When New York’s first television ads for Medicaid managed care ran a few ago, young mothers–or rather, actresses playing them–earnestly praised the benefits of the system. “No more taking my kids to the emergency room when they have a simple cold,” said one, her voice cracking with outrage. For the poor, suggested the ads, it would be health care with dignity.

The promise of Medicaid managed care was that poor people would finally have more preventive care and better access to specialists instead of being trapped in a debilitating round of Medicaid mills and hospitals. For taxpayers, who ultimately pay the tab, the emphasis on preventive care would mean subsidizing fewer visits to the emergency room.

As it turns out, it’s not that simple. For average Americans, learning to deal with the whims and peculiarities of managed care has been exasperating, at best. For poor people, it can be a nightmare. Managed care simply wasn’t built to deal with people who move frequently or are homeless, don’t speak English, gain and lose their coverage in quick succession, have no savings to pay for bureaucratic slip-ups, or in general lead unpredictable and chaotic lives.

Both homeless and unable to speak English, Iris Ramirez is exactly the kind of person the new Medicaid lets down. Ramirez, 28, is hardly shy about seeking better health care for her family. She has three good reasons to be vigilant: herself; her 11-year-old, asthmatic daughter Lilliana; and an infant, Gabriel Ivan–“like the angel Gabriel,” she explains, as he drools into her collar.

So last spring, when she saw the tables at her daughter’s school advertising various Medicaid health care plans, she paid attention. To Ramirez, the plans seemed to promise access to the kind of health care she couldn’t get from regular Medicaid. Even better, a representative from a plan called HealthPlus, who spoke Spanish, told her it would work just like Medicaid, but with extras. She signed up.

“I asked her if I could get all the regular Medicaid services with her health plan, and she said yes,” Ramirez explains through an interpreter. “If there was something that Medicaid didn’t cover, then HealthPlus would cover it. That both of them would be working in an emergency–that’s what I asked the woman, and she said yes.”

Deftly burping the baby, Ramirez details what happened next. First, she says, she never got her cards from the plan; an erroneously keystroked zip code most likely sent them astray. When she called to find out why, the people on the other end were rude, and “no one knew anything.”

Two months in, Ramirez was already unhappy. But when she called to switch back into the old Medicaid system, HealthPlus first tried to convince her to stay, then told her she wasn’t allowed to drop out of the plan until the end of the year. “They were doing everything possible so that I couldn’t leave,” she says. Finally, they sent her disenrollment forms, which she promptly submitted.

“This,” she says grimly, “happened three times.”

On June 15, she finally got a letter from New York Medicaid Choice, the company in charge of enrollment, stating that she had been dropped from HealthPlus. “After July 1st, 1999 you will get health care using your Medicaid card at any doctor’s office or clinic that takes Medicaid,” the letter promised.

It didn’t work. Two months later, she got a letter from HealthPlus telling her that they were her insurers until September 1. “Medicaid was telling me to call HealthPlus, HealthPlus was telling me to call Medicaid,” she says. “The two were at war.”

Meanwhile, she was growing increasingly frantic: Now pregnant and suffering from gestational diabetes, she needed prenatal care. But even though she had supposedly switched back to old-style, non-HMO Medicaid, Medicaid refused to reimburse her doctor for treatment. Her unpaid bills were piling up, and the doctor’s secretary told her he wouldn’t see her anymore. Ramirez had a Caesarian section scheduled just a month away, without either a doctor or the cash to pay for one.

Terrified she would miss the surgery date, she turned to a bilingual advocate. With his help, she got back on traditional Medicaid in October–almost six months after the ordeal began.

Looking as pained as her television counterpart, Ramirez sums up her experience with the new Medicaid. “What it is,” she says, disgusted, “is complete disorganization.”

More than a decade into the insurance revolution, millions of Americans have been through the HMO wringer. But Iris Ramirez’ predicament is more than just another managed care nightmare. She was a ghost in a brand-new machine: the sleek, competitive model of Medicaid that was going to strip down a money-guzzling bureaucracy, save billions and give people better health care at the same time.

Medicaid patients in New York State have been allowed–but not required–to enroll in HMOs since the early 1980s. Then, in July of 1997, New York became the 13th state to require all its Medicaid recipients to switch to managed care. With 2.4 million Medicaid recipients, this transition to mandatory managed care is the nation’s biggest.

