Food as Medicine: A Deep Dive Into Reimbursement

DEFINING FOOD AS MEDICINE

While there is no single definition of food as medicine, the concept generally refers to prioritizing food and diet in an individual’s health regimen with the goal of either preventing, reducing symptoms of, or reversing disease. In its Food Is Medicine Landscape Summary, the US Department of Health and Human Services defines the concept as “encompass[ing] a broad range of approaches that promote optimal health and healing and reduce disease burden by providing nutritious food – with human services, education, and policy change – through collaboration at the nexus of health care and community.” The American Society for Nutrition notes that food as medicine sits at the crossroads of nutrition and healthcare and may take many forms, including medically tailored meals (MTM), medically tailored groceries, and produce prescription programs. As illustrated by the varying definitions and potential service offerings, food as medicine represents a broad array of disciplines, interests, and actors and may include services, whether standalone or in conjunction with one another, in furtherance of a person’s overall health and well-being.

The chart below summarizes various key actors within the food as medicine industry. These actors often must engage with one another via a patchwork of contractual and other relationships to successfully implement and execute effective food as medicine programs.

The Food as Medicine Landscape

FUNDING AND REIMBURSEMENT FOR FOOD AS MEDICINE INITIATIVES

As with any innovative initiatives, funding sources are of pivotal importance for food as medicine programs. Food as medicine initiatives may be funded and reimbursed via both governmental and private sources. However, not all actors are able to participate in each potential reimbursement stream, further necessitating strategic partnerships between payors and providers of both food and patient services to develop effective programs. Actors may also face specific regulatory issues and related hurdles.

Food as medicine initiatives are not currently reimbursed by Medicare or Medicaid on a fee-for-service basis under the traditional programs. However, both Medicare Advantage (MA) and Medicaid waiver programs have provided certain avenues for food as medicine reimbursement. While the Biden administration advanced initiatives in this arena, the new Trump administration has already narrowed some of these flexibilities (see Medicaid Managed Care section below).It will be important to closely monitor federal rulemakings to stay abreast of potentially changing rules in this arena.

MEDICARE ADVANTAGE

Many MA organizations (MAOs) offer food as medicine interventions under a range of authorities. These benefits may be attractive to MAOs as a way to reduce costs and improve member health, and offer an enhanced, competitive benefits package. Despite these incentives, MAOs do not have the authority to offer any food as medicine benefits that they wish and instead must fit all benefits into an authorized benefits category. The most common pathways for MAOs to offer food as medicine include supplemental benefits, special supplemental benefits for the chronically ill (SSBCIs), and the Value-Based Insurance Design (VBID) Model.

Supplemental Benefits

A supplemental benefit is an item or service not covered by original Medicare that is primarily health related and for which the MA plan must incur a non-zero direct medical cost.[1] Guidance from the Centers for Medicare & Medicaid Services (CMS) regarding supplemental benefits specifically lists several food as medicine items that qualify as supplemental benefits:

• Meals for a temporary duration immediately following surgery or an inpatient hospital stay.
• General nutritional education through classes and/or individual counseling.
• Enhanced disease management programs that include educational activities related to dietary restrictions and nutritional counseling.
• Weight management programs that include a plan to keep the weight off over time; guidance on healthier eating; and ongoing feedback, monitoring, and support.
• One-on-one medical nutrition therapy counseling provided by a registered dietician or other nutrition professional.[2]

Offering these food as medicine items as supplemental benefits is popular in the MA program. For CY 2025, nearly two-thirds of MA plans offer some kind of temporary meal service benefit, and more than 99% of Medicare beneficiaries have access to a plan that offers one.[3]

