Medicaid: States' Efforts to Educate and Enroll Beneficiaries in Managed
Care (Letter Report, 09/17/96, GAO/HEHS-96-184).

Pursuant to a congressional request, GAO provided information on state
efforts to enroll Medicaid beneficiaries in managed care, focusing on:
(1) the role of managed care organizations (MCO) in marketing and
expanding managed care participation; (2) the types of marketing and
enrollment abuses that have occurred and states' efforts to curb these
abuses and ensure that beneficiaries are informed about their health
plan options; and (3) state efforts to measure the effectiveness of
their education and enrollment approaches.

GAO found that: (1) some states have allowed MCO to use various
direct-marketing strategies to boost enrollment in Medicaid managed care
programs; (2) because some MCO and their agents have engaged in
unscrupulous and illegal practices to enroll Medicaid beneficiaries and
maximize their revenues and commissions, many states have banned or
restricted MCO activities; (3) Minnesota, Ohio, Washington, and Missouri
have effectively controlled their enrollment programs by banning
direct-marketing activities and retaining enrollment responsibilities;
(4) these states devote considerable resources to educating Medicaid
beneficiaries on managed care so their transition from fee-for-service
care is easier; (5) each of these states' educational approaches varies
because of their differing circumstances and program goals; (6) these
states use public employees to provide in-person education and
counseling, independent contractors or enrollment brokers, and telephone
and direct mail strategies to promote better understanding of the
program; (7) state education and enrollment efforts are often enhanced
by community group and MCO education activities; (8) although community
groups in these states believe that education and enrollment efforts
have helped Medicaid beneficiaries' transition to managed care, the
effectiveness of these approaches has not been adequately measured; (9)
state officials and experts believe that the best measure of
effectiveness is the rate which beneficiaries select their own health
plan; and (10) most states voluntary selection rates range from 59 to 88
percent.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  HEHS-96-184
     TITLE:  Medicaid: States' Efforts to Educate and Enroll 
             Beneficiaries in Managed Care
      DATE:  09/17/96
   SUBJECT:  Managed health care
             Health resources utilization
             State-administered programs
             Health maintenance organizations
             Health services administration
             Health insurance cost control
             Program abuses
             Information dissemination operations
             Beneficiaries
             Health care programs
IDENTIFIER:  Medicaid Program
             Washington
             Missouri
             Ohio
             Minnesota
             
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Cover
================================================================ COVER


Report to the Chairman, Special Committee on Aging, U.S.  Senate

September 1996

MEDICAID - STATES' EFFORTS TO
EDUCATE AND ENROLL BENEFICIARIES
IN MANAGED CARE

GAO/HEHS-96-184

Medicaid Managed Care Enrollment

(101390)


Abbreviations
=============================================================== ABBREV

  AFDC - Aid to Families With Dependent Children
  HCFA - Health Care Financing Administration
  HHS - Department of Health and Human Services
  MCO - managed care organization
  SSI - Supplemental Security Income

Letter
=============================================================== LETTER


B-271265

September 17, 1996

The Honorable William S.  Cohen
Chairman, Special Committee on Aging
United States Senate

Dear Mr.  Chairman: 

In fiscal year 1995, federal and state Medicaid expenditures reached
$159 billion and accounted for more than 19 percent of state budgets. 
To help control expenditures and expand access to health care, 48
states have implemented some type of managed care program. 
Initially, these programs were largely voluntary, but states are
increasingly requiring Medicaid beneficiaries to enroll in managed
care.  As of June 1995, 11.6 million beneficiaries, or 32 percent of
all Medicaid beneficiaries, were enrolled in managed care.  In some
states, however, Medicaid managed care programs have been plagued
with allegations of marketing and enrollment abuses. 

Given the expansion of managed care and reports of abuses, you asked
us to (1) describe the role of marketing in expanding participation
in managed care and the types of marketing and enrollment abuses that
have occurred, (2) identify state efforts to curb or prevent these
abuses and to ensure that beneficiaries are adequately informed about
their health plan options and managed care as a service delivery
approach, and (3) identify state efforts to measure the effectiveness
of their education and enrollment approaches. 

To develop this information, we reviewed documented cases of
marketing and enrollment abuses in five states that have received
media coverage:  California, Florida, Maryland, New York, and
Tennessee.  We discussed with the Medicaid officials in these states
the cases and any actions taken to prevent further abuses. 

In addition, we asked experts to identify states whose education and
enrollment programs were noteworthy for their innovative approaches. 
Based on their input, we visited four states--Minnesota, Missouri,
Ohio, and Washington--to review their managed care programs.\1 We
focused on mandatory enrollment programs for low-income families,
women, and children, who constitute the majority of Medicaid
beneficiaries in these states.  We interviewed state and local
officials in the four states and analyzed documentation on their
education, marketing, and enrollment efforts.  We also interviewed
health care advocates and representatives of selected managed care
organizations in each state to obtain their views on how well these
functions are being conducted.  For more detailed information on our
scope and methodology, see appendix I. 


--------------------
\1 The four states were judgmentally selected to represent diversity
of program maturity, strategies for educating and enrolling
beneficiaries, and geographical area. 


   RESULTS IN BRIEF
------------------------------------------------------------ Letter :1

To boost enrollment in their Medicaid managed care
programs--especially where participation is voluntary--some states
have allowed managed care organizations (MCO) to use various
direct-marketing strategies, including door-to-door marketing, to
encourage beneficiaries to sign up with their plan.  Many of these
states also have delegated to MCOs the responsibility of enrolling
and disenrolling beneficiaries.  However, some MCOs and their agents
have engaged in unscrupulous practices to maximize beneficiary
enrollment--and thereby maximize plan revenues and commissions. 
These practices include bribing public officials to obtain
confidential information on beneficiaries, paying beneficiaries cash
and other incentives to sign up, deliberately misinforming
beneficiaries about access to care, and enrolling ineligible
beneficiaries--as many as 4,800 in one state. 

To address--or avoid--these marketing problems, many states have
banned or restricted direct-marketing activities by MCOs and have
retained responsibility for enrolling or disenrolling Medicaid
beneficiaries.  Four states that are viewed as having effective
enrollment programs--
Minnesota, Missouri, Ohio, and Washington--at a minimum, ban
marketing door-to-door and at public assistance offices, and each has
retained enrollment responsibilities rather than turning them over to
MCOs.  We found that, as part of their enrollment programs, these
states devote considerable efforts to facilitating beneficiaries'
difficult transition from fee-for-service to managed care.  To do
this, they have developed strategies to help beneficiaries understand
the principles of managed care and make the often complex decisions
involved with selecting an MCO. 

Despite their common emphasis on using the enrollment process as an
opportunity to promote beneficiary understanding of the program and
selection of an MCO, the four states varied in their specific
approaches--in part, due to their goals and circumstances.  Minnesota
relies on public employees to provide in-person education and
counseling, thereby taking advantage of their knowledge of the
Medicaid program and their experience with the population involved. 
Ohio also uses in-person education and counseling but, like a growing
number of states, delegates these responsibilities to an independent
contractor--also referred to as an enrollment broker--believing a
broker can ensure that beneficiaries receive information from a
neutral source.  Similarly, Missouri contracts with an enrollment
broker, which combines in-person and telephone and mail strategies to
meet Missouri's goal of rapid implementation statewide.  Unlike the
other three states, Washington mails informational and enrollment
materials to beneficiaries and provides counseling by public
employees via telephone.  These four states' education and enrollment
efforts are also often augmented by community groups, such as
maternal and child health advocates, and by MCOs, who are
contractually required to inform enrollees on a continuing basis of
plan services and operations. 

