California Chiropractic Association Sues ASHP

The California Chiropractic Association (CCA) filed suit June 27 in San Diego Superior Court against American Specialty Health Plans (ASHP), alleging that ASHP practices are "damaging the entire chiropractic profession" and "negatively affected the patients' ability to access care and doctors' ability to provide care."

ASHP, founded 14 years ago, is a provider network of complementary health care practitioners, the largest of its kind in the U.S. According to ASHP, the San Diego-based company's network includes 19,000 chiropractors, acupuncturists, dieticians, and massage therapists, located in all 50 states. In California, ASHP contracts with approximately 2,200 chiropractors, according to CEO and co-founder of ASHP, George DeVries.

"When ASHP started up, it hurt those of us not contracted with them," said Robert Dubin,DC, president of the CCA. "I personally lost significant numbers of patients, but as a profession, we hoped ASHP would be a benefit to patients and doctors." Dr. Dubin asserts that many of ASHP's practices aren't beneficial to DCs or patients. "CCA has filed this lawsuit to ensure that doctors of chiropractic and their patients are treated fairly by ASHP."

According to a recent release from ASHP, the company has experienced a "500 percent growth in the size of its provider network" since the company went national two years ago. During that time, ASHP said it has had a "75 percent growth in membership and a 40 percent growth in revenue." ASHP reports current revenues of $108 million.

CCA estimates that from 1997 to 1999, ASHP withheld over $8 million in doctor compensation. In an interview with George DeVries in the March 6, 2000 issue of DC (www.chiroweb.com/archives/18/06/01.html), Mr. DeVries said that "effective Jan. 1, 2000, we moved to eliminate provider withholds of any type inside of ASHP in California." ASHP removed the withholds, but did not return the $8 million in withholds. ASHP then lowered reimbursement to $30 for an initial exam, and $20 for subsequent exams (see the Sept. 4, 2000 issue of DC, www.chiroweb.com/archives/18/19/03.html).

The CCA says that according to figures from the California Department of Managed Care, ASHP has enrolled 90 percent of Californians who have access to chiropractic in their managed care plans, but less that 20 percent of DCs are under contract with ASHP to provide that care.

"ASHP's control over 90 percent of the covered lives gives them a lot of power over doctors and patients," asserts Rebecca Downing, executive director of the CCA. "In our doctors' experience, ASHP's contracts are not negotiable and treatment authorization denials are routine, which we feel is a direct threat to patient health."

CCA has asked the California attorney general's office if the practices of ASHP constitute a monopoly. "Chiropractors are afraid of insolvency," noted Ms. Downing. "Those who can't get contracts lose because of ASHP's substantial share of the market. All the contracted ASHP doctors have lost money, either through money withheld by ASHP, or by providing patients with free medically necessary treatment ASHP won't authorize."

Interview with ASHP CEO George DeVries

Editor's note: We called ASHP CEO George Derives for his reactions to the lawsuit against his company. This is his statement in full:

George Devries: We are deeply disappointed by the CCA's action to file suit against ASHP. We have not seen the suit, only the press release saying that CCA was filing the suit. While I can't comment on the suit, as we haven't yet seen it, I will say that if the press release accurately reflects the suit, then there is no merit in the suit. We will vigorously defend ourselves against the suit and will prevail.

There were highly inaccurate statements throughout the CCA press release. I'd like to give three examples:

The first is that we restrict the addition of new providers into the network. We believe that CCA is aware that ASHP has lifted its geographic restrictions on providers from applying to participate in our network. As we have expanded nationally over the last two years, there have never been any geographic restrictions for providers to participate in our networks anywhere in the country, except in Hawaii, which partially has to do with our relationship with an IPA there.

DC: The CCA states that less than 20 percent of California licensed DCs are under contract with ASHP. Is that accurate?

Mr. DeVries: "We have about 2,200 providers in California, and we hope it continues to grow. (Editor's note: There are approximately 10,018 DCs in California)."

DC: You mentioned other inaccuracies?

Mr. DeVries: "A second example is utilization procedures. ASHP is licensed as a specialty health plan in California. We're basically a licensed specialty HMO. Most HMOs in California capitate providers and put them at financial risk. We do not put providers at risk. We do not capitate providers directly. We pay them on a discounted fee-for-service basis. In that type of system, we do have utilization review, however, we do not require utilization review on all patients, only if patients require five or more visits. In 2000, 47 percent of all patients utilizing chiropractic under our system did not require any utilization review. So, participating chiropractors did not submit any treatment plans for about half of the patients in our system. Of the remaining half, 66 percent of those authorizations were approved 100 percent. All services requested as part of the treatment plan were approved. Of the authorizations that we received, only one percent were completely denied. About 33 percent were partially approved.

"If the provider does not have all services approved, the provider receives written notification of specifically why those services weren't approved. If the chiropractor has any questions about why a service wasn't approved, there is a toll-free number to speak directly with a chiropractor on staff who reviewed the treatment plan. So it's 100-percent peer reviewed: no administrators; no medical physicians or nurses reviewing the authorization. If a chiropractor disagrees with the authorization, he can appeal to directly to the California Department of Managed Care (CDMC). Last year, out of four million members eligible under our system, we only had one patient send an appeal to the CDMC regarding utilization review. That's an extremely low number compared to other health plans in the state.

"A third issue, reflecting the inaccuracies of the press release, there was a statement that we had 90 percent market share of California. There are three ways that chiropractic benefits are provided in California. There are health plans that directly contract with chiropractors to provide chiropractic benefits. A good example of that is Blue Shield of California, that contracts with thousands of chiropractors through its PPO product, and provides coverage to a couple of million members under that PPO program. We do not have any involvement with Blue Shield's PPO, because Blue Shield contracts directly with chiropractors and administers its own program. We do work with Blue Shield on its HMO side for supplemental benefit program, but for a much smaller membership.

"The second way chiropractic benefits are provided by health plans in California is through medical groups and physician practice management companies. In California, the HMO model is that health plans pay a capitation rate to medical groups, medical IPAs, physician practice management companies for the provision of all medical services. Under that system, the primary care physician makes a referral for chiropractic services, which are typically provided by chiropractors on staff, employed by the medical group, or under contract with the medical group, the medical IPA, or the physician practice management company. We really have no involvement of those types of programs in California. According to the CDMC website, there are over 23 million members covered under health plans in California. We cover four million of the 23 million: a small percentage of those members.

"The third way that chiropractic benefits are provided by health plans in California is through specialty health plans. ASHP was the first licensed specialty health plan for chiropractic in California back in 1994. Since then, three others have been licensed. Being the first in the industry, we've been successful and we've had a wonderful opportunity to grow.

"Among specialty health plans, we have over 80 percent of the membership. That's were the figure is being described in the press release, but it's important to remember that the vast majority of members receiving chiropractic benefits in California are provided under the first two options: either under chiropractic networks directly contracted by the health plan, or provided through medical groups, medical IPAs, or physician practice management companies under medical referral.

"The concept of specialty health plans is a new one, a growing one, but our overall coverage is relatively small. If you consider ASHP networks and the work that we do under our separate affiliate, we probably cover in the neighborhood of seven million people in California. When you consider this compared to the population in the state, that's about 25 to 30 percent. That's a very different number that 90 percent.

"I appreciate sharing with you three examples: geographic restrictions of our network; our utilization review procedure; and our market share in California. I hope this clearly demonstrates our concern of the inaccuracies of the CCA's press release.

"Again, we believe the CCA's lawsuit has no merit. We will vigorously defend ourselves, and believe we will prevail."