11-0901-21263-1
STATE OF
OFFICE
OF ADMINISTRATIVE HEARINGS
FOR
THE BOARD OF CHIROPRACTIC EXAMINERS
|
In the Matter of the Proposed Rules Relating to Chiropractic Prepay Plans, |
REPORT OF THE ADMINISTRATIVE LAW JUDGE |
Administrative Law Judge Barbara L.
Neilson conducted a hearing in this rulemaking proceeding commencing at
The hearing and this Report are part of a rulemaking process
governed by the Minnesota Administrative Procedure Act.[1] The legislature has designed the rulemaking
process to ensure that state agencies have met all the requirements that
Careen H. Martin, Assistant Attorney General, represented the Board of
Chiropractic Examiners (the Board) at the hearing. The members of the Board’s hearing panel were Larry A. Spicer, D.C., Executive
Director of the Board; Howard
The Board and the Administrative
Law Judge received written comments on the proposed rules prior to the
hearing. After the hearing, the
Administrative Law Judge kept the administrative record open for an additional
twenty calendar days, until
NOTICE
The Board must make this Report
available for review by anyone who wishes to review it for at least five
working days before the Board takes any further action to adopt final rules or
to modify or withdraw the proposed rules.
If the Board makes changes in the rules other than those recommended in
this report, it must submit the rules, along with the complete hearing record,
to the Chief Administrative Law Judge for a review of those changes before it
may adopt the rules in final form.
Because the Administrative Law
Judge has determined that the proposed rules are defective in certain respects,
state law requires that this Report be submitted to the Chief Administrative
Law Judge for his approval. If the Chief Administrative Law Judge
approves the adverse findings contained in this Report, he will advise the Board
of actions that will correct the defects, and the Board may not adopt the rules
until the Chief Administrative Law Judge determines that the defects have been
corrected. However, if the Chief Administrative Law Judge identifies
defects that relate to the issues of need or reasonableness, the Board may
either adopt the actions suggested by the Chief Administrative Law Judge to
cure the defects or, in the alternative, submit the proposed rules to the
Legislative Coordinating Commission for the Commission’s advice and
comment. The Board may not adopt the rules until it has received and
considered the advice of the Commission. However, the Board is not
required to wait for the Commission’s advice for more than 60 days after the
Commission has received the Board’s submission.
If the Board elects to adopt the
actions suggested by the Chief Administrative Law Judge and make no other
changes and the Chief Administrative Law Judge determines that the defects have
been corrected, it may proceed to adopt the rules. If the Board makes
changes in the rules other than those suggested by the Administrative Law Judge
and the Chief Administrative Law Judge, it must submit copies of the rules
showing its changes, the rules as initially proposed, and the proposed order
adopting the rules to the Chief Administrative Law Judge for a review of those
changes before it may adopt the rules in final form.
After adopting the final version
of the rules, the Board must submit them to the Revisor of Statutes for a
review of their form. If the Revisor of
Statutes approves the form of the rules, the Revisor will submit certified copies
to the Administrative Law Judge, who will then review them and file them with
the Secretary of State. When they are
filed with the Secretary of State, the Administrative Law Judge will notify the
Board, and the Board will notify those persons who requested to be informed of
their filing.
Based upon all the testimony,
exhibits, and written comments, the Administrative Law Judge makes the
following:
FINDINGS OF FACT
Nature
of the Proposed Rules
1.
The Minnesota
Board of Chiropractic Examiners is the regulatory agency charged with
protecting public health and safety through effective licensure and enforcement
of the statutes and rules governing the practice of chiropractic care.
2.
The Board
is proposing rules regulating the creation and implementation of prepayment
chiropractic plans. Prepayment plans are
agreements between a chiropractor and patient for future chiropractic treatment
services for which payment is collected in advance. These plans are frequently used in the
delivery of chiropractic services because they simplify the billing process for
both the chiropractor and the patient when multiple treatments are recommended,
and they typically are offered to patients at a discounted rate of care.
3.
The Board
states that the proposed rules will provide needed transparency and safeguards
to patients regarding prepay plans and curb the potential for financial abuse
on the part of chiropractors.
Essentially, the proposed rule is a consumer protection measure. It would require chiropractors to deposit
patients’ prepay plan funds in an escrow account, provide patients with written
plans, limit the number of treatment visits per plan to 50 or less, prohibit
additional billing to a third-party payor, and provide the right to early
cancellation and refund of unused payments.
4.
The
Board asserts that the proposed rule parts are necessary to address
disagreements over the amount of money to be refunded to a patient who elects
to end a prepayment plan early. The
Board maintains that it has received an increasing number of complaints from
patients who believe they were not refunded the correct amount of money when
they terminated their prepay plans early.
5.
The
Board is proposing to regulate only those prepay plans for which payment in an
amount of $1,000 or more is collected in advance of chiropractic treatment
services. The Board contends that prepay
plans for less than that amount are typically for short-term treatment regimens
and are rarely the subject of complaints.
6.
The
Board states in its Statement of Need and Reasonableness that it was also
motivated to propose the rule to address problems patients have encountered
when using health care credit cards.
These credit cards permit consumers to charge the entire cost of
treatment in one transaction and then typically pay it off over the course of a
year without interest. However, these
cards may charge a high interest rate if the consumer fails to pay on time. According to the Board, the proposed rules
are intended to provide a consistent standard for the use of prepay plans,
alone or in conjunction with health care credit cards.[4]
Rulemaking
Legal Standards
7.
Under
8.
The
question of whether a rule has been shown to be reasonable focuses on whether
it has been shown to have a rational basis, or whether it is arbitrary, based
upon the rulemaking record.
9.
Reasonable
minds might be divided about the wisdom of a certain course of action. An agency is legally entitled to make choices
between possible approaches so long as its choice is rational. It is not the role of the Administrative Law
Judge to determine which policy alternative presents the “best” approach, since
this would invade the policy-making discretion of the agency. The question is, rather, whether the choice
made by the agency is one that a rational person could have made.[11]
10.
In
addition to need and reasonableness, the Administrative Law Judge must also
assess whether the Board complied with the rule adoption procedure, whether the
proposed rules grant undue discretion, whether the Board has statutory
authority to adopt the rules, whether the rules are unconstitutional or
illegal, whether the rules involve an undue delegation of authority to another
entity, or whether the proposed language is not a rule.[12]
11.
Because
the Board suggested changes to the proposed rules after original publication of
the rule language in the State Register, it is also necessary for the
Administrative Law Judge to determine if the new language is substantially
different from that which was originally proposed. The standards to determine whether changes to
proposed rules create a substantially different rule are found in Minn. Stat. § 14.05,
subd. 2. The statute specifies that a
modification does not make a proposed rule substantially different if the
differences are within the scope of the matter announced in the notice of
hearing and are in character with the issues raised in that notice; the
differences are a logical outgrowth of the contents of the notice of hearing,
and the comments submitted in response to the notice; and the notice of hearing
provided fair warning that the outcome of that rulemaking proceeding could be
the rule in question.[13]
12.
In
reaching a determination regarding whether modifications result in a rule that
is substantially different, the Administrative Law Judge is to consider whether
persons who will be affected by the rule should have understood that the
rulemaking proceeding could affect their interests; whether the subject matter
of the rule or issues determined by the rule are different from the subject
matter or issues contained in the notice of hearing; and whether the effects of
the rule differ from the effects of the proposed rule contained in the notice
of hearing.[14]
Procedural
Requirements of Chapter 14
13.
The
Minnesota Administrative Procedures Act[15] and
the rules of the Office of Administrative Hearings[16] set
forth certain procedural requirements that are to be followed during agency
rulemaking.
14.
On
15.
By letter dated
16.
In a letter dated
17.
As
required by Minn. Stat. § 14.131, the Board asked the Commissioner of the
Minnesota Management and Budget (MMB) to evaluate the fiscal impact and
benefits of the proposed rules on local units of government.[20]
18. In a memo dated August 3, 2010, Jim King, MMB’s Executive Budget Officer, reviewed the Board’s proposed rule amendments and concluded that they will have no fiscal impact on local units of government.[21]
19.
By letter dated
20. Administrative Law Judge Barbara L. Neilson was assigned to the rule hearing.
21.
In a letter dated
22. On December 14, 2010, the Board electronically mailed a copy of the SONAR to the Legislative Reference Library as required by law.[24]
23.
On
24.
On
25.
On
26.
On
27.