Although community groups in the four states we visited generally
believe that their states' education and enrollment efforts have
facilitated beneficiaries' transition or introduction to managed
care, methods used to measure the effectiveness of these approaches
have been limited.  State officials and experts we contacted consider
the best current measure to be the rate at which beneficiaries select
their own health plan--rather than being assigned to one by the
state.  While these states attempt to reach voluntary selection rates
of 80 percent or higher, their actual experience has ranged from 59
to 88 percent.  As general measures of the overall operation of their
Medicaid managed care programs, these states also track other
indicators, such as the rates at which beneficiaries switch plans,
complaints, and results of customer satisfaction surveys.  However,
none of these was designed or analyzed to specifically measure the
effectiveness of the education and enrollment process. 


   BACKGROUND
------------------------------------------------------------ Letter :2

In fiscal year 1995, Medicaid, a program jointly funded by the
federal government and the states, provided health care coverage for
about 40 million low-income individuals.\2 Over the past 10 years,
Medicaid expenditures have more than tripled to $159 billion.  Under
current projections, they will double again within 8 years. 

As budgetary pressures intensify, many states are increasing
enrollment of Medicaid beneficiaries in managed care--as an
alternative to the fee-for-service health care delivery system--in an
attempt to control program costs.  States also expect managed care to
increase beneficiary access to health care services and to improve
the quality and oversight of these services.  Many states have
attempted to maximize the benefits of managed care by requiring
beneficiaries to enroll.\3 As of June 30, 1995, 36 states have
mandated enrollment for some or all of their Medicaid beneficiaries
in managed care plans. 

To date, most states have largely targeted their mandatory enrollment
managed care programs to low-income families who receive financial
assistance under Aid to Families With Dependent Children (AFDC) and
pregnant women and children who qualify for Medicaid.  However,
states are increasingly including managed care options for low-income
elderly, blind, and disabled individuals receiving assistance under
the Supplemental Security Income (SSI) program and who qualify for
Medicaid.\4


--------------------
\2 Medicaid is administered at the state level; oversight and
coordination are provided at the federal level through the Health
Care Financing Administration (HCFA) in the Department of Health and
Human Services (HHS). 

\3 To mandate enrollment, states must obtain from HHS a waiver of
certain requirements in the Medicaid statute.  Two waiver authorities
have been used widely by states.  Under section 1915(b) of title XIX
of the Social Security Act, states can obtain federal authorization
to waive the "freedom of choice" provision and mandate enrollment
with plan switches generally allowed on a monthly basis.  Under
section 1115, states can obtain federal authorization to require
beneficiaries to remain enrolled in a specific health plan for 6 to
12 months and can expand eligibility to the uninsured, who would not
otherwise qualify for Medicaid due to income limits.  The 1915(b)
waiver is the most prevalent. 

\4 See Medicaid Managed Care:  Serving the Disabled Challenges State
Programs (GAO/HEHS-96-136, July 31, 1996). 


   DIRECT MARKETING INCREASES
   ENROLLMENT IN MANAGED CARE BUT
   HAS RESULTED IN SOME ABUSES
------------------------------------------------------------ Letter :3

In some managed care programs--primarily those that are
voluntary--states rely on participating MCOs to inform beneficiaries
about managed care and to encourage them to enroll.\5 To do this,
MCOs use a variety of methods, including direct marketing.\6 Allowing
MCOs to market to and enroll beneficiaries can benefit both the state
and the MCOs.  With the staff and experience to promote managed care,
MCOs can relieve the state of the administrative burden of reaching
beneficiaries and convincing them to enroll in managed care.  In
addition, if a state chooses to expand its managed care programs to
some uninsured, MCOs can help solicit these newly eligible
individuals, who can be hard to reach.  MCOs also benefit as they can
actively seek a larger share of enrollees. 

However, MCO marketing activities are funded with part of their
monthly capitation payments from the state--funds which might
otherwise be used for medical services.\7 In addition, delegating
marketing and enrollment activities to MCOs in the five states we
reviewed--California, Florida, Maryland, New York, and Tennessee--has
enabled some MCOs and their sales agents to commit a number of
marketing abuses.  These abuses include deliberately misinforming
beneficiaries about benefits or available providers, subjecting
beneficiaries to high-pressure sales tactics, and fraudulently
enrolling beneficiaries.  In some cases, these abuses have become
more prominent when states announce that they intend to go to
mandatory enrollment and plans anticipate that direct marketing will
be restricted or prohibited. 

Many of these abuses have resulted in access problems for
beneficiaries--which are sometimes compounded by MCOs' delays in
processing beneficiaries' requests to disenroll from their plan.  For
example, in August 1994, an MCO sales agent in California assured a
newly enrolled beneficiary that she could continue to take her
children to their current provider.  However, in November 1994, this
provider denied care for the beneficiary's infant because the
provider was not affiliated with her MCO.  Unable to find a provider
for her infant, she took action to disenroll her family from the
managed care plan.  After several weeks of contacting the MCO to
determine the status of her disenrollment, she received disenrollment
forms--which she had already completed and submitted to the MCO.  In
March 1995, the beneficiary learned that she was still enrolled in
the MCO when she attempted to take her infant to her fee-for-service
provider for needed care.  The beneficiary then sought assistance
from the local Legal Aid office to help her switch back to
fee-for-service.  As a result of allegations of marketing and
enrollment abuses, California has banned door-to-door marketing and
enrollment by MCOs. 

MCOs that use commissions to compensate their sales agents create an
incentive for agents to increase enrollment.  However, this incentive
may also increase the likelihood for abuses to occur.  A 1995
Tennessee audit of the marketing activities of a Medicaid MCO found
that the MCO's sales agents had used fraudulent or abusive enrollment
practices to enroll about 4,800 individuals.  One MCO agent
inappropriately enrolled over 200 prisoners, who are ineligible for
Medicaid benefits.  Another sales agent forged over 140 Medicaid
enrollment applications for individuals who were not eligible because
they were employed and had private health insurance.  The state audit
also found that over 4,500 homeless individuals with the same address
had been enrolled in the MCO.  When the state could not verify their
residence or eligibility, they were disenrolled from the plan. 

Some MCO sales agents illegally obtained confidential information on
beneficiaries, which enabled them to target potential enrollees, meet
enrollment quotas, and increase commissions.  For example, in
Maryland, sales agents from four MCOs bribed state Medicaid officials
to obtain the names, addresses, dependent information, and benefit
status of Medicaid beneficiaries eligible for enrollment in managed
care. 

Each of the five states with reported marketing and enrollment abuses
has taken a number of enforcement actions or levied fines against
fraudulent and abusive MCOs.  For example, Tennessee prosecuted and
imprisoned two sales agents for fraudulent enrollments and recouped
over $1.9 million in payments made to the MCO that had
inappropriately enrolled homeless individuals.  Maryland convicted 24
individuals--including sales agents and state workers--on charges
related to bribery, unlawful disclosure of confidential information,
and Medicaid fraud.  According to a Maryland official, the state
recouped over $25,000 in MCO overpayments.  Florida imposed over
$520,000 in fines on MCOs found to have fraudulently enrolled
beneficiaries.  (App.  II contains more detail about recently
reported abuses and corrective actions in California, Florida,
Maryland, New York, and Tennessee.)

