My clinic often receives calls from patients wondering are functional medicine doctors covered by insurance. There is no comprehensive functional medicine health care insurance plan available. Some insurance plans will cover some services and labs, but usually not the supplements required for complete programs. Also, insurance reimbursement is usually quite limited, often it’s not enough to cover the doctor’s expenses for running a clinic. There are, however, a small number of functional medicine doctors that take insurance and many of them are my close friends and colleagues and I’d like to share what I’ve learned from them about practicing functional medicine in an insurance based model.
First to lay out the pros and cons of functional medicine within the insurance model, this is an area the Kalish Institute course “My Practice Plan” explores in depth as we help functional medicine doctors build business models and financial models for their clinics.
The insurance model has several excellent built theoretical constructs behind it, although in the current health care climate these ideals have been over shadowed. One excellent aspect to insurance is the general theory that paying insurance premiums spreads risk among large groups of people so that when the time comes and you have a $250,000 medical bill, you have your insurance company, funded by other like minded patients, step up and cover the cost. And for all those years you have no significant medical expenses you pay into the insurance pool to support others. In this way it’s a community minded and progressive concept. Taking care of others and, when needed, taking care of your own needs.
However, as the insurance industry has gradually taken over the practice of American medicine, increasingly controlling the delivery of care since the end of World War II, the human tendency for greed has snuck into our medical insurance model just a little bit. The negative aspects of insurance include removing the patient from directly experiencing the real costs of treatment and stimulating a sense of entitlement that one deserves the best of treatments available, regardless of cost. So we want everything for everyone without taking into account if the treatment makes financial sense and without taking into account if there is an equally effective less expensive solution.
Also, insurers picking up the tab can distance the patient from the financial reality of their lifestyle choices. For example you can eat a high animal fat diet for a few decades expecting that yourinsurance company will pay for the medications and surgeries required to treat your now significant heart disease. Also, the emphasis on third party payers picking up the tab has allowed for an escalation of drug prices and an increase in the cost of various medical procedures. We’ve lost the normal check and balance system that exists in other industries. For example there is a limit on how much people will pay for a pair of shoes and shoe companies are required to stay within certain price ranges or people won’t buy their shoes. Imagine if there was “shoe insurance” and every new pair of shoes you got you just had a fixed co-pay on, it’d be likely that shoe companies would jack up their prices and you wouldn’t really think twice about it. You pay the co-pay, the shoe insurance kicks in for the remaining balance and everyone is happy. You would complain about the skyrocketing cost of shoe insurance at cocktail parties, but then what to do, it’s just the nature of shoe insurance premiums to go up faster than the rest of the economy.
Insurance (health insurance!) companies in the U.S. are not sufficiently motivated to keep the burden of health care expenses down. At the same time patients feel somewhat entitled to every available service that they want without being price sensitive. Further adding to the mess, doctors have become completely overwhelmed by all the extra work required by insurance company billing and reimbursement schemes and the majority of physicians now working in insurance based practices are burned out because no matter how many hours they work it’s hard to put together a decent income that will cover your student loans and other day to day expenses.
Enter Functional Medicine. So, is Functional Medicine covered by insurance? Sometimes yes and sometimes no. The answer depends on what specific services you are taking about and what specific doctor you are working with. While the majority of Functional Medicine doctors have all cash practices, meaning the patient pays up front in cash for all services and products, there are a few Functional Medicine doctors that have figured out how to make an insurance model work without having a schedule that leads to over work and exhaustion.
Getting away from the more common cash model, there are some progressive and socially minded doctors that are determined to make an insurance based Functional Medicine clinic work for their community. In speaking with many colleagues I’ve found there are some important reasons why some doctors want to work within the insurance model. One is simply to increase the spread of functional medicine by increasing the number of people using it with an emphasis on the end goal being the wide spread acceptance of Functional medicine. Another reason is to open up Functional Medicine as an option to more people by making it more affordable.
The challenges faced are many. Functional Medicine doctors often have one or two hour new patient intake sessions and thirty or forty minute follow up consultations. Insurance companies often only want to reimburse for visits of a few minutes and won’t cover visits lasting a few hours. Additionally, many Functional Medicine concepts are not yet accepted by the conventional medical system and this means many treatments such as high dose nutrient replacement are not seen as valid treatments and are not typically reimbursed. Because the payment on an hour long visit can be the same as a visit lasting a few minutes and because of the significant costs incurred by clinics in taking and processing insurance, a typical stand alone Functional Medicine insurance based practice goes into debt losing money hand over fist and will fail in a short period of time.
Because Functional Medicine is individualized and there are no “this for that” type treatments such as “high cholesterol means X medication” and because all Functional Medicine also involves time consuming health coaching and lifestyle coaching and teaching – the business model collapses quickly if insurance is the only source of income for the clinic. To make up for the deficits created by practicing Functional Medicine, doctors that are committed to providing Functional Medicine services to those that would not otherwise be able to afford them have come up with hybrid models.
By hybrid I mean they accept insurance when they can for the procedures that are covered by insurance, often losing money on this part of the practice. Then they add in non-covered services, meaning they add in Functional Medicine services explicitly not covered by insurance which are then paid for in cash by the patient. This might be supplements or a special class on diet. These non-covered services that patients pay for in cash are profitable enough to cover loses incurred elsewhere. This means the cash based non-covered services help finance the parts of the clinic accepting insurance that lose money so as to create a feasible business model.
Another hybrid model is a combination of an insurance based practice with a membership model. In this example all patients in the practice pay a membership fee and I’ve seen these range from $300 per year to $5,000 annually. This cash payment for membership provides a variety of membership services and then all remaining services are billed through insurance. In this situation the membership fees create profit that makes up for the losses on the insurance side of the practice. It is exceedingly rare to see a doctor make a go of it with a 100% insurance based practice that solely delivers Functional Medicine treatments.
While the majority of Functional Medicine practices may be cash based, there is often the option for insurance to help reimburse for a few of the high-ticket items, even within a cash practice, usually lab fees. This can help defray hundreds or even thousands of dollars and lower the barrier of entry for people on a strict budget to still be able to enjoy the benefits of Functional Medicine access.