFICIARY DOES NOT REMEMBER:  140 (23%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
26(19%)  27(29%)  15(19%)  31(34%)  19(18%)  22(23%) 
Number Not Responding: 21 (3%)
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
1(1%)  2(2%)  11(12%)  7(7%) 
Did the salesperson push you or pressure you to join (Name of HMO)? 
YES: 21 (3%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
5(4%)  5(5%)  2(2%)  4(4%)  5(5%) 
NO: 564 (94%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
130(96%)  88(94%)  73(90%)  87(95%)  95(92%)  91(95%) 
Number Not Responding: 16 (3%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
1(1 %)  6(7%)  1(1%)  8(8%) 
B - 7
 10.  Were you offered any incentives, like a gift, to join (Name of HMO)? 
YEs: 0 
H(M)  H(1)  CAC  Av-Med  Health Op  CFL 
NO:  589 (98%) 
H(M)  H(1)  CAC  Av-Med  Health Op  CFL 
135(100%)  94(100%)  76(94%)  91(99%)  97(94%)  96(100%) 
Number Not Responding: 12 (2%) 
H(M)  H(1)  CAC  Av-Med  Health Op  CFL 
5(6%)  1(1 %)  6(6%) 
11.  I'm going to read to you some methods a salesperson might use to try to get 
people to join an HMO. Did the salesperson that signed you up use any of 
these? 
a. Keep encouraging you to join even if you said you were not interested? 
YEs: 20(3%) 
H(M)  H(1)  CAC  Av-Med  Health Op  CFL 
7(7%)  3(4%)  1(1%)  2(2%)  7(7%) 
NO: 540 (90%) 
H(M)  H(1)  CAC  Av-Med  Health Op  CFL 
132(98%)  85(90%)  67(83%)  86(93%)  89(86%)  81(84%) 
BENEFICIARY DOES NOT REMEMBER:  22 (4%) 
H(M)  H(1)  CAC  Av-Med  Health Op  CFL 
3(2%)  1(1 %)  4(5%)  3(3%)  3(3%)  8(8%) 
Number Not Responding: 19 (3%)
H(M)  H(1)  CAC  Av-Med  Health Op  CFL 
1(1 %)  7(9%)  2(2%)  9(9%) 
b. Promise to leave as soon as you signed? 
YES: 37 (6%) 
H(M)  H(1)  CAC  Av-Med  Health Op  CFL 
5(4%)  9(10%)  6(7%)  4(4%)  8(8%)  5(5%) 
NO: 487 (81%) 
H(M)  H(1)  CAC  Av-Med  Health Op  CFL 
123(91 %)  74(79%)  47(58%)  81(88%)  78(76%)  84(88%) 
BENEFICIARY DOES NOT REMEMBER:  41 (7%) 
H(M)  H(1)  CAC  Av-Med  Health Op  CFL 
7(5%)  6(6%)  11(14%)  4(4%)  6(6%)  7(7%) 
Number Not Responding: 36 (6%)
H(M)  H(1)  CAC  Av-Med  Health Op  CFL 
B - 8  5(5%)  17(21 %)  3(3%)  11(11 %) 
you it would be more difficult to sign up if you waited until later? 
c. Tell 
YEs: 24 (4%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
4(3%)  8(9%)  3(3%)  5(5%)  4(4%) 
NO: 518 (86%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
123(91 %)  77(82%)  67(83%)  83(90%)  83(81 %)  85(89%) 
BENEFICIARY DOES NOT REMEMBER:  39 (6%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
8(6%)  7(7%)  7(9%)  4(4%)  6(6%)  7(7%) 
Number Not Responding: 20 (3%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
2(2%)  7(9%)  2(2%)  9(9%) 
Tell you it would be hard to get medical care if you did not join? 
YES: 8 (1%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
1(1%)  3(3%)  1(1 %)  3(3%) 
NO: 546 (91%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
129(%%)  88(94%)  66(81 %)  87(95%)  91(88%)  85(89%) 
BENEFICIARY DOES NOT REMEMBER:  28 (5%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
5(4%)  2(2%)  8(10%)  3(3%)  2(2%)  8(8%) 
Number Not Responding: 19 (3%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
1(1%)  7(9%)  2(2%)  9(9%) 
you would like to say about the methods the 
e. Is there anything else 
salesperson used to try to get you to sign up? 
YES: 88 (15%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
23(17%)  26(28%)  12(15%)  7(8%)  11(11%)  9(9%) 
NO: 490 (82%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
112(83%)  67(71%)  58(72%)  83(90%)  83(81 %)  87(91%) 
Number Not Responding: 23 (4%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
1(1%)  11(14%)  2(2%)  9(9%) 
B - 9  12.	 After you signed the application, did you know you could change your mind 
and "back out" before the enrollment took effect? 
YEs: 480 (80%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
104(77%)  86(91%)  58(72%)  75(82%)  93(90%)  64(67%) 
NO: 109 (18%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
29(21 %)  6(6%)  20(25%)  14(15%)  8(8%)  32(33%) 
Number Not Responding: 12 (2%)
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
2(1%)  2(2%)  3(4%)  3(3%)  2(2%) 
13.  At the time you signed up, did you know: 
a. The date your enrollment would take effect? 
YEs: 511 (85%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
115(85%)  87(93%)  68(84%)  78(85%)  92(89%)  71(74%) 
NO: 34 (6%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
12(9%)  3(3%)  1(1 %)  7(8%)  2(2%)  9(9%) 
BENEFICIARY DOES NOT REMEMBER:  44 (7%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
7(5%)  2(2%)  9(11 %)  4(4%)  6(6%)  16(17%) 
Number Not Responding: 12 (2%)
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
1(1%)  2(2%)  3(4%)  3(3%)  3(3%) 
b. 
How to get medical services? 
