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Medicaid behavioral health carve-outs are a managed care financing model where some portion of Medicaid benefits—in this case, specifically for behavioral health services—are separately managed and/or financed.  Medicaid behavioral health financing arrangements (those serving populations suffering from mental illness and/or addictions) are managed in three models:

  • Integrated with the financing for physical health across the plan (sometimes referred to as a “carve-in”)
  • Managed through a traditional specialty carve-out plan
  • Included in a vertical consumer-specific specialty carve-out plan

The current trend shows states moving toward integration of behavioral health benefits with the financing of physical health across a health plan with fewer carve-outs overall.

This OPEN MINDS annual update on the changes in state Medicaid behavioral health carve-outs and other financing models provides a state-by-state comparison of the behavioral health financing arrangement in each state. This report specifically focuses on Medicaid behavioral health carve-outs at the primary level and the different financing arrangements that state Medicaid programs use to provide behavioral health benefits. The report also explores the Medicaid behavioral health carve-out trend over time, the rise in the use of the Medicaid vertical carve-out, and future changes to state Medicaid financing arrangements.

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