Comparing Carve-In vs Carve-Out Financing for Behavioral Health Services on Medicaid

In recent years, many state Medicaid programs have moved from carve-out financing for behavioral health (BH) services to carve-in ones. A new article in Health Affairs covers this trend, which is driven in part by growing recognition that integrating care for physical health (PH) and BH improves care outcomes and lowers premature death.

According to the authors, “Other potential drivers include simplification of state administrative functions as a result of the state entering into contracts with comprehensive MCOs as opposed to a larger number of entities managing partial benefits, and changes in federal policy. A key example of the latter is the 2016 final rule regarding compliance with the Mental Health Parity and Addiction Equity Act, which charged MCOs with the responsibility for parity analysis and compliance, an administrative burden borne by the state in carve-out states.”

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(Source: Health Affairs, February 7^th, 2023)