Business Environmental Analysis: Cigna & CAM Insurance

Market Domain: CAM Coverage Gap in Health Insurance

Historical Significance

The industry selected for this analysis is healthcare — specifically medical health insurance plans. In seeking to evaluate an unmet need in the health insurance realm, it is useful to first offer a concise definition of health insurance. In basic terms, health insurance can be defined as "a contract that requires a health insurer to pay some or all of an insured person's health care costs in exchange for a premium" (HealthCare.gov, 2020). Among the things covered by health insurance are hospital and doctor visits, medical devices, and prescription drugs, among others. It therefore follows that health insurance does not necessarily provide cover for brand-new medical technologies, off-label drug use, complementary and alternative medicine (CAM), cosmetic and elective surgery, and similar services. However, this is precisely where significant opportunities lie for players in the industry, given that failure to provide coverage in these areas means that key market needs remain unmet.

Complementary and alternative medicine is rather popular in the United States. For instance, in a study assessing the prevalence of herbal medicine use among adults, more than a third of participants reported that they regularly used herbal supplements (Rashrash, Schommer, and Brown, 2017). In the words of the authors, "older age and higher education were associated with a higher use of herbal supplements" (Rashrash, Schommer, and Brown, 2017, p. 109). Herbal medicines are part of CAM. These findings are corroborated by Ventola (2010), who notes that approximately 40% of U.S. adults have at some point used CAM. Ventola (2010) describes CAM as "a group of diverse medical and health care systems, practices, and products that are not presently considered to be part of conventional medicine." One area that has seen widespread CAM utilization is cancer treatment. According to Halter (2018), while radiation and chemotherapy have high efficacy rates, "nearly 40 percent of Americans believe alternative medicine alone can stop the disease in its tracks."

To a large extent, most CAM treatments are not covered by health insurers, leaving a significant portion of CAM use without insurance coverage. According to Patricia and Coulter (2016), most CAM practitioners have legal standing as professionals and some are permitted to provide primary care; however, they are yet to be fully embraced by Medicare and private insurers. As Patricia and Coulter (2016) explain, "CAM practitioners cannot seek reimbursement from insurers for many services they are trained to perform and so cannot practice to the full extent of their capabilities, which for chiropractors might include giving full physical examinations or writing prescriptions." It should be noted that some health insurance plans do cover certain CAM services — such as chiropractic and acupuncture care — which are routinely used in the treatment of back pain and migraines, among other conditions. However, even when covered, significant restrictions often apply regarding the frequency of visits.

There is therefore a clear need that the insurance industry has not yet fully addressed: health insurance plans should cover a wider range of alternative care services, including dietary supplements, naturopathy, and homeopathy. Various studies indicate that a significant portion of the adult population actively uses CAM, and insurance companies could establish clear guidelines to streamline coverage — for instance, extending it to approaches with sufficient evidence of effectiveness in alleviating symptoms or illness. There is sound basis for alternative medicine to be considered alongside traditional healthcare in the context of health insurance.

Factors Influencing CAM Insurance Coverage

Complementary and alternative medicine continues to be embraced by many individuals across the U.S. and in much of the world. Yet insurance coverage for alternative medicine remains limited — with some insurers expressly refusing coverage and others covering only select CAM procedures such as acupuncture and chiropractic care. Several factors have made health insurance companies wary of this market domain.

In the year 2000, the White House Commission on Complementary and Alternative Medicine Policy (WHCCAMP) was established to assess concerns surrounding the delivery and access to CAM across the nation (National Institutes of Health, 2020). Various stakeholder consultations were held, and one of the commission's key findings was that a primary reason most insurance companies avoided CAM was the lack of sufficient evidence for the effectiveness of those therapies. Players in the health insurance industry were "concerned that their limited dollars be spent on care that has been shown to be safe and effective" (National Institutes of Health, 2020).

Beyond effectiveness, safety is another concern. Unlike conventional medicine, there is no well-founded framework for assessing and evaluating the safety of CAM drugs and treatment approaches, which raises ethical considerations about supporting approaches that could have a net negative impact on patient wellbeing. Additionally, health insurance companies have cited the lack of established criteria for assessing the medical viability or necessity of CAM therapies (Synovitz and Larson, 2013). Conventional medicine has developed methodologies for determining the relevance of procedures — an important factor in insurance risk management — whereas CAM lacks a comparable framework of necessity assessment.

However, some health insurance companies do cover alternative and complementary therapies, and a significant enabling factor is patient demand. As Herman and Courter (2015) note, "the American Hospital Association survey of hospitals found that 49 percent of respondents indicated that patient demand was the primary motivation for offering CAM services" (p. 74). Furthermore, most healthcare institutions have begun embracing integrated care. Herman and Courter (2015) assert that "there is evidence that other therapeutic modalities, with different conceptual frameworks, are beginning to compete with this dominant [biomedical] model" (p. 102), and insurers are cognizant that CAM will claim a growing share of Western medicine going forward.

Impact of Factors

The factors described above have had a major influence on opportunities for innovation and change in the CAM insurance realm. Most directly, they have slowed the integration of conventional medicine with CAM, as players in the healthcare industry lack sufficient motivation and incentives to pursue this course. If health insurance plans were to actively cover CAM, those players would be more motivated to find ways of integrating conventional and CAM therapies.

These same factors have, however, inadvertently spurred research on the effectiveness of CAM therapies. As Hu, Li, Duan, and Arao (2013) point out, "for policy makers, practitioners, patients, and health care system managers to make informed decisions about the use of CAM therapies, they must have both access to and a means of evaluating the results of research on the topic." For instance, there has been increased research activity seeking to determine how effective CAM therapies are among hypertension patients (Hu, Li, Duan, and Arao, 2013).

The factors have also had an impact on the prevalence of CAM itself. Although CAM is popular, the lack of consensus on insurance coverage has kept a significant portion of the population from accessing it. For instance, CAM does not typically feature in group health insurance policies or employer-sponsored insurance, meaning that for the millions of employees who rely on group coverage, CAM therapies are simply not an option.