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 ~claa OEI-04-91-00630 
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 feefor-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. 

The HCF A should establish an on-line system to identify and review cases of frequent enrollment change. 

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 ................................................


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


Background ..................................................
 Scope .
 ...................................................... 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 ....................... AAppendix B: Responses to Telephone 

Survey of Beneficiaries ................................... B-


Appendix C: Responses to Face-to-Face 

InterviewswithBeneficiaries ............................... CAppendix D: Analysis of Survey Respondents vs. Nonrespondents ....... DAppendix 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 feefor-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-forservice 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 HMOowned 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 threecounty 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 "miniHMO. 

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 

Humana Medical Plan 

Humana Medical Plan 

CAC-RAMSA Y 

Av-Med Health Plan 

Health Options of


South Florida 

CareFlorida 

MEDICARE 

ENROLlEES * 

722 

100 503 

090 

138 

300 

484 

COUNTIES 

SERVED 

Pinellas, Hillsborough, Pasco (Tampa area)€

Dade, Broward, Palm Beach (Miami area)€

Dade, Broward


Dade, Broward, Palm Beach€

Dade, Broward


Dade, Broward, Palm Beach€

Number of Medicare members as of February 
 1991 according to the HMOs.
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 

Miami 

Humana 

Tampa CAC Health 

Options Av-Med Care 

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-todoor 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 extensive sales force training. Initially, each salesperson 

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 "lockDuring 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 

HUMAN A MIAMI


HUMAN A TAMPA 

CAC 

HEALTH OPTIONS 

AV-MED 

CAREFLORIDA 

Employees 

Independent Agents 

(Includes some 

PCP-based agents) 

Independent Agents 

From 3 PCPs 

How are sales staffs paid? 

Weekly Twice Monthly Monthly 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

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 

Miami Tampa CAC Options Av-Med 

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 factors other than the HMO of 

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 Afor the method used to standardize for age and gender. 

BENEFICIARIES' KNOWLEDGE OF REQUIREMENTS DIFFERS BY HMO 

Human Human Health Care 

Miami Tampa CAC Options Av-Med 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 

beneficiaries receive prior to enrolling inform them of their ability to disenroll and 
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. 

How do the HMOs compare in marketing approaches and operations? 

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. at risk"), their interest in who is enrolled and who is not may be 

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, it is 10 days after they have been 

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 26 BENEFICIARIES TOTALlED 86 IN 1990 

Number of Enrollment Actions In: Average Length of Enrollment 

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 

sign-up just to get the sales person to leave. 

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 changing HMOs frequently. 

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 

Site visits were made to all HMOs to verify their marketing policies and procedures. 

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 

regular fee-for-service Medicare program. 

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€

Humana - Miami 

Humana - Tampa€

CAC€

Av-Med€

Health Options


CareFlorida€

NUMBER IN SAMPLE 

210€

132€

133€

132€

131€

833€

NUMBER OF RESPONSE RA 1E 

RESPONSES 

135€

103€

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: 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%) 

H(M)


Number Not Responding: 1 (0. 1%) 

H(T) CAC Av-Med Health Op CFL 1(1%) 

How did the HMO contact you?


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


SALESPERSON STOPPED BY HOME: 57 (38%) H(M) H(T) CAC Av-Med Health Op 10(33%) 10(32%) 7(29%) 2(22%) 11(65%) 

CFL 

17(44%) 

SALESPERSON CONTACTED H(M) H(T) BENEFICIARY BY PHONE: 51 (34%) CAC Av-Med Health Op 

12(40%) 

CFL


13(42%) 8(33%) 5(56%) 3(18%) 10(26% ) 

SALESPERSON STOPPED BY A "GROUP GArnERING PLACE" (like a Senior Citizen 

Center): 3 (2%) H(M) H(T) CAC Av-Med Health Op CFL 1(3%) 1(3%) 1(3%) 
SALESPERSON CONTACfED BY OTHER MEANS: 39 (26%) H(M) H(T) CAC Av-Med Health Op CFL 7(23%) 7(23%) 9(38%) 2(22%) 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. 

