Abuses in Door-to-Door Sales of Health Plans Cited : Marketing: State is investigating reports that poor are tricked into switching from Medi-Cal to private programs.

It took Sonia Beltran months to unravel a nightmare that began last September when a salesman knocked on her door and persuaded her to enroll her baby in a new health care plan.

Under heavy sales pressure, she said she signed a form that switched her son out of the state-sponsored Medi-Cal program into the new health plan. Later, she discovered that she had to travel miles to a new clinic instead of using her regular doctor around the corner from her downtown Los Angeles apartment. Promises of free transportation were broken, she said, and it took months to disenroll from the program.

“I was tricked. I was deceived from the beginning,” the distraught 22-year-old mother said in an interview. In November, she detailed these problems in a complaint to state health officials, who then helped her disenroll from the program.

Responding to many similar complaints, the state attorney general’s office launched an inquiry this year into door-to-door marketing by health care sales representatives. So far, six marketing agents have been arrested on felony charges ranging from misrepresentation to forgery.

The complaints have arisen from a major statewide health policy change that is aimed at shifting hundreds of thousands of low-income Californians out of the Medi-Cal program into privately operated “managed health care plans,” such as health maintenance organizations.

For a set, monthly fee, the state health department contracts with various prepaid health plans to provide cost-effective health care for low-income people, who typically have difficulty finding private practitioners to treat them.

The program is part of a long-term journey that California, like many states, is taking to overhaul the delivery and financing of health services for the poor in the hopes of improving access and reining in spiraling costs.

But unlike most states, California permits private health plans to employ door-to-door salespeople as marketing agents.

Critics say this has led to widespread abuses, as competing health plans have unleashed squadrons of high-pressure, door-to-door marketing agents, paid on commission, to sell health care plans to people who often do not understand the consequences of the choices they are about to make.

Furthermore, in an attempt to gain a competitive edge, many salespeople are routinely violating the privacy of people they solicit by illegally securing access to confidential government data listing addresses, incomes, dependents and other information about prospective enrollees, said Deputy Atty. Gen. Hardy Gold of the Medi-Cal fraud bureau.

Molly Joel Coye, director of state health services, said she is unaware of any problems with door-to-door salespeople. Marketing abuses will occur, she said, “only if you’ve got bad plans, and my sense is that we’re watching our plans very, very closely.”

Coye called managed care “clearly the wave of the future.” About 420,000 of the state’s 4.2 million Medi-Cal beneficiaries are now enrolled in one of 27 private, managed-care health plans, and during the next five years state health officials hope to enroll an additional 1.6 million.

But records, correspondence and complaints lodged with the state health department charge that:

* Sales people have repeatedly misrepresented themselves as government employees and have threatened or coerced Medi-Cal beneficiaries into enrolling in a health plan without making clear what rights will be forfeited.

* Once patients are enrolled, some health plans have held patients by refusing to comply with requests for disenrollment.

* Salesmen have obtained confidential information about prospective enrollees from county welfare department workers. Marketing agents terminated from the program during the last six months have admitted paying off county welfare workers for information used to locate eligible beneficiaries.

* State health authorities have handled enrollment fraud on a case-by-case basis rather than remedying systemic program flaws that have spawned abuses reminiscent of the same problems that plagued a similar program in California during the early 1970s.

Across the nation, other states have learned from California’s early experience and are trying to model managed-care programs to avoid this state’s pitfalls, said W. Pete Welch, a senior research associate with the Urban Institute in Washington.

“But it looks now like you out there in California haven’t learned very much,” Welch said. “California is serving again as an example of how not to do it.’

Alan Stolmack, in charge of the state health department’s managed-care program, defended the program as a great success and said that the small percentage of people who have disenrolled from the program suggests that as many as 90% of patients are satisfied with their care. He acknowledged periodic problems with door-to-door marketing in Los Angeles, but said his office has cooperated with investigations by the attorney general’s office.

But others charge that it is the door-to-door sales technique that is undermining the program.

Last year, health inspectors were “absolutely inundated with complaints” about salesmen, said Theresa Franco, an investigating supervisor in the attorney general’s office.

