Judging by the marketing, it would seem that the teachers of New Jersey have collectively thrown out their backs, pulled a muscle or pinched a nerve while engaged in rigorous educating.

Last fall, when teachers at about a dozen New Jersey schools returned from break, employees from Thompson Healthcare & Sports Medicine welcomed them with bagels and orange juice. The clinic’s owner also created an empathetic YouTube video titled “We Understand Painful Conditions Suffered By Teachers.”

NJ Spine and Wellness offered catered lunches, chairside massages and prizes at “Teacher Wellness Days.” “Want us to come to your school?” the chiropractic business asks educators in an online ad.

Other acupuncturists, chiropractors and physical therapists have donated cash, supplies and even wheelchairs to local schools and districts. On social media, some dangle the promise of a stress-relieving rubdown. “Contact our office about medical massage included as part of our chiropractic services,” says one post.

But this competitive wooing is not fueled by a dawning recognition of the back pain associated with teaching algebra. Unbeknownst to most of the 158,000 active and retired New Jersey school employees covered by the state’s School Employees’ Health Benefits Program — about a third of the state’s districts — their benefit plan has a lucrative carveout for out-of-network providers.

And it’s a big one: The teachers’ plan will cover virtually anything they charge.

This bonanza has not gone unnoticed by the providers of services like physical therapy that generally require repeat visits. Last year, the teachers’ plan paid some acupuncturists and physical therapists an average of more than $600 per visit, according to payment data obtained by ProPublica — dwarfing the out-of-network fees of even psychiatrists and gynecologists. More than 70 acupuncturists and physical therapists earned more than $200,000 in 2018 from their teacher clients alone, the data shows. The services of one acupuncturist brought in more than $1 million.

The state paid Thompson Healthcare & Sports Medicine, with 10 clinics along the Jersey Shore, about $11.2 million in 2018 for providing chiropractic services, acupuncture and physical therapy to teachers.

In interviews, the owners of several of these businesses acknowledged pursuing teachers because they know their plan will pay their fees. And some conceded that they receive significantly less reimbursement when providing the same services to other public employees. But, they said, that’s just smart business.

“We strategically target schools and municipalities where there are self-funded plans, where we as a company can continue to grow,” said Harris Hafeez, a co-owner of Advanced Physical Medicine & Rehabilitation, which is based in Red Bank and has seven offices in central New Jersey.

At Advanced, each acupuncture patient enjoys an hourlong, one-on-one session in a “state of the art” soundproof treatment room with a high-end sound system, said co-owner Daniel Reizis, who is a physical therapist. The practice even had an acupuncturist flown in from Japan, he said. “That’s why we have five stars across the board.”

But even Reizis hesitated when questioned about the fees for one of his acupuncturists, whose single sessions in 2018 averaged almost $700. Those fees, he agreed, could be considered “excessive.” But, he said, “at the same time, there’s nothing I do that’s wrong.”

Over the past two years, ProPublica has been detailing the hidden forces — side deals, unchecked fraud, lazy regulators and greedy providers and insurers — that make Americans’ health benefits so expensive. One constant has almost always proven true: Just because a health plan covers something doesn’t mean that the employees in the plan won’t eventually pay the cost.

In recent months, teachers across New Jersey have been protesting, even striking, for higher wages and more affordable benefits. Meanwhile, a state analysis shows, the glut of out-of-network payments has consumed hundreds of millions of dollars in the past four years. That’s money that experts say could have helped fund the teachers’ demands. And New Jersey residents are also pitching in to pay the bills: Homeowners in the towns where the schools are located are chipping in through higher property taxes.

The state panel overseeing the benefit plan, made up of six people, half of whom are union members, has done nothing to stop the runaway costs, although meeting transcripts show they’ve been discussed since at least 2014. The panel members declined to comment on their oversight of the plan.