SALESPERSON GOT NAME FROM FRIEND OR RELATIVE: 13 (25%) H(M) H(T) CAC Av-Med Health Op CFL 3(33%) 3(60%) 1(10%) 2(67%) 2(29%) 2(11%) 

SALESPERSON GOT NAME FROM BENEFICIARY'S DOcrOR: 7 (13%) H(M) H(T) CAC Av-Med Health Op CFL 2(20%) 1(14%) 4(22%) 

SALESPERSON GOT NAME FROM MEDICARE: 5 (10%) H(M) H(T) CAC Av-Med Health Op CFL 2(22%) 1(20%) 2(20%) 

SALESPERSON GOT NAME FROM SOCIAL SECURITY: 4 (8%) H(M) H(T) CAC Av-Med Health Op CFL 1(11%) 1(20%) 2(11 %) 

SALESPERSON GOT NAME FROM OTHER SOURCE: 23 (44%) H(M) H(T) CAC Av-Med Health Op CFL 3(33%) 5(50%) 1(33%) 4(57%) 10(56%) 

Where did the salesperson say he or she was from? 

THE HMO: 504 (84%) H(M) H(T) CAC Av-Med Health Op CFL 120(89%) 84(89%) 62(77%) 83(90%) 77(75%) 78(81 %) 

THE GOVERNMENT: 2 (0.3%) H(M) H(T) 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% ) 

NO: 66 (11%) H(M) H(T) CAC Av-Med Health Op CFL 13(10%) 5(5%) 11(14%) 10(11%) 5(5%) 22(23%) 

BENEFICIARY DOES NOT REMEMBER SIGNING APPLICATION: 5 (1%) H(M) H(T) CAC Av-Med Health Op CFL 1(1%) 1(1%) 3(3%) 

Number Not Responding: 5 (1 

H(M) H(T) CAC Av-Med Health Op CFL 1(1%) 2(2%) 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 

3(50%) 1(20%) 2(22%) 

Health Op CFL 

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%) 

Number Not Responding: 11 (24%) 

H(M) H(T) CAC Av-Med 

1(17%) 1(20%) 2(22%) 

Health Op 

2(40%) 

CFL 

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. 

11. 

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%) 

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 

7(7%) 3(4%) 1(1%) 

NO: 540 (90%) 

H(M) H(1) CAC Av-Med 

132(98%) 85(90%) 67(83%) 86(93%) 

BENEFICIARY DOES NOT REMEMBER: 22 (4%) 

H(M) H(1) CAC Av-Med 

3(2%) 1(1 %) 4(5%) 3(3%) 

Number Not Responding: 19 (3%)€

H(M) H(1) CAC Av-Med 

1(1 %) 7(9%) 2(2%) 

b. Promise to leave as soon as you signed? 

YES: 37 (6%) 

H(M) H(1) CAC Av-Med 

5(4%) 9(10%) 6(7%) 4(4%) 

NO: 487 (81%) 

H(M) H(1) CAC Av-Med 

123(91 %) 74(79%) 47(58%) 81(88%) 

BENEFICIARY DOES NOT REMEMBER: 41 (7%) 

H(M) H(1) CAC Av-Med 

7(5%) 6(6%) 11(14%) 4(4%) 

Number Not Responding: 36 (6%)€

H(M) H(1) CAC Av-Med 

B - 8 

Health Op CFL 

2(2%) 7(7%) 

Health Op CFL 

89(86%) 81(84%) 

Health Op CFL 

3(3%) 8(8%) 

Health Op CFL 

9(9%) 

Health Op CFL 

8(8%) 5(5%) 

Health Op CFL 

78(76%) 84(88%) 

Health Op CFL 

6(6%) 7(7%) 

Health Op CFL 
5(5%) 17(21 %) 3(3%) 11(11 %) 

c. Tell you it would be more difficult to sign up if you waited until later? 

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%) 

e. Is there anything else you would like to say about the methods the 

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%) 

Number Not Responding: 16 (3%) 

H(M) H(1) CAC Av-Med 

3(2%) 2(2%) 3(4%) 4(4%) 

f. How to disenroII, or "get out" of the HMO? 

