Consumers in Washington state again have the freedom to choose acupuncturists, massage therapists, chiropractors and other "alternative" providers as options within their HMO panels-at least for the time being.
In a move that preserves the nation's only comprehensive alternative medicine mandate, according to state officials, a Washington state law requiring health plans in the state to offer enrollees access to licensed alternative-care providers has been upheld by a federal appeals court.
Edward Fleisher, deputy commissioner for legal affairs at the state's Office of the Insurance Commissioner, described the ruling as "a significant victory for the state," but added that the legal battle isn't over.
Still to come are possible appeals by the HMOs that filed suit in September 1996 to overturn the 1995 "alternative providers statute" and resolution of a related Superior Court case in Thurston County, Wash.
The Thurston County suit challenges the state's right to legislate in this area on the basis of prior state law, rather than federal law, according to a spokesman for the insurance commissioner's office.
Twelve health plans doing business in Washington-including Blue Cross of Washington and Alaska, PacifiCare of Washington, Group Health Cooperative of Puget Sound, Kaiser Foundation Health Plan of the Northwest and QualMed Washington Health Plan-filed a federal suit, Washington Physicians Service Association vs. Gregoire, to throw out the 1995 law, largely on the grounds that it is pre-empted by the federal Employee Retirement Income Security Act, or ERISA.
From the beginning, opponents have raised the issue of the mandate's cost as a key stumbling block. But the main thrust of their legal argument has been that the law conflicts with federal requirements under ERISA.
The Washington, D.C.-based American Association of Health Plans filed a "friend of the court" brief supporting the Washington health plans' position, arguing that ERISA was "intended" to prevent this sort of interference by local jurisdictions.
Defendants in the suit were Washington state Attorney General Christine Gregoire and state Insurance Commissioner Deborah Senn, in their official capacities.
Senn has been a strong supporter of the law and pushed to have alternative-care requirements imposed on all health plans, not just managed-care organizations.
ERISA prohibits state regulation of employee benefit plans but doesn't bar states from regulating the business of insurance within their borders.
The U.S. Court of Appeals for the 9th Circuit in San Francisco ruled June 18 that Washington's alternative-provider law doesn't violate ERISA, because it properly attempts to regulate the insurance market and directly affects health plans, not employee-benefit programs. The three-judge panel unanimously overturned a decision last year by a lower court that invalidated the 1995 law. In that ruling, the court saw conflicts with ERISA.
"The problem for the plaintiffs, however, is their inability to distinguish between the (employee benefit) plan and the health carrier," Judge A. Wallace Tashima wrote in a strongly worded opinion on behalf of the appellate panel.
"The mere fact that many ERISA plans chose to buy health insurance for their plan members does not cause a regulation of health insurance automatically to `relate to' an employee benefit plan-just as a plan's decision to buy an apple a day for every employee, or to offer employees a gym membership, does not cause all state regulations of apples and gyms to `relate to' employee benefit plans."
As a result of the ruling, HMOs in Washington state ultimately may have to cover treatment by chiropractors, massage therapists, naturopaths, podiatrists, midwives and any other alternative-care providers who are licensed to practice in the state. Some health plans already have done so, to a limited degree, despite the legal hiatus while the alternative-provider law is being reviewed by the courts. But several legal hurdles remain before full implementation of the law is likely.
On July 2 the plaintiff health plans filed for a rehearing of the case before an expanded 11-judge panel of the 9th Circuit Court, says Lee Thorson, an attorney with Birmingham, Thorson and Barnett in Seattle who represents the coalition of health plans.
"We don't think (the ruling) is consistent with prior cases," Thorson says. "We think the court just misunderstood or misinterpreted the laws relating to ERISA plans."
It's not clear at this point whether the appeals court decision will be challenged.
"We would not do it alone; we would do it as part of the coalition," says Jay Gusick, a spokesman for Seattle-based Group Health Cooperative.
Steve Eaton, a spokesman for Regence Blue Shield, another of the plaintiffs in the case, also says no decision has been made on an appeal. Regence Blue Shield was formed through the merger of King County Medical Blue Shield and Pierce County Medical Bureau.
"We will be analyzing this recent decision by the 9th Circuit prior to determining if we will take any additional legal steps," Eaton says.
Even though they're involved in the effort to shoot down the alternative-providers law, some of the health plans already have taken steps to make such providers available to their enrollees.
For example, Group Health Cooperative, now an affiliate of Kaiser Permanente, initially focused on acupuncture, naturopathy and massage therapy, which are available to enrollees with referrals from primary-care doctors.
"Only certain conditions and diagnoses are covered," and each referral authorizes only a specified number of visits to an alternative-care provider, Laura Patton, M.D., who is spearheading Group Health's efforts, said at last month's AAHP Institute in Boston. After that, "the provider must get authorization for further treatments," she said.
Over the first two years, about 1% of Group Health's eligible enrollment has taken advantage of the new options.
At Seattle-based Regence Blue Shield, meanwhile, more than 380,000 enrollees have access to alternative care through more than 700 contracting providers, Eaton said.
But managed-care plans say they want the flexibility to design their own offerings, not respond to state mandates. Group Health, for one, is involved in the lawsuit "not because we don't believe in alternative care, but because we objected to the mandate," says spokesman Gusick.
Even before the mandate, "we were looking for a way to creatively marry consumer demands (for alternative care) to science and evidence-to cover things we knew worked," he says.