In addition to these actions, four states--California, Florida, New
York, and Tennessee--have since banned or restricted door-to-door
marketing by MCOs.  Banning direct marketing, however, has resulted
in significant declines in managed care enrollment in Florida and New
York.  As a result, New York has temporarily suspended its ban on
direct marketing in order to increase enrollment again and is
implementing certain steps to help avert marketing abuses by MCOs. 


--------------------
\5 Federal regulations require states that contract with MCOs to
ensure that marketing plans, procedures, and materials are accurate
and do not mislead, confuse, or defraud beneficiaries or the state. 
HCFA has issued guidelines to assist the states in developing their
marketing oversight standards.  See HCFA, Medicaid Managed Care
Marketing Guidelines for States (Washington, D.C.:  Department of
Health and Human Services, HCFA, Aug.  25, 1994). 

\6 Direct marketing can occur at home, public assistance offices,
health fairs, check-cashing locations, or through targeted mass
mailings.  In addition, MCOs may offer beneficiaries gifts costing
less than $10 as incentives to enroll and memberships to children's
programs, such as the Dr.  Bear Club offered by a Missouri MCO. 

\7 Under capitated managed care programs, MCOs receive payments that
are based on a set monthly amount per enrollee--or capitation fee--to
provide or arrange for a specified set of services. 


   IN MOVING TO MANDATORY
   ENROLLMENT, STATES GENERALLY
   RESTRICT DIRECT MARKETING AND
   ASSUME RESPONSIBILITY FOR
   OUTREACH AND EDUCATION
------------------------------------------------------------ Letter :4

Mandatory managed care programs obviate the need for states to
convince beneficiaries to switch to managed care from
fee-for-service.  Therefore, as states transition from voluntary to
mandatory managed care programs--or move directly to mandatory
managed care--they can reassess the value of delegating marketing and
enrollment activities to MCOs.\8 Each of the four states we visited
as examples of innovative enrollment programs has prohibited or
significantly restricted MCOs from initiating contact with
beneficiaries not enrolled in their plans.  Each state also has
elected to assume--either directly or through its counties or
enrollment broker--the enrollment function and, as part of this
process, to concentrate its resources on educating beneficiaries
about managed care and helping them select a health plan rather than
be assigned to one by default.  Table 1 shows the marketing and
enrollment strategies and other selected characteristics of the
managed care programs in the four states we visited. 



                                Table 1
                
                  Selected Characteristics of Medicaid
                Managed Care Programs in Four States, As
                            of June 30, 1996

Program
characterist
ic            Minnesota     Missouri      Ohio          Washington
------------  ------------  ------------  ------------  --------------
MCO           Prohibited    Restricted    Restricted    Prohibited
marketing

Responsibili  State/local   State and     State and     State
ty for                      enrollment    enrollment
education                   broker        broker
before
enrollment

Responsibili  State/local   Enrollment    State/local   State
ty for                      broker        and
enrollment                                enrollment
processing                                broker

Assignment    12 percent    14-20         32-41         20-30 percent
rate\a                      percent       percent

Area of       16 counties   15 counties   2 counties\b  Statewide
coverage                    and city of
                            St. Louis

Eligible      AFDC,         AFDC and      AFDC and      AFDC,
populations   AFDC-         AFDC-         AFDC-         AFDC-related,
              related, and  related       related       and SSI in
              elderly                                   selected
                                                        counties

Percent of    35            35            38            69
state
Medicaid
population
enrolled in
mandatory
managed care

Frequency     Once during   Monthly\c     Once during   Monthly\c
with which    first year                  first year
beneficiarie  and during                  and during
s can change  annual open                 semiannual
plans         enrollment                  open
              period                      enrollment
                                          period\d
----------------------------------------------------------------------
\a The assignment rate is the percentage of beneficiaries who have
failed to select an MCO and for whom the state has designated a plan. 

\b Effective July 1, 1996, Ohio expanded its mandatory enrollment
program to five additional counties. 

\c Beneficiaries enrolled in federally qualified health maintenance
organizations must remain enrolled for 6 months. 

\d Semiannual open enrollment practice will be effective Jan.  1,
1997. 


--------------------
\8 Tennessee chose to use direct marketing when it implemented
mandatory managed care enrollment statewide to facilitate enrollment,
especially for the newly eligible uninsured. 


      STATES ARE RESTRICTING
      DIRECT MARKETING
---------------------------------------------------------- Letter :4.1

Because of their concern about potential marketing and enrollment
abuses, Minnesota, Missouri, Ohio, and Washington prohibit MCOs from
marketing door-to-door and at public assistance offices to
beneficiaries in their mandatory programs.\9 Beyond this prohibition,
these states have adopted somewhat different approaches as to what
type of direct contact the MCOs are allowed to initiate with
beneficiaries. 

Missouri and Ohio allow limited contact with beneficiaries because
each state believes that some types of marketing have a role in
outreach and education.  For example, Missouri allows MCOs to make
presentations to groups if all participating MCOs are present and to
distribute nominal gifts if they are given to all Medicaid
beneficiaries, not just to those who enroll with the MCO.  Ohio
allows MCOs to display marketing materials at enrollment centers and
to mail promotional materials to beneficiaries via the state. 
Missouri and Ohio also review and approve marketing materials to
ensure that they are accurate and understandable.  Missouri further
requires that MCO materials meet certain content and presentation
standards.  For example, Missouri requires that MCO marketing
materials be written at a sixth-grade reading level. 

Minnesota and Washington prohibit MCOs from initiating contact with
Medicaid beneficiaries before enrollment.  Both states review any
materials that MCOs provide beneficiaries upon request and require
that these materials meet certain criteria, such as reading-level and
translation standards. 


--------------------
\9 Ohio still allows MCOs to conduct door-to-door marketing in 8 of
the 15 counties where enrollment is voluntary.  Like other states,
Ohio has taken over enrollment and most education activities and has
imposed restrictions on marketing when counties move to mandatory
enrollment. 


      STATES EMPHASIZE BENEFICIARY
      EDUCATION AND CHOICE
      COUNSELING
---------------------------------------------------------- Letter :4.2

When implementing mandatory programs or enrolling new beneficiaries,
the four states we visited assume the task of informing beneficiaries
about how to access care in a managed care system and of counseling
them on important choices they must make in selecting a specific plan
and a primary care provider.  Most beneficiaries are accustomed to
fee-for-service care, where they may select services from any
qualified provider.  In contrast, managed care requires enrollees to
select a primary care provider, or gatekeeper, who authorizes all
care, including access to specialists.  These states believe that the
more beneficiaries understand managed care principles, the better the
managed care system works for them.  For example, the four states
believe that when beneficiaries understand the role of the primary
care provider and the availability of services, their use of more
costly emergency room services for nonemergency care will decrease. 

In the states we visited, one approach used to inform beneficiaries
about the requirement to enroll in managed care is to provide this
information when they come to their local public assistance office to
apply for or seek redetermination of eligibility for financial
assistance.  Each state then provides an overview of managed care,
which generally emphasizes the benefits of developing a relationship
with a primary care provider, the importance of primary and
preventive care, and the appropriate use of emergency room services. 
Beneficiaries also are informed of the MCOs they can choose from, how
and where to enroll, and their rights and responsibilities as a
participant in managed care.  After beneficiaries have selected a
plan, states sometimes also try to identify those beneficiaries who
have certain high-risk medical conditions, such as asthma and
diabetes, and encourage them to seek routine care.  For example,
enrollment counselors in Minnesota and Missouri guide beneficiaries
through a self-assessment of their health care needs,\10 which is
passed on to the plan in which they enroll. 