The
hearing on the proposed rules was held on
A.
the
Request for Comments as published in the State Register on
B.
a copy
of the proposed rules dated
C.
a copy
of the SONAR.[31]
D.
the
Certificate of Mailing a copy of the SONAR to the Legislative Reference Library
on
E.
a copy
of the Board’s letter to Chief Administrative Law Judge Raymond Krause dated
April 7, 2010, requesting approval of its Additional Notice Plan; a copy of
Administrative Law Judge Eric Lipman’s April 19, 2010, letter approving the
Board’s additional notice plan; a copy of the Board’s December 2, 2010, letter
requesting Chief Judge Krause to schedule a hearing on the proposed rules and
enclosing the Board’s Dual Notice and SONAR; and a copy of the December 10,
2010, letter from Administrative Law Judge Barbara L. Neilson approving the
Board’s Dual Notice.[33]
F.
a copy
of the Board’s Dual Notice as published in the State Register on
G.
a
Certificate attesting to the accuracy of the Board’s mailing list; a
Certificate attesting that the Dual Notice was mailed to all persons and
associations on the Board’s rulemaking list; a Certificate attesting that the
Dual Notice and SONAR were posted on the Board’s website pursuant to the
Board’s Additional Notice Plan; and a Certificate that a link to the Dual
Notice and proposed rules was emailed to all active, inactive, and suspended
licensees in accordance with the Board’s Additional Notice Plan.[35]
H.
a copy
of the memorandum from Jim King, Executive Budget Officer for Minnesota
Management & Budget, regarding the fiscal impact and benefits of the
proposed rules with respect to local governments;[36]
I.
a copy
of the Board’s transmittal letter to the Chair of the Senate Health & Human
Services Budget Committee, the Chair of the House Health Care and Human
Services Reform Committee, the Chair of the House Health Care and Human
Services Finance Committee, and the Director of the Legislative Coordinating
Commission, enclosing the Board’s Dual Notice, SONAR, and Proposed Rules.[37]
J.
copies
of public comments and hearing requests received from members of the public
before the public hearing;[38]
K.
a
Certificate attesting to the Board’s mailing of the Notice of Hearing to those
who requested a hearing;[39]
and
L.
Affidavits
from Board Members Richard R. Tollefson, D.C.;
28.
Under
Minn. Stat. § 14.116, an agency is required to give notice of proposed rules to
both the chairs and the ranking
minority members of the legislative policy and budget committees with
jurisdiction over the subject matter of the proposed rules, Here, the Board certified that it provided
proper notice to the chairs of those committees, but did not provide any evidence
that it gave notice to the ranking minority members. The Board’s apparent failure to provide
notice of the proposed rules to the ranking minority members constitutes a
procedural defect in these rules.
However, it is evident that the Board provided notice of the rules to the
Legislative Coordinating Commission and also broadly disseminated notice to
members of the public. Moreover, there
is no evidence that the oversight deprived any person or entity of an
opportunity to participate meaningfully in the rulemaking process. Under the circumstances, the Administrative
Law Judge concludes that the Board’s failure to notify the ranking minority
members of the relevant legislative committees constituted a harmless error
under Minn. Stat. § 14.15, subd. 5(1).
29.
The
Administrative Law Judge finds that in all other respects the Board met the
procedural requirements under applicable law and rules.
Additional Notice
30.
Minn.
Stat. §§ 14.131 and 14.23 require that the SONAR contain a description of the
Board’s efforts to provide additional notice to persons who may be affected by
the proposed rules. The Board submitted
an additional notice plan to the Office of Administrative Hearings. The additional notice plan was reviewed and
approved by Judge Lipman on
31.
In its post-hearing
comments, the Board stated that it held public meetings on the proposed rule
for over a year, beginning in September 2009 and ending in November 2010, and
that it e-mailed notification of the proposed rule to over 2600 licensed
chiropractors on
32.
The Administrative
Law Judge finds that the Board has fulfilled its additional notice
requirements.
Statutory Authority
33.
The
general statutory authority of the Board to adopt or amend rules is set forth
in Minn. Stat. § 148.08, which authorizes the Board to
promulgate
rules necessary to administer sections 148.01 to 148.105 to protect the health,
safety, and welfare of the public, including rules governing the practice of
chiropractic, and defining terms, whether or not used in sections 148.01 to
148.105, if the definitions are not inconsistent with the provisions of 148.01
to 148.105.[44]
34.
The
Administrative Law Judge concludes that the Board has general statutory authority
under Minn. Stat. § 148.08 to adopt the proposed rules.
Impact
on Farming Operations
35.
Minn.
Stat. § 14.111 imposes an additional requirement calling for notification to be
provided to the Commissioner of Agriculture when rules are proposed that affect
farming operations. In addition, where
proposed rules affect farming operations, Minn. Stat. § 14.14, subd. 1b,
requires that at least one public hearing be conducted in an agricultural area
of the state.
36.
There is
no evidence that the proposed rules affect farming operations. Accordingly, the Administrative Law Judge
concludes that the Board was not required to notify the Commissioner of
Agriculture.
Regulatory
Analysis in the SONAR
37.
Minn.
Stat. § 14.131 requires an agency adopting rules to consider seven factors in
its Statement of Need and Reasonableness.
Each of these factors, and the Board’s analysis, are discussed below.
38.
The
first factor requires “a description of the classes of persons who
probably will be affected by the proposed rule, including classes that will
bear the costs of the proposed rule and classes that will benefit from the
proposed rule.” In its SONAR, the Board stated that the classes
of persons that will be affected by the proposed rules will be doctors of
chiropractic and their patients who use prepayment plans and/or health care
credit cards to pay for chiropractic care.[45] The discussion of this factor in the SONAR
did not specifically address the classes of persons who will bear the costs or
the classes who will benefit from the proposed rule.
39.
The
second factor requires consideration of “the probable costs to the agency and to any
other agency of the implementation and enforcement of the proposed rule and any
anticipated effect on state revenues.” In
the SONAR, the Board states that it is the only agency responsible for
implementing and enforcing the Board’s rules.
It acknowledges that it may incur minimal additional costs associated
with enforcing the proposed rule’s new requirements, but it believes its annual
budget of $160,000 for expenses relating to legal services provided by the
Office of the Attorney General should be sufficient. Moreover, the Board contends that over time
the new requirements should reduce complaints and enforcement costs by
clarifying the criteria under which doctors of chiropractic may implement these
prepayment plans. The Board also states
that the proposed rules will have no impact on the State’s general fund since
the Board receives an appropriation for its budget from the State’s special
revenue fund.[46]
40.
The third factor requires “a determination of
whether there are less costly methods or less intrusive methods for achieving
the purpose of the proposed rule.” The
Board stated in the SONAR that there were no less costly or less intrusive
methods available to bring about the proposed changes other than rulemaking by
the Board.[47]
41.
The fourth factor requires “a description of any
alternative methods for achieving the purpose of the proposed rule that were
seriously considered by the agency and the reasons why they were rejected in
favor of the proposed rule.” The Board states
in its SONAR that it considered no other methods for achieving the purpose of
the proposed rule. While the Board
concedes that some of the objectives of the proposed rule may be achieved
through education and outreach, the Board asserts that these efforts are costly
and yield inconsistent results. The
Board maintains that only by establishing standards and criteria in rule will
the public be sufficiently protected.[48]
42.
The fifth factor specifies that the agency must
assess “the probable costs of complying with the proposed rule, including the
portion of the total costs that will be borne by identifiable categories of
affected parties, such as separate classes of governmental units, businesses,
or individuals.” In the SONAR, the Board
merely stated that it “anticipates minimal costs will be associated in
complying with this rule amendment to any affected party and certainly no costs
would meet [the $25,000 threshold referenced in Minn. Stat. § 14.127].”[49]
43.
In a written comment and in oral testimony at the
hearing, Dr. Todd Crabtree objected to the Board’s lack of analysis regarding
the potential costs of complying with the proposed rules. Dr. Crabtree contends that the costs of
complying with the rule could run as high as $25,000 for an individual
practice. Dr. Crabtree bases this amount
on the cost of purchasing sophisticated billing software, which he estimates to
be in excess of $10,000, and the need to increase staff hours or hire
additional staff to perform the new accounting requirements. Dr. Crabtree predicts that these costs will
be prohibitive for some clinics and that they will simply choose not to offer
prepay plans.[50] Numerous other individuals noted that they
agreed with the concerns raised by Dr. Crabtree.[51]
44.
In a similar comment and testimony at the public
hearing, Dr. Jeffrey Danielson stated that the proposed rule will force him to
hire another staff member to manage the different accounts and track all the
charges and deposits. According to Dr.
Danielson, the cost of adding a new employee will be “upwards of $25,000 per
year” and he estimates new billing software will cost approximately $500 to
$1,000.[52]
45.
Several other individuals objected in written
submissions and hearing testimony to the costs that they believe will be incurred
if the proposed rules are adopted. For
example, Dr. Brian Tasky asserted that
the proposed rule will result in burdensome administrative costs for
chiropractors. Dr. Tasky noted that
chiropractors typically run very small businesses and many have no staff at
all.[53] Similarly, Dr. Barbara Kaiser stated that the
proposed rule will require chiropractic clinics to overhaul their billing
software, accounting practices, and daily paperwork. Dr. Kaiser maintained that chiropractors will
either have to hire staff to perform the new administrative duties, or reduce
their patient care hours to do the tasks themselves. In her view, either option will result in
lost revenue to the chiropractor.[54]
46.