State treasury officials, who have watched the money pouring out to practices like Advanced, said in interviews that they’ve repeatedly pushed the panel to cap the out-of-network fees.

The payments made by benefits plans typically remain private. But ProPublica filed public records requests with the New Jersey Department of the Treasury for the amount paid to the highest earning out-of-network providers, as well as the internal memos and meeting transcripts describing the problem. The data and documents, along with interviews with state officials, reveal what happens when savvy practitioners discover the lucrative loopholes in a loosely designed employee health plan.

Across the country, health care providers are targeting similar plans with what insiders call “rich benefits,” said Dr. Eric Bricker, a general internist who founded a company to aid people in navigating their health benefits.

“Sharks are gonna eat, that’s just what they do,” Bricker said. The ongoing over-the-top payments in New Jersey, he said, “point to poor management or negligence on the part of the people administering the plan.”

The New Jersey school employees covered by the plan, and their districts, have been paying the price. Their premiums have spiked by 8% and 13% in recent years, in part due to the out-of-network spending, according to data from the state. They now cost more than $36,000 a year for the most popular family plan, nearly twice the typical cost in other parts of the country.

Health insurance reformers said if the teachers fully understood the exploitation of their benefit plan, they’d demand change.

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In New Jersey, such a change happened in 2015 with separate state-funded benefits for firefighters, police officers and local and state government workers, called the State Health Benefits Program.

At the time, that program also had no caps on billing for out-of-network practitioners. But that year its plan design committee, alarmed by runaway costs, capped the payments to bring them in line with what in-network providers make for the same services.

Today, according to state data, the differences between that plan and the teacher’s plan are stark.

An out-of-network physical therapist treating a teacher would have been paid an average of $351 per visit by the state in 2018. The state would have paid the same therapist treating a police officer an average of $119, nearly a third as much, according to state data.

Out-of-network acupuncturists were paid an average of $377 per visit from the teachers’ plan while the state workers’ plan paid $144. For chiropractor visits, it was $121 compared with $25.

The state data does not include the 20% to 30% coinsurance amount that the patients are supposed to pay for each out-of-network visit. State officials suspect some providers are waiving this coinsurance to draw in patients and said they are investigating.

The teachers’ plan pays out-of-network practitioners at the 90th percentile of what other clinicians in their area bill for the same services — so if everyone is charging a lot, everyone gets paid more. The program also allows clinicians to unbundle services, allowing providers to bill for many treatments per visit.

The generous out-of-network benefits apply to all medical providers. But state officials, internal memos and meeting transcripts show that the teachers are being targeted primarily by acupuncturists, chiropractors and physical therapists, who can draw them in for multiple appointments.

ProPublica contacted scores of New Jersey teachers and school employees to find out if they’d seen such providers, and if so, if they understood the costs. Few responded, and those who did, declined to speak on the record.

State officials say capping the payments to such providers on the state workers’ plan has drastically reduced the costs. And they say they haven’t received any complaints from employees about not getting the care they need.

In August, consultants for the state estimated that if the teachers’ plan similarly capped payments to out-of-network providers of chiropractic services, acupuncture and physical therapy, the plan could save about $130 million a year. That could reduce medical premiums by about 8%, according to other estimates. The consultants have been making similar reports for years. Officials in the state’s division of pension and benefits say that they are frustrated by the overspending in the teachers’ plan, but that they don’t have the authority to make the changes to the plan themselves.

But tightening up the state workers’ plan has had a perhaps predictable effect: It focused the marketing of some New Jersey practitioners on the remaining lucrative customers: teachers.

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The Thompson Healthcare & Sports Medicine clinic in Forked River looks like an upscale spa, with flat-screen televisions, wide-plank wood floors, soft lighting and exposed brick and ductwork. The site serves as the headquarters for chiropractor Robert Thompson’s chain of clinics.

