CHAPEL HILL -- A popular Chapel Hill alternative medicine clinic has closed after insurer Blue Cross and Blue Shield of North Carolina decided to stop reimbursing patients for many of the clinic's services.

Plum Spring Clinic, which was located in Southern Village, officially shut down Aug. 1, though some staff members continued to see patients at the clinic's offices through the end of the month.

The majority of the clinic's patients were Blue Cross policy holders, and as a result the clinic could not continue to operate following the company's decision, said medical director Michael Sharp.

Sharp declined to comment further on the specifics of the Blue Cross decision. He referred questions to a statement on the clinic's Web site noting that the insurer's decision was based on the opinion that the clinic's services - which included acupuncture, psychotherapy and nutritional testing - are alternative and holistic treatments that aren't medically necessary.

"The dispute with Blue Cross Blue Shield is still active," Sharp said, adding that his lawyer advised him to keep additional details of the dispute private.

A spokesman for Blue Cross said the company also would not comment on the case because Sharp has retained legal counsel.

Sharp said 27 people lost their jobs when the clinic closed, but many of the medical professionals from the clinic will continue to practice in the Chapel Hill area.

"I think most of the people have found another place to practice," he said. "Some people are deciding to take a break."

Many of the clinic's patients were upset about the closing and the Blue Cross decision, Sharp said. The clinic saw 6,000 patients in its more than seven years of operation.

"There were a lot of people that felt that they had the rug pulled out from under them," he said. While the services and treatments offered by the clinic are available elsewhere, patients might not be able to receive insurance coverage.

Isabelle Geffner, spokeswoman for Duke Integrative Medicine, which specializes in alternative treatments, said she was unaware of any other insurance-related closings. She added that insurance companies' failure to cover alternative medicine is a major problem facing the field.

"We recognize that ultimately we need to reform the health care system so the kind of care we are modeling is available to every patient," Geffner said.

Lew Borman, program manager for Blue Cross's corporate communications, said the company's policies regarding alternative medicine have not changed.

"Anything that's considered investigational we don't cover," Borman said, noting that the company classifies most alternative and complementary medicine as investigational, meaning the benefits haven't been scientifically proven.

Most Blue Cross policies specifically exclude treatments such as acupuncture, holistic medicine services and hypnosis.

But Borman added that the insurer offers discounts of up to 30 percent for many of these treatments.

"We were the first in the country to offer discounts for alternative medical services," he said.

Sharp said his clinic did not participate in the discount program, and most of its alternative medicine services had been fully covered by Blue Cross.

In order for medical practitioners to have their services covered by Blue Cross, their practice must undergo a recredentialing process every three years, Borman said. In some cases, the coverage can be revoked, though Borman said that may or may not have happened in the Plum Spring case.

Blue Cross had credentialed the clinic twice and audited it twice in the past five years, but did not take action until now, Sharp said.

"It was quite a surprise when they stopped all payments," he said.

Borman declined to comment on why the Blue Cross had covered the clinic's services for years.