YES: 523 (87%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
119(88%)  83(88%)  63(78%)  83(90%)  94(91 %)  81(84%) 
NO: 43 (7%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
10(7%)  6(6%)  8(10%)  3(3%)  5(5%)  11(11%) 
BENEFI CIAR Y DOES NOT REMEMBER:  22 (4%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
5(4%)  3(3%)  7(9%)  2(2%)  1(1 %)  4(4%) 
B - 10  Number Not Responding: 13 (2%)
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
1(1 %)  2(2%)  3(4%)  4(4%)  3(3%) 
c. What you should do in emergency situations? 
YEs: 482 (80%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
117(87%)  76(81%)  62(77%)  69(75%)  87(84%)  71(74%) 
NO: 76 (13%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
15(11%)  12(13%)  8(10%)  13(14%)  9(9%)  19(20%) 
BENEFICIARY DOES NOT REMEMBER:  29 (5%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
2(1%)  4(4%)  8(10%)  6(7%)  4(4%)  5(5%) 
Number Not Responding: 14 (2%)
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
1(1%)  2(2%)  3(4%)  4(4%)  3(3%)  1(1%) 
d What to do if you needed to see a specialist? 
YES: 454 (76%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
101(75%)  66(70%)  57(70%)  79(86%)  94(91%)  57(59%) 
NO: 95 (16%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
27(20%)  20(21 %)  12(15%)  6(7%)  4(4%)  26(27%) 
BENEFICIARY DOES NOT REMEMBER:  38 (6%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
6(4%)  6(6%)  9(11%)  3(3%)  2(2%)  12(13%) 
Number Not Responding: 14 (2%)
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
1(1%)  2(2%)  3(4%)  4(4%)  3(3%)  1(1%) 
e. How to get other information you needed? 
YES: 426 (71 %) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
98(73%)  70(74%)  53(65%)  72(78%)  86(83%)  47(49%) 
NO: 98 (16%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
21(16%)  12(13%)  11(14%)  12(13%)  13(13%)  29(30%) 
BENEFICIARY DOES NOT REMEMBER:  61 (10%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
B - 11
 13(10%)  10(11%)  14(17%)  4(4%)  1(1%)  19(20%) 
Number Not Responding: 16 (3%) 
H(M)  H(1)  CAC  Av-Med  Health Op  CFL 
3(2%)  2(2%)  3(4%)  4(4%)  3(3%)  1(1%) 
f. 
How to  get out" of the HMO? 
disenroII, or "
YEs: 368 (61%) 
H(M)  H(1)  CAC  Av-Med  Health Op  CFL 
80(59%)  60(64%)  48(59%)  55(60%)  74(72%)  51(53%) 
NO: 175 (29%) 
H(M)  H(1)  CAC  Av-Med  Health Op  CFL 
43(32%)  24(26%)  21(26%)  27(29%)  24(23%)  36(38%) 
BENEFICIARY DOES NOT REMEMBER: 45 (7%) 
H(M)  H(1)  CAC  Av-Med  Health Op  CFL 
11(8%)  8(9%)  9(11 %)  6(7%)  3(3%)  8(8%) 
Number Not Responding: 13 (2%) 
H(M)  H(1)  CAC  Av-Med  Health Op  CFL 
1(1 %)  2(2%)  3(4%)  4(4%)  2(2%)  1(1%) 
g. How to appeal decisions (Name of HMO) makes concerning your medical 
care? 
YES: 219 (36%) 
H(M)  H(1)  CAC  Av-Med  Health Op  CFL 
43(32%)  39(41%)  23(28%)  35(38%)  51(50%)  28(29%) 
NO: 259 (43%) 
H(M)  H(1)  CAC  Av-Med  Health Op  CFL 
68(50%)  39(41 %)  28(35%)  38(41%)  36(35%)  50(52%) 
BENEFICIARY DOES NOT REMEMBER:  109 (18%) 
H(M)  H(1)  CAC  Av-Med  Health Op  CFL 
23(17%)  14(15%)  26(32%)  15(16%)  14(14%)  17(18%) 
Number Not Responding: 14 (2%) 
H(M)  H(1)  CAC  Av-Med  Health Op  CFL 
1(1%)  2(2%)  4(5%)  4(4%)  2(2%)  1(1%) 
14.	 In addition to the things I just mentioned, is there anything you later learned 
about being in an HMO that you wished you had known before you signed up? 
YHES:( 1M00 (1)7% )
H(1)  CAC  Av-Med  Health Op  CFL
27(20%) 
19(20%)  9(11 %)  16(17%)  16(16%)  13(14%) 
NHO: 4(8M3 (80%)) 
H(1)  CAC  Av-Med  Health Op  CFL 
B - 12  106(79%)  73(78%)  66(81 %)  72(78%)  84(82%)  82(85%) 
H(T) 
Number Not Responding: 18 (3%) 
CAC Av-
H(M)  2(2%) 6(7%)  Med  Health Op  CFL 
2(1%)  4(4%)  3(3%)  1(1%) 
15. Before you signed up for (Name of HMO), or at the time you signed up, did 
the salesperson give you a Member s Handbook or other written material that 
explained how the HMO worked? 
YES, SALESPERSON LEFf SUCH MATERIAL: 443 (74%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
114(84%)  80(85%)  57(70%)  71(77%)  73(71 %)  48(50%) 
SALESPERSON DID NOT LEAVE MATERIAL, BUT IT 
WAS MAILED: 83 (14%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
10(7%)  8(9%)  9(11%)  14(15%)  16(16%)  26(27%) 
H(T) 
SAHLE(SPMERS)ON  DID NOT LEAVE ANY MATERMIAL: e19 d(3% )
CAC Av-
4(3%) 3(3%) 2(2%)  Health Op  CFL
2(2%)  8(8%) 
SALESPERSON LEFf SOME MATERIAL, BUT BENEFICIARY DOES NOT 
H(T) 
RHEME(MMBER) W  HAT IT WAS: 15 (2%) Med 
CAC Av-
Health Op 
2(1%)  3(4%)  CFL
10(10%) 
BENEFICIARY DOES NOT REMEMBER IF RECEIVED ANY 
H(T) 
MHATE(RMIAL:) 1 3 (2%) Med 
CAC Av-
3(2%) 1(1%) 2(2%) 2(2%) Health Op  CFL
2(2%)  3(3%) 
H(T) 
Number Not Responding: 28 (5%) 
CAC Av-
H(M)  2(2%) 8(10%)  Med  Health Op  CFL 
2(1%)  5(5%)  10(10%)  1(1%) 
16. Were you later mailed a notification of the date your enrollment in (Name of 
HMO) began? 
