Selected key issues in the development and drafting of public managed behavioral health care carve-out contracts

The development of managed behavioral health care carve-out contracts covering a discrete subset of benefits available for use by persons with mental health and/or substance abuse disorders poses major challenges for public purchasers. This Issue Brief explores several key issues that arise when drafting such agreements. Many of the issues that arise in the drafting of carve-out agreements will require the public purchaser to resolve basic policy questions well before the drafting of requests for proposals or contracts can proceed. Analyses of public sector managed behavioral health care contracts by attorneys at the Center for Health Policy Research suggest that there are four essential areas that must be addressed if mental health and substance abuse services are carved-out (either by the purchaser or by a comprehensive managed health care entity): (1) what population is eligible for enrollment; (2) what services is the contractor expected to furnish; (3) what triggers a duty on the part of the mental health or substance abuse carve-out contractor to provide services; and (4) how are services furnished by the managed behavioral health care contractor integrated with or coordinated with services furnished by a beneficiary's primary health care provider, with pharmaceutical benefits, and with other services that may be available to a beneficiary through a fee-for-service or other mechanism. However a purchaser chooses to resolve these four issues, it is essential that parallel clarifying clauses are also built into the contracts of primary health care providers and other entities providing needed services for persons whose mental health and substance abuse service needs are covered by the carve-out. Underlying all of these issues is the fact that ambiguity, vagueness, or failure to define terms and responsibilities can create unexpected and unwelcome clinical and financial liabilities to purchasers.