FOR THOSE WHO PREFER acupuncture, spinal "adjustments," and "body work" to the traditional approaches of Western medicine, Washington has lately become a very hospitable place.

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Stuck . . . with the bill

Insurance companies are having to pay up for alternative medicine.

FOR THOSE WHO PREFER acupuncture, spinal "adjustments," and "body work" to the traditional approaches of Western medicine, Washington has lately become a very hospitable place.

As of this spring, state law requires health insurers to open up all their policies to the services of chiropractors, naturopaths, osteopaths, massage therapists, and others. What's more, a judge's ruling last week in a class-action lawsuit is forcing Regence BlueShield, the state's largest insurer, to cough up back pay—reimbursing its subscribers for several years' worth of alternative care that the company previously refused to cover.

These broad new requirements result from long-delayed enforcement of a state statute passed back in 1995 known as the "every category of provider" law—the first and only law in the nation to mandate insurance coverage for alternative medicine. That law essentially says that health insurers must permit "every category of health care provider" to provide service, so long as the service is for a condition that the provider is licensed to treat— and acupuncturists et al. tend to have a pretty broad license.

Since its passage, the law has been subject to political and legal attacks by the insurance industry, most of them in vain. "Four sessions of the Legislature declined to repeal or amend the law," notes Jim Stevenson, spokesman for state Insurance Commissioner Deborah Senn.

Insurers challenged the legislation in court, but Washington state judges ruled against them, and the US Supreme Court declined to hear their appeal last year. New rules from Commissioner Senn also went into effect this spring, closing several potential loopholes in the 1995 statute.

Now Regence, along with the rest of the industry, must open its checkbook for treatments with which it has little experience and no scientific data. "Does the average person get six massages or 12?" wonders Chris Bruzzo, spokesperson for Regence. "We generally rely on studies published in peer-reviewed journals. But there's not a lot of information available [about alternative medicine] on which to make those kinds of decisions." Bruzzo says it will be "at least six to nine months" before the company has any idea what effect all those massages will begin to have on the cost of insurance.

For fans of alternative care, the change is long overdue. Dale Snow and his family first consulted a naturopath in Tacoma several years ago, after a pediatrician wanted to prescribe Ritalin to Snow's hyperactive son. "We felt there had to be some alternative to putting him on drugs at 3 years old," says Snow. "That drove us to natural medicine."

Since then, Snow, 53, who works as an accountant for a limestone wholesaler in South Seattle, and his family have begun to use the naturopath as their regular doctor. "I went two months ago just for a general work-up," Snow says. "He usually makes recommendations for changing the supplements we're on to address different things." The family is spending somewhere between $3,000 and $4,000 a year. Regence has paid little of that, Snow says.

Last year, Snow became the lead plaintiff in a class-action lawsuit spearheaded by the Seattle law firm of Sirianni & Youtz. The suit claims that Regence has been flouting the "every category" law for years and owes its subscribers reimbursement for the alternative care the company failed to cover since the law went into effect in 1996. Last Friday, the plaintiffs won a startling victory, as US District Judge Marsha J. Pechman found there were no factual issues in the case meriting a trial and ruled in favor of the plaintiffs on summary judgement.

REGENCE MADE ITSELF vulnerable to the suit with a strategic decision back in 1995. Apparently fearful that the new "every category" law would open the way to a lot of expensive claims, Regence decided that the statute applied only to its "managed care" plans—those in which patients have to go through a "gatekeeper" doctor to get specialized treatment. The vast majority of Regence subscribers, who are on more traditional "indemnity" plans, were left out.

At the same time, Regence made what is widely regarded in alternative medicine circles as a remarkably progressive decision: It allowed its managed care patients to choose a naturopath as their "gatekeeper," or primary care provider. That made Regence's managed care plans "one of the most forward-looking insurance products in the nation," says John Weeks, publisher of an industry newsletter on the integration of natural and traditional medicine. (The offer was of no use to Dale Snow, however, since he, like most Regence subscribers, was on a fee-for-service plan.)

In legal briefs, Regence maintained that its reading of the law as only applying to managed care was a legitimate interpretation of a vaguely written statute. But documents obtained by Snow's attorneys suggest that the company was driven more by bottom-line concerns and did not really expect its interpretation to "fly" with regulators.

One internal company report, for example, stated: "At present [Regence] chooses to interpret the statute to cover only 'managed care' products. . . . This approach is being taken in order to reduce the 'business risk' and to buy some time in order to gain experience with alternative health care under smaller scale 'controlled' conditions. Eventually [Regence] will probably be required to incorporate alternative health care into all its products."

As Judge Pechman wrote in her opinion, "[These documents] evince an understanding that the statute likely applied to" all health plans, and "indicate that" Regence made its decision "for business reasons." The judge noted that "Regence was, of course, free to adopt a narrow reading of the statute and to defend that reading in court." But, she said, that does not free the company from liability if its gamble fails.

In the end, Regence's interpretation of the law did not hold up well. The state Supreme Court unanimously rejected it earlier this year. As a result, in April, Judge Pechman declared that Regence could no longer exclude alternative care coverage from its health plans, and she ordered the company to send out a notice of the change to some 800,000 subscribers. Last week, she went even further, backdating the company's responsibility and finding Regence liable for the out-of-pocket expenses that its customers have rung up on alternative medical care that should have been covered since 1996.

Jonathan P. Meier, one of the two plaintiffs' attorneys who oversaw the case, says he doesn't yet know how damages will be assessed: "There's no fixed formula for doing it." The court might send out claims forms to Regence subscribers and then total up the value of legitimate claims. Or there might just be a lump sum judgment and subscribers would each make a bid for their share.

Either way, Meier says, "organizing documentation of the alternative care you've received over the last four years would be a good thing to do."

REGENCE IS NOT the only company that is being targeted for compliance. The state insurance commissioner's office is also demanding that Premera Blue Cross and Group Health Cooperative eliminate certain caps and restrictions that they have applied to alternative care, though both companies insist that their current policies meet the law's requirements.

For the moment, insurance companies still have the right to place "reasonable limits" on the use of alternative care, as they do with other kinds of treatment. Regence, for example, is typically offering just 10 annual visits to an acupuncturist and 12 visits to a chiropractor. The company can also limit subscribers to a network of providers if they want the maximum reimbursement. "We've done our best to structure the benefit in such a way that we hope and believe it won't have a significant impact on rates," says Regence spokesman Chris Bruzzo.

But attorney Jonathan Meier contends that even these kinds of limitations are illegal if they are applied to alternative treatments and caregivers only, rather than to medical service as a whole. "We are actively considering whether a whole host of limitations are permissible or not," Meier says.

The insurance commissioner's rules also make clear that the insurance companies have the right to impose standards of effectiveness and cost-efficiency. But as Chris Bruzzo observes, "There isn't much out there." The one thing he says Regence has learned so far about "alternative care" is that, contrary to what its advocates sometimes claim, it does not appear to save any money.

Based on an anecdotal review of the company's experience with managed care in the last few years, Bruzzo says, the natural stuff seems to be more of an add-on. "What was very typical was patients would exhaust the remedies available to them in traditional medicine" and then turn to the alternatives, he says.

"One of the prevailing arguments out there is that this can replace or prevent some traditional medical costs or hospitalizations or things like that," says Bruzzo. "We did not find that to be true."

 
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