LYLE H. ABBAS, F. DOW BATES, BRADLEY J. BROWN, SIDNEY E. CARTER, BRAD CHICOINE, RUSSELL J. COX, PAUL D. EBERLINE, JOSEPH N. GEELAN, RICHARD W. HAAS, REX J. JONES, KEITH L. KLEMME, ELIZABETH C. KRESSIN, STEVEN J. KRAUS, MARK A. KRUSE, RODNEY D. LANGEL, RONALD O. MASTERS II, KEVIN MILLER, STEVEN A. MUELLER, MARK A. NILES, VALORIE J. PRAHL, JENNIFER A. RASMUSSEN, ROD R. REBARCAK, RANDALL P. STANGE, LANCE E. VANDERLOO, KENNETH W. VAN WYK, and BEN WINECOFF, Appellants,
IOWA INSURANCE DIVISION, Appellee, WELLMARK, INC. d/b/a WELLMARK BLUE CROSS AND BLUE SHIELD OF IOWA, and WELLMARK HEALTH PLAN OF IOWA, INC., Intervenors.
from the Iowa District Court for Polk County, Karen A.
of chiropractors appeals a judicial review proceeding in
which the district court upheld a decision of the insurance
commissioner finding the insurers did not violate Iowa Code
section 514F.2 (2013). AFFIRMED.
L. Norris of Hawkins & Norris, P.C., Des Moines, and
Steven P. Wandro and Kara M. Simon of Wandro &
Associates, P.C., Des Moines, for appellants.
J. Miller, Attorney General, and Jordan Esbrook, Assistant
Attorney General, for appellee.
G. Koopmans and Hayward L. Draper of Nyemaster Goode, P.C.,
Des Moines, for intervenors.
chiropractors petitioned for judicial review of the Iowa
Insurance Commissioner's decision that health insurers
did not violate Iowa Code section 514F.2 (2013). The district
court upheld the commissioner's decision, and the
chiropractors appealed. We hold that (1) the interpretation
of section 514F.2 has not been clearly vested by a provision
of law in the discretion of the commissioner, (2) section
514F.2 regulates payments to providers, (3) the health
insurer's payments for chiropractic care are not based
solely on licensure, and (4) the Employee Retirement Security
Program (ERISA) preempts the application of Iowa Code section
514F.2 to self-funded health plans. Accordingly, we affirm
the judgment of the district court.
Background Facts and Proceedings.
appellants are Iowa-licensed chiropractors. Chiropractors
obtain a license in Iowa by completing a high-school
education, graduating from an approved college of
chiropractic, and passing an exam issued by the board of
chiropractic. Iowa Code § 151.3. A chiropractic license
does not authorize a chiropractor to practice surgery or
administer or prescribe prescription drugs or controlled
substances. Id. § 151.5.
intervenor in this case is Wellmark, Inc. d/b/a Wellmark Blue
Cross and Blue Shield of Iowa and Wellmark Health Plan of
Iowa, Inc. Wellmark sells health insurance plans to
individuals and employer groups. It also provides
administrative services to assist others who provide health
insurance coverage, such as self-funded governmental entity
plans. Mueller v. Wellmark, Inc., 818 N.W.2d 244,
248 (Iowa 2012). Wellmark offers both preferred provider
organization (PPO) plans and health maintenance organization
PPO, Wellmark creates a network of preferred healthcare
providers, including doctors of chiropractic, medical
doctors, and osteopathic doctors. Mueller, 818
N.W.2d at 248. It incentivizes its members to use its
preferred provider panel. Id. Chiropractors are
preferred providers of Wellmark's PPO network. Wellmark
enters into contracts governing the terms and conditions of
treatment as well as fee schedules with its preferred
providers. Id. Preferred providers must adhere to
these contracts to receive compensation from Wellmark for
services provided to Wellmark's members. Id.
Preferred provider arrangements are expressly encouraged by
the Iowa legislature as a healthcare cost control mechanism.
See Iowa Code § 514F.2. The legislature has
directed the commissioner to regulate these preferred
provider arrangements. Id. § 514F.3.
HMO, Wellmark has an agreement with the Iowa Chiropractic
Physicians Clinic (ICPC), a chiropractic network, to provide
care to its members. Wellmark pays ICPC a certain rate per
member regardless if members seek chiropractic care, which is
an arrangement known as a capitated rate.
to 1986, Iowa law prohibited coverage for chiropractic
services by healthcare service corporations. Health Care
Equalization Comm. of Iowa Chiropractic Soc. v. Iowa Med.
