Dan Butler's mother-in-law is 85, but she often says she is 63.
Her failing memory has erased the recollection of an FHP sales representative who came to her home 15 months ago and signed her as a member of the company's senior health plan. Her family first learned that she was signed up for FHP when she needed treatment for a broken finger.
For the Record
Los Angeles Times Thursday August 29, 1991 Orange County Edition Business Part D Page 2 Column 6 Financial Desk 2 inches; 36 words Type of Material: Correction
Health Care--A list of Medicare substitute health plans in Southern California that appeared in the Wednesday Business section omitted Scan Health Plan of Long Beach, which began marketing its program in March, 1985, and had 2,988 members as of July 1, 1991.
The Butlers took her to an FHP member hospital, but the company did not consider the broken finger to be an emergency. Now the Butlers are stuck with a $500 ambulance and emergency room bill that the health maintenance organization said it will not cover.
What's worse, Butler said he believes that the FHP salesperson forged his mother-in-law's signature, because her name is spelled wrong. But he said he can't prove it.
"She is 85 years old. She is not competent; that's why my wife has power of attorney," Butler said. "It's amazing how easy (seniors) are to dupe."
Fountain Valley-based FHP is undergoing a federal review because of complaints such as Butler's. Routine reviews are conducted every two years, and this review is in the normal sequence for FHP. But this time, the government put FHP on notice that it had received too many complaints and has temporarily blocked the company from marketing in new territories.
Regulators are expected to approve changes to FHP's marketing program this week and said they would release a summary of findings to the public shortly afterward.
The FHP senior plan is one of a growing number of substitute Medicare programs offered by HMOs around the country. The arrangement is seemingly beneficial for everyone: The government saves an average of 5% in medical costs per Medicare patient, the HMO receives an average $350 a month from Medicare for each senior who signs up and members save an average of $100 a month because an HMO generally provides discounts on prescriptions and has lower-cost deductibles on visits to physicians and hospital stays.
FHP's Senior Plan is the second-largest of these Medicare substitution plans in the country--it recently reported a membership of 208,000, a number that grew by almost 23% in the past year. The company says it has so many members because its patients are happy with their care and with the money they save.
However, the plan's benefits are not at issue. The complaints center on how the plan is sold.
Seniors, doctors and a few of the company's salespeople themselves say FHP does not fully explain its program to seniors. For example, seniors often do not know that signing up may mean they can no longer visit the doctors they have seen for years. Some seniors have been told that they are just signing an acknowledgement that the salesperson visited, when the paperwork is actually an application. Also, seniors and their families say FHP is slow to remove people from the list of members once they request it.
The government review has left critics feeling vindicated, but others say it will not affect FHP's fortunes at all.
"The memberships are not growing because FHP is capturing senior citizens at gunpoint," said stock analyst Kenneth Abramowitz of Sanford C. Bernstein, an investment research and management firm in New York. "Membership is growing because (FHP) is essentially offering a product that's a gift. There are low co-payments, low deductibles and no premium. It saves the typical senior citizen $100 a month."
Still, there is dissent. Some FHP sales agents, who asked not be identified, have voiced their complaints to the Los Angeles Times and said they also spoke with federal regulators from the Health Care Financing Administration (HCFA), the agency that administers Medicare.
Among their concerns are that the company's sales quotas are too high. Agents must sell nine memberships a week or risk reprimand. And the commission structure is such that to move up into a higher pay bracket, agents must sell 12 to 15 memberships each week, depending on their sales area.
Two salespeople from separate FHP offices confirmed that agents have been known to resort to tactics that are not approved by the company to meet the quotas. Such as:
* To get seniors to sign, some salespeople do not explain clearly that the prescription reimbursement feature of the plan may apply only if the patient is willing to accept a generic substitute.
* The law prohibits FHP salespeople from making sales door-to-door and requires them to call first and make an appointment. Some salespeople get around this by setting up an appointment with one person in a neighborhood and then approaching other seniors they see out around their homes. Salespeople call these "drive-by" sales.
* A senior has three days to change his or her mind about joining FHP before the membership application becomes official. Some salespeople ignore requests to cancel enrollments during this three-day period, because a sale only counts toward an agent's quota after three days.