Medicare Pilot Shakes Out as $50-Million High Stakes Game for Chiropractors

Summary: In 2003, the American Chiropractic Association (ACA) took a bet with Medicare that expanded coverage of chiropractic services would be at least cost neutral for the agency. HHS Secretary Sibelius has submitted her final report to Congress on the 2005-2007 demonstration project. Patients rated the pilot highly across the board, but the cost results are conflicting from the 4 separate sites. On the all-important question of cost neutrality, findings range from cost saving to quite costly. Now Medicare is looking to recoup $50-million through a lowering of reimbursement rates for chiropractors. An ACA team including health services expert Christine Goertz, DC, PhD and Susan McClelland has been formed to explore the huge variances between sites, and especially why the Chicago area showed as a costly outlier. The lessons and process here may be of interest to any integrative practice interests who believe all they need is a demonstration project to guarantee rapid adoption into the healthcare payment and delivery system.


Engages 2005-2007 chiropractic project

Where one sits geographically appears to matter, big
time, when it comes to evaluating the critical cost dimensions of the
recently reported pilot project “Demonstration of (Expanded) Coverage of
Chiropractic Services under Medicare.” At least $50-million and the
future of chiropractic in Medicare are on the line.

In 2003, the American
Chiropractic Association
(ACA) took a bet that
expanded coverage of chiropractic under Medicare would be, at worst,
cost neutral. Via an act of Congress, Medicare engaged a 2005-2007
pilot, to most accounts begrudgingly. A condition was that
if the pilot cost the system, Medicare could
put chiropractors on the hook to cover the losses via downward
adjustment of their
fee schedule.

The potential upside for the ACA and the chiropractic profession of this
bet was huge. If this 2-year pilot showed patient satisfaction, cost
savings or at least cost-neutrality via cost offsets, chiropractors
would be loaded for bear in lobbying for expanded coverage nationwide.
Because private coverage often follows Medicare’s lead, the impact could
be fruitful for chiropractors throughout the payment system.

 In these 3 sites,

the chiropractic pilot was
effectively cost neutral

or actually saved money relative
 to control


A January 14, 2010 report to Congress
from US
Secretary of Health and Human Services Kathleen Sibelius suggests that
chiropractic made a great bet. But this requires one caveat. The
outcomes under would have to be limited to 3
of the pilot’s 4 sites: 17 counties in central Virginia, and the entire
states of New Mexico and Maine. Here, expanded
chiropractic coverage was either cost neutral or actually saved Medicare
money relative to control sites.

Yet if the pilot is evaluated based on outcomes in the 4th site, the
Chicago-area of Northern Illinois, the cost picture gets ugly for chiropractic bet according
to the report
. Medicare’s contractors on the study found
significant costs to Medicare in this zone. And because 2/3 of the total
dollars involved in the pilot were in the Illinois site, the overall
project also ran well into the red.

In short, Medicare is presently in a collections mode. The agency is
seeking $50-million from the profession through lowering the
chiropractic fee schedule nationwide. The ACA appears to have made a bad bet.

  Right now, the pilot looks a bad bet
for the chiropractic profession.
Medicare is in a collections mode,
$50-million from chiropractors
through lowering fees nationwide.

The ACA is questioning the findings and
protesting the fee adjustment. They view the Chicago data as an “outlier” when compared to the rest of the data and believe that this
“raises significant questions.” In a release, the professional
association states that
“further research into the reasons why the
results in Chicago differ
from the rest of the demonstration project sites is needed to better
understand these findings.”

The ACA has appointed a 6-person team to examine the study’s
methodology. Health services
research specialist Christine
Goertz, DC, PhD
, part of the ACA team and an Integrator

adviser, told the Integrator that from initial analysis, she
believes that there may be a number of reasons for the surprising
results in Chicago.

In many integrative practice fields, from integrative medicine doctors
to acupuncturists, naturopathic physicians and directors of integrative
centers, the idea of a major Medicare pilot project has been suggested
by those seeking greater access to their services. Here is a closer look
at the pilot and the current controversy surrounding the findings. 