These states also provide to varying extents choice counseling to
assist beneficiaries in selecting an MCO and in completing the
enrollment paperwork.  These states prefer that, when multiple plans
are available, beneficiaries choose their own plan--as opposed to
being assigned to one by the state.\11 Officials in these states
believe that by choosing a plan, beneficiaries are more committed to
managed care and are more likely to use the system appropriately. 
However, choosing a plan is not a simple exercise.  The materials
that describe managed care are generally complex and range in length
from a few pages to over 100 pages.  In reviewing these materials,
beneficiaries must consider a number of factors, including whether
their provider of choice is associated with a plan and whether other
associated providers, such as hospitals, are conveniently located. 
In addition, numerous plans are offered in some areas.  In the
Seattle area, there are 11 plans to choose from; in St.  Louis,
Missouri, there are 7.  To help beneficiaries choose a plan, the four
states offer literature that lists providers in each MCO's network
and, to varying degrees, work with individual beneficiaries to try to
match them with plans that include their regular physicians, if the
beneficiaries have established such relationships. 

Although the states we visited use choice counseling, the intensity
of this counseling varies.  Where one state may offer extensive
assistance to ensure that beneficiaries make informed choices,
another state may be wary of biasing beneficiary decisions and, thus,
simply inform beneficiaries of their options.  Minnesota, for
example, encourages enrollment counselors to work closely with
beneficiaries to identify their individual needs and to help
beneficiaries select the MCO and primary care provider that best meet
these needs.\12 Minnesota believes that the chance of a beneficiary
selecting an MCO increases when the beneficiary receives such
individualized counseling.  In contrast, Ohio officials believe that
beneficiary selection of an MCO should not be influenced by
enrollment broker staff.  Therefore, Ohio's enrollment brokers focus
on providing beneficiaries with information needed to make an
informed selection; dialogue is reserved to answering questions
beneficiaries may have about this information. 


--------------------
\10 The health care assessment is a checklist of questions to
identify common health conditions and special needs of beneficiaries. 
This assessment is done after the beneficiary has selected an MCO and
is not a condition for enrollment. 

\11 Beneficiaries who do not choose an MCO are automatically assigned
to one by the state.  In the states we visited, Ohio allows
beneficiaries 15 days to make a selection before automatically
assigning them to an MCO, Minnesota and Missouri allow 30 days, and
Washington allows 60 days.  Assignment in these states is conducted
in different ways.  Ohio, Minnesota, and Missouri make assignments to
participating plans on a rotating or percentage basis.  Washington
has devised a methodology for assigning beneficiaries that gives
preference to MCOs on the basis of quality measures and to a lesser
extent on costs. 

\12 Minnesota requires information on plan benefits and providers to
be in a standardized format.  This standardization facilitates
comparison of MCO services and providers. 


      BENEFICIARY EDUCATION AND
      ENROLLMENT STRATEGIES DEPEND
      ON STATE CIRCUMSTANCES AND
      GOALS
---------------------------------------------------------- Letter :4.3

In the states we visited, their circumstances and goals--such as
staff resources, expertise required, the importance states attach to
assisting individuals in choosing a plan, whether the program is
being first implemented or is ongoing, and state implementation
schedules--influence their education and enrollment strategies in two
key ways.  The first is in how the states communicate with
beneficiaries, such as through in-person meetings, mail and telephone
contacts, or some combination of both.  The second is in who carries
out these activities--state and local employees or an enrollment
broker. 

The four states' education and enrollment efforts also are augmented
by other players.  Community organizations, such as maternal and
child health advocacy groups, play significant roles in informing
beneficiaries about managed care programs--sometimes at the urging of
the state and sometimes at their own initiative.  Once beneficiaries
are enrolled in a plan, MCOs continue to educate them--as explicitly
required by state contracts--on issues such as prenatal and
well-child care, nutrition, and family planning.  In addition, the
states continue, at some level, to provide beneficiaries support in
navigating the managed care system. 


      STATES' CHOICE OF IN-PERSON
      OR MAIL AND TELEPHONE
      CONTACTS IS OFTEN RESOURCE-
      OR TIME-DEPENDENT
---------------------------------------------------------- Letter :4.4

A major contrast among states that we visited is whether the state
chooses to educate and enroll beneficiaries in managed care through
(1) in-person meetings with beneficiaries when they come to local
public assistance offices to apply or request redetermination of
eligibility for financial assistance or (2) mail and telephone
contacts.  While each approach has its advantages and disadvantages,
these states seem to use in-person interactions when the resources
are available and mail and telephone contacts to facilitate a rapid
enrollment schedule or maintain enrollment in an ongoing program. 

In-person meetings can include small group or individual
presentations--sometimes supplemented by charts and videos--or
individualized counseling, or both.  Meeting in the local public
assistance office provides enrollment counselors an opportunity to
sit with beneficiaries to review MCO and other potentially complex
materials and explain the differences among plans.  These
face-to-face meetings can help beneficiaries sort out these
differences and make difficult decisions about health plans and
providers.  However, this type of interaction requires additional
staff resources for counseling.  In addition, for states
transitioning beneficiaries from the fee-for-service program to
managed care, in-person interaction can take 6 to 12 months if these
states link enrollment of current Medicaid beneficiaries in managed
care to their semiannual or annual process for redetermining
eligibility for financial assistance.  Minnesota uses face-to-face
meetings because state officials believe that this type of contact
helps beneficiaries make informed selections that they can commit to. 
Ohio uses similar methods in its in-person meetings, although with
less individualized guidance in choosing a plan. 

As an alternative to in-person meetings and enrollment, some states
with managed care programs may opt to mail managed care information
packages to beneficiaries and to enroll them by mail or telephone. 
Through mail, more beneficiaries can be reached at less cost to the
state.  However, some MCOs and advocates are concerned that this form
of contact may not provide some beneficiaries the assistance they
need in learning about managed care.  Washington, whose statewide
program has been in place for several years, relies primarily on mail
to inform beneficiaries about the requirement to enroll in managed
care; however, beneficiaries can contact the state by telephone to
obtain additional information or receive counseling in choosing their
plan and provider.  Beneficiaries can enroll by mail or telephone. 

Missouri uses both in-person and mail and telephone contacts.  The
state always has available enrollment staff to meet with
beneficiaries who come in to the local public assistance office. 
When expanding its program into new counties, Missouri uses mail and
telephone contacts to expedite enrollment.  In 1995, for example, the
state enrolled 150,000 people in the St.  Louis metropolitan area in
a 3-month period. 


      STATES ARE MOVING TO
      CONTRACTING OUT EDUCATION
      AND ENROLLMENT
      RESPONSIBILITIES
---------------------------------------------------------- Letter :4.5

Education and enrollment responsibilities can be done by state and
local staff or contracted out to an enrollment broker.  The four
states that we visited considered a number of factors in determining
who takes on this role.  Although only two of these states--Missouri
and Ohio--use enrollment brokers, experts that we spoke with indicate
that states are increasingly contracting out their education and
enrollment functions.  We were informed that more than half of the
states with Medicaid mandatory managed care programs now contract or
are considering contracting with enrollment brokers. 

Using state and local workers can be advantageous to a state because
they are already on the public payroll; as the state transitions from
a fee-for-service to a managed care program, staff can transition as
well.  Public staff already know and understand the Medicaid program
and the population being served.  However, transitions can be
difficult.  When managed care and fee-for-service programs are
running simultaneously--especially if the new program has a rapid
start-up--there can be a high volume of work and staff may require
additional training on managed care.  In addition, if a state cannot
increase its staff or resources for local enrollment efforts, adding
Medicaid managed care responsibilities to existing staff workloads
can overburden staff and may result in beneficiaries not receiving
sufficient education and enrollment counseling. 