In his hearing testimony on behalf of the Board, Dr.
Larry Spicer, the Board’s Executive Director, addressed the costs associated
with the proposed rules. He indicated
that the costs for establishing an escrow account would likely run between $0
and $50 per month, depending on the bank, plus additional costs to print checks
and deposit receipts that he projected would not exceed $200.[55] He provided print-outs from the websites of
TCF Bank, Bremer Bank, Wells Fargo, FirstBank, Bank of America, and Affinity
Plus Federal Credit Union in support of this estimate.[56] Dr. Spicer pointed out that the statutes
applicable to rulemaking do not require an agency to undertake a formal “cost
study.”[57] Dr.
Spicer and the Board reject Dr. Crabtree’s assertion that highly sophisticated
(and expensive) billing software is necessary to comply with the rules. Instead, the Board maintains that basic
accounting/billing systems that most clinics already have in place are
sufficient to calculate the amount of prepay fees to refund to a patient who
terminates the plan earlier. And the
Board insists that the hiring of additional staff would not be necessary. For all of these reasons, the Board contends that there are no
requirements in the proposed rules that would force businesses to pay in excess
of $25,000 in the first year.[58]
47.
Dr.
Howard Fidler, a licensed chiropractor and Board member, also provided
testimony in support of the proposed rules at the hearing. Dr. Fidler indicated that most chiropractic
offices already use computer programs to manage their financial accounts, and
asserted that these programs are easy to operate and can quickly be modified. He
also stated that it is very easy with basic billing software to keep an
accurate account of patients’ services and funds. He testified that his clinic would not need any
additional software or staff to carry out the requirements of the proposed
rules. In addition, he estimated that it
would cost no more than $20 per month to open and maintain an escrow
account. In his opinion, the costs
associated with the proposed rules would be marginal and would not approach
$25,000 in the first year.[59]
48.
During the hearing, the Board also entered into the
record affidavits from four Board members (Richard R. Tollefson, D.C.;
49.
The sixth factor requires a description of “the
probable costs or consequences of not adopting the proposed rule, including
those costs or consequences borne by identifiable categories of affected
parties, such as separate classes of government units, businesses, or
individuals.” In the SONAR, the Board notes
that it has received numerous complaints regarding prepayment plans and it
anticipates that such complaints will only increase if the criteria and
limitations established by proposed rules are not adopted.[64]
50.
The seventh and final factor requires “an
assessment of any differences between the proposed rule and existing federal
regulations and a specific analysis of the need for and reasonableness of each
difference.” In the SONAR, the Board
noted that federal regulations are not a consideration because the federal
government is not involved in licensing doctors of chiropractic.[65]
51.
The
Administrative Law Judge finds that the Board’s SONAR did not adequately identify
the classes of persons who will bear the costs of the proposed rules and the
classes who will benefit from the proposed rules, as required by the first
regulatory factor, or adequately assess the probable costs to individuals and
businesses of complying with the proposed rules in its SONAR, as required by
the fifth regulatory factor. This
constitutes a procedural defect in the rules.
The Administrative Law Judge concludes, however, that this was a
harmless error under Minn. Stat. § 14.15, subd. 5(2), because the Board took
corrective action to cure the defect by addressing who will bear the costs and
receive the benefits of the proposed rules more fully during the hearing, and
there is no evidence that the Board’s failure to include a more detailed
discussion of anticipated costs and benefits in the SONAR deprived any person
or entity of an opportunity to participate meaningfully in the rulemaking
process. The Administrative Law Judge further
concludes that the Board has adequately considered the other regulatory factors
required by Minn. Stat. § 14.131.
Performance-Based
Regulation
52.
The
Administrative Procedure Act also requires that an agency describe in its SONAR
how it has considered and implemented the legislative policy supporting
performance-based regulatory systems set forth in Minn. Stat. § 14.002.[66] A performance-based rule is one that
emphasizes superior achievement in meeting the agency’s regulatory objectives
and maximum flexibility for the regulated party and the agency in meeting those
goals.[67]
53.
In its SONAR,
the Board indicated that, in developing the proposed rules, it attempted to
draft criteria and restrictions narrowly and with as much flexibility as feasibly
possible to still meet its objectives of protecting the public’s interests with
respect to prepayment plans.[68]
In his hearing testimony, Dr. Larry Spicer stated that instead of prohibiting
the practice of prepay plans altogether, the Board chose to regulate those
plans valued at $1,000 or more.[69]
54.
The
Administrative Law Judge finds that the Board has met the requirements set
forth in § 14.131 for assessing the impact of the proposed rules, including
consideration and implementation of the legislative policy supporting
performance-based regulatory systems.
Consultation
with the Commissioner of Management and Budget
55. Under Minn. Stat. § 14.131, the Agency is also required to “consult with the commissioner of management and budget to help evaluate the fiscal impact and fiscal benefits of the proposed rule on units of local government.”
56.
The Board consulted with the Office of
Management and Budget, and in a response dated
57. The Administrative Law Judge finds that the Board has met the requirements set forth in Minn. Stat. § 14.131.
Compliance
Costs for Small Businesses and Cities
58.
Under
Minn. Stat. § 14.127, the Board must “determine if the cost of complying with a
proposed rule in the first year after the rule takes effect will exceed $25,000
for: (1)
any one business that has less than 50 full-time employees; or
(2) any one statutory or home rule charter city that has less than
ten full-time employees.” The Board must
make this determination before the close of the hearing record, and the
Administrative Law Judge must review the determination and approve or
disapprove it.
59.
The
Board’s SONAR included a single sentence which addressed both the fifth
regulatory factor and the requirements of Minn. Stat. § 14.127. In that sentence, the Board merely stated in
conclusory fashion that it “anticipates minimal costs will be associated in
complying with this rule amendment to any affected party and certainly no costs
would meet those thresholds.”[71]
60.
As noted
above in Findings 43-45 above, several Doctors of Chiropractic objected during
this rulemaking proceeding to the Board’s minimal analysis of costs in the
SONAR and contended that the actual costs associated with the proposed rules
would be much higher. However, as
reflected in Findings 46-48 above, the Board provided further explanation and documentation
in support of its cost assessment during the hearing, in response to comments
from those opposed to the proposed rules.
61.
The
Administrative Law Judge finds that, by the close of the record the Board did make
the determination required by Minn. Stat. § 14.127, subd. 1, and approves its
determination that costs of compliance for small businesses and cities will not
exceed the cost threshold established by that statute. It is evident that the costs of establishing
and maintaining an escrow account will be nominal, and the Administrative Law
Judge is not persuaded that costs associated with additional staff time or with
purchasing or upgrading a computer billing program will exceed $25,000 for a
chiropractor’s business in the first year after the rules are effective.
Adoption or Amendment of Local
Ordinances
62.
Under
Minn. Stat. § 14.128, the agency must determine if a local government
will be required to adopt or amend an ordinance or other regulation to comply
with a proposed agency rule. The agency must make this determination
before the close of the hearing record, and the Administrative Law Judge must
review the determination and approve or disapprove it.[72]
63.
The
Board concludes that the proposed rules will have no effect on any division of
local government that would require the adoption or amendment of an ordinance
or other regulation to comply with the rules.[73]
64.
The Administrative Law Judge finds that the
Board has made the determination required by Minn. Stat. § 14.128 and approves
that determination.
Analysis of the Proposed Rules
65.
This
Report is limited to discussion of the portions of the proposed rules that
received critical comment or otherwise need to be examined; it will not discuss
each comment or rule part. Persons or
groups who do not find their particular comments referenced in this Report
should know that all comments, including those made prior to the hearing, have
been carefully read and considered.
66.
The proposed
rule sets out criteria for the creation and implementation of prepayment
chiropractic plans. The Board defines “prepay
plans” as any agreement between a chiropractor and patient for a course of
future chiropractic treatment services for which payment in an amount of $1,000
or more is collected in advance of the services.
67.
The
proposed rule would require chiropractors to establish escrow accounts for prepay
plan fund deposits, require prepay plans to be in writing, limit the number of
treatment visits per plan, prohibit additional billing to a third-party payor,
and provide the right to early cancellation and refund of unused payments.
68.
Prior to
the hearing, the Board received a number of general comments from practitioners
in the field. These commentators
stressed that prepay plans provide patients the option of paying for a course
of treatment in advance, at a discounted rate.
According to the commentators, such plans make chiropractic treatment
more affordable for the patients and ensure doctors’ reimbursement. Many of those filing comments expressed
concern that the proposed rules will place unnecessary limits and burdensome
administrative requirements on their ability to continue offering prepay plans
to their patients.[74] Likewise, several chiropractors testified at
the hearing that their patients are very satisfied with prepay plans and view
these plans as an affordable and cost-effective way to obtain chiropractic
care.[75]
69.
