Mental Health Carve-Outs: Effects and Implications

To control the rise in expenditures and to increase access to mental health and substance abuse (MH/SA) services, a growing number of employers and states are implementing a "carve-out."Under this arrangement, the sponsor separates insurance benefits by disease or condition, service category, or population and contracts separately for the management of care and/or associated risks.A carve-out allows a unique set of managed care techniques to be applied to a subset of particularly costly or complex benefits.This article describes various carve-out models, discusses the potential advantages and disadvantages of a full carve-out, and summarizes recent public and private sector research regarding the strategy's effects on access and use, cost savings and shifting, and quality of care.It concludes by discussing approaches to the assessment and monitoring of the processes and outcomes associated with a MH/SA carve-out.After a decade of fast-paced growth, it appears that employers' and public sponsors' health care costs have finally begun to slow down.Efforts to manage especially costly areas, such as mental health and substance abuse (MH/SA) benefits, are contributing to the slowdown.Although the average annual growth of expenditures from 1986 to 1996 in treatment of MH/SA services has been estimated at 7 percent, individual employers and states report costs for these services outpacing those for general health services by 5