The most obvious difference between “fee-for-service” Medicaid and the new managed care regime is the way providers are paid. Before, doctors who served Medicaid patients billed the program for each patient visit. Now, physicians sign on to several plans and negotiate a flat fee per patient per month, no matter how often or infrequently the patient comes. The plans, in turn, get a set fee every month from the state for every patient they enroll. For plans, this “capitation” system gives them fixed costs and a guaranteed market.

For patients, the biggest advantage is that their doctors can now easily refer them to specialists, something that was much harder before. Theoretically, there is another plus: patients can now choose the plan best suited to them. The idea was that poor people, just like everyone else, would be able to shop around.

On the contrary, what many patients are finding is that they have a hard time choosing anything at all that makes sense. As mandatory Medicaid managed care takes hold in New York City–Southwest Brooklyn, southern Manhattan, and all of Staten Island started last October, and the rest of the city will follow during the next three years, subject to approval by federal monitors–the evidence is starting to accumulate. Before managed care can effectively serve poor New Yorkers, the state Department of Health and the plans it works with will have to shoulder a basic responsibility that they now don’t. They’ll have to make sure people on Medicaid get care at all.


Under the old system, sick patients had only one obligation: to find a doctor who accepted Medicaid. Now, the responsibilities have become much more complex. Like anyone enrolled in an HMO, Medicaid patients are finding that they have to become diligent, inquisitive experts on the rules of managed care to get what they want–whether it’s a new pair of glasses or 30-day drug treatment instead of a five-day detox.

“We know that some people who’ve joined a health plan try to go where they used to go and get turned away,” says Christine Molnar, director of the Medicaid managed care education project of the Community Service Society. “Other people don’t understand that the place where they’re looking for care doesn’t speak their language.” In the parts of the city in which managed care is now mandatory, 19 percent have a plan chosen for them and may have no idea where they can see a doctor.

Instead of dealing with one bureacracy, people on Medicaid now have three to contend with if something goes wrong. First, there are the plans themselves. Just two, HIP and Wellcare, are large corporate HMOs; 16 others are “prepaid health services plans,” networks of doctors who serve people on Medicaid. Those plans vary greatly in size and scope, ranging from 5,000 to 250,000 patients. Most only operate in certain parts of the city; only five are citywide, and six serve just one or two boroughs. Patients who move from one part of the city to another cannot necessarily expect their plans to move with them.

Just like regular HMOs, every Medicaid managed care plan is different, and it’s not always easy to figure out what will and won’t be covered. Some cover nicotine patches, for example, and others don’t. Fidelis, an alliance of Catholic hospitals, won’t cover birth control or abortions.

If patients want to switch, they now have to negotiate with the enrollment broker, the go-between that traffics information between patients, plans and government. In New York City, that broker is Maximus, the nation’s largest private provider of social service case management. Critics charge that Maximus is mishandling the job, leaving patients misinformed and confused. Most recently, the company’s hotline came under fire from Public Advocate Mark Green for incorrectly answering callers’ questions about their rights.

The last line of defense is the state Department of Health, which is supposed to grant exemptions so that some people–including the homeless, people who don’t speak English and, for now, mentally ill people and people with HIV–can see any doctor they want. So far, however, patients seeking exemptions frequently find their applications rejected. In fact, every single person who has applied for an exemption because of language problems has been turned down.

Already, people like Ramirez are getting stuck between these cogs. Many of them, report health policy analysts, are fighting to get back into fee-for-service Medicaid while it still exists; the number of people who enroll in managed care before they are forced to remains well below expectations. What’s especially frustrating for health care advocates is knowing that those patients they do see are ones like Ramirez, passionate enough about their health to take matters into their own hands.

For every patient aggressively pursuing health care, there’s another who, lacking the language skills or the gumption, has simply given up; advocates speak of seeing patients who either didn’t know they were in a plan or had no idea how to use it. “Our daily bread,” says policy analyst David Wunsch of Care for the Homeless, which provides health care and other services to people in the city’s homeless shelters, “is people who are coming in and are enrolled in managed care and have never seen their doctor.”


