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In a primary behavioral health carve-out, a state Medicaid program delegates some or all behavioral health benefits to a separate management entity. In a secondary carve-out, Medicaid contracts with a health plan to manage all benefits, including behavioral health. The health plan then sub-contracts with another organization (a behavioral health care management organization) to manage behavioral health services. Management of behavioral health services can include provider organization credentialing, network management, prior authorization, and claims processing. Within the secondary carve-out, a health plan can either use a plan subsidiary to manage benefits or contract with an unrelated external organization.

In 2017, there were 38 states using 312 health plans with more than 450 contracts to provide Medicaid managed care services. Of those 38 states, four (Maryland, New Jersey, Pennsylvania, and Utah) had primary behavioral health carve-outs where are all services except those provided in a primary care setting were excluded from the health plan’s capitation rate. Remaining were 34 states using 286 health plans with more than 400 contracts. Of these health plans, 40% had a secondary carve-out; the other health plans used an internal unit or department for managing behavioral health services. Of those health plans with a secondary carve-out, the majority had an external behavioral health vendor while the others had a subsidiary acting as the behavioral health vendor.

The report includes:

  • An in-depth overview of the different types of carve-outs, including primary, secondary, and secondary sub-types
  • A strategic market landscape overview with key stats on the use of secondary carve-outs
  • The number of lives covered under secondary carve-outs
  • A state-by-state directory of the health plans with secondary carve-outs and their behavioral health organization

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