Editor's note: After receiving a number of complaints from doctors of chiropractic (particularly in California) about American Specialty Health Plans, Dynamic Chiropractic asked the CEO of the company, George DeVries, to respond to those concerns in an exclusive interview.
DC: We have received quite a few inquiries regarding the way ASHP has handled the portion of the money it keeps for each payment that it makes to its panel doctors, commonly called the "withhold." It has been suggested that ASHP kept an estimated $7 million, or about 93% of the total withhold that should have gone back to the DCs, according to the services they provided. This is at a time when ASHP has shown an estimated profit that exceeds that. How would you respond to that?
George DeVries: The agreement between American Specialty Health Plans and its providers has two provisions that govern this specific issue. One is that we disclose from the beginning that the return of any portion, or nonreturn of any portion of the financial withhold really is subject to sole and absolute discretion of ASHP for any reason. Secondly, there's a provision in the agreement that says that the providers participating in our network are accepting the payment amount that they receive at the point of service as payment in full for all services.
This is prior to return of any withhold. So tose are really the contractual provisions that guide it. The use of a withhold, combined with profitability, is a business decision on the part of ASHP.
We know that there've been concerns and we understand them; that's why, effective January 1, 2000, we moved to eliminate provider withholds of any type inside of ASHP in California. We think this is the only true way to address the concerns the providers have. We're also moving ahead to have no financial withholds anywhere in the country. We have one state with one other contract that currently has a financial withhold; other than that, there are none throughout the rest of the country. We will not implement them in the future.
DC: When you look at the old office visit "adjustment and adjunctive therapy" fee schedule of $38 (in the example from the announcement that SPAH provided its chiropractors), versus the new amount ($34), you get a sense that this is really a reduction in the fee schedule. While it may look better than last year, it can only look better if you assume the withhold isn't going to be returned. How would you respond?
G. DeVries: The critical issue here is comparing ASHP to other networks. If you look at the two or three major competitors that ASHP has in the California market, based on that $34 fee schedule you described, we provide the highest reimbursement in California related to health plans. Our competitors pay less. We are making an active effort to maintain reimbursement, but we cannot ignore what our competitors are doing. The challenge we have in the California market is the competing chiropractic organizations who are submitting premium rates that are less than what we charge the health plans. The health plans we work with are paying the providers less than we do. So we have a difficult competitive issue that challenges us in reimbursement. As we look at the reimbursement schedules for January 1, 2000, this was the primary driver for reimbursement.
DC: Some chiropractors we've talked to suggest that one of the reasons for keeping the withhold and changing the fee was to fund ASHP's move into states other than California.
G. DeVries: I really can't comment on the business practices, other than to acknowledge that yes, we have grown into a 49-state organization in the past year.
DC: Looking at a letter to you from the corporate counsel of the California State Department of Corporations, their concern is the status of American Specialty Health Network (ASHN), i.e., what providers are participating chiropractors in ASHN and how doctors become participating chiropractors? Why is the department of corporations so concerned?
G. DeVries: We don't believe the department of corporations has significant concerns about ASHN. We filed information on the operations of ASHN with the department in 1993 as part of our application process to become licensed as a specialized health care service plan in California. The department reviewed that information and ASHP was licensed as a specialized health care service plan in September of 1994. On December 31, 1999 the department approved an administrative service agreement between ASHP, ASHN and ASHW (American Specialty Health & Wellness).
I believe the concerns you're talking about are really just the simple questions the department had about the operation of ASHN. It is common for any health plan, whether they be specialty health plans or full service plans, to receive letters of inquiry from the department. We answered their questions. The department can inquire about operations of any licensed health plan at ant time. We have responded to them and have met with them on various issues. We continue to work with them and dialogue with them. We believe that there are no significant issues at the department regarding ASHN at this time. If they do have questions or an issue, I'm sure they'll ask us.
DC: Have you met or spoken with them since their September letter to you?
G. DeVries: We have met with the department on various issues. I think there's just a general question in California that all health plans are dealing with regarding the operation of provider discount networks. That's not an ASHN or an ASHP issue. That's an industry-wide issue that all health plans are facing. California Senator Polanco (D-Los Angeles), the senate majority leader, is planning to put forth a bill that allows the discount programs to exist, because they may help solve part of the access to services issue. The California attorney general in January issued an opinion stating that health care service plans could offer discount programs for audiology when they didn't cover audiology. So there is support for the context of doing discount programs, but there is some question with the department regarding those programs.
DC: If a chiropractor is a participating member of ASHP, do they need to accept the discounts that ASHN offers, or can they say, "No, I don't want to take any ASHN patients"?
G. DeVries: We offer one network principally to health plans in the context of a one-provider network. Please understand, we work with over 20 health plans in California and have multiple programs with each plan. We're administering probably upwards of 50 different programs for various different health plans in California. It would be extremely confusing, not only for the patient, but for the full-service health plans that we work with, the employers that we serve, for our organization as a whole, and I think especially for the providers, if basically they were included or not included in a particular program. There is an expectation by health plans generally that, when they have a network of providers, they want to be able to utilize that network for all of their various programs: for their benefit programs, their discount programs, or their Medicare programs.
DC: So, if you're an ASHP member, you are required to accept the discount patients that come to you through whatever insurance they may have?
G. DeVries: Yes, in the context of participating in the greater whole of all the programs that you're eligible for with us.
DC: Some chiropractors who've been in your program for a few years feel that the fee schedule is below what they would like to receive; that there was some suggestion on the part of your organization that those fees would increase, and obviously they haven't.
G. DeVries: We have never promised any increase in our fees, however, I would say to the chiropractors who have been with us a long time that we certainly would have expected to see the fee schedule increase. However, what we didn't expect was that some of our competitors would so dramatically lower the fee schedules that are available in California. That had an impact on all chiropractic networks.