Thompson said he wants to achieve the “wow” factor with his patients, so they keep coming back and refer others. The facility’s acupuncture suites are tranquil and scented with essential oils. And it’s loaded with devices: compression sleeves that slide over the limbs, machines for shock wave therapy and spinal decompression, a handheld device that vibrates to break up adhesions in joint capsules and more. Thompson called some of the tools his “secret weapons.”

Thompson said teachers are some of his best patients and make up about a third of his practice. His wife is a former teacher, and he readily concedes that his clinic markets to them. But he doesn’t consider the fees he charges excessive. The wow factor and the cutting-edge devices cost money, he said, driving up the per-visit fee. But patients heal faster and don’t have to come in as often, he said. And while the $11.2 million the teachers’ plan paid to Thompson Healthcare & Sports Medicine in 2018 makes it the plan’s biggest earner, Thompson said his business collected less because checks for out-of-network treatment often go to patients, who may keep the fees. In addition, Horizon Blue Cross Blue Shield of New Jersey, which administers the plan, sometimes reverses payments, he said, because of billing disputes or other issues.

A Clinic Woos Teachers

An April 2017 Instagram post shows a provider from Thompson Healthcare & Sports Medicine giving chair massages during a visit to an elementary school.

The state’s data shows marked differences between what Thompson’s clinics made from the teachers’ plan in 2018 and from the state workers’ plan. Thompson was reimbursed an average of $465 per acupuncture appointment from the teachers’ plan compared with $44 from the state workers’. For physical therapy, it was about $321 versus $33; for chiropractic, an average of $161 and $25.

Thompson said he doesn’t market to other state employees because their reimbursement is too low. He treats those who come in, but he said he suffers a loss when he does.

A more equitable solution for all state employees, including teachers, he said, would be for the state and clinicians to agree on a flat fee per service that would reduce the administrative hassle and be fair to everyone.

Some providers contacted by ProPublica, including NJ Spine and Wellness, declined to answer questions about their practices or their payments from the state.

Acupuncturist Jason Sargis, president of the New Jersey Association of Acupuncture & Oriental Medicine, said he knows some providers “take advantage of the system.” He said his out-of-network price is the same as his cash price, which remains $125 per 15 minutes of acupuncture, with a maximum of $250 per visit.

According to the state data, almost 50 acupuncturists were paid at least $400 on average per session from the teachers’ plan in 2018. To put such fees in context, many medical doctors in New Jersey charge much less, according to Fair Health, the nonprofit the state uses to set its out-of-network payments. A psychiatrist performing a diagnostic evaluation typically charges about $250 out-of-network. A gynecologist charges about $285 out-of-network for an annual exam.

The payments attributed to one acupuncturist at Advanced Physical Medicine & Rehabilitation averaged $677 per visit in 2018, the state data shows. In response to questions about those fees, co-owner Reizis said, “We are all familiar that out-of-network pays very well.” Hafeez, his partner, said that the provider’s patients suffered from complex medical conditions.

Advanced is getting paid top dollar from both the teachers’ plan and the one for state workers — despite that plan’s reforms. For acupuncture, for instance, the teachers’ plan paid an average of $609 per visit in 2018, the data shows, while the state workers’ plan paid an average of $569 per visit — far more than should be allowed under the limits that went into effect in 2016.

Hafeez and Reizis said the limits may not apply to them because the treatments may also have involved medical doctors. But after questions from ProPublica, Christin Deacon, who leads the health benefits operation for the state, said the caps should apply and that she sent their claims to Horizon’s fraud unit to investigate.

Some of the payments ProPublica found in the state data were so extreme they raised bigger questions about oversight by the state and Horizon. Horizon declined to answer questions for this story.

In 2018, the teachers’ plan paid more than $1 million for 3,308 patient visits to a single acupuncturist at Palluzzi Health Center in Old Bridge, the data shows. That would require the acupuncturist to have treated about 13 school employees every day for the entire year, given a five-day workweek. Through his attorney, Dr. Edward Palluzzi, the chiropractor who founded the clinic, declined to be interviewed. His attorney said the practice is high volume and stands behind the care it provides and how it interacts with payers, including the teachers’ plan.