That managed care tidal wave has already hit mentally ill, homeless, and HIV-infected patients–people who were supposed to be on dry land. Health professionals who work with the homeless say they are seeing more people showing up at shelters with severe or chronically undertreated illnesses like asthma–and already enrolled in a managed care plan. Often, the doctors don’t belong to the same plan, leaving them with two options: either don’t treat the patients, or try enroll them in old-style Medicaid instead. Instead, most shelter-based providers simply treat homeless people at their own expense, knowing that they can’t be reimbursed.

“We find out that most people don’t even know they’re in a managed care plan,” says Susan Moscou, a family nurse-practitioner at Montefiore Care for the Homeless in the Bronx. “How do they find out? They find out when I write them a prescription and they find out the plan doesn’t cover it.” Most commonly, says Moscou, the prescription is for an asthma nebulizer, which many of the plans don’t cover. Until she can get them disenrolled, or convince the plan to cover a nebulizer, she gives them a loaner from the center, and hopes she’ll get it back: “I have two of our nebulizers out now to people who are on plans,” she says wryly, “and one has a big sign saying “Don’t Lend Out.'”

Plus, a lot of patients who don’t even belong in managed care wind up mistakenly enrolling in an HMO. Andrea Ryan, a social worker with the Urban Justice Center, has a caseload of these Medicaid clients. She was leading a workshop on Medicaid managed care at a supportive housing facility in Brooklyn when she met Ethel (not her real name), a sweet-looking middle-aged woman. Methadone made Ethel talk very slowly.

Ethel approached Ryan after the workshop and asked for some help. Unhappy with her health plan because she couldn’t get glasses, Ethel wanted to get out of it. As it turned out, she shouldn’t have been in managed care in the first place–as a mentally ill substance abuser and someone living on Supplemental Security Income, she qualified twice over as someone who could stay for now in the old fee-for-service system. (Eventually, the state will have two separate managed care systems, called “special needs plans,” for people with HIV/AIDS or mental illness.)

“I told her, ‘This is easy–you qualify for an exemption. We’ll just call,'” recalls Ryan. But when Ryan got on the phone to Medicaid Choice, the operator refused to speak to her or to Ethel. “She kept saying “I can’t do this, I can’t do this,’ recalls Ryan.

When Ryan insisted it was all right for Ethel to have an advocate with her on the phone, the operator hung up. In the end, Ethel had to apply three times, in three different ways, to get out of her plan–a plan that she never should have been signed up for in the first place.

The fact that Ethel was recruited points to one of the big flaws in the market-driven managed care system. According to Ethel, a representative from New York Hospital Community Health Plan first approached her in the waiting room of a day treatment center for substance abuse–a good placeto find recruits, but also a good place to find people with HIV and mental illness who are not supposed to be in managed care to begin with.

“Granted, the plans can say they didn’t know they were exempt,” says Ryan. “But if [patients] are an outpatient clinic, you should know!” It’s not an uncommon story, advocates report.

(City Limits tried repeatedly to reach the plan via the patient hotline, which was not answered. The plan has no listed number.)

Aggressive marketing from plans has been a problem in every state that has Medicaid managed care; some states have even passed laws against all marketing. After patients were routinely misled, New York prohibited HMOs from directly recruiting patients, only to lift the ban one year later after enrollment declined precipitously. New York now requires Maximus to conduct a phone interview with patients who voluntarily enter managed care, verifying that they are willingly signing up for a plan. For people who live in neighborhoods where managed care is mandatory, Maximus is supposed to check a database provided by the city’s welfare agency to make sure that people who qualify for exemptions get them automatically–a provision intended to keep plans’ marketers in check.

Ryan contends that recruitment agents still abuse the process all the time, and she has the clients to prove it, including AIDS patients who were approached by plan marketers and urged to sign up “just to get information” (she had to walk them through the disenrollment process). “Unless somebody has died, nobody seems to care,” Ryan fumes. “How is this better than the emergency room?”


Patients aren’t the only ones struggling through this transition–the community-based health centers that have treated poor people all along are also suffering.

In his audit the public advocate found that Maximus had particular difficulties educating immigrants about managed care. To help bridge language and cultural barriers, Green recommended that the company forge ties with community-based health organizations that have long track records working with immigrant groups and low-income people.