Contracting out education and enrollment functions has a number of
advantages.  In general, enrollment brokers can respond more readily
to the demand of high-volume enrollment periods because they are
frequently not constrained by state personnel rules and they can more
easily build--or reduce--workforce capacity.  In addition, enrollment
brokers can provide information systems and expertise that assist
states with verification of eligibility for MCO enrollment,
enrollment processing, and data transmission at a potentially lower
cost to the state than developing such a system in-house.  Other
services that states contract with enrollment brokers to provide
include developing innovative education and outreach techniques;
meeting the special needs of beneficiaries who do not speak English
or who have vision, speech, or hearing impairments; and providing
toll-free telephone lines to respond to beneficiary inquiries. 
Despite these advantages, enrollment broker employees initially may
have less knowledge of the Medicaid program than state and local
workers.  Moreover, state staff may need to acquire new skills and
additional state resources may be needed to monitor broker education
and enrollment activities, ensure compliance with contract
requirements, and carry out other contract management activities. 

Regardless of who performs the education and enrollment function, the
state, local government workers, and enrollment brokers need to
coordinate their efforts.  Experience has shown that when local
government workers are not included or kept informed, they may not
communicate to beneficiaries the importance of the managed care
program or sufficiently encourage them to meet with the enrollment
broker. 

The states we visited did not conduct extensive analyses of the
relative effectiveness or costs of using public employees or an
enrollment broker.  Rather, deciding which of these two approaches to
use was primarily made on the basis of other factors, such as
implementation schedules, the availability of adequate staff
resources, and prior experience.  For example, Missouri contracts
with an enrollment broker primarily because of limits in hiring
additional full-time state employees.  In addition, contracting out
allows Missouri to bring in the expertise needed to facilitate a
rapid enrollment schedule.  Ohio opted to use enrollment brokers when
it expanded its mandatory program, because of its positive experience
with a broker in the Dayton area, which Ohio felt provided a neutral
source of information.  (App.  III describes in more detail the terms
and services in Missouri's and Ohio's contracts and the states'
performance expectations for enrollment brokers.)

When Minnesota began its managed care program in the mid-1980s, it
contracted with an enrollment broker but found that the broker lacked
the necessary understanding of Medicaid.  Consequently, the state now
provides counties funding for the staff that carries out education
and enrollment responsibilities.  However, due to budgetary concerns,
Minnesota is considering alternative approaches for its statewide
program expansion to rural counties and non-Medicaid individuals. 
Because there are few beneficiaries in rural counties and
non-Medicaid individuals are expected to enroll in settings other
than the local public assistance office, state officials believe that
using county staff dedicated to education and enrollment activities
in these areas may not be cost-effective.  Washington also opted to
use state workers to educate and enroll beneficiaries in managed
care.  When the state moved to implement its mandatory program
statewide, many state workers who had been working on claims
processing for the former fee-for-service program became available to
carry out managed care functions. 


      COMMUNITY GROUP AND MCO
      EDUCATION ACTIVITIES
      COMPLEMENT STATE EFFORTS
---------------------------------------------------------- Letter :4.6

In the four states we visited, community-based groups and MCOs also
play important roles in educating Medicaid beneficiaries about
managed care and enrollment choices and in promoting preventive and
primary health care. 

Generally, various community groups and programs--such as churches,
Head Start, maternal and child health programs, programs for homeless
people, and legal aid services--promote beneficiary understanding of
a state's managed care program and provide assistance to
beneficiaries in choosing an MCO.  Because of their frequent direct
contact with the Medicaid population, community groups have some
understanding of the health care needs of beneficiaries and know the
providers and MCOs in the community.  Washington, for example,
informed us that it relies heavily on community-based organizations
to augment its mail and telephone outreach and enrollment efforts. 
Among other initiatives, this state has used a train-the-trainer
approach that prepares these community organizations to provide
face-to-face counseling to beneficiaries and help them enroll.  In
turn, community and advocacy groups that we contacted readily
acknowledge that the state encouraged their involvement in its
managed care program. 

As part of their contractual agreement, the states we visited require
MCOs to initiate contact with new enrollees in their plans and, in
some cases, conduct an initial health assessment screening to
identify individuals with certain high-risk health conditions.\13
MCOs provide enrollees information, through mailings and other
contacts, on the importance of primary and preventive care and
enrollee responsibilities--such as contacting their primary care
provider first when they need care and reserving emergency room use
for emergencies only.\14 MCOs may also be required to provide
toll-free telephone lines to answer members' questions on services
and other matters and to handle members' complaints.  Some of the
MCOs in the states we visited also assist enrollees by providing
services that are not required by the state.  For example, in
general, the MCOs we spoke with had at least one social worker on
staff to handle problems beyond health care. 

In addition to their direct contact with beneficiaries, community
groups in Washington and Ohio are part of county advisory committees,
whose membership also includes providers; government officials; and,
in Ohio, MCOs.  These committees meet regularly to discuss issues
regarding the managed care programs, particularly as they affect
beneficiaries, and are generally viewed as constructive in addressing
program challenges and concerns.  In Ohio, for example, members of a
county advisory committee worked with the local telephone company to
help provide beneficiaries basic telephone services to facilitate
their communications with their primary care provider and MCO. 


--------------------
\13 Health assessments may occur even if the state conducted an
assessment at the time of enrollment. 

\14 Some states have translation requirements for membership
materials.  For example, Washington requires MCOs operating in the
Seattle area to translate materials into 13 languages, including
Hmong and Tigrigna. 


      STATES CONTINUE TO PROVIDE
      BENEFICIARIES SUPPORT AFTER
      ENROLLMENT
---------------------------------------------------------- Letter :4.7

The four states we visited provide additional support to
beneficiaries once they are enrolled in a plan.  Each state has a
complaint and grievance process, as required by federal regulations,
and three have toll-free telephone lines to assist beneficiaries with
questions and complaints on issues, such as access and health care
services provided by their plans.  In addition, Washington and
Minnesota have state officials dedicated to assisting beneficiaries
who encounter difficulties in the managed care system. 

Of the states we visited, Minnesota has the most extensive system for
supporting enrollees.  The state provides funding for counties to
hire advocates, who assist beneficiaries in resolving problems that
may arise with their MCO.  Minnesota also has a state ombudsman for
the Medicaid managed care program to mediate grievances between
beneficiaries and MCOs.  The state and MCOs credit the advocates and
ombudsman with generally being able to resolve problems to the
satisfaction of beneficiaries and all other stakeholders. 


   MEASURES OF THE EFFECTIVENESS
   OF EDUCATION AND ENROLLMENT
   EFFORTS ARE LIMITED
------------------------------------------------------------ Letter :5

Collectively, the states we visited point to a number of data sources
that can indicate beneficiary understanding of and satisfaction with
the Medicaid managed care program.  These include assignment rates,
rates at which beneficiaries voluntarily switch MCOs, complaints, and
results of customer satisfaction surveys.  However, these sources--as
currently designed and analyzed--do not directly measure the
effectiveness of their enrollment and education programs. 

Despite some limitations, assignment rates appear to be the best
available indicator for measuring the effectiveness of a state's
education and enrollment activities.  A low assignment rate may
indicate that beneficiaries have knowingly exercised their choice to
select an MCO and a primary care provider.  It is not, however, a
perfect indicator of a beneficiary's knowledge and understanding of a
state's managed care program.  For example, a state or contractor
could count a beneficiary as having made a choice when the
beneficiary did not understand how the program or the selected MCO
worked. 