Special Supplemental Benefits for the Chronically Ill

In addition to traditional supplemental benefits, MAOs can offer an even broader range of supplemental benefits to chronically ill enrollees. Per the Social Security Act, these benefits, known as SSBCIs, need not fall within the definition of “primarily health related” but must be limited to items or services that have a “reasonable expectation of improving or maintaining the health or overall function of the chronically ill enrollee.”[4] This gives MAOs more leeway in the types of items and services they can offer. However, only members who qualify as chronically ill enrollees[5] are eligible to receive SSBCIs.[6] Common SSBCIs include meals and allowances for healthy food and produce.[7] The meals can go beyond those provided as a traditional supplemental benefit and do not need to be tied to a member’s surgery or an inpatient hospital stay. Healthy food allowances typically are offered in the form of a debit card that can be used at a grocery store. CMS has recently clarified that nonhealthy foods are not allowable as SSBCIs because they do not have a reasonable expectation of improving or maintaining the health or overall function of a chronically ill enrollee.[8] For CY 2025, the vast majority (84%) of special needs plans, which typically enroll higher proportions of chronically ill members, offer food and produce as an SSBCI while only 15% of non-special-needs plans do.[9]

Value-Based Insurance Design Model

The VBID Model has permitted participating MAOs the flexibility to use certain varied supplemental benefit designs.[10] Under the model, MAOs have offered certain enrollees non-primarily health-related supplemental benefits and may offer them on a non-uniform, tailored basis to certain enrollees.[11] MAOs may target the benefits based on chronic health conditions, socioeconomic status, residence in most underserved area deprivation index areas, or a combination of the foregoing. Food as medicine benefits under the model include meals (beyond otherwise allowable limits) and individual food items, including produce.[12] While the model has been a popular avenue to offer these benefits, CMS has announced that it will terminate the VBID Model at the end of 2025.[13]

MEDICAID MANAGED CARE AND SECTIONS 1115 AND 1915 WAIVERS

To receive federal matching funds for their Medicaid programs, states generally must agree to meet federal requirements.[14] However, states can choose to provide optional benefits under state plan authority and through waiver authority under Section 1915 of the Social Security Act. They can also offer non-mandatory benefits under demonstration project waiver or expenditure authorities under Section 1115 of the Act. States also use managed care delivery systems to provide Medicaid covered benefits through contracted arrangements with managed care organizations (MCOs).[15]

With limited exceptions, federal law does not explicitly permit states to cover the direct provision of food as an established Medicaid benefit.[16] However, states and MCOs can address nutritional needs in a variety of ways. For example, states could add home-delivered meals as a service under Section 1915(b)(3) authority and have managed care plans provide this service to individuals with chronic conditions, as long as the meals do not constitute a full dietary regimen and the individuals receiving the service have an assessed need for home-delivered meals documented in their person-centered service plan.[17] At least 10 states, including California, New York, Massachusetts, and Illinois, have obtained CMS-approved Section 1115 waivers to implement food as medicine demonstration projects.[18]

While states have had great flexibility to tailor their food as medicine projects in the past, CMS recently rescinded guidance on covering services and supports for health-related social needs, which had given states a framework for providing food.[19] CMS has previously articulated that it considers the following nutrition services allowable under Section 1115 authority:

• Case management services.
• Nutrition counseling and instruction.
• Home-delivered meals (including MTM) or pantry stocking, up to three meals per day.
• Nutrition prescriptions, up to three meals per day.
• Grocery provisions, up to three meals per day.[20]^{, [21]}

States were also granted leeway to propose clinically focused, needs-based criteria to target interventions at certain populations.[22] Common target populations include pregnant and postpartum individuals, individuals with chronic diet-sensitive conditions, and individuals with substance use disorder or serious mental illness.[23]

Recently, CMS sent a state Medicaid director letter indicating that the agency would review Section 1115 waivers that provided federal matching funds for programs that would not have otherwise qualified for federal Medicaid funding.[24] The letter did not directly mention food and nutritional supports, but six of the eight states mentioned as having approved Section 1115 waivers that would be reviewed are states that currently implement food as medicine programs.[25] The extent to which the Trump administration will approve federal funds being used for food as medicine programs is uncertain at this time.