YEs: 368 (61%) 

H(M) H(1) CAC Av-Med 

80(59%) 60(64%) 48(59%) 55(60%) 

NO: 175 (29%) 

H(M) H(1) CAC Av-Med 

43(32%) 24(26%) 21(26%) 27(29%) 

BENEFICIARY DOES NOT REMEMBER: 45 (7%) 

H(M) H(1) CAC Av-Med 

11(8%) 8(9%) 9(11 %) 6(7%) 

Number Not Responding: 13 (2%) 

H(M) H(1) CAC Av-Med 

1(1 %) 2(2%) 3(4%) 4(4%) 

1(1%) 19(20%) 

Health Op CFL 

3(3%) 1(1%) 

Health Op CFL 

74(72%) 51(53%) 

Health Op CFL 

24(23%) 36(38%) 

Health Op CFL 

3(3%) 8(8%) 

Health Op CFL 

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? 

YES: 100 (17%) H(M) H(1) CAC Av-Med Health Op CFL 27(20%) 19(20%) 9(11 %) 16(17%) 16(16%) 13(14%) 

NO: 483 (80%) H(M) H(1) CAC Av-Med Health Op CFL 

B - 12 
106(79%) 73(78%) 66(81 %) 72(78%) 84(82%) 82(85%) 

Number Not Responding: 18 (3%) 

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

2(1%) 2(2%) 6(7%) 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%) 

SALESPERSON DID NOT LEAVE ANY MATERIAL: 19 (3%) H(M) H(T) CAC Av-Med Health Op CFL 4(3%) 3(3%) 2(2%) 2(2%) 8(8%) 

SALESPERSON LEFf SOME MATERIAL, BUT BENEFICIARY DOES NOT 

REMEMBER WHAT IT WAS: 15 (2%) H(M) H(T) CAC Av-Med Health Op CFL 2(1%) 3(4%) 10(10%) 

BENEFICIARY DOES NOT REMEMBER IF RECEIVED ANY 

MATERIAL: 13 (2%) H(M) H(T) CAC Av-Med Health Op CFL 3(2%) 1(1%) 2(2%) 2(2%) 2(2%) 3(3%) 

Number Not Responding: 28 (5%) 

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

2(1%) 2(2%) 8(10%) 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%) 

BENEFICIARY DOES NOT REMEMBER: 51 (8%) H(M) H(T) CAC Av-Med 14(10%) 9(10%) 9(11%) 8(9%) 

Health Op 

4(4%) 

CFL 

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. Since you have been in (Name of HMO), have there been times when you 

needed to see a doctor, but haven t 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? 

BEITER THAN YOUR PREVIOUS CARE: 116 (19%) H(M) H(1) CAC Av-Med Health Op CFL 30(22%) 13(14%) 18(22%) 16(16%) 16(15%) 23(24%) 

ABOUT THE SAME AS YOUR PREVIOUS CARE: 245 (41%) H(M) H(1) CAC Av-Med Health Op CFL 41(30%) 47(50%) 31(38%) 46(50%) 50(49%) 30(31%) 

NOT AS GOOD AS YOUR PREVIOUS CARE: 73 (12%) H(M) H(1) CAC Av-Med Health Op CFL 20(15%) 18(19%) 9(11%) 5(5%) 8(8% ) 13(14%) 

BENEFICIARY CAN'T OR WON'T COMPARE CARE: 147 (24%) H(M) H(1) CAC Av-Med Health Op CFL 41(30%) 14(15%) 18(22%) 20(22%) 27(26%) 27(28%) 

Number Not Responding: 20 (3%) 

H(M) H(1) CAC Av-Med Health Op CFL 

3(2% ) 2(2%) 5(6%) 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.€

1. Are you a year-round Florida resident or do you live in Florida only part of the year?€

RESPONSES 22 - LIVE IN FLORIDA YEAR-ROUND€

2. Are you currently enrolled in an HMO?€

RESPONSES 1 - NO - (GO TO #4)€

19 - YES€

2 - DON'T KNOW€

3. In which HMO are you (currently) enrolled?€

RESPONSES 10 - 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€

4. Do you remember signing an application form to enroll in these HMO plans?€

RESPONSES . 5 - NO€

17 - YES€

C - 1€
5.  What were the reasons you changed from each of these plans (PLANS IDENTIFIED 

IN QUESTION #4) to another? 

