ASHP
Drops Reimbursement to $30 Global Fee
1999 Withholds will NOT be Returned
Used
with permission by Dynamic Chiropractic – www.chiroweb.com
The reaction was one
of anger and frustration when most of the 1998 withhold amount was not
returned to the chiropractic providers of American Specialty Health Plans
(ASHP). Now, six months later, more bad news of further earnings erosion
could dramatically impact approximately one of every six DCs in the U.S.
ASHP is by far the
largest chiropractic health maintenance organization (HMO) in the United
States, and probably the world. With over 24 million members, 10,000 chiropractic
providers and revenues in excess of $80 million, ASHP sets the trend for
chiropractic in managed care.
Recent management
decisions are placing incredible pressure on those 10,000 DCs. The decision
to keep an estimated 93 percent of the 1998 withholds cost chiropractors
an estimated $7 million in revenues, money they expected to get back.
Now, the latest announcement promises even more financial hardship.
On January 1, 2000,
ASHP announced it would no longer collect a withhold from the fees paid
to its chiropractic providers. This announcement came in conjunction with
a reduction in the “office visit and adjunctive therapy” fee from $38
to $34. At that time, DCs were still paid additionally for initial examinations,
re-examinations and other EM services.
The July 5, 2000 announcement
further compounded the injury by reducing the payment to DCs to “an all-inclusive
$30 per diem for each office visit” that includes “the initial examination,
the subsequent examination, one or more manipulations at each visit, one
or more adjunctive therapeutic modalities or procedures at each visit,
brief evaluation, and/or any consultative service.” Only x-rays, chiropractic
appliances and clinical laboratory services are excluded from the $30
global fee. All of these fees are before any co-pay (usually $5 to $10)
is deducted.
Then ASHP announced:
“As allowed by the chiropractic service agreement, we will not be returning
any financial withhold for 1999 dates of service.” While many ASHP providers
probably didn’t expect much after ASHP’s decision to keep most of the
1998 withhold, this hardly came as welcomed news.
When looking at decreasing
reimbursement, the immediate question is: Why?
A response letter
from ASHP President and CEO George DeVries commented:
“While our rates
have remained stable and relatively unchanged for the past 12 years,
our competitors have introduced lower rates that have been accepted
by their providers. These competitors recently also began offering some
of our clients vastly reduced rates for chiropractic services. Some
of our client health plans have, in turn, requested that we reduce our
premium rates in their attempt to reduce costs while maintaining quality
(over half of the HMOs in the country lost money in 1999 and the balance
operated on an average two percent margin). The combination of these
two factors, the financial state of HMOs, and the aggressive pricing
strategy of our competitors recently forced us to commit to reducing
the premium charged to our health plan clients.”
Mr. DeVries also announced
that the ASHP staff had been reduced “from 660 to 500 over the past eight
months.”
While ASHP’s actions
appear reasonable, some providers have suggested that the real reason
for the $30 global fee is to maintain inordinately high profits. ASHP
doctors point to several facts that support this contention:
ASHP Moves to
New Offices – The old ASHP offices were located in modest-but-adequate
facilities near San Diego stadium. Just before the July 5th announcements,
they moved to the “Paladion,” an upscale building in the heart of downtown
San Diego at 777 Front Street.
Only 43% of Premiums
Paid to Providers – According to the latest available revenue statements
for the year ending June 30, 1999, ASHP received $74,024,163 in premiums
while paying only $32,030,140 for “physician services.” DCs have suggested
that since they are the ones caring for the patients, they should get
most of the premiums paid to ASHP, not just 43 percent.
ASHP’s Unusually
Large Profit of $14,680,763 – When looking at the fee reductions,
one has to consider how the company and the providers. The income before
taxes from the same revenue statement shows earnings of $14,680,763.
This is an amazing 19.4% of total revenue and almost 46 percent of the
total paid for “physician services.” This means that for every $30 paid
to an ASHP DC (gross income to them) for a patient visit, ASHP enjoyed
almost $14 of profit. Depending on the amount of co-payment deducted
from that $30 fee, the ratio of ASHP profit to chiropractic payment
would be much higher. ASHP’s financial success is in sharp contrast
to Mr. DeVries comments that “over half of the HMOs in the country lost
money in 1999 and the balance operated on an average two percent margin.”
ASHP’s HealthyRoads.com
Competing with Providers – The July 5 announcement included information
about ASHP’s HealthyRoads.com website. This website has generated much
concern that ASHP is in competition with its providers. While ASHP will
not reimburse for vitamin supplements provided to patients, its website
openly sells vitamins, herbs, homeopathic products, books, videos, foot
care and body care products. All of these are sold directly to ASHP
patients allowing them to “save up to 45 percent.”
If there is any good
news, it is that ASHP does “not anticipate any additional fee reductions
will be needed.” And while they expect that some DCs will be tempted to
resign from ASHP, they contend “the new reimbursement is comparable to
what others are paying.”
ASHP’s announcement
does include one point that bears repeating:
“But each chiropractor
will need to decide whether or not to stay part of ASH based on what is
best for his or her individual practice.”
Editor’s note: Please
see “Positioning and Power Continues to Plague Chiropractic Providers”
on page three (of Dynamic Chiropractic vol 18, # 17, dated August 6, 2000)
for additional thoughts on ASHP