Yet managed care is already taking a toll on some of the most essential of these resources: the city’s 32 community health centers, which rely on Medcaid dollars. So far, the cost of treating Medicaid patients has remained about the same, but the amount of money coming in has dwindled. “You’re squeezing the dollar longer, now,” says Ulysses Kilgore III, director of the Bedford-Stuyvesant Health Clinic. “You’re squeezing it till it squeals, now.”

Under the old Medicaid, fee-for-service payments provided clinics like Kilgore’s with a funding stream that, coupled with federal grants, allowed them to treat uninsured patients. It also allowed them to run preventive programs like nutritional counseling, translation services and health education. Now, says Kilgore, “The capitated dollars that are coming through now aren’t even paying for the uninsured. So how can they pay for these other services?”

Over the past three years, with more and more patients in Bed-Stuy choosing to enroll in managed care, his clinic lost half a million dollars from its budget; this year, he expects to lose even more. Kilgore says he’s had to concentrate on raising funds just to stay open.

“What has happened is that, while we’re trying to concentrate on care, we have to spend more time scraping for dollars,” says Kilgore. “To be in this money-searching mode all the time, when we have this moral commitment to serving everybody who comes through the door–it’s a dispiriting experience for me. It’s immoral.”

The state Department of Health is supposed to help out here as well, by tracking which doctors speak foreign languages and making that information available to patients. That database has come under fire from State Comptroller Carl McCall, who found last year that the managed care plans were submitting unreliable and misleading information about doctors’ language abilities. McCall recommended that the state put in place some sort of verification procedure. Almost a year later, there is none.

Still, the state health department continues to use that list when patients ask to get out of managed care because they cannot find a doctor who speaks their language. A patient can get out of managed care if there are fewer than three doctors in the area who speak his or her language. So far, not one of the 204 people who have petitioned for exemptions under this rule has been approved.

Those routine denials add up to a pattern of discrimination, according to a complaint filed earlier this year with the federal Office of Civil Rights by Legal Aid lawyer Elisabeth Benjamin. One of her clients, a Russian named Aleksandr G., had chronic asthma and depression, but according to the complaint, his regular physician wasn’t enrolled in any managed care plan.

So Aleksandr began his search. First, the state sent him a list of Russian-speaking providers, culled from its comprehensive roster. But the list of 42 supposedly Russian-speaking doctors came with no phone numbers. Out of those 42, says Benjamin, only 15 were listed in the phone book. An English-speaking friend of Aleksandr’s called all of them and found that just five actually spoke Russian.

Of the five, only three knew how to treat Aleksandr’s conditions, and only one was less than half an hour from his home. Even so when he applied for an exemption to managed care, the state turned him down. The system that forced Aleksandr to stop seeing his own doctor–who had successfully treated his asthma and depression–had delivered a universe of alternatives that narrowed down to a choice of exactly one.


Ultimately, the biggest obstacles to making managed care work in new York lie not with patients, providers or even with plans, but with forces beyond their control. Those include the growing number of people falling off the rolls for good.

One reason plans recruit so aggressively is that they are constantly losing patients. Welfare reform, and New York City’s efforts to discourage eligible people to apply for Medicaid, have resulted in a 13 percent drop in the rolls in the last five years. Even families who remain on the rolls will frequently lose their coverage temporarily because of stringent eligibility rules and bureaucratic snafus.

New York State’s Medicaid managed care plans lose almost four percent of their patients each month and about 40 percent a year. “Think about it: almost half the people who are in the plan at the beginning of the year are not in your plan at the end of the year,” says Deborah Bachrach, a policy analyst for the Coalition of Prepaid Health Services Plans. “All of the work that goes into care management, it never takes hold. If you’re only in the plan for four months, none of that has a chance to work. Diabetes management can’t be done in four-month cycles.”

As the rest of the city gradually moves into mandatory managed care, the entire system will be dealing with a population that is less likely to be employed, less likely to speak English, and much more likely to be chronically ill, according to research from the United Hospital Fund. For instance, 11 percent of people in fee-for-service have heart disease, compared with just 1.7 percent in managed care. Nearly 30 percent of fee-for-service patients have some kind of serious illness, compared with 16 percent in managed care plans.

As they are forced into managed care, those people will have three options when they run into roadblocks. They can pursue their cases through a multilevel maze of jurisdictions. They can try to postpone getting care. And then, there’s always the emergency room.