DC: Another issue that has been brought up is that ASHP appears to have deliberately sought out some of the leaders in chiropractic to be a part of your organization, as consultants, subcommittee members, etc. or whatever. A lot of DCs feel that's a conflict of interest.
G. DeVries: I don't believe it is a conflict of interest. Chiropractic leaders who participate with our organization receive a broad understanding of the various challenges that we face as a chiropractic managed care company: trying to put together a network of chiropractors; putting together a program that benefits chiropractic; presenting to health plans and employers; and gaining the confidence of health plans and employers to offer chiropractic. It's a challenging process for us to be successful in making inroads for chiropractic at the health plan level. For those chiropractors who are able to participate, either in our committee structures or as consultants or on other levels, it gives them an extraordinary understanding of managed care and the challenges in the third-party reimbursement system.
DC: One chiropractor sent us a copy of a Blue Shield of California flier. It indicates that adjunctive and massage therapy are included, yet it doesn't mention that only one therapy is included per visit. Some doctors feel that this is misleading and that your organization should clear up anything misleading.
G. DeVries: Our provider agreement under American Specialty Health Plan reads that it's an all-inclusive per diem for adjunctive therapy. The reality is we don't cover just one therapy-we cover multiple therapies, and it's reimbursed under one payment. I'm not familiar with the Blue Shield flier you're talking about. I'd like to see it. I'd appreciate it if you could send me a copy of it, because if it's misleading, we definitely would want to work with Blue Shield to modify it.
DC: We've spoken to many doctors about ASHP. Frankly, most of them are not very happy; there's a lot of criticism and few compliments. Why do you think that is?
Kurt Hegetschweiler, DC:Maybe I should answer that one. We have a great deal of providers that are very happy with what we do and the chiropractic access we have provided our patients over all these years. I think managed care has always been an issue and has always been difficult for providers. Having been a provider in this system for 11 years and in this business for over 20 years, I understand perfectly well the concerns over paperwork and accountability. Such concerns are healthy for this profession. I think the unhappiness is more with the presence of managed care than the presence of ASHP. Managed care, however, has helped make chiropractic more mainstream.
G. DeVries: You know, I've spoken before of the challenges of managed care, and there are great challenges. There are challenges for our company to convince health plans and employers to cover chiropractic care. Often, before we ever get into discussions of benefit plans, premiums or network size, we're talking about chiropractic. We've got Dr. Hegetschweiler at the table, or another chiropractor helping us describe the clinical studies that support the efficacy of chiropractic. We have to allay a broad range of misunderstandings that health plans sometimes have with chiropractic. Moving chiropractic into a managed care environment, there are requirements by the health plans and the employers we work with, such as contracted networks, which involves credentialing. That involves paperwork and an application in the front end. It involves a recredentialing application every two years. It involves on-site office audits, because the national accreditation agencies for managed care require that health plans for specialty networks like us meet these accreditation standards or credential requirements.
Once the program begins, there's a level of accountability by the providers related to the provision of services. We manage that through an authorization process. In the past, we've had to require that all services other than the initial exam go through that authorization process.
We are very pleased that as of January 1st, basically all services beyond four visits require authorization. The first four visits do not require authorization or paperwork any further. That's a change we're not only in California, but also making nationally with all of our health plans and employers. We are working very hard to help the providers with the administrative systems in their offices. We know that in general, reimbursement is dropping for providers in chiropractic networks across the country. It's a challenge. We're trying to work on administrative systems to help providers reduce the administrative inefficiencies in their offices. Effective April 1, we'll be implementing a pilot program in which our participating providers have secured access to an intranet or extranet site, so the providers can check eligibility or benefits for a member. As we build upon this system, they'll be able to check the status of a client or the status of an authorization. In the near future, we hope to be able to file an online claim or authorization.
We're trying to reduce some of the administrative requirements for our providers. We recognize fully that there are challenges for our providers. They're running businesses, and the challenge of paperwork and the extra work of managed care produces a burden for their offices. We're trying to take steps; to help reduce some of that burden for providers in the future. Some of the challenges will become more manageable as we grow together.
DC: Is there anything else you'd like to add?
Kurt Hegetschweiler, DC: I might add that I would feel there is a silent majority that very much understands what ASHP does for their offices every day; what it provides to their ability to provide access to employees to chiropractic care. They might not like managed care and the way it's doing business, but they do appreciate that it provides much greater patient access to chiropractic and how chiropractic is part of their benefit book in California.
G. DeVries: Our interests are wed in the sense that we're trying to build a national chiropractic network. I know our providers want to see their practices thrive. I think one of the great challenges for both of us is the "patient pool" out there available to chiropractors. One of our concerns is that we have to do more. I know the chiropractic colleges and your newspaper, which I read, are trying to expand the awareness of chiropractic to the greater population and dramatically increase that patient pool. I think that's one of the greatest challenges.
The pool of doctors has grown significantly and will continue to grow significantly. The patient pool has to grow larger, so that, for example, our doctors are not solely dependent on our company for their patients. There needs to be a large enough pool out there in cash pay, indemnity, workers' compensation and the various areas where we're not their sole source of patients. Sometimes we become concerned that the patient pool generally isn't large enough, and that the doctor's expectations of us become very high when they don't have adequate access to a broader patient pool. That's something I hope that we'll see increase over time. We believe the discount programs help increase the general patient pool. It encourages patients who have never used chiropractic to use it. Our patient satisfaction surveys tell us that about 30-40 percent of the patients who used chiropractic care under our benefits programs are accessing it for the first time. We believe that's a good thing, but we want to grow a little faster than that.