YES: 512 (85%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
111(82%)  81(86%)  66(81 %)  78(85%)  95(92%)  81(84%) 
NO: 22 (4%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
7(5%)  3(3%)  2(2%)  2(2%)  1(1 %)  7(7%) 
H(T) 
BHENE(FIMCIAR)Y  DOES NOT REMEMBER: 51 (8%)
CAC Av-
Med Health Op  CFL 
14(10%) 9(10%) 9(11%) 
8(9%)  4(4%)  7(7%) 
Number Not Responding: 16 (3%)
B - 13
 H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
3(2%)  1(1%)  4(5%)  4(4% )  3(3%)  1(1%) 
17.	 Thinlring about the things the salesperson told you about (Name of HMO), 
would you say the salesperson gave you accurate information? 
YEs: 504 (84%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
120(89%)  88(94%)  63(78%)  76(83%)  87(84%)  70(73%) 
NO: 34 (6%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
6(4%)  3(3%)  7(9%)  6(7%)  2(2%)  10(10%) 
DO NOT KNOW: 18 (3%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
5(4%)  2(2%)  3(3%)  8(8%) 
OTHER RESPONSES:  20 (3%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
2(1%)  1(1%)  2(2%)  2(2%)  8(8%)  5(5%) 
BENEFICIARY DOES NOT REMEMBER: 5 (1%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
3(4%)  1(1%)  1(1 %) 
Number Not Responding: 20 (3%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
2(1 %)  2(2%)  4(5%)  4(4%)  6(6%)  2(2%) 
18.	 When the salesperson talked to you about enrolling in (Name of HMO), did he 
or she explain that when you are in an HMO... 
a. Unless it was an emergency, you needed to get (Name of HMO)'s 
permission before you went to doctors or hospitals not part of (Name of 
HMO)? 
YES: 428 (71 %) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
101(75%)  72(77%)  49(60%)  67(73%)  74(72%)  65(68%) 
NO: 87 (14%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
20(15%)  12(13%)  15(19%)  11(12%)  11(11%)  18(19%) 
BENEFICIARY DOES NOT REMEMBER: 59 (10%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
12(9%)  7(7%)  10(12%)  10(11%)  9(9%)  11(11%) 
Number Not Responding: 27 (4%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
2(1 %)  3(3%)  7(9%)  4(4%)  9(9%)  2(2%) 
B - 14  b. H you did not get (Name of HMO)'s permission, and it was not an
emergency, you would have to pay for visits to doctors and hospitals that are
not affiliated with (Name of HMO)? 
YEs: 399 (66%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
100(74%)  67(71%)  45(56%)  66(72%)  62(60%)  59(61%) 
NO: 112 (19%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
18(13%)  17(18%)  17(21%)  13(14%)  20(19%)  27(28%) 
BENEFICIARY DOES NOT REMEMBER:  63 (10%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
15(11 %)  7(7%)  12(15%)  9(10%)  12(12%)  8(8%) 
Number Not Responding: 27 (4%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL
2(1%)  3(3%)  7(9%)  4(4%)  9(9%)  2(2%)
c. Medicare would be paying (Name of HMO) for your medical care and
would not make payments directly to doctors?
YES: 399 (66%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
93(69%)  69(73%)  48(59%)  70(76%)  65(63%)  54(56%) 
NO: 106 (18%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
23(17%)  13(14%)  16(20%)  10(11%)  18(17%)  26(27%) 
BENEFICIARY DOES NOT REMEMBER:  68 (11%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
17(13%)  9(10%)  10(12%)  7(8%)  11(11%)  14(15%) 
Number Not Responding:  28 (5%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
2(1 %)  3(3%)  7(9%)  5(5%)  9(9%)  2(2%) 
19.(cid:1) Since you have been in (Name of HMO), have there been times when you 
needed to see a doctor, but havent been able to? 
YES: 56 (9%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
14(10%)  13(14%)  6(7%)  7(8%)  9(9%)  7(7%) 
NO: 529 (88%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
119(88%)  79(84%)  71(88%)  80(87%)  92(89%)  88(92%) 
Number Not Responding: 16 (3%) 
H(M)  H(T)  CAC  Av-Med  Health Op  CFL 
2(1%)  2(2%)  4(5%)  5(5%)  2(2%)  1(1 %) 
B - 15 20. Since you have been enrolled in (Name of HMO), have you been told that 
some services you wanted were not covered? 
YEs: 80 (13%) 
H(M)  H(1)  CAC  Av-Med  Health Op  CFL 
21(16%)  13(14%)  8(10%)  15(16%)  15(15%)  8(8%) 
NO: 503 (84%) 
H(M)  H(1)  CAC  Av-Med  Health Op  CFL 
111(82%)  79(84%)  69(85%)  72(78%)  86(83%)  86(90%) 
Number Not Responding: 18 (3%) 
H(M)  H(1)  CAC  Av-Med  Health Op  CFL 
3(2%)  2(2%)  4(5%)  5(5%)  2(2%)  2(2%) 
21.  How would you compare the care you have received while in (Name of HMO) 
with the medical care you received before you joined? Would you say the care 
you have received while in (Name of HMO) is? 
