What does the term "carve-outs" refer to in managed care plans?

The term "carve-outs" in managed care plans specifically refers to benefits or services that are managed separately from the main plan by third parties. This typically occurs when certain high-cost services, such as behavioral health, dental, or vision care, are not included in the core benefits of the managed care plan. Instead, these services are "carved out" and handled by specialized organizations that have expertise in those specific areas. This approach allows managed care organizations to potentially reduce their total costs while ensuring access to specific services through entities that are better suited to manage them.

For example, a health insurance plan might have a general coverage for most medical services but decide to carve out mental health services to a separate organization that specializes in mental health care management. This allows for more focused management of those services, potentially leading to better outcomes for patients and cost savings for the plan.

Understanding the concept of carve-outs is crucial for those involved in managed care, as it impacts how benefits are structured, how care is coordinated, and what administrative processes might be involved.