Soc., 501 F.Supp. 970, 990 (S.D. Iowa 1980),
aff'd, 851 F.2d 1020 (8th Cir. 1988). In 1986,
the legislature enacted House File 2219 to provide for the
"payment by corporations subject to chapters 509, 514,
and 514B for services performed by chiropractors." 1986
Iowa Acts ch. 1180. The Code now requires
payment or reimbursement for necessary diagnosis or treatment
provided by a chiropractor licensed under chapter 151, if the
diagnosis or treatment is provided within the scope of the
chiropractor's license and if the policy would pay or
reimburse for the diagnosis or treatment by [medical doctors
and osteopathic doctors] of the human ailment, irrespective
of and disregarding variances in terminology employed by the
various licensed professions in describing the human ailment
or its diagnosis or its treatment.
Iowa Code § 509.3(1)(f) (2013). It is
undisputed chiropractors have agreements with Wellmark to
provide services to its members in the PPO and HMO networks
for payment or reimbursement. It is also undisputed
Wellmark's PPO pays chiropractors less than licensed
medical doctors and osteopathic doctors for several services,
including office visits, manual adjustments, and x-rays.
Further, the fees paid at a capitated rate to the
chiropractors in the HMO network are less than the fees paid
by Wellmark to the chiropractors in Wellmark's PPO
our decision in Mueller v. Wellmark, 818 N.W.2d at
258, where we ruled that Iowa Code section 514F.2 does not
grant a private right of action and dismissed the claim, the
chiropractors brought this action. On November 30, 2012, the
chiropractors submitted a request for contested case
proceeding to the commissioner, alleging Wellmark wrongfully
imposes restrictions and pays lower rates for chiropractic
services than for equivalent services offered by medical and
osteopathic doctors in violation of Iowa Code section 514F.2.
Nothing contained in the chapters of Title XIII, subtitle 1,
of the Code shall be construed to
prohibit or discourage insurers, nonprofit service
corporations, health maintenance organizations, or
self-insurers for health care benefits to employees from
providing payments of benefits or providing care and
treatment under capitated payment systems, prospective
reimbursement rate systems, utilization control systems,
incentive systems for the use of least restrictive and least
costly levels of care, preferred provider contracts limiting
choice of specific provider, or other systems, methods or
organizations designed to contain costs without sacrificing
care or treatment outcome, provided these systems do not
limit or make optional payment or reimbursement for health
care services on a basis solely related to the license under
or the practices authorized by chapter 151 or on a basis that
is dependent upon a method of classification, categorization,
or description based upon differences in terminology used by
different licensees under the chapters of Title IV, subtitle
3, of the Code in describing human ailments or their
diagnosis or treatment.
Iowa Code § 514F.2.
December 14, the parties submitted a stipulation outlining
the issues for the commissioner to decide:
1. Are the fees paid by Wellmark, Inc. to chiropractors
unlawfully discriminatory in violation of Iowa Code §
(a) Does the Wellmark annual fee schedule for the year
beginning July 1, 2012, applicable to individual or other
fully-insured coverages limit payment for health care
services on a basis solely related to the license under or
the practices authorized by Iowa Code chapter 151 in such a
manner as to violate the provisions of Iowa Code §
(b) Does the Wellmark annual fee schedule for the year
beginning July 1, 2012, applicable to self-funded group
health plans that are administered by Wellmark, or to Blue
Card claims administered by Wellmark, limit payment for
health care services on a basis solely related to the license
under or the practices authorized by Iowa Code chapter 151 in
such a manner as to violate the provisions of Iowa Code
2. Is the capitated payment plan used for chiropractic
coverage by Wellmark Health Plan of Iowa, Inc., unlawfully
discriminatory in violation of Iowa Code § 514F.2?
(a) Does the capitated services payment system which Wellmark
Health Plan of Iowa, Inc., has put in place for its Blue
Advantage coverage for payment for services of Iowa
chiropractors limit payment for health care services on a
basis solely related to the license under or the practices
authorized by Iowa Code chapter 151 in a manner that violates
Iowa Code § 514F.2?
(b) Does the provision in the capitated services payment
system used for Wellmark Health Plan of Iowa, Inc.'s Blue
Advantage coverage violate the provisions of Iowa Code §
514F.2 with regard to a referral from the member's
primary care physician being required after 12 chiropractic
visits for a particular condition?
August 28, 2013, the parties substituted updated stipulations
that set forth the only issues to be decided by the agency.
The updated stipulations are as follows:
1. Petitioner will present this Stipulation as their prima
facie case for the hearing in this matter, including
"Wellmark, Inc.'s July 1, 2013, PPO Fees for
Selected CPT and Provider Types, " which is attached and
which the Petitioners will designate as Exhibit 1.
Petitioners claim that the difference in the amount of the
fees paid to chiropractors for the same or similar CPT codes
as compared to what is paid to MDs and DOs, including the
differences in the fees paid for CMT codes as opposed to OMT
codes, constitute a violation by Wellmark, Inc. of Iowa Code
2. The parties further stipulate that the fees shown on
Exhibit 1 are not used by Wellmark Health Plan of Iowa
(WHPI), which instead contracts with the Iowa Chiropractic
Physicians Clinic (ICPC) to provide a chiropractic network
and pays ICPC at a capitated rate, and that ICPC's
reimbursement for the CPT codes listed on the attached
exhibit is less overall than the fees paid to chiropractors
by Wellmark's PPO. Petitioners claim that this
constitutes a violation by WHPI of Iowa Code § 514F.2.