Franco, who worked undercover as a door-to-door saleswoman, said she discovered that salespeople were paying $400 to county welfare workers for the latest government microfiche listing the names and addresses as well as other private information about eligible Medi-Cal beneficiaries.

The sales representatives use these lists--often duplicated and resold to other marketing agents--to target their victims, Franco said. “To get in the front door, they used any kind of scam, any kind of story, anything and everything, because for every person they enroll, they are paid $40 to $50,” Franco said. One 21-year-old salesman with no more than a high school diploma was making $50,000 a year, she said.

The salesmen frequently victimize Spanish-speaking people by telling them they will lose their Medi-Cal benefits or be investigated by the government if they do not sign up for a health plan, Franco said.

“It’s very sad,” she said. “They are poor people, and all they want to do is go down the street to see their doctor. They have no idea what these salesmen are doing to them.”

By law, state health officials have the discretion to ban door-to-door solicitations. Most states do not allow it, relying instead on government officials to inform Medi-Cal beneficiaries in neutral terms about the advantages of various private health plans during welfare eligibility and recertification interviews.

But in California, door-to-door marketing accounts for 82% of all enrollments.

“It makes the program viable,” said Stolmack, a state health official in charge of the managed-care program.

“We keep reassessing the need for it . . . and when it’s no longer necessary we will promptly discontinue it,” Stolmack said, “because it’s just not the best way to promote the integrity of this program.”

Trish Riley, executive director of the National Academy for State Health Policy in Maine, which has published a guide to Medicaid managed-care programs, said she knows of no other state that allows door-to-door marketing of health plans.

Ironically, she said it was California’s pioneering efforts with managed care during the early 1970s that gave door-to-door marketing “a black eye” and discouraged many states from permitting the practice.

The early program in California, which enrolled 160,000 people in 27 prepaid health plans, was racked by scandal that has been well documented in scathing reports by the state auditor general and during congressional hearings.

In a review of the early program, the Hastings Law Journal concluded: “Massive enrollment fraud and poor-quality services characterized . . . many plans. Numerous reports alleged widespread profiteering, conflict of interest and mismanagement” by the private plans and by state health officials.

Some plans boasted annual profits ranging up to 2,500%. One plan enlisted doctors by offering either a Cadillac or a Mercedes-Benz as a bonus. Numerous Medi-Cal recipients reported enrollment inducements such as free fried chicken or tickets to sporting events.

“As long as door-to-door solicitation is the sole or primary method of securing new plan members, enrollment abuse will be the rule rather than the exception,” the article concluded.

Legislative reforms have been enacted to safeguard against many abuses that occurred during the 1970s, but critics say that serious, widespread enrollment problems are continuing because door-to-door marketing is still permitted. Furthermore, they decry recent state legislation that will permit the private plans, beginning in 1994, to offer incentives for enrollment such as crates of free diapers and caseloads of infant formula.

Opening the door ever so slightly to program inducements “is a slippery slope,” warned attorney Deborah Garvey. “It muddies the issue for people trying to decide whether to enroll on the merits of the plan.” She pointed out that the services offered and the locations of clinics and hospitals can vary from plan to plan.

As a Legal Aid attorney in East Los Angeles, Garvey said that she alerted state health authorities to about 100 complaints of unfair enrollment tactics by door-to-door salesmen during the last year.

Stolmack at the state health department said that three marketing representatives have been terminated from the program during the last year for improper sales tactics, but no financial or administrative sanctions have been applied to any plan for marketing violations.

He asserted that most critics of the program have unfairly criticized managed care based upon their encounters with a small, unrepresentative sample of problem cases.

Managed care has attracted growing support, especially among many state and federal policy makers. They say it offers a superior way of providing care to Medi-Cal beneficiaries, who otherwise often have trouble finding a family doctor.

“Most rely on hospitals--on outpatient departments or busy emergency departments, ill-equipped to deliver adequate primary care--or on Medicaid ‘mills’ where cursory examination is common and patients are often rushed out the door with a handful of unnecessary prescriptions,” according to a recent report on Medicaid managed care by the United Hospital Fund.

Besides its cost-effectiveness, the big advantage of managed care, said Christine Nye, director of the Health Care Financing Administration’s Medicaid Bureau, is that it emphasizes preventive health care by building a “good solid relationship” between patients and primary care providers. For a set fee, patients are linked with specific practitioners for delivery of basic medical care and coordination of all other health services.