The
Board also received comments throughout the rulemaking proceeding from patients
who like the option of being able to prepay for chiropractic care. These patients stated that prepaying allows
them to budget for and afford chiropractic care, which is typically an
out-of-pocket expense due to limited insurance coverage. They also stated that they like the
convenience of being able to visit the chiropractor whenever needed without the
worry or hassle of paying for each treatment on the date it is provided.[76]
70.
In a
written comment submitted
71.
During
the hearing and in its post-hearing comments, the Board responded that it does
not have authority under the rules to issue guidelines or advisory
opinions. It also pointed out that doing
so may be viewed as unpromulgated rulemaking and could be contested on that
basis by licensees. Moreover, the Board
stated that results of articles or guidance published on its webpage and
newsletter are often uneven based on readership, whereas the rules will apply
to the entire licensed community.[79]
72.
The
Board further demonstrated that, since 2005, it has seen an increase in the
number of complaints from patients regarding prepay plans. The complaints typically concern the alleged
failure of a chiropractor to fully refund a patient’s unused portion of prepay
funds when that patient elects to terminate a prepay plan early. According to Dr. Larry Spicer, the Board
received 6 complaints regarding prepay plans during calendar years 2005-2007,
and 39 complaints regarding prepay plans in 2008-2010. Moreover, the Board noted that
complaints and concerns regarding prepay plans have grown nationwide. The Board points out that Dynamic
Chiropractic, the profession’s leading newspaper, ran a series of articles on
the subject of prepay plans in the mid-1990s.
In addition, the Federation of Chiropractic Licensing Board’s (FCLB)
Fraud Prevention Committee published a paper in 2006 on the subject of prepay
plans. The Committee focused on the
increase in complaints regarding “poor reimbursement management” in the event
of early termination of plans by patients.
The Committee concluded that patients should have full disclosure of how
the plans work, including reimbursement in the event of early termination, and
recommended that patients’ monies be placed in an escrow account to prevent
co-mingling with other funds. The Board
also pointed out that some states have gone so far as to prohibit prepay plans
entirely.[80]
73.
The
Board contends that the proposed rule is needed to provide clear standards to
licensed chiropractors on how prepay plans may be implemented. The goal of the proposed rule is to provide
written disclosure to the patient regarding the terms of the prepay plan and to
safeguard the patient’s money in a separate escrow account.[81]
74.
The
Administrative Law Judge finds that the Board has proper discretion and
authority to choose to adopt rules governing prepay plans rather than follow
another approach.
75.
The
Administrative Law Judge finds that the Board has demonstrated, by an
affirmative presentation of facts, the need for and reasonableness of all rule
provisions not specifically discussed in this Report. The Administrative Law Judge also finds that
all provisions not specifically discussed are authorized by statute and there
are no other problems that would prevent the adoption of the rules.
76.
The
Board has proposed describing “Prepay plans” at Subpart 1 as follows:
Subpart 1. Description. Any arrangement
between a chiropractor and a patient for the purposes of entering into an
agreement for a course of future treatment for which funds in an amount of
$1,000 or more is collected in advance of these services shall be considered a
prepay plan within the meaning of this part.
Prepay plans shall include a written statement describing all fees for
services, goods, appliances, supplements, or any other benefit considered part
of the plan.
77.
In its
SONAR, the Board states that it considers $1,000 to be a reasonable threshold
for triggering the requirements of this proposed rule. According to the Board, prepay plans for
services valued under $1,000 are typically short-term treatment regimens and rarely
result in disputes over termination of the plan or reimbursement.[82]
78.
A number
of individuals commenting on the proposed rules questioned the rationale for
establishing the $1,000 threshold. David
Wulff, Attorney at Law, commented that the rule and its requirements should
apply to all prepay plans and not just those in an amount of $1,000 or
more. Mr. Wulff stated that it makes no
sense to withhold the rule’s safeguards from patients who prepay $999 to a
doctor. According to Mr. Wulff, if the
doctor is honest and the plan legitimate, he or she should have no qualms about
conforming to the rule’s requirements.[83] Dr. Cathi Hammond similarly commented that
the proposed rules should apply to all prepay plans and not just those over
$1,000.[84]
79.
In his
testimony at the hearing, Dr. Larry Spicer stated that the $1,000 threshold and
the 50-visit limit per plan were “established strictly for the purpose of limiting
the patient’s potential loss, should there be a dispute as to plan termination
procedures.” He noted that, during the
course of drafting the rule language, the Board heard from chiropractors who
offer prepay plans valued at under $1,000 (such as 10-visit plans for
$600). These smaller plans rarely result
in complaints to the Board. Instead, the
complaints most frequently received by the Board involve disputes over much
larger sums of money. Accordingly, the
Board determined that setting $1,000 as the threshold amount for triggering the
rule requirements would best serve the needs of patients, chiropractors and the
Board.[85]
80.
The
Administrative Law Judge finds that the $1,000 threshold is consistent with the
Board’s goal of protecting patients while minimizing the administrative burden
on chiropractors who offer smaller prepay plans. Accordingly, it is concluded that the Board
has demonstrated the need for and reasonableness of the proposed $1,000
threshold.
81.
Mr.
Wulff also suggested that the Board define the words “services, goods,
appliances, supplements” and “benefit” used in Subpart 1. He further noted that Subpart 2 of the
proposed rules only refers to “services, goods or appliances,” and Subpart 3
only refers to “services,” and recommended that the Board be consistent in its
use of this terminology throughout the rule to avoid confusion.[86] The Board did not provide any response to Mr.
Wulff’s suggestions. No one else
suggested that the terms used in the proposed rules require definition. The Administrative Law Judge concludes that neither
the failure to define these terms in the proposed rules nor the use of slightly
different terminology in Subparts 1, 2, and 3 renders the rules defective. However, in the interests of consistency, the
Board is urged to use the same terminology throughout the rule.
82.
Mr.
Wulff commented generally that the rule should prohibit chiropractors from
offering discounts in connection with prepay plans. He contends that such discounts violate
federal Medicare/Medicaid “anti-kickback” statutes, as well as state law (Minn.
Stat. § 62J.23), and unduly influence prospective patients to purchase health
care services.[87] In its post hearing comments, the Board
stated that it takes no position on the legality of chiropractors offering
discounts to patients who prepay for a course of treatment. The Board notes that its proposed rule makes
no reference to discounts and therefore it is not in conflict with federal or
state law.[88] The Administrative Law Judge agrees with the
Board’s assessment, and finds no conflict between the proposed rules and state
and federal law.
83.
In a
written comment dated January 27, 2011, Kathryn Berger, Compensation Attorney
Principal, submitted a comment on behalf of the Department of Labor and
Industry (DOLI). DOLI informed the Board
that worker’s compensation laws prohibit the use of prepaid plans when the
doctor is treating a patient for a workers’ compensation injury. DOLI pointed out that Minn. Stat. § 176.135,
subd. 7, requires a health care provider to submit charges for treatment of a
workers’ compensation injury to the workers’ compensation insurer or
self-insured employer, along with medical records or reports that substantiate
the nature of the charge and its relationship to the work injury. The statute further provides, “[a] health
care provider shall not collect, attempt to collect, refer a bill for
collection, or commence an action for collection against the employee,
employer, or any other party until the information required by this section has
been furnished.” The insurer is required
to pay or deny the charges within 30 days of receiving all required
information.[89] According to DOLI, entering into prepay plans
for treatment of a workers’ compensation injury would be prohibited by Minn.
Stat. § 176.135, subd. 7, because the chiropractor would be collecting
payment from the employee before submitting the charges to the insurer.[90]
84.
To
ensure that chiropractors who enter into prepay agreements with their patients
do not inadvertently violate the workers’ compensation law, DOLI recommended
that the subtitle of Subpart 1 be changed from “Description” to “Scope,” and
that the following sentence be added to the end of Subpart 1: “A chiropractor shall not offer, enter into,
or continue a prepay plan where one is prohibited by law.” The Administrative Law Judge finds that the
failure of the proposed rules to include the language recommended by DOLI does
not render them defective. DOLI’s
proposed additional language would merely state the obvious—that persons must
not violate the law—and does not add any clarity or guidance to the proposed
rules.
85.
The
Administrative Law Judge concludes that the Board has demonstrated that Subpart
1 is needed and reasonable to define what types of arrangements are encompassed
within the term “prepay plan” and are thus subject to the rule. The Board has also presented a rational basis
for applying the provisions of the proposed rule only to prepay plans costing
$1,000 or more.
86.
While
there is no defect in the language of Subpart 1 as proposed, the Administrative
Law Judge recommends that the Board consider revising Subpart 1 as follows:
Subpart 1. Description. Any arrangement
or agreement between a chiropractor and a patient for the purposes of
entering into an agreement for a course of future treatment for which funds
in an amount of $1,000 or more is collected in advance of these services shall
be considered a prepay plan within the meaning of this part. Prepay plans shall include a written
statement describing all fees for services, goods, appliances, supplements, or
any other benefit considered part of the plan.