Comparing assignment rates across states also is problematic.  The
states we visited define assignment rates somewhat differently.  For
example, when enrolling newborns in their mothers' plans, Washington
considers them assigned enrollees, whereas Ohio considers them
voluntary.  The states' process of assignments also vary somewhat. 
For example, the time allowed to beneficiaries to select a
plan--which can affect the number of beneficiaries who choose a plan
for themselves--ranged from 15 to 60 days. 

The states we visited generally attempt to keep assignment rates at
20 percent or less.  The most recent data available indicate that
Minnesota's assignment rate has been stable at 12 percent, Missouri's
assignment rate is between 14 and 20 percent, and Ohio's assignment
rate is 32 percent in one county and 41 percent in another.  In
Washington, assignment rates reveal an interesting pattern.  After an
extensive education and enrollment effort during the statewide
implementation of managed care, the assignment rate was relatively
low--between 20 and 25 percent.  In recent months, however, the
assignment rate crept above 30 percent, and both state and MCO
officials we contacted believe that to ensure beneficiary knowledge
about managed care, sufficient resources need to be devoted to
education and enrollment on an ongoing basis. 

Rates at which beneficiaries switch MCOs may be an important
indicator of overall program quality and satisfaction, although not
necessarily of the effectiveness of an education and enrollment
program.\15 Rates of rapid disenrollment--the percentage of enrollees
choosing to switch plans within the first 90 days of joining a plan
in those states that allow monthly plan changes--might be a more
direct indicator of the effectiveness of education and enrollment
programs.  Choosing to leave a plan within such a short time period
can indicate that the plan does not meet the enrollee's expectations
or needs.  However, neither Missouri nor Washington--the two states
we visited that allow monthly plan switches--analyze their data for
these purposes. 

Other data sources, if modified, may have the potential to be used as
indicators of the success of state education and enrollment efforts. 
For example, data are available on the number and nature of
beneficiary complaints registered with MCOs and the state.  However,
more focused tracking and analysis of complaints and appeals might
enable states to better identify and correct problems associated with
their education and enrollment programs. 

Customer satisfaction surveys also could be used to measure the
effectiveness of state education and enrollment programs.  However,
these surveys generally have focused on beneficiary views on the
overall quality of care received and have suffered from very low
response rates.  To better measure the effectiveness of their
education and enrollment programs, states might include in their
satisfaction surveys specific questions related to these programs. 
Washington has begun to do this.  The state conducts monthly customer
satisfaction surveys of random groups of beneficiaries and surveys of
beneficiaries who switch MCOs to obtain reasons for plan changes. 
Both surveys include questions pertaining to beneficiary knowledge
about their managed care plans. 


--------------------
\15 Minnesota, Ohio, and Washington collect and analyze data on
reasons for plan switches. 


   CONCLUSIONS
------------------------------------------------------------ Letter :6

Allowing MCOs to directly market to Medicaid beneficiaries--whether
to boost enrollment in voluntary managed care programs or to reach
newly eligible uninsured in certain mandatory programs--has resulted
in some abusive practices that states have found difficult to
prevent.  As states move to mandatory enrollment, they are
increasingly retaining primary responsibility for the enrollment
process or contracting with enrollment brokers.  The four states we
visited that are considered to have effective enrollment programs are
focusing on educating beneficiaries about how to access services in a
plan and counseling them to choose a primary care provider and MCO
that best meets their health care needs. 

For the majority of Medicaid beneficiaries, who are accustomed to a
fee-for-service system in which they can choose their own provider,
learning how to navigate the managed care system and choosing a plan
can be a perplexing process.  This process also can be difficult for
new beneficiaries who are unfamiliar with fee-for-service or managed
care.  Consequently, some states believe that investing resources in
educating beneficiaries--with an emphasis on choosing a primary care
physician and appropriately using health care services--is important
for the beneficiary's smooth transition to this new health care
delivery approach. 

Differences in the relative effectiveness of how a state communicates
with beneficiaries or who handles these communications have not been
fully evaluated.  Although in-person counseling can be more
time-consuming and resource-intensive than mail and telephone
contacts, this type of counseling may best meet the states' aim to
match beneficiaries to an MCO and primary care provider.  Learning
about managed care and choosing an MCO can be a daunting
responsibility, and some states believe that face-to-face interaction
results in better understanding and use of the program.  When faced
with the decision to keep the education and enrollment activities
in-house or to contract them out, states are increasingly electing to
contract with an enrollment broker.  Again, however, there is little
evidence that this approach is more effective or less costly than
performing functions in-house.  Rather, states, such as the ones we
visited, have made their decisions on the basis of factors such as
available staff resources and the ability to meet peak workload
demands associated with program expansions. 

Also lacking are strong performance measures of effective education
and enrollment efforts.  While the rate at which beneficiaries select
an MCO is one available indicator, it alone does not reflect the
degree to which Medicaid beneficiaries understand and appropriately
use the managed care system.  Focused analyses of complaints and
voluntary disenrollment patterns--especially within the first 90 days
of enrollment--and well-designed customer surveys are additional
tools that states might explore to further strengthen their education
and enrollment processes. 


   AGENCY COMMENTS AND OUR
   EVALUATION
------------------------------------------------------------ Letter :7

A draft of this report was reviewed by officials in HCFA's Office of
Managed Care and the Medicaid Bureau.  HCFA officials provided
technical comments that we incorporated as appropriate.  We also
provided the draft report to Medicaid staff from the nine states
discussed in our report.  All the states responded with technical or
clarifying comments, generally agreeing with the accuracy of the
information.  In addition, three states--California, Florida, and New
York--informed us of new initiatives they have recently undertaken or
planned that are similar to the education and enrollment strategies
used by states discussed in this report.  Specifically, these states
have restricted the types of direct-marketing activities MCOS can
use.  They also have acquired or plan to acquire the services of
enrollment brokers to assume the functions of educating and enrolling
beneficiaries in managed care.  Based on their comments, we updated
the report where appropriate to reflect these initiatives. 

In addition to requesting comments from HCFA and state agencies, we
provided the draft report to independent researchers from the
National Academy for State Health Policy, Virginia Commonwealth
University, and Health Policy Crossroads.  These experts generally
agreed with the accuracy and comprehensiveness of our presentation of
the issues and programs.  We also incorporated their technical and
clarifying comments as appropriate. 


---------------------------------------------------------- Letter :7.1

As arranged with your office, unless you announce its contents
earlier, we plan no further distribution of this report until 30 days
after the date of this letter.  At that time, we will send copies to
the Secretary of Health and Human Services.  We also will make copies
available to others on request. 

Please contact me on (202) 512-7114 or Kathryn G.  Allen on (202)
512-7059 if you or your staff have any questions.  Lourdes R.  Cho,
Richard N.  Jensen, and Karen M.  Sloan were major contributors to
this report. 

Sincerely yours,

William J.  Scanlon
Director, Health Financing and
 Systems Issues


SCOPE AND METHODOLOGY
=========================================================== Appendix I

To describe the role of marketing in expanding participation in
managed care and the types of marketing and enrollment abuses that
have occurred in Medicaid managed care to date, we obtained and
reviewed documentation from state Medicaid agencies and state
attorneys general offices.  We selected cases in five
states--California, Florida, Maryland, New York, and Tennessee--that
have received media attention due to Medicaid managed care marketing
problems.  We reviewed these cases with state Medicaid officials and
discussed their planned actions to correct the abuse problems
identified with these cases. 

