A recent ProPublica investigation suggests that New Jersey's School Employees' Health Benefits Program "pays out-of-network providers virtually whatever they want," raising questions about whether providers are targeting teachers to benefit from this "lucrative" arrangement.

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Investigation details

For the investigation, ProPublica filed public records requests for data, internal memos, meeting transcripts, and other documents from the New Jersey Department of the Treasury to understand how out-of-network practitioners interact with teachers enrolled in New Jersey's School Employees' Health Benefits Program. ProPublica also interviewed state officials and the owners of acupuncture, chiropractic, and physical therapy clinics.

Part of the investigation focused on how New Jersey's School Employees' Health Benefits Program, which covers teachers, compares with New Jersey's State Health Benefits Program, a separate state-funded health plan for firefighters, police officers, and local and state government workers. The State Health Benefits program began to cap out-of-network billing in 2015.

ProPublica contacted New Jersey school teachers and employees to determine if they had seen an out-of-network provider and understood the costs of their services, but few responded and those who did declined to speak on the record, ProPublica reports.

Findings

ProPublica reports that the School Employees' Health Benefits Program pays "out-of-network practitioners at the 90th percentile of what other clinicians in their area bill for the same services—so if everyone is charging a lot, everyone gets paid more." In addition, the plan allows providers to unbundle services, which mean providers can bill for several different services in one visit. Put simply, according to ProPublica, "The teachers' plan will cover virtually anything [providers] charge."

State data showed more than 70 acupuncturists and physical therapists received more than $200,000 in 2018 from treating teachers, ProPublica reports. One acupuncturist received more than $1 million, according to ProPublica. Another acupuncturist averaged payments of $677 per visit in 2018. 

State officials also believe some providers might be waiving the 20% to 30% coinsurance amount New Jersey school employees are required to pay for each out-of-network visit to help draw patients to their practices, the investigation found.

Eric Bricker, a general internist who founded a company to help people navigate their health benefits, said, "Across the country, health care providers are targeting similar plans with what insiders call 'rich benefits.' Sharks are gonna eat, that's just what they do."

Meanwhile, some out-of-network providers have been targeting their marketing efforts toward teachers, ProPublica reports. For example, the chiropractor business NJ Spine and Wellness, which declined to answer ProPublica's questions about the company's practices and payments, offered to provide catered lunches, chairside massages, and prizes during "Teacher Wellness Days," ProPublica found.

ProPublica also found acupuncturists, chiropractors, and physical therapists have given cash, supplies, and wheelchairs to local schools and districts.

Thompson Healthcare & Sports Medicine, which has 10 clinics along the Jersey Shore, was reportedly paid $11.2 million for providing chiropractic services, acupuncture, and physical therapy to teachers in 2018, according to ProPublica. That said, owner Robert Thompson noted his business collected less because checks for out-of-network reimbursement often go directly to patients and they might keep them.

One of Thompson Healthcare's sites "looks like an upscale spa, with flat-screen televisions, wide-plank wood floors, soft lighting, and exposed brick and ductwork," ProPublica reports. Thompson said he wants to achieve a "wow factor" with patients.

When it comes to reaching out to teachers, Thompson Healthcare has a YouTube video titled "We Understand Painful Conditions Suffered By Teachers." It also gave out bagels and orange juice to teachers last fall, ProPublica reports. 

Thompson, whose wife is a former teacher, said he markets to teachers but that he doesn't believe his fees are excessive. He said his cutting-edge technology and "wow factor" raise the price but that his services help patients heal factor and keep them from coming back as frequently as they would otherwise.

Thompson also acknowledged he doesn't market to other state employees because of their low reimbursement.

The state reimbursed Thompson's business an average of $465 per acupuncture appointment for school employees, compared with $44 for other state employees. For physical therapy, the school employees' plan reimbursed about $321 on average, while the other employees' plan reimbursed $33, according to ProPublica. For chiropractic services the school employees' plan reimbursed an average of $161, while the other plan reimbursed $25.

Overall, for an out-of-network physical therapy appointment, the school employees' health plan would pay an average of $351 in 2018, while the other state employees' plan would pay just $119, ProPublica reports.

State treasury officials have repeatedly called on the state panel overseeing the health benefits for teachers to cap out-of-network fees. Consultants in August 2019 estimated the state would save about $130 million a year if officials capped the plan's payments for out-of-network providers.

However, the panel, which has discussed the issue since at least 2014, has not taken action. Half of the members on the panel represent teachers' unions, according to ProPublica.

The downstream effects

The price of these high payments is ultimately paid by teachers in the form of higher premiums and homeowners in the form of property taxes, ProPublica reports.

ProPublica found premiums for New Jersey school employees have increased by 8% and 13% in recent years in part because of the out-of-network spending. According to estimates, caps on out-of-network payments could reduce premiums by about 8%.

Meanwhile, New Jersey teachers in recent months have been advocating, and in some cases striking, for better pay and less costly benefits, according to ProPublica. Without what ProPublica dubs "the glut of out-of-network benefits," there would be more funding to meet teachers' demands, experts say.

David Ridolfino, director of the state's Office of Management and Budget, said, "Until we make changes here, this is just going to keep getting worse and worse" (Allen, ProPublica, 12/19).