The suggested revision would
improve the readability of the rule and limit the language to that needed to
describe the types of plans covered by the rules. The Administrative Law Judge recommends that
the second sentence be deleted as unnecessary, since Subpart 3 of the proposed
rules requires that plans be in writing and list the covered services. The Administrative Law Judge finds that the
above modifications would not render Subpart 1 substantially different that the
rules as originally proposed.
Minn. Rule part 2500.7000, Subpart 2
87.
Subpart
2 requires that any payments made in advance of services rendered be deposited
into a separate designated escrow account.
As originally proposed, Subpart 2 stated:
Subp. 2. Escrow account.
A.
Any funds received as part of a
prepay plan shall be deposited into a separate designated escrow account, and
shall not be commingled with a chiropractor’s personal or business account.
(1) All instruments,
including checks and deposit slips, shall bear the phrase “Escrow Account.”
(2) The chiropractor shall maintain a clear accounting of all funds
received, including the date and from whom the funds were received.
(3) The chiropractor shall maintain a clear accounting of all
disbursements including the dates and to whom the disbursements were made, and
to which patient the disbursements are to be applied or accounted for.
(4) If the account is an
interest-bearing account, the interest shall be applied to the patient’s
balance. In the event of early
termination, the patient shall be provided with a pro rata share of the
interest.
B. Funds may only be transferred out of
the escrow account for the following reasons:
(1) After services, goods, or appliances have
been provided to the patient, and only in the amounts specifically related to
the services, goods, or appliances provided.
(2) To reimburse the patient any amounts owed following a notice by
either the patient or the chiropractor to terminate the prepay plan. Any amounts shall be transferred according to
the written agreement.
C. The chiropractor shall cause a
reconciliation of the escrow account to be made no less than quarterly, and
shall retain a copy of the reconciliations and all supporting documents for no
less than seven years.
88.
In the
SONAR, the Board stated that the proposed escrow requirement will ensure that chiropractors
maintain sufficient funds in a separate account to reimburse those patients who
elect to terminate prepay plans earlier.[91]
89.
Dr. Josh
Watkins[92]
and several other individuals who commented on the proposed rules stated that
the language of the proposed rule was unclear regarding whether chiropractors
would be required to establish separate escrow accounts for each individual patient
who enters into a prepay plan valued at over $1,000, or whether they would be permitted
to set up one escrow account for all patients with prepay funds of $1,000 or more.
90.
In its
response comments, the Board clarified that its intent was for chiropractors to
establish one escrow account for all of their patients’ prepay funds, and not
to require that a separate escrow account be created for each patient.[93]
91.
Some of
those who commented on the proposed rules provided some support for the ease
with which an escrow account could be maintained. For example, Margo Davis, business
administrator for Dr. Amy Wilcockson’s office, testified during the hearing
that her office handled escrow accounts all the time and indicated that it was
no problem. Lori Goodsell, D.C., acknowledged
in her testimony that escrow accounts were a great idea and were easy to
maintain. And Jennifer Zea, D.C., filed
a written comment in which she also supported placing prepay funds into a
separate escrow account.[94]
92.
Numerous
other individuals objected to the requirement that chiropractors place prepay
plan funds in a separate escrow account.
Dr. Josh Watkins commented that even if the rule is intended to require
that only one escrow account be established per clinic for all prepayment
patients, the accounting requirements will be burdensome.[95] Similarly, Jason Gerard, D.C., stated that
having to create escrow accounts for prepay plans of $1,000 or more will be
overly onerous for chiropractors and potentially will require the hiring of
additional employees to carry out the accounting requirements, such as
determining interest distribution and conducting quarterly reconciliations.[96] Dr. Jason Baker estimated that it will cost
him an additional $1,500 a year to have an accountant manage an escrow account
in accordance with the proposed rule. [97]Dr.
Jamy Antoine also contended that the proposed rule would place a substantial
financial burden on chiropractic clinics throughout the state. In Dr. Antoine’s view, the accounting and
escrow requirements associated with the proposed rules will require
chiropractors to purchase billing software and hire at least one full time
accounting specialist to track payments, charges, insurance co-payments, and
interest accrual.[98] Dr. Brian Boyd and Dr. Paul Moon also objected
to the burdens imposed by the escrow account requirement. Dr. Boyd maintained that such a requirement is
unnecessary given the requirements under Subpart 3 that all prepay plans be in
writing and explain in detail the reimbursement policies and formulae.[99]
93.
David
Wulff suggested that Subpart 2A be modified to require that chiropractors
deposit the prepay funds into an interest-bearing escrow account that is
insured by the FDIC to give patients an added layer of protection.[100]
94.
Dr. Amy
Wilcockson commented that the requirement in Subpart 2 A(4) that the refund of a
patient’s money in the event of an early termination must include the patient’s
pro-rata share of any interest earned in the escrow account would be an
administrative nightmare.[101] Similarly, Representative Jim Abeler
commented that requiring that interest earned on funds in the escrow account be
returned to patients who cancel will add considerable complexity to
recordkeeping while yielding little value to the patient in light of the small
amount of interest involved.[102] In response to these post-hearing comments,
the Board stated that it will delete proposed Subpart 2 A(4), governing
application of interest to patients’ escrowed funds, in its entirety.[103]
95.
Several
of those commenting on the proposed rules questioned what the Board intended by
the requirement that chiropractors “cause a reconciliation of the escrow
account” quarterly.[104] For example, Representative Abeler suggested
that the Board clarify what effort needs to be exerted to “reconcile” the
escrow account. If the rule is merely
aimed at requiring chiropractors to keep the account records up to date, Representative
Abeler acknowledged that would be reasonable.[105] In its post-hearing response, the Board confirmed
that the requirement in the proposed rule is simply intended to ensure that
reasonable attention is paid to the account and it is not permitted to remain
unreconciled indefinitely. The Board
stated that the process should be no more involved than the typical business
practice associated with periodic bank account reconciliation.[106]
96.
The
Administrative Law Judge finds that Subpart 2, as modified by the Board, has
been shown to be needed and reasonable. The
Administrative Law Judge finds the requirement that chiropractors deposit
prepay plan funds into an escrow account and “reconcile” the account quarterly to
be needed and reasonable. Separating the
patients’ money from the chiropractor’s personal or business account is a reasonable
safeguard and one that many professions require to limit clients’ exposure to
financial loss. The Administrative Law
Judge also concludes that the Board’s decision to delete the original requirement
in Subpart 2 A(4) that the escrow account bear interest and that practitioners
provide a pro rata share of the interest to the patient in the event of a
refund to be needed and reasonable. This
modification was made by the Board in response to persuasive comments by
members of the regulated public, and avoids the creation of a situation in
which a significant administrative burden is imposed on chiropractors with limited
benefit for patients. The Administrative
Law Judge concludes that the modification does not render the subpart
substantially different from the rules as originally proposed.
97.
Although
the language of Subpart 2 as modified by the Board is not defective, the
Administrative Law Judge recommends the following additional modifications be
made to item A for readability and to clarify that chiropractors or clinics
need only establish one FDIC-insured escrow account for all of the prepay funds
they receive:
Subp. 2. Escrow account.
A. Any All funds
received as part of a in connection with prepay plans
shall be deposited into a separate designated escrow account insured
by the FDIC, and shall not be commingled with a chiropractor’s personal or
business account.
(1) All instruments, including checks and deposit slips, shall bear
the phrase “Escrow Account.”
(2) The chiropractor shall maintain an clear
accounting of all funds received, including the date and from whom the funds
were received.
(3) The chiropractor shall maintain an clear
accounting of all disbursements including the dates and to whom the
disbursements were made, and to which patient the disbursements are to be
applied or accounted for.
The further modifications
suggested by the Administrative Law Judge would serve to clarify the proposed
rules and would not constitute a substantial change from the rules as
originally proposed.
98.
Subpart
3 requires that all prepay plans be in writing and include specific
information. The subpart reads as
follows:
Subp. 3. Written plans. All prepay
plans shall be in writing, signed by both the chiropractor and the patient,
with a copy provided to the patient and a copy maintained in the patient’s
record, and shall include at least the following:
A. A list of all services which are covered
and which are not covered by the plan.
B. A list of all fees related to the
services described in item A.
C. A
statement that an accounting can be requested by the patient at any time. This accounting shall:
(1)
be
provided to the patient within 14 days of a written or verbal request;
(2) be
separately initialed by the patient; and
(3) itemize
all fees used to calculate any reimbursement.
D. A
clear explanation of the reimbursement policies and formulae which are used in
returning unused funds to the patient in the event of early termination by
either the chiropractor or the patient.
This explanation should be separately initialed by the patient. As part of this explanation, a representative
example should be provided to the patient.
E.
A clear explanation of any policy
suspending the plan in the event of a new injury, such as an auto injury or
worker’s compensation injury. This
explanation shall be separately initialed by the patient.
F. The
plan shall include a provision for the patient to be notified in writing when
the patient’s account reaches a zero balance.