To identify states' efforts to curb or prevent fraud and abuse in
Medicaid managed care marketing and enrollment, we discussed existing
or emerging state models for educating and enrolling beneficiaries in
MCOs with experts in Medicaid managed care.  We discussed these
issues with officials from HCFA's Office of Managed Care and a
representative from the American Public Welfare Association.  We also
consulted with the following researchers:  Jane Horvath and Neva
Kaye, National Academy for State Health Policy; Robert Hurley,
Virginia Commonwealth University; Sara Rosenbaum, Center for Health
Policy Research of The George Washington University; and Mary
Kenesson, Health Policy Crossroads.  We also reviewed the general
literature on Medicaid managed care marketing and education. 

We judgmentally selected four states for case studies--Minnesota,
Missouri, Ohio, and Washington.  Each state has mandatory capitated
managed care programs in some or all of its counties that represent
diversity of program maturity, strategies for education and
enrollment, and grographic areas.  In these four states, we focused
on programs for low-income families, women, and children, who
constitute the majority of Medicaid beneficiaries in these states. 
Among other selection criteria, these states had been recommended to
us as having assignment rates that were low in relation to other
states--one potential indicator of an effective education and
enrollment process.  In each of the four states, we interviewed state
Medicaid officials and reviewed documentation to determine how the
managed care programs were organized and operated and how education,
marketing, and enrollment functions were conducted.  In addition, we
interviewed local public assistance officials and community-based
groups to obtain their views on how well the educational, marketing,
and enrollment efforts were proceeding.  We also interviewed
representatives of selected managed care plans in each state to
obtain their views on education and marketing issues.  Finally, we
interviewed the enrollment brokers in Missouri and Ohio. 

To identify states' efforts to measure the effectiveness of their
education and enrollment approaches, we discussed the use of various
performance indicators with program officials in the four states.  We
then assessed the extent to which these indicators accurately gauge
the effectiveness of these states' education and enrollment programs. 

We conducted our review from November 1995 to August 1996 in
accordance with generally accepted government auditing standards. 


MARKETING, ENROLLMENT, AND
DISENROLLMENT ABUSES AND STATE
CORRECTIVE ACTIONS
========================================================== Appendix II

In the past 2 years, at least five states have received media
attention due to deceptive or inappropriate marketing, enrollment,
and disenrollment practices by some MCOs.  Each of these states
allowed plans to market directly to Medicaid beneficiaries.  At the
time of the reports of marketing abuses, four of the
states--California, Florida, Maryland, and New York--had managed care
programs with voluntary enrollment in MCOs.  Since then, California
and Florida have switched to mandatory enrollment, and Maryland plans
to switch in January 1997.\16

Beyond moving to mandatory programs, these states and New York have
taken several actions intended to respond to marketing and enrollment
abuses.  In May 1996, California banned door-to-door marketing and
MCO enrollment and significantly restricted the types of marketing
activities MCOs can use.  In July 1996, it contracted with an
independent firm to enroll and disenroll beneficiaries in managed
care statewide.  Florida has banned direct marketing in managed care
programs effective July 1995, and is in the process of acquiring the
services of an enrollment broker.  Effective October 1996, Maryland
will ban direct marketing to prepare for its mandatory program.  New
York banned door-to-door marketing in New York City, where marketing
abuses were found, and has begun the process of contracting with an
enrollment broker to educate and enroll beneficiaries in managed
care. 

In addition to these actions and in direct response to problems
associated with abusive or fraudulent practices, states have modified
their MCO contracts and taken enforcement actions against the MCOs
and sales agents.  For example, Florida cancelled or did not renew
the contracts of three MCOs as a result of its investigation into the
plans' marketing and enrollment activities.  In addition, Florida
imposed over $520,000 in fines on MCOs found to have fraudulently
enrolled beneficiaries.  Maryland prosecuted and convicted MCO
representatives found to have bribed state officials for information
on Medicaid beneficiaries.  Maryland also successfully recouped
$25,000 from the MCOs involved in the cases.  Tennessee successfully
prosecuted three sales agents and recouped over $1.9 million in MCO
overpayments. 

Table II.1 summarizes abuses encountered by the five states and
actions taken by state officials to address these abuses.  We did not
evaluate the effectiveness of these corrective actions because they
were recently implemented and were outside the scope of our work. 



                                    Table II.1
                     
                       Examples of Marketing and Enrollment
                       Abuses in Medicaid Managed Care and
                             State Corrective Actions

Problem                                  Corrective/enforcement action
---------------------------------------  ---------------------------------------
California
--------------------------------------------------------------------------------
Cash and other incentives to             Banned plans' use of door-to-door
beneficiaries as an inducement to        marketing
enroll
                                         Prohibited plans from directly
Misinformation about managed care        enrolling beneficiaries

Misrepresentation of plan benefits and   Decertified some enrollers and made the
choices of providers                     state certification process more
                                         difficult
False claims by marketing agents
                                         Suspended enrollment in some plans
Delays in disenrollments


Florida
--------------------------------------------------------------------------------
Fraudulent enrollments                   Banned marketing activities conducted
                                         door-to-door, at food stamp lines, and
Misrepresentation of plan benefits       at the public assistance offices

Cash to beneficiaries as an inducement   Required marketing agents to be
to enroll                                salaried employees of health plan

Delays in disenrollments                 Capped sales commissions to a specific
                                         percentage of total salary

                                         Amended managed care contracts to allow
                                         the state to recoup capitation payments
                                         for beneficiaries who disenroll within
                                         the first 3 months of enrollment
                                         without using plan services

                                         Terminated contracts with three managed
                                         care plans

                                         Imposed fines on MCOs of over $520,000


Maryland
--------------------------------------------------------------------------------
Misrepresentation of managed care        Prohibited marketing agents from
                                         obtaining medical information during
Fraudulent enrollments                   enrollment process

Bribes to state officials to obtain      Prosecuted and convicted MCO
confidential information about Medicaid  representatives and state employees
beneficiaries eligible for managed care
                                         Recouped $25,000 in payments to plans
                                         for fraudulent enrollments

                                         Established fines of up to $5,000 for
                                         each violation of marketing and
                                         enrollment contract requirements

                                         Established fines of up to $10,000 per
                                         Medicaid beneficiary enrolled as a
                                         result of marketing fraud


New York
--------------------------------------------------------------------------------
Misleading information about health      Prohibited plans in New York City from
plan benefits and choice of providers    directly enrolling beneficiaries

                                         Banned the use of door-to-door
                                         marketing by plans in New York City

                                         Froze enrollment in selected managed
                                         care plans


Tennessee
--------------------------------------------------------------------------------
Fraudulent enrollments                   Prosecuted and convicted MCO agents for
                                         fraudulent enrollments

                                         Recouped over $1.9 million in payments
                                         to plans for fraudulent enrollments

                                         Required MCOs to submit their marketing
                                         materials to the state for review and
                                         restricted direct marketing

                                         Limited commissions and bonuses paid to
                                         MCO agents to not more than 50 percent
                                         of their compensation

                                         Prohibited MCOs from submitting
                                         beneficiary enrollment applications

                                         Amended contract to require managed
                                         care plans to report suspected fraud
                                         and abuse to the state
--------------------------------------------------------------------------------

--------------------
\16 Tennessee has a mandatory enrollment managed care program that
has an option for the working uninsured to voluntarily participate. 
To assist uninsured individuals with enrolling in managed care, the
state has allowed MCOs to conduct direct-marketing activities. 