ADDITIONAL AUTHORITIES

In addition to waivers, Medicaid MCOs may leverage the following authorities to implement food as medicine interventions:

• In lieu of services and settings is a payment pathway that enables states to authorize Medicaid MCOs to provide medically appropriate, cost-effective substitutes for covered services.[26] Allowable substitutes include grocery provisions, nutrition prescriptions, home delivered meals or tailored pantry stocking, and nutrition counseling.[27]
• Value-added services are services in addition to those covered under the state plan, although the cost of these services may not be included in the capitation rate.[28]
• Federal regulations include requirements for how states may direct plans to implement specific delivery systems and provider payment initiatives under Medicaid managed care. These types of payment arrangements permit states to direct specific payments made by managed care plans to providers under certain circumstances and can assist states in furthering the goals and priorities of their Medicaid programs, including to reinforce a state’s commitment to addressing social determinants of health (SDOH).[29]
• States may use incentive payments to reward managed care plans that make investments or improvements in SDOH in line with performance targets specified in the managed care plan contract, including implementation of a mandatory performance improvement project that focuses on factors associated with SDOH.[30]
• States may develop and implement specific managed care plan procurement and contracting strategies to incentivize care coordination across medical and nonmedical contexts, including to address SDOH.[31]

PRIVATE SOURCES OF FUNDING AND REIMBURSEMENT

Covering food as medicine under an employer-sponsored health plan currently may pose administrative challenges, but the Internal Revenue Service (IRS) may adopt more flexible guidance to expand such coverage.[32]

Currently, whether an employer health plan may cover or reimburse an expense on a tax-advantaged basis generally depends on whether it meets the definition of a qualified medical expense. Section 213(d) of the Internal Revenue Code and related regulations define medical expenses as amounts paid “for the diagnosis, cure, mitigation, treatment or prevention of disease, or for the purpose of affecting any structure or function of the body” that are “incurred primarily for the prevention or alleviation of a physical or mental defect or illness.” Expenses that are merely “beneficial” to an individual’s general health are not medical care under Code Section 213(d). Such expenses generally are not qualified medical expenses unless a physician determines that they are necessary to treat or alleviate a certain physical or mental illness.

As a result, food as medicine generally must meet the definition of a qualified medical expense to be covered or reimbursed under an employer-sponsored health plan. Food as medicine, such as special foods or supplements, may be considered a dual-purpose expense, which can be a qualified medical expense or a personal expense depending on the facts and circumstances. To substantiate that a particular expense, such as food as medicine, is in fact a qualified medical expense, IRS guidance generally requires that claims for expense reimbursements be substantiated with independent third-party information. This is usually accomplished through an invoice or other documentation of the expense and a letter of medical necessity, in which a healthcare provider documents that an individual has a certain condition for which the provider recommends a specific food as medicine. The IRS does not consider an individual’s self-substantiation or certification to be adequate. Even when an individual obtains a letter of medical necessity, the employer-sponsored health plan administrator (often a third-party administrator) may take a conservative position and not cover or reimburse potential dual-purpose items such as food as medicine.

In addition to potential government reimbursement opportunities and coverage under employer-sponsored health plans, food as medicine programs may be paid for on a cash basis or otherwise funded by private investment. These partnerships and funding sources can potentially alleviate some regulatory complexities associated with government reimbursement but may also present other considerations when building a successful food as medicine program.

KEY TAKEAWAYS

The concept of food as medicine is broad and constantly evolving. Marketplace participants continue to face various hurdles such as funding and reimbursement to get initiatives off the ground and to show their value proposition and beneficial impact on global health and well-being. As these programs evolve and seek to expand, market participants in this space should implement strategies for regulatory compliance and stay abreast of current reimbursement opportunities.

In addition to tracking and complying with reimbursement requirements, it is important to remember that actors in this space do not act alone and often must partner and contract with each other to implement effective programs. As food as medicine opportunities continue to evolve, actors in the food as medicine space should continue to look for new ways to partner with one another to implement and deliver food as medicine programs.