This document shall be signed by both the patient and the chiropractor,
with a copy given to the patient and a copy maintained in the patient’s file.
99.
In a
written comment and testimony at the hearing, Ms. Gergen-Mandel noted that she
generally agrees with the requirement that prepay plans be in writing.[107] Likewise, Dr. Jennifer Zea noted in her
written comment that she favors having patients and chiropractors sign a
written agreement that lays out the terms of the plan and the refund policy.[108]
100.
In a
post-hearing comment, Representative Jim Abeler, D.C., expressed concern
regarding the requirements in Subparts 3C, 3E and 6 that patients initial
certain provisions of the written plan.
Representative Abeler pointed out that patients may not be able to
initial documents sent electronically or come into the office and the
requirement may inadvertently cause the chiropractor to be in violation of the
rule.[109] In its post-hearing response, the Board
indicated that it concurred with these concerns and was merely interested in
“providing a verifiable assurance that the patient was furnished with the
documentation in question.” The Board
stated that it “will consider a modification to the language that accomplishes
this goal, without limiting such assurance to a patient-initialed/signed
document,” but did not propose specific language changes.[110]
101.
David
Wulff recommended that the Board add a provision to Subpart 3 requiring that
all prepay plans automatically terminate in 12 months and that any remaining funds
in the escrow account be refunded to the patients. Mr. Wulff said that such a provision would
protect patients from having their money tied up for extensive periods of time
and it would address situations where patients simply forget that they have money
remaining in their fund.[111]
102.
Like Mr.
Wulff, Dr. Cathi Hammond recommended that prepay plans automatically expire
after 12 months and that any unused funds after 12 months be refunded to the
patient within 14 days of the plan’s expiration. According to Dr. Hammond, patients can start
feeling better after a couple of visits and then simply forget about their
unused pre-paid visits. She also expressed
concern that requiring chiropractors to notify patients when their prepay plan
accounts have reached a zero balance will require a lot of extra work and
expense for chiropractors. She suggested
that patients instead be required to affirmatively request written notification
by initialing the provision at the time the patient is signing the written
plan.[112] The Board did not respond to this
suggestion.
103.
In a written
comment, DOLI recommended revising Subpart 3E to clarify that prepay plans may
violate workers’ compensation law when used for treatment of workers’
compensation injuries,. DOLI contends
that Subpart 3E of the proposed rules suggests that chiropractors have
discretion to suspend prepay plans in the event of a workers’ compensation
injury. DOLI recommends the following
revisions to ensure that chiropractors who enter into prepay agreements with patients
do not inadvertently violate workers’ compensation law:
Subp. 3.
Written plans.
. . .
E. A clear explanation of any
policy suspending the plan in the event of a new injury, such as an auto
injury or workers’ compensation injury and a statement that the plan
will be discontinued during treatment of a workers’ compensation injury for
which an insurer or self-insured employer is liable. This explanation and statement shall
be separately initialed by the patient.[113]
104.
In
response to DOLI’s comments, the Board proposed to modify Subpart 3E of the
rules by deleting the word “suspending” and replacing it with the word
“modifying.” The Administrative Law
Judge agrees that it is appropriate to make this change in language, and finds
that it would not render the rules substantially different from the rules as
originally proposed. The Board apparently
declined to make the other changes suggested by DOLI. The Administrative Law Judge concludes that
the rules are not rendered defective by their failure to include DOLI’s
interpretation of applicable statutes and rules. The Board may, if it wishes, consider adding in
Subpart 3E cross-references to applicable workers’ compensation statutes and
rules, and such cross-references would not constitute a substantial change.
105.
The
Administrative Law Judge finds as a general matter that the Board has
demonstrated that it is needed and reasonable to require that prepay plans
covered by the rule be in writing, signed by the chiropractor and the patient,
and contain certain specified information.
Because the patient is already required to sign the written plan, the
Board’s proposal to modify the rule to delete the requirements set forth in
Subpart 3C(2) and the second sentence of Subpart 3D for the separate initialing
of provisions has also been shown to be reasonable and necessary. This modification was made in response to
comments received during the rulemaking proceeding and does not render the
rules as finally proposed significantly different from the rules as originally
proposed.
106.
The
Administrative Law Judge concludes that there are two defects in Subpart 3. These defects are described below.
107.
First,
the Administrative Law Judge concludes that Subpart 3, item A is defective
because the Board has not shown that it is needed or reasonable to require that
chiropractors list “all services . .
. which are not covered” by the
plan. That list could be virtually endless. To correct this defect, and in keeping with
Mr. Wulff’s earlier comment urging consistency in terminology, the
Administrative Law Judge recommends that item A be revised to simply require
that written prepay plans include “A list of all services, goods and appliances
that are covered by the plan.”
108.
Second, the
Administrative Law Judge finds that the last sentence in Subpart 3, item D is
defective because it is impermissibly vague.
As originally proposed, that sentence stated that a “representative
example should be provided to the patient.”
The sentence is defective because it is not clear what the phrase “representative
example” means and the use of the word “should” makes the act
discretionary. Stating in rule that a
practitioner “should” do something that is not clearly described is so
indefinite as to not meet the statutory definition of “rule.” To correct this defect, the Board could
(1) delete the last sentence in its
entirety; or (2) modify the language to explain
more clearly what is meant by “a representative sample” and indicate that such
a sample “shall” be provided to the patient.
109.
The
Administrative Law Judge further suggests that the Board consider making some
wording changes to Subpart 3 to eliminate redundant terminology and clarify its
provisions. In Subpart 3, item C, it is
recommended that the Board replace the word “can” with the word “may.” In Subpart 3, items D and E, it is suggested
that the Board delete the word “clear” before the word “explanation” as
unnecessary. The Administrative Law
Judge also recommends that the Board consider deleting the last sentence of
Subpart 3, item F. The first sentence of
item F makes it clear that the written prepay plan itself must include a
provision informing the patient that he or she will be notified in writing when
the account reaches a zero balance.
However, the last sentence of item F implies that the explanation must
be contained in a separate
document. For this reason, it is
recommended the last sentence be deleted for clarity. Finally, it is recommended that the first
sentence in item F be modified to read as follows: “A provision that the
patient will be notified in writing when the patient’s account reaches a zero
balance.” This modification is suggested
to ensure that the language of item F parallels that of items A-E.
110.
The Administrative
Law Judge also urges the Board to consider adding an item G to address the
right of cancellation that is currently discussed in Subpart 6 of the proposed
rules. Since the Board is proposing that
the three-day right of cancellation be a required provision of the plan, it
makes sense to make this clear in Subpart 3.
If the Board chooses to do this, it should delete Subpart 6 and instead
include language similar to the following in the new item G:
G.
A
statement that the patient has the right to cancel the prepay plan without
penalty within three business days of entering into the plan by submitting a
written and signed cancellation form and, upon receipt of the cancellation
notice, the chiropractor shall have seven days to fully refund any unused funds
to the patient.
111.
If the
Board chooses to make the above changes recommended by the Administrative Law
Judge, they would not constitute substantial changes under Minn. Stat. § 14.05,
subd. 2.
112.
Subpart
4 of the proposed rules limits the number of treatments that can be included in
each prepay plan but allows for renewal of the plan after it is exhausted:
Subp. 4. Limitation on number of service treatment dates per plan
A. No prepay plan may be
based upon a package which would exceed 50 visits.
B. A plan may not be
renewed until the visits in the previous plan have been exhausted.
113.
In the
SONAR, the Board states that limiting prepay plans to 50 visits protects
patients by providing them the opportunity to reevaluate whether they want to
continue with care. The Board points out
that nothing in the proposed rule places any cap on the total number of
treatments a patient may receive from a chiropractor. Rather, this subpart limits the number of
visits per plan, and requires only that the patient and doctor renew any prepay
plans after 50 visits.[114]
114.
Numerous
interested parties testified and provided written comments objecting to the
proposed 50-visit limit per plan as arbitrary and asserting that it constituted
an unlawful interference with their rights to freely contract with patients.[115] For example, in testimony given at the
hearing and in a subsequent written comment, Kathleen Gergen-Mandel objected to
the proposed limit because she believes the terms of a prepay agreement should
be left up to the discretion of the doctor and patient. According to Ms. Gergen-Mandel, whether the
prepay plan involves five visits, 50 visits or 100 visits should be of no
concern to the Board.[116]
115.
Some commentators
misinterpreted the proposed rule provision as limiting the total number of allowable
treatment visits for a patient,
rather than simply the number of treatments encompassed under a single plan.[117] Other commentators questioned whether the 50-visit
limit per plan applies to family plans or just to plans for single individuals. At the hearing, Dr. Laurie Goodsell testified
that she treats a very athletic couple and their four children every other
week. According to Dr. Goodsell, if the 50-visit
limit were applied to that entire family, she would have to renew the plan
frequently.[118]
Others noted that the 50-visit limit per plan means that a single plan would
not be long enough for a person who wants to be treated once per week for a
year.[119]
116.