ENROLLMENT BROKER CONTRACTS IN
MISSOURI AND OHIO
========================================================= Appendix III

Of the four states we visited, Missouri and Ohio elected to use
enrollment brokers to conduct their Medicaid managed care education
and enrollment functions.  Both states contract for similar types of
services; however, there are several notable differences in their
enrollment broker contracts with regard to contract terms, service
requirements, and performance expectations.  Tables III.1 and III.2
delineate these differences, as well as the similarities. 


   CONTRACT TERMS
------------------------------------------------------- Appendix III:1

Missouri's and Ohio's enrollment broker contracts both delineate the
geographic area to be covered, the duration of the contract, and the
method of reimbursement; however, some key terms vary.  Missouri
awarded one contract to a national Medicaid claims processing firm to
serve as a statewide enrollment broker.  In contrast, Ohio awarded
seven county-based contracts and encouraged local companies to bid
for these contracts.  Both states currently reimburse brokers on a
per-enrollment basis.  Ohio initially reimbursed the enrollment
broker on a cost basis, but found that this type of reimbursement
required too much direct oversight.  Neither state reimburses their
enrollment brokers for plan switches. 



                              Table III.1
                
                  Selected Terms of Enrollment Broker
                     Contracts in Missouri and Ohio

Contract terms          Missouri                Ohio
----------------------  ----------------------  ----------------------
Scope                   All regions with        County-based
                        mandatory enrollment
                        programs

Duration                Annual with renewal     Annual with renewal
                        option for two more 1-  option for two more 1-
                        year periods            year periods

Type of reimbursement   Per-enrollment          Per-enrollment

Per-enrollment rates\a  $9.78-$19.17            $7-$25

Annual cost             About $5 million        7 contracts ranging
                                                from $130,000-
                                                $760,000 (with most
                                                about $230,000)

Type of company         For-profit, national    Local for-profit
holding current         claims processing firm  companies
contract(s)
----------------------------------------------------------------------
\a The per-enrollment rates vary according to the geographical region
of the state and the stage of the managed care program
implementation.  For example, enrollment brokers may receive a higher
rate of per-enrollment reimbursement in the regions where Medicaid
managed care is first implemented. 


   CONTRACT SERVICES
------------------------------------------------------- Appendix III:2

In their enrollment broker contracts, Missouri and Ohio specified
education, beneficiary, and administrative and clerical services that
would complement state capabilities.  Although there are many
similarities in the states' requirements for carrying out these
services, there are some notable differences.  For example,
Missouri's enrollment broker carries out all enrollment functions
using automated systems to input enrollment data and to transfer
these data to the state and MCOs.  In Ohio, the enrollment brokers
send completed enrollment forms to the state; the state then inputs
the enrollment data and provides the MCOs with enrollment
information.  Table III.2 displays the similarities and differences
in these two states' contracts. 



                              Table III.2
                
                 Examples of Contract Requirements for
                Enrollment Brokers in Missouri and Ohio

Contract requirement                Missouri          Ohio
----------------------------------  ----------------  ----------------
Develop innovative education and                      
outreach techniques to target
specific needs of the county and
maintain and distribute all state-
and MCO-provided materials to
beneficiaries.

Create, produce, and mail                            
education and enrollment
materials, including letters,
brochures, and other outreach
materials.

Conduct neutral and impartial                        
presentations to beneficiaries
about MCO options.

Provide choice counseling to                         
beneficiaries to help them select
an MCO and a primary care
provider.

Assist beneficiaries in completing                   
enrollment forms.\a

Contact and provide over-the-       
telephone education and counseling
to beneficiaries who do not meet
with staff at public assistance
offices.

Meet the special needs of non-                       
English-speaking beneficiaries and
beneficiaries with vision, speech,
or hearing impairments.

Provide toll-free telephone lines                    
to respond to beneficiary
inquiries, provide MCO enrollment
information, and log beneficiary
complaints.

Use toll-free telephone lines to    
enable beneficiaries to enroll and
switch MCOs.

Provide enrollment counselors                        
access to the state information
systems to enable them to respond
rapidly to beneficiary questions
about eligibility, to review MCO
provider networks, and to conduct
enrollment.

Conduct a health assessment,        
identify third-party health
insurance coverage, and promote
voter registration.

Provide enrollment counselors       
training on managed care, how to
disseminate information in an
effective manner, and general
customer service principles,
including managing hostile
callers.

Provide enrollment counselors 40                     
hours of training on managed care
and cultural sensitivity.

Develop and use automated systems   
to log in enrollment applications
received through the mail, to
verify eligibility status (through
state eligibility files), generate
eligible-specific enrollment
forms, and accept client
enrollments electronically from
local public assistance offices.

Verify enrollment eligibility                         
using the state automated system.

Assign beneficiaries to MCOs based                    
on the state's algorithm.

Resolve or refer to the MCO or                        
state beneficiary complaints about
the enrollment broker,
participating MCOs, and providers.

Make available to the state on a    
regular basis via electronic media
a list of newly enrolled
beneficiaries.

Track and monitor beneficiary                        
inquiries and complaints.

Provide periodic statistical                         
reports on all broker activities,
such as enrollments, assignments,
and the number and types of
inquiries received.

Maintain logs of completed                            
enrollment forms mailed to the
state for processing and of
processed forms picked up by MCOs.

Maintain active communication with                    
the local public assistance
offices and other key stakeholders
in the enrollment process.
----------------------------------------------------------------------
\a Ohio gives beneficiaries 3 working days to change their choice;
contractors must hold on to enrollment forms during this time. 


      PERFORMANCE EXPECTATIONS FOR
      ENROLLMENT BROKERS
----------------------------------------------------- Appendix III:2.1

Missouri and Ohio have set a number of performance expectations for
their enrollment brokers in facilitating beneficiary selection of an
MCO.  Missouri explicitly requires its enrollment broker to maintain
an assignment rate of 20 percent or less.\17 Other state requirements
include performance expectations for education and beneficiary
services. 

In educating beneficiaries, both states require their enrollment
brokers to meet certain special needs.  For example, Missouri
requires that education materials be written at a sixth-grade reading
level and be printed in several languages to ensure that most
beneficiaries will comprehend the materials.  Ohio requires that the
enrollment broker have available interpreters and other staff to
assist non-English-speaking beneficiaries and those with vision,
speech, and hearing impairments. 

Both states expect their enrollment brokers to be responsive to
beneficiaries.  Ohio requires that enrollment packages be mailed
within 2 days of receiving a request.  Missouri requires that
undeliverable packages returned to the broker be forwarded to the
state within 3 days of return.  Both states' toll-free telephone
lines must be operational during typical business hours, Monday
through Friday.  Missouri also requires that lines be answered by the
fifth ring 97 percent of the time and that no caller can be put on
hold for longer than 2 minutes.  Ohio requires that the enrollment
brokers provide a system that allows beneficiaries to obtain basic
program information and to leave requests for call-backs 24 hours a
day, 7 days a week.  Call-backs must be made no later than the end of
the next business day. 


--------------------
\17 Missouri attaches a penalty to its broker reimbursements if an
assignment rate of 20 percent or less is not met.  For each 1 percent
above 20 percent, the state reduces the next month's total payment to
the enrollment broker by 1.5 percent.  To date, the enrollment broker
in Missouri has had an assignment rate below 20 percent, and no
penalty has been imposed. 


*** End of document. ***