REASONS 7 - DOES NOT KNOW WHY 

11 - HMO REPRESENTATIVE CONVINCED BENEFICIARY 

TO CHANGE 

4 - UNHAPPY WITH SERVICES OF HMO 

6.  Did any of these plans make a special offer; give you a free gift; or give you money to 

enroll in their plan? 

RESPONSES 4 - BENEFICIARY DOESN'T REMEMBER 

18 - NO 

7.  When you signed the application form, was it clear that by enrolling in this new 

HMO, you would be automatically disenrolled from your current HMO? (PROVIDE 

ILLUSTRATION TO BENEFICIARY BASED ON HIS/HER HMO 

ENROLLMENT HISTORY AND INDICATE HMO BY NAME) 

RESPONSES 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? 

8. Because you needed to see a doctor more often than your plan would allow?€

RESPONSES 5 - BENEFICIARY DOESN'T REMEMBER 

16 - NO 

YES 

9.  Have you ever changed plans because you needed services of a specialist and those 

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€

11.  Have you ever changed plans because your doctor left the plan and you wanted to€

continue with that doctor?€

RESPONSES 4 - BENEFICIARY DOESN'T REMEMBER€

15 - NO€

YES€

12.  Have you ever changed plans because your doctor advised you to change to another€

plan?€

RESPONSES 3 - BENEFICIARY DOESN'T REMEMBER€

16 - NO€

YES€

13.  Have you ever changed plans because an HMO sales representative advised you to€

join a new plan? (NOTE: A SALESMAN COULD ADVISE AN ENROLLEE TO


JOIN HIS PLAN JOIN ANOTHER PLAN IN ORDER TO DISENROLL A€

BENEFICIARY. €

RESPONSES 5 - BENEFICIARY DOESN'T REMEMBER€

1- NO€

16 - YES€

(A) €

(B)€

(C)€

What HMO did that salesman represent?€

RESPONSES€

16 - BENEFICIARY DOESN'T REMEMBER€

Do you know the salesman s name?€

RESPONSES€

16 - NO€

Which plan did he/she suggest you to enroll in?€

RESPONSES€

16 - BENEFICIARY DOESN' T REMEMBER€

C - 3€
14.  Have you ever changed plans because a friend or relative suggested that you join a 

different plan? 

RESPONSES 4 - BENEFICIARY DOESN'T REMEMBER€

17 - NO€

YES€

15. Have you ever changed plans because you didn t like the plan you were in?€

RESPONSES 4 - BENEFICIARY DOESN' T REMEMBER 

12 - NO 

6 - YES 

(A) IF YES, Which plan did you dislike and why? 

RESPONSES€

6 - BENEFICIARY DOESN' T REMEMBER 

16. Have you changed health care plans for any other reason we did not mention?€

RESPONSES 7 - BENEFICIARY DOESN'T REMEMBER€

15 - NO€

17. Do you plan to change from (CURRENT HMO PLAN) to another plan?€

RESPONSES 4 - BENEFICIARY DOESN'T REMEMBER€

17 - NO€

YES€

18. Would you like to tell us anything else regarding why you have changed HMOs? 

RESPONSES 18 - NO FURTHER COMMENT WAS MADE€

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€

results would have been the same if the entire sample had been interviewed.€

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€

information for each individual, notably gender and age. With these data elements, 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 is/was enrolled. The frequencies of these€

characteristics in the respondent group were compared against the nonrespondent€

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 

Beneficiary initiated contact 

HMO initiated contact 

answers: 

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 could only go to (Name of HMO)'s doctors, hospitals, and medical providers? 