But critics say that managed care often does not work out as planned. Lynn Kersey, director of the Pregnancy Assistance Program for the Homeless Health Care Project, said managed-care plans may work well for those Medi-Cal beneficiaries who have not been able to find a doctor. But she said that in many cases, salespeople are interrupting good relationships that exist between patients and providers.

Donald Nollar, a health educator at the South Central Family Health Center, who since March has handled 47 complaints involving door-to-door marketing, said: “We’re not saying that (managed care) is inherently bad. The unscrupulous marketing practices are what’s bad.”

In a complaint that Nollar helped prepare for Beltran, she stated that in mid-September a marketing representative from the PractiCare Medical Group misrepresented himself as a government employee and directed her to sign up for the PractiCare health plan, which he said would provide free transportation to its clinics.

Because he had confidential information about her family’s economic status and Medi-Cal enrollment, she said she believed he was from the government.

However, she soon decided to disenroll, partly because the PractiCare clinic at 2707 S. Central Ave. was too far from her home in the Pico-Union area of Los Angeles. On two occasions when her baby was sick, she said, her request for free transportation was denied.

The law requires that health plans promptly comply with disenrollment requests for any reason. But Beltran complained that when she called for disenrollment information, she was put on hold for up to two hours.

After a month of frustration, she said, she finally reached somebody in mid-November who told her she had to make an appointment to voice her grievance at an office in Sun Valley, 20 miles from her home. The next available appointment, she was told, would be two months later.

But state health officials intervened in December, ordering PractiCare to immediately release Beltran’s son from the program. They took no disciplinary action against the group.

Dr. Bassett Brown, president of PractiCare, said that Beltran’s complaint, like others, appears to have been fabricated by social workers and Legal Aid attorneys who have mounted an organized effort to smear managed-care programs.

“It’s very strange the way the state has suddenly been flooded by all these complaints all at the same time,” he said.

He asserted that his clinics provide excellent care and denied that patients who wish to disenroll from the program have to wait or submit to an interview.

PractiCare enrolls as many as 700 people a month and employs about a dozen marketing agents--none of whom have been arrested by the Medi-Cal fraud bureau, Brown said. In the aftermath of the attorney general’s investigation, Brown said, he has warned all his marketing agents to obey the law and make every effort to educate prospective enrollees, “largely new immigrants, who are not city people, and who are quite unsophisticated.”

He said that as a safeguard he requires marketing agents to tape the last portion of their interview in which they specifically state that they are not government representatives.

But social workers and attorneys claim that even these tape recordings do not prevent misrepresentations.

In a complaint to state health officials, Terri Hyde, a health educator who works with low-income pregnant women in downtown Los Angeles, complained that a PractiCare marketing representative made a series of false statements to her client during a door-to-door solicitation in October.

“The worker then took out a tape recorder, instructed my client to answer yes to all of his questions, and proceeded to confuse her thoroughly because everything he said into the recorder completely contradicted everything he had just told her.”

Hyde said the woman decided to disenroll her 2-year-old daughter from the program when the child got sick in November and PractiCare did not send a van to pick her up. They took the bus to the clinic, where they waited eight hours to be seen by a doctor, Hyde said.

Bassett said it is impossible that any patient would have to wait that long for care. “Everything (in that complaint) was exaggerated to the maximum,” he said.

But Rep. Henry A. Waxman, (D-Los Angeles), who sponsored reforms of the Medi-Cal managed-care program in the 1970s, cautioned that one of the important lessons to be learned from the state’s early experience is that “door-to-door salesmanship is an open invitation to abuse.”

Health Care Shift

Many states, including California, are trying to shift hundreds of thousands of low-income people out of their state-sponsored Medicaid programs into privately operated managed-care plans, such as health maintenance organizations.

For a set, monthly fee, the states contract with prepaid health plans to treat low-income patients who otherwise may have difficulty finding doctors.

Medicaid Managed-Care Enrollment*

12/86: 1,767,352

12/87: 1,822,272

6/89: 1,988,510

6/90: 2,310,091

5/91: 2,456,254

* Does not include Indiana and Texas