While chiropractic appears to be increasingly well-positioned courtesy of the Patient Protection and Affordable Care Act, with recent suggestion that many states are including chiropractic as an essential benefit, the health care reform law may have some unintended drawbacks for the profession.
Is ASH eliminating its chiropractic coverage plan in California, and if so, what factors led to that decision? ASH has withdrawn from its employer-direct line of business only. While that includes benefits for acupuncture, chiropractic, naturopathy and massage therapy, the direct employer group market represents only a small part of the overall business of ASH. Our withdrawal will only affect employer groups with whom we contract directly. This change will not affect our relationships with any of the 130 health plans we contract with across the country, nor do we expect it to significantly impact any of our provider networks or the services they provide.
ASH currently provides various programs for 31.7 million members nationwide, including over 4 million members in California; our exit from the employer-direct market will only affect approximately 63,000 subscribers (and their related family members) in California with whom ASH contracts directly. It will not affect the other 31 million-plus members nationally or the more than 4 million other members in California for whom we administer programs through various health plans. We will also continue to administer programs for self-funded employer groups on an Administrative Services Only ("ASO") basis.
Our withdrawal from this market was due to the Patient Protection and Affordable Care Act (PPACA). PPACA essentially only allows two types of health insurance companies to continue to issue policies directly to groups: 1) full-service medical insurance plans; and 2) exempt insurers offering Excepted Benefits, limited to dental, vision, long-term disability and several other types of plans. Despite our efforts to convince the regulatory agencies to include chiropractic, acupuncture and similar specialty health coverage among the other types of health insurance companies that would be allowed to function as an Excepted Benefits insurer, our request was declined. Since we have no intention of becoming a full-service medical insurance plan, our choice, therefore, was to withdraw from the direct-to-group insurance market. We have been honored to serve this market in California since 1995.
Is there is a timeline for discontinuation and any other variables in play? The withdrawal plan for ASH Insurance Company and ASH Plans has received approval respectively from the California Department of Insurance and the Department of Managed Health Care (in California). Under the approved withdrawal plans, we will proceed with sending notices to subscribers within the next two weeks [late December 2012]. Pursuant to the communications approved by California regulators, we are providing groups and subscribers with at least 180 days notice of the non-renewal or cancellation of their benefit plans due to the withdrawal. At this point, we will not renew existing policies in-force in California for direct employer group business with future renewal dates occurring between June 20, 2013 and June 30, 2013. All other in-force policies will be cancelled effective July 1, 2013.
Is there any contingency plan for either the DCs currently enrolled in the plan or insureds who currently utilize the chiropractic benefit? The concept for ASH was founded in 1987 to expand access to chiropractic benefits in California. Health plans regulated by the California Department of Managed Health Care are not required to offer chiropractic or acupuncture benefits as part of their basic medical plan. ASH currently works with California health plans who desire to offer chiropractic and/or acupuncture as a supplemental group rider, similar to how an employer group purchases a vision or dental benefit. American Specialty Health Plans of California ("ASH Plans") and American Specialty Health Insurance Company ("ASH Insurance Company") also began many years ago to sell supplemental chiropractic and/or acupuncture benefit plans directly to employer groups who wished to add chiropractic and/or acupuncture benefits to their basic medical plans; it is only this direct-to-employer group business that is ending for ASH.
At this time, we cannot guarantee that employer groups will be able to replace the chiropractic and/or acupuncture benefits plans provided through ASH Plans or ASH Insurance Company in California. However, we are encouraging health plans to offer a supplemental group benefit for chiropractic and/or acupuncture for purchase by the employer group. In addition, some employer groups who are self-funded are transitioning their chiropractic and/or acupuncture benefit plan under ASH Plans or ASH Insurance Company to a self-funded program, where an ASH affiliate will provide the provider network and administrative services on an ASO basis.
Again, this change will not affect our relationships with any of the 130 health plans with whom we contract, nor will it affect any of our regulatory licenses or approvals related to the services and programs we provide to the health plans we contract with across the country. In California, ASH affiliates will continue to administer the supplemental group chiropractic benefit plans provided by various health plans in the state.
Also, we don't anticipate that the change will significantly affect any of our provider networks or the services they provide. ASH will continue to contract with and grow our national network of practitioners, including chiropractic doctors, and to administer other specialty health services to health plans. We will continue to administer these services consistent with the PPACA's requirements for accountability of health care services, including medical necessity review and other health quality improvement activities.
Does this affect chiropractic coverage just in California, or are other states involved? ASH is not cutting chiropractic at all for the 130 health plans it works with that offer chiropractic benefits, in California or any other state. ASH Insurance Company has initiated the withdrawal in California and is evaluating next steps in a few other states where we have a smaller presence in the employer-direct business offered by ASH Insurance Company.
Anything else you'd like to add? The Affordable Care Act will provide health coverage for over 30 million new members. The [Act] demands that health plans improve the quality, delivery and outcomes of health care services. It also demands that the health plans bend the cost curve and mitigate the increasing cost of health care. ASH affiliates and our participating providers are an important part of the solution in the health care system.
Our concern is that not all states appear to be covering chiropractic and/or acupuncture as an essential benefit. And it appears that not all options on the Exchanges in all states will include chiropractic and/or acupuncture. ASH will be working to promote access to chiropractic and/or acupuncture. We believe that inclusion of chiropractic and acupuncture are an important part of the solution for our health care system. And we look forward to working with our providers in this important mission.
I believe we are in a strong position to support and encourage the inclusion of chiropractic in benefit plans. ASH demonstrated its support and promotion of evidence-based chiropractic when it funded a comprehensive study that published a series of papers, during 2004 and 2005, in the Archives of Internal Medicine, Journal of Manipulative and Physiological Therapeutics, and Journal of Occupational and Environmental Medicine. We demonstrated significant cost savings and cost substitution effects, replacing high-cost medical care with more efficient chiropractic care, when evidence-based chiropractic benefits were available to a population.