Reports from the field-Behavioral health

Carve-out programs reduce costs

Carve-out programs for special health conditions, such as mental health and substance abuse problems, are not included in health insurance plans' covered services. Instead, they are covered under a separate contract. Now, a study finds that carve-out plans can reduce overall costs for these services by more than 50%.

The Massachusetts Group Insurance Commission adopted a carve-out program in 1992 to cover mental health and substance abuse services. The commission sought a soft capitation contract that exposed the vendor to a limited amount of financial risk.

The carve-out results include:

• 54% decrease in total episode costs for individuals with unipolar depression;

• 33% decrease in total episode costs for those with substance abuse.

Researchers concluded that these savings were the direct result of a shift from expensive traditional inpatient care to less-intensive and less-expensive partial hospitalization services and traditional outpatient care for people with unipolar depression. It was not clear whether the decreases in costs and shifts in treatment settings resulted in more or less appropriate and effective care. The researchers cautioned that disproportionate decreases in per-episode spending for individuals with severe mental health conditions may be a cause for concern.

[See: Huskamp HA. Episodes of mental health and substance abuse treatment under a managed behavioral health care carve-out. Inquiry 1999; 36:147-161.]