H(1) 
BEHITE(RM THA)N  YOUR PREVIOUS CARE: 116 (19%)
CAC Av-
Med  Health Op  CFL
30(22%) 13(14%) 18(22%) 
16(16%)  16(15%)  23(24%) 
H(1) 
AHBOU(TM THE) S AME AS YOUR PREVIOUS CAREM: 245e (4d1% )
CAC Av-
Health Op  CFL
41(30%) 47(50%) 31(38%) 46(50%) 
50(49%)  30(31%) 
H(1) 
NHOT A(SM GOO)D  AS YOUR PREVIOUS CARE: 73 (12%)
CAC Av-
Med  Health Op  CFL
20(15%) 18(19%) 9(11%) 
5(5%)  8(8% )  13(14%) 
H(1) 
BHENE(FMICIAR)Y  CAN'T OR WON'T COMPARE CMAREe: 14d7 ( 24%)
CAC Av-
Health Op  CFL
41(30%) 14(15%) 18(22%) 20(22%) 
27(26%)  27(28%) 
H(1) 
Number Not Responding: 20 (3%) 
CAC Av-
H(M)  2(2%) 5(6%)  Med  Health Op  CFL 
3(2% )  5(5%)  2(2%)  3(3%) 
B - 16
 APPENDIX C

RESPONSES TO FACE-TO-FACE INTERVIEWS WITII BENEFICIARIES
The following are the results of face-to-face interviews with 22 of 26 beneficiaries who
were identified by HCF A as having enrolled in HMOs an excessive number of times.
Four beneficiaries could not be located. Each beneficiary was shown his/her HMO
enrollment history which identified the current and all previous enrollments.
RESULTS: PERSONS INTERVIEWED:
BENEFICIARIES
RESPONSffiLE PARTY: Spouse
I would like to ask you some questions about your experiences with Health
Maintenance Organizations.
Are you a year-round Florida resident or do you live in Florida only part of the year?
1. 
RESPONSES 22 - LIVE IN FLORIDA YEAR-ROUND
Are you currently enrolled in an HMO?
2. 
RESPONSES 1(cid:1)  - NO - (GO TO #4)
19 - YES
2 - DON'T KNOW
In which HMO are you (currently) enrolled?
3. 
RESPONSES 1(cid:1) 0 - Humana Gold Plus Plan (Dade, Broward, & Palm Beach)
5 - CAC-RAMSAY
5 - CareFlorida
2 - DON'T KNOW
Show and briefly explain to the beneficiary his/her HMO enrollment histo
Do you remember signing an application form to enroll in these HMO plans?
4. 
RESPONSES  . 5 - NO
17 - YES
C - 1 What were the reasons you changed from each of these plans (PLANS IDENTIFIED 
5. (cid:1)
to another? 
IN QUESTION  #4) 
REASONS(cid:1) 7 - DOES NOT KNOW WHY 
11 - HMO REPRESENTATIVE CONVINCED BENEFICIARY 
TO CHANGE 
4 - UNHAPPY WITH SERVICES OF HMO 
Did any of these plans make a special offer; give you a free gift; or give you money to 
6. (cid:1)
enroll in their plan? 
RESPONSES 4 - BENEFICIARY DOESN'T REMEMBER 
18 - NO 
When you signed the application form, was it clear that by enrolling in this new 
7. (cid:1)
disenrolled from your current HMO? (PROVIDE 
HMO, you would be automatically 
ILLUSTRATION TO BENEFICIARY BASED ON HIS/HER HMO 
ENROLLMENT HISTORY AND INDICATE HMO BY NAME) 
RESPONSES(cid:1) 8 - BENEFICIARY DOESN'T REMEMBER 
5 - YES, IT WAS CLEAR 
9 - NO, IT WAS NOT CLEAR 
Some people give the following reasons for changing health care plans. Have you ever 
changed plans because of any of these reasons? 
Because you needed to see a doctor more often than your plan would allow?
8. 
RESPONSES 5 - BENEFICIARY DOESN'T REMEMBER 
16 - NO 
YES 
Have you ever changed plans because you needed services of a specialist and those 
9. (cid:1)
services were not available in your plan? 
RESPONSES 4 - BENEFICIARY DOESN'T REMEMBER 
18 - NO 
YES 
10. Have you ever changed plans because you wanted to use a specific doctor and he/she
was not in your plan?
C - 2 RESPONSES 4 - BENEFICIARY DOESN'T REMEMBER
16 - NO
2 - YES
Have you ever changed plans because your doctor left the plan and you wanted to
11. (cid:1)
continue with that doctor?
RESPONSES 4 - BENEFICIARY DOESN'T REMEMBER
15 - NO
YES
Have you ever changed plans because your doctor advised you to change to another
12. (cid:1)
plan?
RESPONSES 3 - BENEFICIARY DOESN'T REMEMBER
16 - NO
YES
an HMO sales representative advised you to
13. (cid:1) Have you ever changed plans because 
join a new plan? (NOTE: A SALESMAN COULD ADVISE AN ENROLLEE TO

JOIN ANOTHER PLAN IN ORDER TO DISENROLL A
JOIN HIS PLAN 
BENEFICIARY. 
RESPONSES 5 - BENEFICIARY DOESN'T REMEMBER
1- NO
16 - YES
What HMO did that salesman represent?
(A) 
RESPONSES
16 - BENEFICIARY DOESN'T REMEMBER
(B) Do you know the salesmans name?
RESPONSES
16 - NO
(C) Which plan did he/she suggest you to enroll in?
RESPONSES
16 - BENEFICIARY DOESN'T REMEMBER
C - 3 14. (cid:1) Have you ever changed plans because a  friend or relative suggested that you join a 
different plan? 
4 - BENEFICIARY DOESN'T REMEMBER
RESPONSES 
17 - NO
YES
Have you ever changed plans because you didn t like the plan you were in?
15. 
4 - BENEFICIARY DOESN'T REMEMBER 
RESPONSES 
12 - NO 
6 - YES 
IF YES, Which plan did you dislike and why? 
(A) 
RESPONSES
6 - BENEFICIARY DOESN'T REMEMBER 
Have you changed health care plans for any other reason we did not mention?
16. 
7 - BENEFICIARY DOESN'T REMEMBER
RESPONSES 
15 - NO
Do you plan to change from (CURRENT HMO PLAN) to another plan?
17. 
4 - BENEFICIARY DOESN'T REMEMBER
RESPONSES 
17 - NO
YES
Would you like to tell us anything else regarding why you have changed HMOs? 
18. 