In
contrast, Mr. Wulff commented that the proposed limit of 50 treatments per plan
is unduly large. He maintains that the
rule should err on the side of protecting patients against being induced into
agreeing to prepay excessively large amounts.
He also noted that the rule does not address the amount of money a
patient may prepay and put at risk. Mr.
Wulff recommended that Subpart 4A be revised to read: “No prepay plan may
exceed a total of 50 visits or $2,000, whichever is less.”[120]
117.
In its
written response, the Board reiterated that the 50-visit limit applies to the
plan and not the patient. Should an
individual receive 50 treatments under a prepay plan and wish to continue with
care, he or she is free to execute a new prepay plan with the
chiropractor. The Board states that the
rule is meant to protect patients by creating a pause in the course of
treatment so that the patient has the opportunity to reassess the goals and
costs of continued care. It pointed out
that the proposed rule is designed to place some limitations on a doctor’s
control of a patient’s finances and ensure that the control is returned to the
patient at some juncture. The Board
acknowledged that the rule language is unclear as to whether the 50-visit limit
would apply to family plans covering more than one individual. The Board explained that its intent was that
the 50-treatment limit would apply only to a single patient and not to an
entire family. The Board indicated that
it “proposes to submit a language change to reflect the intention of such a
plan applying on a per-patient basis,” but did not yet do so.[121]
118.
A number
of commentators stated that the 50-visit limit and renewal requirements of this
subpart will create burdensome paperwork for chiropractors who typically have
little, if any, staff to handle data entry.
Andy Kuecher, D.C., estimated in his written comment that this proposed
subpart would add “a minimum of 15-20 hours per month” to his work load.[122]
119.
The
Administrative Law Judge finds the 50-treatment limit per individual plan has
been shown to be needed and reasonable.
The approach taken in the proposed rules is rationally related to the Board’s
goal of limiting a patient’s financial exposure without unduly interfering with
the chiropractor’s treatment plan, and falls within the policy-making discretion
of the Board. The Board indicated its
willingness to clarify that the rules are not intended to apply a 50-visit
limit to a plan that covers more than one individual, but did not propose
language for consideration. The
Administrative Law Judge agrees that it would be advisable to clarify whether
and in what fashion the proposed rules apply to family prepay plans. It is not clear from the Board’s response
whether it wishes to exclude family plans from the rule altogether, or whether
it wishes to cover both individual and family plans and merely clarify that
such plans shall not be based on a package of more than 50 visits per individual. Although it is not anticipated that either
of these two approaches would render the rules substantially different from the
rules as originally proposed, the Board must submit proposed language for
consideration and review if it chooses to adopt either approach.
120.
Subpart
5 of the proposed rules prohibits chiropractors from billing “a reimbursement
entity or a patient for any amount exceeding what is actually earned and
disbursed to the chiropractor.”
121.
In its
SONAR, the Board states that this provision is meant to prevent chiropractors who
agree to discounted fees from billing a third party payor a greater
(non-discounted) fee. The chiropractor is
required under this provision to bill for actual charges rather than retail
charges.[123]
122.
Dr.
Crabtree asserted that this provision of the proposed rules was in direct
conflict with “Jim’s Law,” Minn. Stat. § 62J.83.[124] That statute specifies that,
“[n]otwithstanding any provision of Chapter 148 or any other provision of law
to the contrary, a health care provider may provide care to a patient at a
discounted payment amount, including care provided for free.” The statute goes on to state that it “does
not apply in a situation in which the discounted payment amount is not
permitted under federal law.” In a separate
comment, Representative Abeler (the sponsor of section 62J.83) also asserted
that, if chiropractors are required to bill health insurance plans (third party
payors) at the discounted prepayment rate, it would violate the spirit of Minn.
Stat. § 62J.83. Representative Abeler
recommended that Subpart 5 of the proposed rules be revised to apply only to
billing entities such as credit card companies.[125]
123.
In its post-hearing
response, the Board pointed out that the proposed rule does not specifically
allow or disallow discounts.
Consequently, the Board asserted that the proposed rule does not
conflict with the spirit or letter of Minn. Stat. § 62J.83.[126]
124.
The Administrative
Law Judge agrees with the Board that the proposed rule does not specifically
allow or prohibit discounts in connection with prepay plans. Accordingly, it is concluded that there is no
conflict between the proposed rule and Minn. Stat. § 62J.83.
125.
Subpart
6 requires that persons entering into a prepay plan with a chiropractor shall be
given three business days to cancel the plan with no penalties assessed for
cancellation. Under item D, if a patient
pays for care under a prepay plan and then elects to cancel the plan within the
cancellation period, the chiropractor must fully refund any unused portion
within 48 hours of receiving the notice of cancellation.
126.
In its
SONAR, the Board states that a three-day right of cancellation is needed to
protect vulnerable patients who may feel pressured by the practitioner to agree
to such plans. According to the Board, a
three-day right of cancellation will provide patients with sufficient time to
reconsider their decision and rescind it if they feel it is not in their best
interest.[127]
127.
Dr.
Thomas Schmidt commented that the rule should define more clearly what
constitutes a “true cancellation” triggering the 48-hour refund.[128]
128.
At the
hearing, Dr. Rebekah Oakland-Garey stated that 48 hours was too short a time period
to refund money in the event a patient opts to cancel a prepay plan. She explained that many chiropractors devote
only one day a week to administrative duties, and recommended that the Board
modify the provision to give chiropractors seven calendar days in which to
refund a patient’s money.[129] In its post-hearing comment, the Board agreed
with Dr. Oakland-Garey and has proposed revising the language in Subpart 6D to
give chiropractors seven calendar days in which to refund a patient’s money.[130]
129.
David
Wulff commented that the three-day right to cancel provision is unnecessary
because patients should have the right to cancel or terminate a prepay plan at
any time for any reason and upon termination be entitled to an accounting of
their funds, interest and disbursements, and full reimbursement of all funds
and interest remaining in the escrow account.[131] Dr. Brian Boyd also commented that patients
should have the right to cancel a prepay plan at any time and be reimbursed
according to the terms of the written agreement.[132]
130.
The
Administrative Law Judge finds that the Board has adequately demonstrated that
the proposed rule provision recognizing a three-day right of cancellation is
needed and reasonable. The Board has broad
authority under Minn. Stat. § 148.08 to adopt rules necessary to protect the
health, safety and welfare of the public, including rules governing the
practice of chiropractic. As noted
above, an agency is legally entitled to make choices between possible
approaches so long as its choice is rational,[133]
and is entitled to rely on policy preferences in support of a rule.[134] It is not the proper role of the
Administrative Law Judge to invade the policy-making discretion of the agency and
attempt to determine that another policy alternative presents the “best”
approach.[135] The Board has also shown that the
modification to allow refunds within seven calendar days rather than 48 hours
is warranted and does not constitute a substantial change in the rules.
131.
If the
Board opts to retain Subpart 6 rather than move its requirements to a new item
under Subpart 3 as recommended by the Administrative Law Judge above (see
Finding 110), the Administrative Law Judge recommends that two additional modifications
be made to Subpart 6 for clarity. First,
in item A of Subpart 6, the Administrative Law Judge recommends that the Board
delete the word “clear” at line 3.18 as superfluous, and also delete the phrase
“and shall be separately initialed by the patient” at lines 3.18 and 3.19 as
discussed earlier in this Report.
Second, the Administrative Law Judge recommends that the Board delete
the phrase “or otherwise acknowledged” in item A(2), line 3.23, due to its
vagueness. The Administrative Law
Judge concludes that these suggested modifications to the rule do not render it
substantially different from the rule as originally proposed.
132.
DOLI
recommended that the Board add a new Subpart 7 to ensure that chiropractors are
aware that prepay plans may violate workers’ compensation laws prohibiting the
collection of payment before the charges are submitted to the insurer.[136] As noted above, the Administrative Law Judge
concludes that the rules are not rendered defective by their failure to include
DOLI’s interpretation of applicable statutes and rules.
Based on the Findings of Fact, the
Administrative Law Judge makes the following:
CONCLUSIONS
1.
The
Board gave proper notice of the hearing in this matter. The Board has fulfilled the procedural
requirements of Minn. Stat. § 14.14 and all other procedural requirements of
law or rule.
2.
The
Board has demonstrated its statutory authority to adopt the proposed rules, and
has fulfilled all other substantive requirements of law or rule within the
meaning of Minn. Stat. §§ 14.05, subd. 1; 14.15, subd. 3; and 14.50 (i) and
(ii), except as noted in Finding 108.
3.
The
Board has demonstrated the need for and reasonableness of the proposed rules by
an affirmative presentation of facts in the record within the meaning of Minn.
Stat. §§ 14.14, subd. 4; and 14.50 (iii), except as noted in Finding 107.
4.
The
amendments to the proposed rules suggested by the Board after publication of
the proposed rules in the State Register are not substantially different from
the proposed rules as published in the State Register within the meaning of Minn.
