State restricts HMO sales tactics Medicaid patients being accosted, lured with prizes; Maryland health officials weigh further restrictions


State health officials are cracking down on methods used to sign up poor people in health maintenance organizations, banning tactics such as accosting prospects at bus stops and outside social service offices or using a life-size Easter bunny or microwave raffles to lure them at malls.

But months of fraud and abuse have forced state health officials to consider either hiring a private, independent contractor to do the marketing and enrolling for HMOs, or creating a unit within the state health department to take over the job. Both options are being evaluated extensively as the state moves to put most of its 467,000 Medicaid recipients -- half of whom live in Baltimore -- into managed care.

Dr. Martin P. Wasserman, state health secretary, said yesterday that it is "likely" an alternative to HMO self-marketing will emerge from that process.

From California to New York, similar marketing abuses have cropped up, as states struggle with exploding Medicaid bills that now consume a fifth of their budgets. Many states are moving thousands of Medicaid patients into managed care, hoping to control costs and improve access.

The change is big business for HMOs. A quarter of Maryland's Medicaid recipients have signed up for HMOs, and this fiscal year the state will pay HMOs $288 million for their care.

The new restrictions stem from rules put in place July 1 after abuses began surfacing. In June, a state investigation resulted in 17 guilty pleas from HMO marketers who lied to and tricked Medicaid recipients and forged their signatures. Social service workers who sold the recipients' names for pennies also pleaded guilty.

One day after those charges were filed, Frederick County health officer Dr. Jim Bowes had to call police to remove from a Frederick health clinic aggressive marketers who were "harassing and frightening" Medicaid recipients. One was even followed home, Dr. Bowes said.

In the fiscal year that ended in June, there were 199 confirmed cases of misrepresentation and 19 cases of fraud in the state.

DState health officials put the restrictions in the contracts for the six HMOs serving Maryland's Medicaid population. As part of those changes, undercover state workers recently began doing spot checks, watching the marketers at work. Financial penalties of up to $10,000 have been put in place.

Since the crackdowns began, nurses and social workers who work with Medicaid patients say they have noticed fewer sales representatives outside social services offices.

At Health Care for the Homeless, a nonprofit group, spokesman Jeff Singer said the staff have not seen as many homeless people signed up without consent.

Yet some problems persist.

Jean Robinson, 59, couldn't see her regular doctor -- whose office is two blocks from her home -- after she signed up for an HMO. She said the sales representative who came to her house told her that she wouldn't have to switch doctors and that the plan was only for dental and eye care.

"I cried in his office when they told me. I wouldn't trade my doctor for anybody," said Ms. Robinson, who is disabled with diabetes, high blood pressure and arthritis. "I was a nervous wreck."

After six weeks, and at least one trip to an HMO clinic much farther away than her regular physician, Ms. Robinson said she was able to withdraw from the program.

Tiffany Randolph, 17, said she was shocked to answer her door this summer and find a marketer who already had her infant son's name. Ms. Randolph said that she was told she didn't have to change doctors and that the plan was only for emergency care.

"I don't know how or who gave him my information," she said. "It's very deceiving, and it makes you think that they're trying to do you a favor, when in reality they just do you wrong."

But HMO officials say that since the state investigation, they have taken aggressive steps to stop the abuses.

Chesapeake Health Plan and Prudential Health Care Plan both reported that they have recruited new marketers and replaced their supervisors.

"We've completely turned the organization upside down," said Kevin O'Neill, Chesapeake's senior vice president of sales and marketing. "I think we've gotten rid of the bad apples."

Prudential's vice president for marketing, Greg Conderacci, said his company has increased training, including ethics, and turned sales pitches into education sessions about managed care.

Officials with Columbia Medical Plan and FreeState weren't available to comment. Total Health Care officials declined comment. Optimum Choice officials didn't return a telephone call.

For years, Medicaid patients were seen by HMOs as expensive and hard to manage, because the federal-state health program covers low-income women, children and the disabled. But as health care has dramatically changed, HMOs now see those patients as a way to expand revenue and position themselves to move into other markets, such as Medicare.

But some HMOs aren't sure taking marketing away from them is a good idea.

Chesapeake's Mr. O'Neill said an independent contractor might give certain HMOs an unfair advantage. He also said a lack of funds could make it difficult for the state to do the job. Prudential's Mr. Conderacci said his company is keeping an open mind and working closely with the state.

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