18 - NO FURTHER COMMENT WAS MADE
RESPONSES 
YES
C - 4 APPENDIX D
ANALYSIS OF RESPONDENTS VS. NONRESPONDENTS
Much of the information regarding marketing practices of South Florida HMOs was
gathered directly from Medicare beneficiaries who had recently enrolled in those
HMOs. A statistically representative sample of the recent-enrollee population was
selected to be interviewed by phone.
A response rate of 72 percent was achieved. However, the possibility of a
nonresponse bias must be considered. That is, it must be assured that the survey
entire sample had been interviewed.
results would have been the same if the 
Since it is not possible to know how those not interviewed would have responded to
the questions, certain assumptions must be made, based on what is known about the
nonrespondents.
The data base from which the sample was drawn contains certain demographic
, notably gender and age. With these data elements
information for each individual
, it
is then possible to compare the demographic characteristics of nonrespondents to
respondents.
If the characteristics are different, it is necessary to determine whether these
characteristics correlate with certain responses from the individuals interviewed.
Assuming the same correlations exist for the nonrespondents, it can be determined
whether survey results would have been different if all individuals in the sample had
responded.
ARIABLES ANALYZED
For this analysis, three characteristics of individuals in the sample were used: age
gender, and HMO in which the individual  The frequencies of these
is/was enrolled. 
respondent  nonrespondent
characteristics in the  group were compared against the 
group.
Where frequencies differed among the two groups (and it might be suspected that
different survey results would be found if all persons in the sample had been
interviewed), it was determined if any of these three characteristics affected responses
to our interview questions.
Three questions on the survey instrument were chosen for comparison of responses:
D - 1 Q #2. Did you call (Name of HMO) to get information, or did (Name of HMO 
contact you to ask you to enroll? 
Possible 
answers:  Beneficiary initiated contact 
HMO initiated contact 
Beneficiary does not remember
Q #6. When you signed the application form, was it clear to you that you were 
enrolling in a Health Maintenance Organization? 
Possible
answers:  Yes
Beneficiary does not remember signing application
Q #7. When you signed the application form, did you know that unless it was an 
emergency, or you were outside the service area and urgently needed care, you 
(Name of HMO)'s doctors, hospitals, and medical providers? 
could only go to 
Possible
answers:  Yes
ANALYSIS BY GENDER
The analysis by gender showed no indication of nonresponse bias. 
Examining the proportions of males and females in the overall sample, in the 
respondent group, and in the nonrespondent group, no significant difference was
found: 
TABLE 1 
Male  Female 
Number  Percent  Number  Percent 
Sample (n = 833)  372  45%  460  55% 
Respondents (n = 601)  271  45%  329  55% 
Nonrespondents (n = 232)  103  44%  129  56% 
D - 2 --- ---
did answer questions differently, it can be assumed that the
Even if males and females 

survey results would not have been different if the nonrespondents had been
interviewed.
ANALYSIS BY AGE
The analysis by age revealed no indication of nonresponse bias.
The proportions of individuals age 73 or younger and those age 74 or older were
determined for the overall sample, the respondent group, and the nonrespondent
group. It  nonrespondents was slightly lower
was found that the percentage of younger 
respondents
than the percentage of younger 
TABLE 
Younger  Older
73 or 
 74 or 
Number Percent  Number  Percent
Sample (n = 833)  612 73%  221  26%
Respondents (n = 601)  451 75%  150  25%
Nonrespondents (n = 232)  161 69%  31%
Given these differences, the survey responses to the three questions were examined to
determine if individuals in the younger group answered differently than those in the
older group. We found that for two of the questions, responses differed only slightly
by age:
TABLE 
#2.(cid:1) Did you call (Name o  HMO  to get information, or did (Name o  HMO
contact you to ask you to enroll?
Younger  74 or Older
73 or 
(n = 451)  (n = 150)

Number  Percent  Number  Percent
Beneficiary Initiated Contact  327  72%  106  71%
HMO Initiated Contact  111  25%  26%
Beneficiary Does Not
Remember
Response Missing
D - 3 TABLE 4 
#7. When you signed the application form, did you know that unless it was an
emergency, or you were outside the service area and urgently needed care, you 
could only go to (Name of HMO)'s doctors, hospitals, and medical providers? 
73 or Younger  74 or Older 
(n = 451) 
(n = 150) 
Number  Percent  Number  Percent
Yes  393  87%  133  89%
12%  10%
Response Missing 
Regarding the third question used in our nonresponse analysis, it was found that age
did relate to the answers given. Younger respondents more 
of the respondent 
was clear to them that they were joining an HMO when 
frequently reported that it 
they signed the application form: 
TABLE 5 
Q#6.(cid:1) When you signed the application form, was it clear to you that you were
enrolling in a Health Maintenance Organization?
or Younger  or Older 
73  74 
(n  = 451)  (n  150) 
Number  Percent  Number  Percent 
Yes  402  89.  123  82. 
15.3%
Beneficiary Does Not  1.3% 
Remember 
Response Missing  1.3% 
D - 4 Assuming that the nonrespondents might answer this question as did their age-
group
peers in the respondent group, the responses were recalculated to include the
nonrespondents. The result was compared to our original finding: 
TABLE 6
Actual Respondents  The Entire Sample 
(n = 601) (n = 833)
Answered: Might Have Answered: 
Number  Percent Number  Percent
Yes (It was clear) 525  87.3% 725  87.
No (It was not clear) 10. 11.0%
Beneficiary Does Not Remember
Response Missing 
actual  potential response (after rounding) were
The  response to this question and the 
almost identical. 
ANALYSIS BY HMO
Similarly, a comparison of response rates for each of the five HMOs showed no 
evidence of bias. 
D - 5 APPENDIX E
COMMENTS TO DRAFT REPORT 
Comments on the draft report were received from HCF A and the Assistant Secretary 
for Planning and Evaluation (ASPE). Both agencies agree that HCFA should identify 
and review frequent enrollment changes, and HCF A believes they now have that 
capability. While ASPE supported the concept of a "cooling off' period for Medicare 
enrollees, HCF A thinks a "cooling off' period is not needed. 
