Sales Tactics of Medi-Cal Plans Under Fire

In front of a busy check-cashing store at a Long Beach mini-mall, Mildred Harris is talking to a Universal Care salesman about signing up for the company’s Medi-Cal managed care health plan.

The talk soon turns to money--that is, how much the enroller will pay the mother of four for signing over her Medi-Cal benefits to the private health plan. He opens his wallet and offers $20.

Offering cash to Medi-Cal enrollees is illegal, state health officials say. But consumer advocates, Legal Aid lawyers and others say that this and other fraudulent marketing tactics are flourishing as the Wilson Administration moves roughly 2 million Medi-Cal patients into managed care health plans. Advocates say these tactics prey upon poor people who may be enticed to sign over their medical insurance to private health plans that are not always in their best interests.

Though it is unclear how widespread these marketing abuses are, a Long Beach physician, Barry G. Lew, filed a lawsuit against Universal Care in Los Angeles County Superior Court last week, alleging that its salespeople were siphoning off his Medi-Cal patients by offering them cash, alcohol and drugs to sign up with the HMO.

Universal Care executives said Friday that the lawsuit is without merit and that they had received no complaints about enrollers offering inducements. Jeffrey V. Davis, Universal Care’s chief operating officer, said the company will not tolerate such activities and is investigating the allegations.

“If Universal Care learns of any such abuses, our policy is to immediately suspend the suspected enroller, investigate the facts and, if the accusations are determined to be true, the enroller is immediately terminated,” Davis said.

He added that the company will install a toll-free telephone number to receive complaints about improper conduct by enrollers.

Davis said most HMOs pay incentive bonuses to their enrollers, which is not illegal, and that Universal’s are similar to what other plans offer.

Signal Hill-based Universal Care is a health maintenance organization that specializes in Medi-Cal patients. It has 80,000 members in its Medi-Cal programs throughout the Southland and stands to gain many more as a subcontractor for Foundation Health, a big HMO that recently won a state contract to serve Medi-Cal patients in Los Angeles County.

The incident at the Long Beach mini-mall--witnessed this month by a Times reporter who accompanied Harris, a patient of Lew’s--comes after numerous allegations by consumer advocates and others about unscrupulous marketing techniques by managed care firms involving Medi-Cal patients.

“These outrageous tactics are flourishing throughout the state,” said Judith Bell, co-director of the San Francisco office of Consumers Union. “The marketers have gotten trickier in their marketing abuses. It’s not just one or two health plans, or one or two places either. It’s all over the place.”

Gunther R. Bauer, chairman of the obstetrics-gynecology department at St. Mary’s Medical Center in Long Beach, said he routinely hears of HMO marketers using “less than desirable” methods to enroll Medi-Cal recipients. “One patient said the enroller told her he got $70 for signing her up and was willing to kick back $20 for her and her baby,” he said.

Bauer said enrollers seem to go after pregnant women or women with children, presumably because they get a bigger bonus for signing up more members. In some instances, he said, marketers have convinced patients in the mid-stage of their pregnancies to switch to HMOs. The disruption in the continuity of care can pose a health hazard for some patients, he said.

Bauer added that patients sometimes find out later that the only clinics and hospitals they can use are many miles away.

“These patients are not very wealthy people and sometimes they can’t even afford the bus,” he said.

In September, a group of Legal Aid offices and consumer organizations, including Consumers Union, sued the state Department of Health Services, which oversees the Medi-Cal program, saying it failed to protect the rights of Medi-Cal recipients. The suit alleged that the state was not enforcing regulations requiring managed care plans to disenroll Medi-Cal patients within 45 days of the patients’ requests.

Earlier this year, Foundation Health, one of California’s biggest HMOs, agreed to settle a lawsuit in which public interest groups accused the company of widespread deceptive marketing practices during door-to-door solicitations in the San Francisco Bay Area. Among the suit’s accusations was that Foundation enrollers had told people they would lose their Medi-Cal benefits unless they signed up with the plan.

Foundation, while contending that its marketing programs complied with the law, later settled the suit by agreeing to cease door-to-door marketing in San Francisco.

Despite concerns raised by consumer advocates and Legal Aid lawyers, Department of Health Services officials contend that the accusations of cash kickbacks and other marketing abuses in the Medi-Cal program are overblown.

“If there was anything widespread going on, I can’t imagine that folks working in the community wouldn’t have heard of it,” said Ken Wagstaff, chief of the agency’s managed care operations branch. He said such abuses were common during the state’s Medi-Cal scandals of the 1970s, but he believes similar activities are “pretty rare” now.

State health care officials said the most common marketing abuses should cease under reforms signed by Gov. Pete Wilson this year. Those reforms would prohibit direct enrollment of Medi-Cal patients by health plans, effective July 1, 1996. The state will instead hire third-party companies to handle enrollment activities.

“We try to maintain vigilance the best we can over these plans,” said Roy Johnson, another official with the state’s Medi-Cal managed care program. He said the state has recently terminated or decided not to renew contracts with three small Medi-Cal providers for failing to meet state requirements.

But consumer advocates contend that the state’s oversight is lax and that there is plenty of time for unscrupulous marketers to prey on Medi-Cal patients until the state reforms go into effect.

“Twenty years of Medi-Cal experience should be long enough for the state to figure out how to make these plans meet the requirements and protect poor people” from abuses, said Geraldine Dalek, director of the Los Angeles-based Center for Health Care Rights. “If they fined these plans significant amounts of money and penalized for egregious abuses, then these things wouldn’t happen.”