OBJECTIVE: To assess the status of managed care and insurance coverage of complementary and alternative medicine (CAM) and the integration of such services into managed care. DATA SOURCES: A literature review and information search were conducted to determine which new insurers had special policies for CAM from 1999 to 2000. Telephone interviews were conducted with a sample of 6 new managed care organizations (MCOs) or insurers identified in 2000 and a nonrepresentative cohort of 4 of the original 18 MCOs and insurers who responded both to the original survey in 1997 and again in 1998 to determine trends. STUDY SELECTION: This study constitutes the results of the third year of an ongoing annual survey. For the year 2000, a total of 14 new companies were identified as offering some CAM coverage. Survey results were analyzed for 6 of these who responded to the current survey as well as the results of the cohort mentioned above. DATA EXTRACTION AND SYNTHESIS: Most of the insurers interviewed offer some coverage for the following: nutrition counseling, biofeedback psychotherapy, acupuncture, preventive medicine, chiropractic, osteopathy, and physical therapy. All new companies indicated that market demand was a primary motivator for covering CAM. Factors determining whether insurers would offer coverage for additional therapies included potential cost-effectiveness, consumer interest, and demonstrable clinical efficacy. Among the most common obstacles listed for incorporating CAM into mainstream healthcare were lack of research on clinical or cost-effectiveness, economics, ignorance about CAM, provider competition, and lack of standards of practice. CONCLUSION: Consumer demand for CAM is motivating more MCOs and insurance companies to assess the clinical and cost benefits of incorporating CAM. Outcomes studies for both conventional and CAM therapies are needed to help create a healthcare system based on treatments that work, whether they are conventional, complementary, alternative, or integrative medicine.