Neither agency concurred with the other recommendations. We will defer our 
comments on their responses until the OIG completes its national study on HMO 
disenrollments (OEI-06-91-00730). 
We have responded to each technical change suggested by HCFA and ASPE. 
E - 1
 ~-.- 
~.  ."'" /
- ' ~=-
. ~~
..  --"-'  , .  -..-... (,  ;-.-;:-; '=~.-'"-:   ,-~=-c=.' ) ; 
'--.r-- /T 
DEPART.'t\ENT OF HEALTH &. HUI't\AN SERVICES  m 'h
f1. 
-r  ti"'J1,~_ 
.::::-i  Washington . D. C.  20201 
MAY 2 9 1991 
.c-~\:i 
DIG-:1.S 
i:'"-i:'i 
Dlc-or  ~::5  -:'1 
TO:  Richard P. Kusserow  ""T1
AIG- (");0
Inspector General  ;-:1 
OGC/IG  -7"  1710 
FROM: Assistant Secretary for.  EXSEC  '...J..J  -:'1 
DATE SENT 
Planning and Evaluation  UJ  c:::: 
Enrollm~t 
SUBJECT: OIG Draft Reports: Marketing Practices and  an~ 
OPatEteIr-ns0 4fo-r9 S1ou-t0h 0Fl6or4i0da  -H-MO Cs, OOEMI-04M-91E-0N063T0 S  :=l
the reports. In
I appreciate the opportunity to comment on 
general, they appear to point more to the need for improved data
follow-up, particularly 
collection, closer monitoring and 
of new
disenrollment patterns, than for implementation 
procedures. 
Consequently, ~I am inclined to disagree with certain 
of your recommendations , as noted below. 
OEI-O4-91-00630:  Marketincr Practices 
HCFA to establish standards for sales force
training and monitoring: 
I understand that HCFA 
has worked informally with the Group Health 
Association of America to improve marketing 
nationally. 
practices of HMO sales representatives 
Responsibility for oversight of marketing staff 
agencies. 
rests with state licensing 
year. 
t enrollment to one "open season" per 
Limi  -legislation and. 
This recommendation would require 
has the appearance of a year-long lock-in which 
rej ected. Moreover, 
Congress has constantly 
section 6206 of OBRA-89 eliminated a coordinated 
open enrollment requirement, which had never been 
implemented, except under certain circumstances. 
ti ve markets 
Continuous open enrollment in competi 
allows beneficiaries to select the benefit package
that best fits their needs, regardless of when
that decision is reached (and, given the data on 
Miami Area HMO I S  report, at most,
page a of the 
sales representa~ives appear responsible for only
20 percent of changes compared with nearly three
times more who expressed dissatisfaction regarding
services). Admittedly, this
HMO physicians or 
practice 
requires closer monitoring against
abus i ve marketing practices. 
E - 2(cid:1) ~..
-. . ------
Page 2 - Richard P. Kusserow 
Based on the preceding comment, I agree that HCFA 
should establish systems to identify aCnda sreesv iine w
cases of frequent enrollment change. 
which marketing abuses are suspected should be 
reported to state licensing agencies. 
Third party handling of RHO enrollment actions: 
Except for existing authority to disenroll at 
social Security District Offices, closer 
monitoring and follow-up would be preferable. 
OtherNise, responsibility for training 
payment for these
of 
salespersons and the question
services arise. 
suppor':. the  a "cooling off" period 
concept  of 
for Medicare risk enrollees. 
OEI-O4-91-00640:  Enrollment Patterns 
This analysis indicates the need for more data 
follow-up. The 
collection, closer monitoring and 
inabili ty to 
segregate the Miami Area enrollment 
for Humana makes it difficult to interpret the
results. 
Editorial Comments 
Regarding both reports, I suggest that OIG staff 
solicit technical assistance from HCFA/Office of 
Prepaid Health Care Operations and oversight on the 
"Background" sectionps lwahnicsh.  distinguish fee-for-service 
See, for exa~ple, the 
from prepaid health 
ttached pages. 
Gerry 
Mar--..in H. 
Attachments 
E - 3
 . .
&.  - .. .-- ,~" .(:. .'.~- - ;. . ,._.:- ~"~-:! '..'::0:.,...._ 'e\'.) 
'~-1~ C) \Lu:~J Y\1~. ~c1'0v  \ I Qc. 
, .:LJ Health Care 
HUMAN SERVICES ,\=-l":i' Financing Administration 
DEPARTMENT OF HEALTH 
\;FF:::: 
:~~F :\  ::C 
Memorandum 
:::z. 
; :d, f"!.: i".'u0  
AUG I 5 Ig9r 
Date 
Gail R. Wilensky, Ph.D ,-1) ) 
From  Administrator  r V'-"
OIG Draft Re  orts: "Marketing Practices and Enrollment Patterns for South 
Subject(cid:1)
Florida H1Y10s" (OEI-O4-91-00630 and OEI-04-91-00640) 
Inspector General
Office of the Secretary
We have reviewed the above referenced draft reports evaluating Health
Maintenance Organization (HMO) marketing practices for South Florida and HwfO
enrollment patterns in the Miami area. As an overall comment on each of the 
above reports, we view the findings as generally positive in that they dispel many of 
the erroneous preconceptions about the marketing and enrollment practices of
Medicare-contracting HMOs in the South Florida area.
Given the positive nature of the reports, we do not believe that the findings as 
reported in the two reports warrant all of the changes in the Medicare HMO 
program suggested by OIG. However, we agree with one of your recommendations. 
Our specific comments on the reports' recommendations are attached for your 
consideration. 
Thank you for the opportunity to comment on these reports. Please advise us of 
whether you agree with our position on the reports' recommendations at your 
earliest convenience.
Attachment
PDIG
DIG-AS
..~DIG-EI
DIG-OI
AIG-MP 
OGC/W
EX3Ee 
. \1' -... .