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€
Even if males and females 
 did answer questions differently, it can be assumed that the€

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 was found that the percentage of younger nonrespondents was slightly lower€

than the percentage of younger respondents€

TABLE €

73 or 


Number€

Sample (n = 833) 612€

Respondents (n = 601) 451€

Nonrespondents (n = 232) 161€

Younger 74 or Older€

Percent Number Percent€

73% 221 26%€

75% 150 25%€

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. Did you call (Name o HMO to get information, or did (Name o HMO€

contact you to ask you to enroll?€

73 or Younger 74 or Older€

(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€ of the respondent did relate to the answers given. Younger respondents more frequently reported that it was clear to them that they were joining an HMO when 

they signed the application form: 

TABLE 5 

Q#6. When you signed the application form, was it clear to you that you were€

enrolling in a Health Maintenance Organization?€

73 or Younger 74 or Older 

(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 

(n = 601)€

Answered:€

Number Percent€

525 87.3%€

10.€

The Entire Sample 

(n = 833)€

Might Have Answered: 

Number Percent€

725 87.€

11.0%€

Yes (It was clear)€

No (It was not clear)€

Beneficiary Does Not Remember€

Response Missing 

The actual response to this question and the 

almost identical. 

ANALYSIS BY HMO€

potential response (after rounding) were€

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

.. 

., . . ..... ;.;/ : . 

'--.r-- (, 

:;/T 

-,c) ; 

DEPART.'t\ENT OF HEALTH &. HUI't\AN SERVICES -r 

m 'h€

f1. ti"'J1,~_ 

.::::-i Washington . D. C. 20201 

MAY 2 9 1991 .c-~\:i 

DIG-:1.S 

i:'"- i:'i 

Dlc-or ~::5 -:'1 

""T1 TO: Richard P. Kusserow AIG- (");0 Inspector General ;-:1 OGC/IG 1710 

FROM:€ Assistant Secretary for. EXSEC -7" '...J..J -:'1 

Planning and Evaluation DATE SENT UJ c:::: 

SUBJECT:€ OIG Draft Reports: Marketing Practices and Enrollm~t 

Patterns for South Florida HMOs, OEI-04-91-00630 an~ :=l OEI-04-91-00640 -- COMMENTS 

I appreciate the opportunity to comment on the reports. In€

general, they appear to point more to the need for improved data€

collection, closer monitoring and follow-up, particularly €

disenrollment patterns, than for implementation of new€

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 

practices of HMO sales representatives nationally. 

Responsibility for oversight of marketing staff 

rests with state licensing agencies. 

Limi t enrollment to one "open season" per year. 

This recommendation would require -legislation and. 

has the appearance of a year-long lock-in which 

Congress has constantly rej ected. Moreover, 

section 6206 of OBRA-89 eliminated a coordinated 

open enrollment requirement, which had never been 

implemented, except under certain circumstances. 

Continuous open enrollment in competi ti ve markets 

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€

HMO physicians or services). Admittedly, this practice requires closer monitoring against

abus i ve marketing practices. 

E - 2
. . ..

Page 2 - Richard P. Kusserow 

Based on the preceding comment, I agree that HCFA 

should establish systems to identify and review cases of frequent enrollment change. Cases in 

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 of payment for these salespersons and the question

services arise. 

suppor':. the concept of a "cooling off" period 

for Medicare risk enrollees. 

OEI-O4-91-00640: Enrollment Patterns 

This analysis indicates the need for more data 

collection, closer monitoring and follow-up. The 

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" sections which distinguish fee-for-service 

from prepaid health plans. See, for exa~ple, the 

ttached pages. 

Mar--..in H. Gerry 

Attachments 

E - 3

&. 

.. .,. .... (.,. . _.: ..:::. '-1 ) \L:J 0,...._

1'0 €

~CuY\~.~cv\ I Qc. 'e\'.) 

~~1 Health Care 

DEPARTMENT OF HEALTH HUMAN SERVICES ,\=-l":i', .:LJ Financing Administration 

\;FF:::: :~~F :\ ::C €

:::z. Memorandum f"!. "'0 

AUG I 5 Ig9r ; :d, :i.u 

Date 

Gail R. Wilensky, Ph.D ,-1) ) 

From Administrator r V'-"€

Subject OIG Draft Re orts: "Marketing Practices and Enrollment Patterns for South 

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€

. \1' -... .€ EX3Ee €

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 

through 5 are contained in both OIG reports. 

