State Mailing of HMO Promotions Ended

Since late October, 100,000 Medi-Cal recipients in Los Angeles County have been mailed advertisements from a private health-maintenance organization in envelopes identifying the state of California as the sender.

Some Medi-Cal recipients mistakenly believed the state was instructing them to enroll in United Health Plan or was endorsing the Inglewood-based health organization, according to some doctors and health activists for the poor and elderly.

“When they first receive the envelope in the mail and it’s from the Department of Health Services, that’s going to lead them to believe that’s the plan being endorsed by the state and that’s the plan they should take,” said Robert Holt, an official with the Los Angeles County Medical Assn. “There is no disclaimer made to lead people to believe anything else.”

State Addresses Envelopes

Since 1982 the state has mailed United Health’s promotional material in envelopes bearing the name and return address of the state Department of Health Services. United Health had the envelopes printed and stuffed and mailed them to the state. The state addressed the envelopes and mailed them at the health plan’s expense.

State law permits the Department of Health Services to assist health plans wanting to reach new customers. It did the mailing because it will not release names and addresses of Medi-Cal beneficiaries.

Other health organizations use the state to mail their advertisements. But the return address in those mailings contains only the Health Services Department’s street address, not the state agency’s name as well, officials said.

After receiving calls from Medi-Cal recipients and a query from a reporter, state officials halted the processing of an additional 200,000 advertisements, and the practice of using the agency’s name in the return address will not be resumed, said Thelma Fraziear, chief of the Medi-Cal operations division.

Change to HMOs Pushed

The United Health letter and promotional brochure, Fraziear conceded, “might give the impression” that one plan is being endorsed over another.

During Gov. George Deukmejian’s first term, the state has pursued a cost-cutting policy of encouraging Medi-Cal patients to abandon their private physicians in favor of health maintenance organizations. It saves money by paying the organizations a flat fee for each poor or elderly patient, regardless of the amount of medical service it provides.

Fraziear said a handful of Medi-Cal recipients contacted the state last month about the mailings and all were assured they were under no obligation to enroll. She said anyone who joins or plans to join United Health because of a misunderstanding will be allowed to drop out of the program immediately.

Clyde W. Oden, United Health’s chief executive officer, said “much less than 5%” who respond are confused by the envelopes. He said his employees go through “extraordinary steps” to educate respondents about the health plan and to inform them that the state is not connected with it.

Experiment Canceled

United Health is one of the health groups that had expected to participate in Expanded Choice, a state health-care experiment slated for the San Fernando Valley and San Diego County. The controversial experiment would have required many Medi-Cal recipients to join health maintenance organizations. It was canceled earlier this year.

“The state is so intent on pushing people into HMOs either through this device or Expanded Choice or anything they can think of, they tend to silently endorse manipulation of marketing materials,” said Adele Erenberg, a health expert with the Gray Panthers, an advocacy group for elderly people.

Fraziear said the state had let United Health use the envelopes since 1982 because it had “never caused a problem.” She attributed complaints this time to people “supersensitive about Expanded Choice.”

This is not the first controversy to envelope United Health’s Medi-Cal marketing efforts. In May, attorneys for the state Department of Corporations obtained a court order forbidding the company from engaging in false or misleading sales pitches.

Customers Misled

State attorneys alleged that telephone and door-to-door salesmen told prospective customers that the state or county endorsed the health plan and that they would lose some or all of their Medi-Cal benefits if they did not enroll. Medi-Cal recipients also were told that they could curb fraud and abuse in the state’s health care program by joining United Health, a state complaint said.

United Health, without admitting or denying the allegations, did not fight the permanent injunction.

Oden declined to comment about the court action, other than saying: “I don’t want to relive it again. There was a problem. That problem was solved.”

George A. Crawford, an attorney for the Department of Corporations who filed the complaint, said he had reviewed United Health’s current literature and had “a reservation about the material going out in a California state envelope.”

Michael Parks, an attorney in Los Angeles with the National Health Law Program, a poor people’s advocacy group, also questioned the state’s role in United Health’s marketing.

“In a certain sense the state is lending its weight in advertising to an outfit it’s had to sanction,” Parks said. “People start to wonder.”