D~TE 
c:!l~ 
E - 4 , "

Comments of the Health Care Financing: Administration 
on OIG Draft Reports: 
Marketing Practices and 
Enrollment Patterns for South Florida HMOs 
(OEI-O4-91-00630 and- Of:I-04-91-00640) 
Recommendation 1 is contained only in OEI-O4-91-00630. Recommendations 2 
reports. 
through 5 are contained in both OIG 
Recommendation 
standards for sales force training and monitoring, and hold 
HCF A should establish 
HMOs accountable for maintaining those standards. 
HCF A Response

necessary to presence more than the general 
We do not believe it is appropriate or 
HCF A 
standards for sales activities of organizations that are already required for 
accountable for marketing practices that lead 
contracts. HNfOs are currently held 
enrollments. Without effective sales force training 
to erroneous and uninformed 
termination, intermediate 
and monitoring, an HNfO will be subject to contract 
failures. 
sanctions, and/or civil monetary penalties for marketing and enrollment 
an tThtfO to provide a 
Under the authority of 42 CFR ~417.428(a), which requires 
and other information for beneficiaries to make an 
written statement of rules "
" HCF A has taken a number of actions to 
informed decision about enrollment 
correct problems found at individual HMOs. 
In Southern California, for example, where there have been problems with 
in, an after-the-fact (i.e.  after-sale ) enrollment 
beneficiaries not understanding lock-
verification process is the norm among all HNfOs in the area, and the situation has 
Similarly, for 
improved as a result of the efforts of the HCFA regional office. 
believe that marketing practices have 
Humana Medical Plan of Florida, we 
1990 (after the OIG survey of beneficiaries) as 
significantly improved since October, 
office staff, in 
a result of Humana s working with the HCFA regional and central 
HCF A was successful in its 
conjunction with intensified monitoring of the Plan. 
of certain 
efforts to encourage Humana to set up its own internal monitoring 
reports. 
operations, and we can monitor Humana through its internal 
E - 5 Page 2

We believe the regulation of insurance and HMO sales agents is more properly a 
State function and we wish to note that many States impose requirements on HMO 
brokers. ?1orida has taken a number of steps to prevent 
marketing personnel and 
marketing abuses, including a requirement that there be certification of enrollment 
in a Medicare tllvfO by someone other than a sales agent. 
Finally, we do believe our civil monetary penalties (CMP) and intermediate 
sanctions authority in this area could be expanded. Currently, although CMPs and 
intermediate sanctions can be applied against entities that provide false information 
we do not have that authority in regard to entities that engage in door-to-door 
marketing or that offer gifts or payment of more  than a nominal value to induce 
, we currently only have the authority to impose a CMP 
enrollment. In addition
against an entity; we do not have the option of imposing a CMF against an 
individual, such as a sales agent. Weare submitting an A-19 to the Department 
which addresses these issues. We would hope that you will support our proposal. 
Recommendation 
year. 
HCF A should establish a policy limiting enrollment to one "open season 
(opportunity to enroll) per 
HCFA Resuonse 
We do not believe that OIG findings, which show that a minority of HMO enrollees 
have had multiple HMO enrollments, are sufficient cause to make a major policy 
change in HCF A's approach to beneficiaries' ability to choose HMO enrollment as 
a Medicare option. The OIG found that switching from one plan to another, even 
on a frequent basis, is not necessarily indicative of marketing or enrollment abuses 
, as noted above. Where "ping-ponging" does in fact 
but rather beneficiary choice
result from marketing or enrollment abuses, HCF A has the means to require an 
tllvfO to cease such practices. 
' freedom of 
A hallmark of the Medicare fee-for-service program is the beneficiaries
Beneficiaries who choose to enroll in a Medicare risk-based 
choice of providers. 
, in order to 
Hlv!O consciously choose to receive care from only the HlV!O providers
pocket costs. 
minimize their administrative burden and to benefit from lower out-of-
Under current law, it should be noted that they are able to exercise the choice 
betWeen HMOs and fee-for-service at any time, if they choose to disenroll from an 
HMO. However, there are limitations under current law, if an HMO conducts only 
the minimum 30-day required annual enrollment period. 
E - 6(cid:1) Page 3 
a choice that is available on a 
HCF A has traditionally viewed the Hi\t10 option as 
are 
voluntary basis to beneficiaries residing in areas where Medicare HMOs 
available, and we have left it up to the HJ...10s to decide whether they preferred a 
, continuous basis. CuIT~ntly, only 
policy of enrollment other than on a year-round
3 percent of Medicare beneficiaries are enrolled in Medicare risk-based HNlOs. 
HNfOs that have a capacity to conduct continuous open enrollment should be 
allowed the option of flexible enrollment periods, since it expands beneficiaries 
choices. 
A legislative change would be necessary to impose a single open enrollment period. 
Since 1985 (the first year of "TEFRA" Medicare risk contracting), Congress has 
Medicare 
changed the original provisions of the Social Security Act relating to 
enrollment and disenrollment. Congress mandated that Medicare risk-based 
Hj\tl0 
HNfO enrollees have the right of immediate disenrollment from the HMO (to 
60 days). 
replace the previous provision that could delay a disenrollment for up to 
Congress also did away with a coordinated open enrollment period requirement 
Reduction Act of 1984). The intent of Congress has 
(introduced in the Deficit 
choosing the HNI0 
been consistently to give beneficiaries maximum flexibility in 
option while giving HMOs the leeway to determine the appropriate enrollment 
periods. 
Recommendation 
HCF A should establish an on-line system to identify and review cases of frequent 
enrollment change. 
HCF A Response 
HCF A has developed such a capability. The Managed Care Option Information 
(MCCOY) Group Health Plan (GHP) System provides online management 
information reports and the capability to update beneficiary enrollments 
this system 
disenrollments, health status indicators and residence codes. We believe 
satisfies the intent and spirit of GIG' s recommendation. 
Recommendation 
Miami service area, RCF A should test the efficacy of a third 
In the three-county 
actions. 
rqrty handling Hi\t10 enro~lment 
E - 7
 Page 4 
HCF A Response 
enrollment process has been tested and many problems 
Ti1C efficacy of a third party 
were found. We do not believe that the OrG's findings warrant anotller test 
because this problem affects a small number of beneficiaries. In the vast majority 
contact with an HM:O. A 
of cases (72 percent), the beneficiary initiated the first 
third party enrollment process would be more appropriate in a situation where the 
HM:O contacts the beneficiaries first, in the majority of cases.