Some providers had been disciplined in the past for insurance fraud.

In 2017, the teachers’ plan paid Dr. Charles Boas, a chiropractor in Bayonne, $311,633 for 7,288 patient visits, according to the data. Boas would have had to treat an average of 29 school employees a day for the entire year, assuming a five-day workweek. The next year he was paid $141,881 for 3,446 visits. Boas did not respond to ProPublica’s requests for comment. In 2014, he pleaded guilty to insurance fraud and had his license suspended for a year, according to an order by the New Jersey State Board of Chiropractic Examiners.

ProPublica asked state officials about the implausible number of visits that led to the Boas payments. They said Horizon, the plan administrator, stopped payments to the chiropractor in June 2018. The case is still being investigated by the New Jersey Office of the Attorney General, and so far, there’s been no public findings or recovery of funds, officials said.

Another chiropractor, Dr. Frank Bello of North Bergen, was paid $208,265 for 2,042 chiropractic patient visits in 2018 under the teachers’ plan. That same year, the data shows he was also paid $266,071 for the same number of physical therapy visits. State officials declined to discuss his case but said chiropractors may bill for both chiropractic and physical therapy treatment during the same visit.

Bello pleaded guilty to insurance fraud in 2006 and had his license suspended for six months by the New Jersey chiropractic board. He did not respond to requests for comment.

State officials said they had forwarded the names of several practitioners flagged by ProPublica to Horizon for further scrutiny. The officials said that Horizon actively monitors out-of-network payments and that the state is in the process of hiring an additional vendor to screen claims for accuracy, appropriateness and potential fraud. ProPublica has previously reported about the lax fraud oversight by the big insurance carriers who administer self-funded plans.

Deacon, the state official, said it wouldn’t be hard to stop to over-the-top payments. With the state workers’ plan, “they changed the payment structure so that we couldn’t be exploited in this way,” Deacon said. “The solution is at our fingertips.”

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Since at least 2014, the six-member committee charged with overseeing the teachers’ plan has publicly lamented the millions rolling out the door — and has done nothing to stop it.

During a meeting in August 2018, committee members wondered if acupuncturists and physical therapists were raising rates on teachers to make up for the lower payments from the state workers’ plan.

“I think the teachers become the prey, because these guys aren’t going to make less money,” said member David Ridolfino, director of the state’s office of management and budget, according to a meeting transcript.

“Right,” said a consultant who had been hired to study the issue, “and I like your term. They are becoming the prey.”

“Until we make changes here, this is just going to keep getting worse and worse,” Ridolfino said.

At a meeting in April, Kevin Kelleher, the committee chairman, noted the cost of the out-of-network visits had increased by 20% to 30%. Kelleher is the director of the research and economic services division of the New Jersey Education Association, a teachers union.

“Right now, we are paying somewhere between 10 and 12 times what an out of network provider is paid” in the state workers’ plan, he said, according to a meeting transcript. “Clearly, we see there is a problem, and we need to do something about it.”

Yet to date, no action has been taken because the committee requires a majority vote to make changes. Three members represent teachers unions. And three work for the Treasury Department, which runs the health plan. Two of those members also serve on the plan design committee for the state workers’ plan, which voted unanimously to cap the out-of-network payments.

Kelleher refused to discuss the committee’s lack of action with ProPublica.

But Dini Ajmani, New Jersey’s assistant treasurer, said if only one of the union members on the panel agrees to vote for caps, the huge payments could be stopped. ProPublica asked state officials how much the teacher’s plan could have saved — just on out-of-network payouts to chiropractors, physical therapists and acupuncturists — if it had followed the state workers’ plan’s changes in 2016.

“You’re looking at half a billion dollars,” Deacon said.