Typical chiropractic inclusion and the pilot’s expanded coverage

Chiropractic, as “manual manipulation of the spine to correct a
subluxation,” is a covered service for those Medicare beneficiaries
covered under Part B Medicare beneficiaries and has been since 1972.
(Interestingly, some Part C HMOs provide this service only through
medical doctors and osteopaths, rather than through chiropractors.) In
addition, treatment is limited to almost any neuromusculoskeletal (NMS)
complaint related to the spine. No evaluation and management (E&M)
time is compensated by Medicare, though it is typically paid by the
patient. X-rays and other diagnostic imaging and laboratory analysis
ordered by chiropractors are not covered.

The resulting care creates
challenges for both patients and practitioners. Patients must rely on
additional insurance or pay out of pocket for clinical services Medicare
doesn’t cover. Patients are likely to be sent to another facility for
diagnostic services that the chiropractor could offer. Practitioners may
need to bill multiple carriers.
is system-centered care rather than patient-centered.

The expanded chiropractic coverage under the pilot addressed these
inefficiencies in a variety of ways:

  • Participating chiropractors had
    their imaging, diagnostic and other tests covered.
  • Coverage was no longer limited to
    treatment of the spine but also included extremities and other
    modalities besides manipulation. 

The analysis of the pilot explored the impacts on the patient as well as
cost impacts to the system relative to total neuromusculoskeletal (NMS)
costs. NMS-related costs in each pilot area were compared to those in a
matched site with customary chiropractic coverage. One angle of inquiry
into the unusual array of outcomes is to examine the sites selected as a


Chiropractic association take key roles

ACA press release focuses on high patient-satisfaction

The January 26, 2010 press
from the ACA that followed Sibelius’ report was headlined
“Patients in Medicare Demonstration Project Give Chiropractors High
Marks.” The second paragraph reads:

“When asked to rate their satisfaction
on a 10-point scale, 87 percent of
patients in the study gave their doctor of chiropractic a level of 8 or
higher. What’s more, 56 percent of those patients rated their
chiropractor with a perfect 10.”

The cover letter to Congress from
Sibelius noted that “surveyed beneficiaries in the demonstration areas
reported positive reactions to their chiropractic care.” The report,
from a team at the Brandeis University Schneider
Institutes for Health Policy
led by William Stason, MD, MS Sci,
offers additional detail.  For 2/3 of these patients, the symptoms that
brought they in were ‘severe” or “very severe.”
Some 60% said they had “complete” or “a lot” of
Over 90% said their
chiropractors spent adequate time with them, said the chiropractors
listened to them, and have positive experience relative to scheduling.
Interestingly, most had no idea that they were part of a pilot.

Notably, however, and despite the ACA’s positioning and the value to
patients, the Brandeis team’s list of the “main policy questions
addressed by the demonstration” did not include patient satisfaction.
Rather, these were questions relative to cost.

Framing the pilot’s cost questions and outcomes

The demonstration project framed the cost issues around 3 questions.

  • Did expanded coverage increase
    Medicare expenditures for chiropractic, and if so, by how much?
  • Were increases in expenditures from
    chiropractic services offset by reductions in the costs of
    non-chiropractic ambulatory (Part B) services or institutional care
    (Part A)?
  • Was expanded coverage for
    chiropractic services budget neutral for Medicare?

Clearly, cost and not patient
experience were the betting points as understood by the Brandeis team.
Sibelius cover letter summed up the findings this way:

“Overall, the demonstration led to
higher total Medicare reimbursements for services provided for NMS
diagnoses indicating that expenditures for expanded chiropractic
services were not offset by Part A or Part B savings … Analysis of the
chiropractic users subgroup found an increased effect of the
demonstration of $50-million.”

The ACA release turned to cost near the
bottom, placing the accent on the affirmative: “(The report)
indicates that in all but one of the
demonstration sites, patients’
health care costs were not significantly changed by expanding coverage
of chiropractic services.” The ACA would “explore the underlying causes”
for why NMS costs were much higher in the Chicago area.

Notably, however, one of the charges given to the ACA team was to
explore how these outcomes – both high patient satisfaction and cost neutrality or better were found in 75% of the sites – could be used to expand coverage of chiropractic
services under Medicare. Meantime, a separate ACA team would fight the
proposed Medicare action to lower rates on chiropractic to re-coup the


Christine Goertz, DC, PhD: Health services research expert is part of ACA team

What happened in Chicago #1: What were the match sites and
were they fair?

The ACA team has not yet had an
opportunity to examine details of the research methods that were not
in the Brandeis Report.
methodological questions that could influence the outcomes are
impossible yet to gauge. Integrator interviews with a half-dozen
individuals, most of whom preferred not to have their comments for
attribution, indicated an array of questions.