If enrollments were the responsibility of a third party, such as the Social Security 
Administration (SSA) (as GIG suggests), the level of enrollment activity in the 
Miami area would make the function a massive undertaking in terms of personnel
and costs (costs currently financed through the HCF A capitation payments made to 
the fTh10s). Unless the third party could fairly present each HM:O's advantages 
competition in the marketplace could be stifled. ,HCFA would also have a new
monitoring responsibility of assuring that the third party was properly enrolling
individuals in the appropriate HMO, etc.
The GIG may wish to consider the findings of the General Accounting Office 
(GAG) in its  HealthChoice demonstration project in Oregon and 
evaluation of the 
California-a demonstration of the use of a third-party broker for Medicare HM:O 
enrollment. Problems that the GAO pointed out included the questionable 
authority for HCFA's financing the project, unfair treatment of HMOs (those paying 
the broker for its services versus those that did not), inadequate Privacy Act 
safeguards, and the erroneous impression given by the broker that it was an agent 
of the Government. Many of the GAO objections would be obviated if SSA were 
the third party, but having SSA function as an tTh10 broker is itself problematic 
beginning with the difficulty of getting SSA to agree to undertake such a function. 
(Please note that the SSA HMO disenrollment function was a legislative mandate. 
Recommendation
HCF A should impose a "cooling off' period allowing beneficiaries to reconsider 
HlyIO enrollment decisions before enrollment applications are processed. 
HCFA Response
An official "cooling off' period is not needed. If a beneficiary does change his or 
her mind, there is usually a certain time lag between the marketing presentation 
and the time the enrollment is actually transmitted to HCF A; a timely cancellation 
is therefore possible. HCF A also permits retroactive disenrollment of beneficiaries 
for good cause (for example, failure to fully understand lock-in) if there has not 
been a fully informed decision to ~nroll in an HNfO. 
E - 8 SPECIFIC COMMENTS
Page 5 
Were the 22 beneficiaries who have changed HMOs multiple times identified 
during a review of the initial sample size of 833 beneficiaries? If not, all 
references to this separate sample should be segregated in a separate section of 
the report with separate descriptions of how these individuals were chosen. 
OIG Response: Oarification has been added to the Methods section to show 
that the 22 beneficiaries were not part of the random sample of 833. 
Page 7 
The impression created by the statement "Although HCF A regulations prohibit 
door-to-door solicitations, 34 percent of those the HMO contacted (8 percent 
of all the beneficiaries) say salespersons stopped by their homes" is misleading. 
HCFA regulations at 42 CFR 417.428(b)(4) prohibits door-to-door solicitations; 
however, they do not prohibit any personal contact at home between a sales 
representative and a prospective or current HMO member. Sales calls at a 
person s home may be the result of telemarketing interest follow-up or mail-
response follow-up. 
OIG Response: The text has been clarified to show that beneficiaries who say 
salespersons stopped by their homes are those who say the HMO initiated the 
contact. 
Page 7 
The fact that "sixty-four percent of the beneficiaries the HMO contacted do not 
know where the salespersons who contacted them got their names" is relevant 
only if it can be shown that an at-home marketing visit was made without 
having been requested by the beneficiary. If the contacts were phone contacts 
or mass mailings, for example, the HMO may have obtained the person s name 
from any number of direct marketing sources. There is no prohibition on direct 
marketing of this nature. However, a small number of individuals, as noted on 
page B- , stated that the salesperson got their names from Social Security or 
Medicare. SSA and HCFA do not release beneficiaries' names; therefore, the 
statement may indicate that the marketing representative alleged that the 
person s name had been provided by SSA or HCF A, or the respondents may 
be confused on this point. 
E - 9
 , " 
Page 8 
Although initial training may be as stated, follow-up sessions for CAC 
RAMSAY agents occur every 2 weeks. 
OIG Response: No revisions made to text. When the information was verified 
with the HMO prior to release of the Draft report, CAC-Ramsay did not 
disagree with the wording. 
Page 13 
Comments made in regard to non-marketing issues such as  things about 
HMOs" disenrollees "had wished they had known before joining," without 
should be deleted from the report. 
substantiating data or further discussion 
The report itself conceded that "these do not relate to marketing issues. 
OIG Response: Section has been removed from the report. 
Page 15 
The conclusions reached on page 15 and page 16 in regard to the statement 
that "Some HMOs fail to adequately monitor sales staff, leaving beneficiaries 
vulnerable to inappropriate marketing practices " are not supported by the data 
summarized on page 14. 
OIG Response: The chart on page  general practices of the HMOs. 
14 reflects 
specific practices. 
Pages 15 and 16 refer to 
Page 15 
The State of Florida has now enacted a statutory prohibition 
regarding the use 
of agents attached to PCP's and/or clinics as marketing agents. 
OIG Response: We understand this legislation has been enacted since our 
inspection was completed; however, the report has not been revised as there is 
no national prohibition regarding this practice. 
Pages 16-
It would appear that the conclusion that "some beneficiaries have been 
vulnerable to unethical sales practices" is based upon the 22 beneficiaries 
discussed on these pages which do not appear to be part of the large sample 
study upon which the rest of the report is based. It is questionable why this 
should be included in the report which is based primarily on a selected sample 
size. 
E - 10  OIG Response: The text on pages 16-18 does refer to the 22 beneficiaries 
identified by HCFA Their experiences are included in tlris report as they 
relate to HMO marketing practices. 
Appendix B 
Regarding item 8b, the interviewer is required to ask a person whether or not 
they have end-stage renal disease or have elected Medicare hospice coverage. 
, such a person would not be eligible to enroll in a Medicare 
In either case
HMO. 
OIG Response: This data is included in the appendix for information only. No 
conclusions were reached from the beneficiaries' responses to questions 8a-&1. 
E - 11