Stat. § 14.05, subd. 2, and 14.15, subd. 3.
5.
The Administrative Law Judge has suggested
action to correct the defects cited in Conclusions 2 and 3, as noted in Findings
107 and 108.
6. Due to Conclusions 2 and 3, this Report has been submitted to the Chief Administrative Law Judge for his approval pursuant to Minn. Stat. § 14.15, subd. 3.
7.
Any Findings that might properly be termed
Conclusions and any Conclusions that might properly be termed Findings are
hereby adopted as such.
8. A Finding or Conclusion of need and reasonableness with regard to any particular rule subsection does not preclude and should not discourage the Board from further modification of the proposed rules based upon this Report and an examination of the public comments, provided that the rule finally adopted is based on facts appearing in this rule hearing record.
Based on the Conclusions, the
Administrative Law Judge makes the following:
RECOMMENDATION
IT IS
RECOMMENDED that the proposed rules, as modified, be adopted, except
where otherwise noted above.
Dated: April 14, 2011.
s/Barbara
L. Neilson_________________
BARBARA
L. NEILSON
Administrative
Law Judge
Digitally Recorded; No Transcript Prepared.
[1]
[2] See Minn. Stat. § 14.15, subd. 1.
[3] Public Exhibits 1-4 were received into the record during the hearing. The post-hearing submissions from members of the public have been marked and received into the record as Public Exhibits 5-61.
[4] SONAR at 5.
[5]
Minn. Stat. § 14.14, subd. 2;
[6]
Mammenga v. Dept. of Human Services,
442 N.W.2d 786 (
[7]
In re Hanson, 275 N.W.2d 790 (
[8] Greenhill v. Bailey, 519 F.2d 5, 19 (8th Cir. 1975).
[9]
Mammenga, 442 N.W.2d at 789-90; Broen Mem’l Home v.
[10] Manufactured Hous. Inst. v. Pettersen, 347 N.W.2d at 244.
[11]
Federal Sec. Adm’r v. Quaker Oats Co.,
318
[12]
[13] Minn. Stat. §14.05, subd. 2(b).
[14] Minn. Stat. § 14.05, subd. 2(c).
[15] The provisions of the Act relating to agency rulemaking are codified in Minn. Stat. §§ 14.001-14.47.
[16] The OAH rules governing rulemaking proceedings are set forth in Minnesota Rules part 1400.2000 through 1400.2240.
[17] Ex. A..
[18] Ex. E.
[19] Ex. E.
[20] See Ex. G.
[21] Ex. G.
[22] Ex. E.
[23] Ex. E.
[24] Ex. D.
[25] Exs. E and F5.
[26] Ex. F5.
[27]
Ex. H. See
[28] Ex. F.
[29] Ex. A.
[30] Ex. B.
[31] Ex. C.
[32] Ex. D.
[33] Ex. E.
[34] Ex. F-2.
[35] Ex. F-3, F-4, F-5 and F-6.
[36] Ex. G.
[37] Ex. H.
[38] Exs. I and J.
[39] Ex. K.
[40] Ex. L.
[41] Ex. E.
[42] Exs. F-5 and F-6
[43]
Board’s
[44] SONAR at 2 citing Minn. Stat. § 148.08.
[45] SONAR at 10.
[46] SONAR at 10-11.
[47] SONAR at 11.
[48] SONAR at 12.
[49] SONAR at 13.
[50]
Exs. I-1 and 4; Hearing Testimony of Dr. Crabtree.
[51] See, e.g., Exs. I-1 (Dr. Erin Anderson), I-6 (Dr. David Butler), I-12 (Dr. Jeff Danielson), I-17 (Dr. Scott Halida), I-20 (Dr. Jeremy Heidt), I-21 (Dr. Trent Iverson), I-23 (Dr. Brenda Kress), I-31 (Dr. Kyle Nye), I-32 (Dr. Dave Phillips), I-43 (Drs. Warren and Heidi Zook), J-30 (Dr. Jeffrey McComb); Public Ex. 7 (Tory Robson).
[52] Public Ex. 37; Hearing Testimony of Dr. Danielson. See also Ex. 46 (Dr. Derek Fisher).
[53] Public Ex. 24; see also Hearing Testimony of Dr. Jeff McComb.
[54] Public Ex. 20.
[55] Ex. M-1 (Testimony of Dr. Spicer) at 6.
[56] Ex. O.
[57] Ex. M-1 at 6.
[58] Ex. M-1 at 5-8.
[59] Ex. M-2.
[60] Ex. L-1.
[61] Ex. L-2.
[62] Ex. L-3.
[63] Ex. L-4.
[64] SONAR at 13.
[65] SONAR at 5.
[66]
[67]
[68] SONAR at 15.
[69] Ex. M-1 (Testimony of Dr. Spicer) at 10-11.
[70] Ex. G.
[71] SONAR at 13.
[72] Minn. Stat. § 14.128, subd. 1.
[73] SONAR at 15.
[74] Ex. I and Ex. J-27.
[75] See, e.g., Hearing Testimony of Timothy Guthman, Nathan Saj, and Liz Raymond (student).
[76] See, e.g., Public Exs. 2 (Susan Parsons), 3 (Misty Marshall), 12 (JoAnn Fager), 13 (Donna Miller), 14 (Norman Christiansen), 33 (Nancy Bonkoski), 35 (Shauna Voigt), 36 (Ruth Erkkila), 47 (Marty, Selena, Yilana and Leila Pagano and Paul and Rosalind Watkins), 48 (Kathy Fiedler), 49 (Ronn and Carrie Rockensock), 50 (Ann Tanko and Kellee, Marty, Maddox, and Mavin Knutson), and 52 (Jeff Duncan, Kim Ranweiler, Kyle and Johanna Puelston, Robert & Deanna Dennis, and Rick Smisson).
[77] Public Ex. 41. See also Public Exs. 29 and 32.
[78] Ex. I-36.
[79]
Board’s
[80] Ex. M-1 (Test. of Spicer) at 3-4, 9-10.
[81] Ex. M-1 (Testimony of Dr. Spicer) at 3-5; Board’s March 7, 2011, Post-Hearing Response at 1-2.
[82] SONAR at 8.
[83] Ex. I-41.
[84] Ex. I-18.
[85] Ex. M-1 (Testimony of Dr. Spicer) at 9.
[86] Ex. I-41.
[87] Ex. I-41.
[88]
Board’s
[89]
[90] Ex. I-2.
[91] SONAR at 6.
[92] Public Ex. 15 (Dr. Josh Watkins).
[93] Board’s March 7, 2011, Response Comments at 9.
[94] Public Ex. 53.
[95] Public Ex. 15.
[96] Ex. I-15. See also, Ex. J-2 (comment from Dr. Jamy Antoine).
[97] Ex. J-3.
[98] Ex. J-2.
[99] Ex. A-2 and I-29.
[100] Ex. I-41.
[101] Public Ex. 59.
[102] Public Ex. 51; Hearing Testimony of Dr. Wilcockson.
[103]
Board’s
[104] Some of those commenting on the proposed rules erroneously believed that they required a daily reconciliation or accounting of these monies.
[105] Public Ex. 51.
[106] Ex. M-1 at 8 (Test. of Spicer).
[107] Public Ex. 29; Hearing Testimony of K. Gergen-Mandel.
[108] Public Ex. 53.
[109] Public Ex. 51.
[110] Board’s Post-Hearing Response at 5.
[111] Ex. I-41.
[112] Ex. I-18.
[113] Ex. I-2.
[114] SONAR at 7.
[115] See, e.g., Ex. A-2; Hearing Testimony of Drs. Shawn Preisler, Tim Fargo, Pete Wuerdemann, and Jason Louie.
[116] Public Ex. 29; Hearing Testimony of K. Gergen-Mandel.
[117] See Exs. I-1, I-3, I-5, I-15, I-38, and J-4.
[118] Hearing Testimony of Dr. Laurie Goodsell; see also Hearing Testimony of Margo Davis.
[119] Public Ex. 27; Hearing Testimony of Dr. Katie Cowles and Liz Raymond.
[120] Ex. I-41.
[121]
Board’s
[122] Ex. A-2.
[123] SONAR at 7.
[124] Public Ex. 4 (Dr. Todd Crabtree) at 5-6.
[125] Public Ex. 51.
[126] Board’s March 7, 2011, Response Comments at 7.
[127] SONAR at 7.
[128] Ex. I-38.
[129] Testimony of Dr. Rebekah Okland-Garey.
[130] Board’s March 7, 2011, Response Comments at 7.
[131] I-41.
[132] Ex. J-6.
[133]
See, e.g., Federal Sec. Adm’r v. Quaker Oats Co., 318
[134]
Mammenga v. Dept. of Human Services,
442 N.W.2d 786 (
[135]
Federal Sec. Adm’r v. Quaker Oats Co.,
318
[136] Ex. I-2.