Regence Blue Shield, Seattle, last week agreed to pay $30.4 million to settle two class-action lawsuits claiming that the health insurer, Washington state's largest, unfairly denied claims for chiropractic, acupuncture and other nontraditional treatment. The arbitrated settlement is the latest victory for alternative-care proponents in their escalating battle against health plans nationwide.
Under the agreement, Regence must refund all subscribers who were denied reimbursement for payments to acupuncturists, chiropractors, massage therapists, midwives, naturopaths, nutritionists and other nontraditional practitioners from 1996 to March 2000. State and federal courts must approve the settlement.
A Regence spokesman said up to half of the insurer's 1.1 million subscribers could be eligible for refunds. The settlement also dictates that unclaimed funds would be used to reduce premium costs.
A similar case against Premera Blue Cross, the state's second-largest health insurer, is set for trial in June.
A state law, which took effect in 1996, mandated that Washington health plans give subscribers the right to choose the category of licensed healthcare provider-alternative or traditional-that best met their needs.
Regence, however, challenged the law as ambiguous and opted to cover alternative treatment only in its managed-care plans, leaving two-thirds of its subscribers to pay for nontraditional care out of their own pockets. The health plan often excluded entire categories of providers, such as chiropractors, from its HMOs.
Both the state Supreme Court and a federal district court ruled last year that Regence's interpretation of the law was faulty.
Although the "every category" law is unique to Washington, the settlement is another blow to health plans facing similar charges in other states.
Already, the national Blue Cross and Blue Shield Association and several individual insurers-including Trigon Blue Cross and Blue Shield of Virginia and Independence Blue Cross, Philadelphia-face lawsuits claiming that they unfairly discouraged patients from seeking alternative treatment.
And in January, U.S. District Court in Washington, D.C., ruled against HCFA's attempt to dismiss an ongoing lawsuit brought by the American Chiropractic Association over the denial of chiropractic services in Medicare HMOs. The chiropractic association contends that HCFA guidelines have virtually excluded chiropractic services from the Medicare managed-care program.