Recommendation 

HCF A should establish standards for sales force training and monitoring, and hold 

HMOs accountable for maintaining those standards. 

HCF A Response


We do not believe it is appropriate or necessary to presence more than the general 

standards for sales activities of organizations that are already required for HCF A 

contracts. HNfOs are currently held accountable for marketing practices that lead 

to erroneous and uninformed enrollments. Without effective sales force training 

and monitoring, an HNfO will be subject to contract termination, intermediate 

sanctions, and/or civil monetary penalties for marketing and enrollment failures. 

Under the authority of 42 CFR ~417.428(a), which requires an tThtfO to provide a 

written statement of rules "and other information for beneficiaries to make an 

informed decision about enrollment " HCF A has taken a number of actions to 

correct problems found at individual HMOs. 

In Southern California, for example, where there have been problems with 

beneficiaries not understanding lock-in, an after-the-fact (i.e. after-sale ) enrollment 

verification process is the norm among all HNfOs in the area, and the situation has 

improved as a result of the efforts of the HCFA regional office. Similarly, for 

Humana Medical Plan of Florida, we believe that marketing practices have 

significantly improved since October, 1990 (after the OIG survey of beneficiaries) as 

a result of Humana s working with the HCFA regional and central office staff, in 

conjunction with intensified monitoring of the Plan. HCF A was successful in its 

efforts to encourage Humana to set up its own internal monitoring of certain 

operations, and we can monitor Humana through its internal reports. 

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 

marketing personnel and brokers. ?1orida has taken a number of steps to prevent 

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 

enrollment. In addition, we currently only have the authority to impose a CMP 

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 

HCF A should establish a policy limiting enrollment to one "open season 

(opportunity to enroll) per year. 

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 

but rather beneficiary choice, as noted above. Where "ping-ponging" does in fact 

result from marketing or enrollment abuses, HCF A has the means to require an 

tllvfO to cease such practices. 

A hallmark of the Medicare fee-for-service program is the beneficiaries' freedom of 

choice of providers. Beneficiaries who choose to enroll in a Medicare risk-based 

Hlv!O consciously choose to receive care from only the HlV!O providers, in order to 

minimize their administrative burden and to benefit from lower out-of-pocket costs. 

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
Page 3 

HCF A has traditionally viewed the Hi\t10 option as a choice that is available on a 

voluntary basis to beneficiaries residing in areas where Medicare HMOs are 

available, and we have left it up to the HJ...10s to decide whether they preferred a 

policy of enrollment other than on a year-round, continuous basis. CuIT~ntly, only 

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 

changed the original provisions of the Social Security Act relating to Medicare 

Hj\tl0 enrollment and disenrollment. Congress mandated that Medicare risk-based 

HNfO enrollees have the right of immediate disenrollment from the HMO (to 

replace the previous provision that could delay a disenrollment for up to 60 days). 

Congress also did away with a coordinated open enrollment period requirement 

(introduced in the Deficit Reduction Act of 1984). The intent of Congress has 

been consistently to give beneficiaries maximum flexibility in choosing the HNI0 

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 

disenrollments, health status indicators and residence codes. We believe this system 

satisfies the intent and spirit of GIG' s recommendation. 

Recommendation 

In the three-county Miami service area, RCF A should test the efficacy of a third 

rqrty handling Hi\t10 enro~lment actions. 

E - 7

Page 4 

HCF A Response 

Ti1C efficacy of a third party enrollment process has been tested and many problems 

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 

of cases (72 percent), the beneficiary initiated the first contact with an HM:O. A 

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 evaluation of the HealthChoice demonstration project in Oregon and 

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 mailresponse 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 CACRAMSAY 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 

substantiating data or further discussion should be deleted from the report. 

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 14 reflects general practices of the HMOs. Pages 15 and 16 refer to specific practices. 

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. 

In either case, such a person would not be eligible to enroll in a Medicare 

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