{"id":2309,"date":"2023-07-05T20:46:08","date_gmt":"2023-07-05T20:46:08","guid":{"rendered":"https:\/\/www.amalgamatedbenefits.com\/amalgamated-employee-benefits-administrators\/?p=2309"},"modified":"2023-07-06T12:55:59","modified_gmt":"2023-07-06T12:55:59","slug":"carve-outs-enable-improved-risk-and-cost-management-for-health-plan-sponsors","status":"publish","type":"post","link":"https:\/\/www.amalgamatedbenefits.com\/amalgamated-employee-benefits-administrators\/carve-outs-enable-improved-risk-and-cost-management-for-health-plan-sponsors\/","title":{"rendered":"Carve-outs Enable Improved Risk and Cost Management for Health Plan Sponsors"},"content":{"rendered":"
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For single and multi-employer health plans, including self-funded, one strategy that can be extremely helpful in isolating risks and containing costs are carve-outs. Carve-outs provide better choices for managing costs and benefits provided by various insurers and other benefit vendors. Understanding how they work and the role of third-party administrators (TPAs) in handling the administration of carve-outs, which can be complex for the inexperienced, is important for all plan sponsors.\u00a0<\/p>\n

Carve-out Basics<\/h3>\n

With a carve-out strategy, a plan sponsor is able to isolate risks within the health coverages they provide their employees\/members. The financial risk for the carve-out is assumed by the benefit vendor who receives a flat fee from the employer\/plan sponsor. A carve-out is not limited to just one benefit (e.g., pharmacy\/prescription drug benefit), but can be broad and include multiple benefits in a health plan. The benefit areas often associated with carve-outs are those with high costs such as prescription drugs, cardiac care, neonatal intensive care, organ transplants and mental illness services (i.e., screening, diagnosis, and treatment benefits). Self-funded plans are especially good candidates for carve-out due to their size and the ability to leverage better rates. While some large plan sponsors may have internal resources, many of them along with middle-market and small organizations often find it is best to hand-off carve-out benefits administration to an experienced TPA. The TPA can effectively manage all aspects of carve-out benefits administration, from employee education to compliance.<\/p>\n

Carve-out Benefits<\/h3>\n

There are clear benefits to using carve-outs. They include:<\/p>\n