Goertz, a former program officer for health services research at the NIH
National Center for Complementary and Alternative Medicine and vice
chancellor for research and health policy at Palmer College, believes
that “the Chicago findings raise questions because they are not
consistent with the data from the other demonstration sites.” 

A number of individuals interviewed stated simply that we need more
information before being able to conclude that these data are “real
findings” that can be generalizable. ACA team member Susan McClelland notes that scopes of practice,
which can differ significantly from state-to-state for chiropractors,
and practice patterns in comparison states also need to be examined “to
see if areas are a good match.”


Susan McClelland: Medicare expert is part of ACA’s team

What happened in
Chicago #2: The training issue

McClelland is viewed by Goertz as “the most knowledgeable person in the
chiropractic field on Medicare.” She has worked on Medicare issues for
25 years. She sits on 3 ACA standing committees and is typically one of
the individuals sent to Medicare/Centers for Medicare and Medicaid (CMS)
as an emissary by the ACA if ever a problem arises.

The ACA contracted with McClelland to provide education of practitioners
in the various demonstration sites around the complicated Medicare
billing processes relative to the new services. She did so in all but
the Illinois site. There, the state chiropractic association association
had its own consultant they preferred to use.

Jim Winterstein, DC, president of Lombard, Illinois-based National University of
Health Sciences
(NUHS) apparently thought McClelland’s services could be
useful. He brought her in for a program sponsored by NUHS. McClelland
estimates that there were roughly 50 attendants.

In the search for understanding why the northern Illinois appears to be
an outlier, the issue of disparate training came up.  

What happened in Chicago #3: “Gold
rush mentality …”

Ultimately, as one more than one
individual interviewed wondered, one question is whether the expansion of coverage
created “a kind of gold rush mentality” among the Illinois
chiropractors. Maybe, as another said, the Illinois chiropractors “went
hog wild.”

I shared with a couple of those interviewed an experience in Washington
State in 1994-1995 when the Blue Cross plan initiated a time-limited
pilot called “AlternaPath.” That initial coverage of a set of acupuncturists and naturopathic
allowed up to $1000 per
patient. Some practitioners clearly maximized their gain.

One person interviewed suggesting that neither the state nor national
associations adequately controlled and prepared the practitioners for
this pilot “in which the spotlight was on and they had a real chance to
show what they could do.” Instead, by
the 2005-2007 time of the pilot, chiropractors “were already getting
squeezed” due to changes in schedules from from various
payers. They
had “already begun to
see some hits to their incomes.” With the Medicare pilot, “the
flood-gates opened.” The interviewee clarifies that he hopes the
analysis will find a valid justification. He fears the doctors were
“feeding at the trough.”

McClelland notes that she thought that if anything providers would make
less money, if the number of modalities and services provided didn’t change. Instead of getting rich, the chiropractors would
experience cost-shifting, and in many cases the shift would be from a higher cash payment
or 3rd party reimbursement to a lower Medicare schedule.

However, if a provider typically
treated a Medicare patient with chiropractic manipulative treatment
occasionally one modality but then, during the demonstration project,
provided CMT, 3
modalities, and rehab on every visit, their income under the
demonstration project would be
higher. In this scenario, income to chiropractors could increase
, even with the lower Medicare fees. 

The Brandeis report offers
some support for McClelland’s view. The report states that participating
“chiropractors indicate that … the pilot had little or no effects on
practice volumes, patterns of services provided, or net practice
incomes.” This is not a portrait of milking the demonstration.

What happened #4: Medicare doesn’t like chiropractic

The legislation that mandated the pilot did not flow from curiosity
inside of Medicare. Rather, according to the Brandeis team, the ACA
“advocated for expanded coverage … asserted that expanded coverage
would reduce out of pocket costs to beneficiaries, attract additional
patients to chiropractors, and, potentially, could reduce the total
costs of care for Medicare beneficiaries by reducing the costs of pain
medications and other medical and surgical treatments for these

The argument is that Congress forced the Centers for Medicare and
Medicaid services to undertake the study, and that Medicare did it
begrudgingly. Such a negative context is not likely to
produce a research methodology that is mostly likely to frame questions for a
cost-neutral or better outcome.

The report notes that Medicare did not seek to drive patients
into the pilot or inform beneficiaries of the pilot. The pilot was slow to get up and running.