WHPI typically pays other providers, and in particular
MD's and DO's pursuant to the fee schedules and not a
contracted network with a capitated rate.
3. WHPI's Blue Advantage coverage includes a provision
with regard to a referral from the member's primary care
physician being required after twelve chiropractic visits for
a particular condition, as set forth in the attached portion
of the current Blue Advantage Benefit Certificate.
Petitioners claim that this constitutes a violation by WHPI
of Iowa Code § 514F.2
agency transferred the matter to the division of
administrative hearings for a contested case hearing, and an
administrative law judge (ALJ) held the hearing on September
16-18. The ALJ issued a proposed decision on February 21,
Petitioners have not proven Wellmark has violated Iowa Code
section 514F.2[.] ERISA preempts application of Iowa Code
section 514F.2 to the self-funded health plans Wellmark
administers. The plain meaning of Iowa Code section 514F.2
does not require payment parity, but precludes insurers from
restraining or restricting payment or reimbursement solely
based on licensure. Petitioners have failed to prove
Wellmark's differing unit fee costs for services are
solely based on licensure. WHPI's use of a capitated fee
agreement with ICPC does not violate Iowa Code section
514F.2. The Division shall take any steps necessary to
implement this decision.
reviewing the ALJ's proposed decision and the record, the
commissioner issued a declaratory order instead of treating
the matter as a contested case. The commissioner explained
that the enforcement of insurance laws "resides
exclusively in the office of insurance commissioner" and
not with private parties. The commissioner opined that Iowa
Code section 514F.2 does not grant
the insurance commissioner the judicial authority to
vindicate the disputes of private parties, whether the
complaining entities are health insurance policyholders or
health care providers. Iowa Code, Chapter 514F exhibits no
legislative intent to transform the insurance commissioner
into an insurance claim court.
commissioner then went on to address the threshold legal
question of whether Iowa Code section 514F.2 requires
Wellmark to compensate the chiropractors equally with medical
and osteopathic doctors in network, concluding that it did
not. The commissioner determined Wellmark did not violate
section 514F.2, because the statute "does not prohibit
insurers, nonprofit service corporations, health maintenance
organizations, or self-insurers for health care benefits to
employees from engaging in any particular act or
practice." But even if it was a regulatory statute, the
commissioner found "that any limitation of fees or
reimbursement by Wellmark is based upon numerous other
factors that have been well established through information
gathered in these proceedings." Thus, the commissioner
concluded that section 514F.2 "does not preclude
Wellmark from differing reimbursements in its annual fee
schedule . . . applicable to individual or other
fully-insured coverages." The commissioner also declared
ERISA preempts "Iowa Code section 514F.2 from
application to the self-funded plans." Additionally, the
commissioner concluded the capitated payment systems under
Wellmark's HMO do not limit payment for services on a
basis solely related to a chiropractor's license in
violation of section 514F.2. Finally, the commissioner ruled
that the twelve-visit rule under Wellmark's HMO does not
violate section 514F.2.
chiropractors filed a petition for judicial review pursuant
to Iowa Code section 17A.19, and the district court affirmed
the commissioner's decision. The district court ruled
that the proviso clause of section 514F.2 "concerns
coverage availability and does not regulate provider
in-network fee schedules." The district court found the
legislature created section 514F.2 to clarify that House File
2219 "did not prevent insurance companies from utilizing
preferred provider contracts as long as the contracts did not
limit coverage solely on a basis related to license."
"[I]n an abundance of caution, " the district court
declared "that even if section 514F.2 was regulatory or
applied to fee schedules, the Insurance commissioner's
determination that Wellmark did not violate section 514F.2 is
supported by substantial evidence in the record." The
court further affirmed the commissioner's decision that
the twelve-visit rule under Wellmark's HMO did not
violate section 514F.2, and ERISA preempts section 514F.2 as
to Wellmark's self-funded health plans.
chiropractors appealed the district court's decision.
appeal presents four issues for review. They are (1) whether
the commissioner has the authority to adjudicate a contested
case between Wellmark and the chiropractors, (2) whether Iowa
Code section 514F.2 regulates payments to providers, (3)
whether Wellmark's payments for chiropractic care are
based solely on licensure, and (4) whether ERISA preempts the
application of Iowa Code section 514F.2 to self-funded health
plans. The chiropractors did not present an argument on
appeal as to the commissioner's decision on the
twelve-visit rule; thus, we will let the district court's
decision stand as the final decision on that issue.