Those looking for evidence for why Medicare may not like chiropractors
don’t have to look far. In May 2009, the Office of the Inspector General
published a report entitled Inappropriate
Medicare Payments for Chiropractic Services
. The OIG found that
what it believes are $178-million in over-billing by chiropractors under
Medicare, typically for “maintenance care” which Medicare does not
cover. That report was also contested by the ACA. In fact, in a June 9,
2009 response
from a three person ACA team
that included Goertz and McClelland,
the issue of methodology was once again among the significant issues
raised. They concliude that “it is probable that the methods used
resulted in an overestimate of inappropriate claims paid.”

One interviewee who preferred anonymity due to ongoing Medicare
relationships, and without reference to whether the judgment was just,
stated simply: “Medicare hates chiropractors.”

Still, this doesn’t explain why the Chicago experience was at such
variance with the rest. Yet negative results are certainly more likely
to arise from hostile environments.


Jim Winterstein, DC: NUHS president offers perspective

A perspective from president of Lombard, Illinois-based NUHS,
Jim Winterstein, DC

Jim Winterstein, DC, as noted above, was instrumental in ensuring that
chiropractors in his home state of Illinois have the opportunity to be
trained in Medicare processes by the ACA’s McClelland. Winterstein, a
sometimes Integrator contributor, is unusual among chiropractic
educators in the long interest and involvement he has had in methods for
integrating chiropractic services into the payment and delivery system.
He has served on the board of Alternative Medicine Integration (AMI)
Group, the firm which has mounted the widely-reported
with chiropractors as primary care providers in a Blue Cross
HMO. Asked for his perspective, Winterstein replied in an e-mail

“As we all know, our experience with AMI
shows marked DECREASE in costs. I
this Medicare demonstration project is a different animal altogether. I
know the percentage of chiropractic physicians and patients as compared
other parts of the country. I don’t know if DCs in other parts of the
were encouraged to control costs. I don’t know which diagnostic and
procedures were allowed by the demonstration project, so the reality is
that at
the present time, without further information I cannot explain the cost
differential. Hopefully the subsequent study being undertaken by the
shed some light on the question.”

Conclusion and Comments

Winterstein is not alone in his curiosity about any additional light
that the ACA’s team might cast from further review of the methods.
Interviews for this article suggest that what light may be shed will not
likely be shed soon.

Goertz provides a useful, sober perspective in a September 2009 article published
in Dynamic Chiropractic
. Referencing a preliminary release of the Medicare
demonstration project data,
the OIG
study and Medicare’s move to reduce fees to chiropractors, she urges
members of her profession to acknowledge that “healthcare reform” is
already happening to them.

As with any
“objective” research, outcomes
are likely to be best when one’s
friends pose

the questions; worse, if
framed by antagonists.

The corollary is that such bias is
likely to be
more pronounced the more money is on
the table. Back care
is a high stakes game.


Yet while the impact of such reform would
seem to be negative, the ACA is operating with a positive spin. An ACA
spokesperson notes, for instance, that HHS Secretary Sibelius, in her
cover letter when presenting the report to Congress, made no
recommendation thumbs up or thumbs down on expanded chiropractic
benefits. Despite the overall finding of a failure to achieve cost
neutrality, Sibelius did not weigh in negatively.

For the chiropractors, this is an improvement from their previous
demonstration project. The Department of Defense argued against expanded
chiropractic in a report a decade ago. Yet, ironically, the uptake of
chiropractic into the VA and other defense establishments is under way
throughout the United States.

We do not know yet whether the bet the ACA made in 2003 will pay off, or
will be haunting them in 2010 and beyond. One may comfortably conclude that, as with any
“objective” research, the outcomes are likely to be best when one’s
friends are posing the questions. Conversely, they’re likely to be worse
framed by an antagonist. I would add the corollary that such bias is
likely to be more pronounced the more money is on the table. Back care
is a high stakes game.

What we do know for sure from the story of this pilot is that the
business of proving assertions of system-wide cost savings, from any
integrative practice, is likely to require a journey of many unforeseen
challenges before data are widely accepted as conclusive, one way or the

Meantime, keep a game face, build relationships, and lobby, lobby,

Note: The ACA maintains a resource page
on the project
with numerous useful links for those seeking more

Send your comments to

for inclusion in a future Your Comments Forum.
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Written by John Weeks

Explore Wellness in 2021