Beware The “Carve-In”

“Carve-ins” are services paid for by you under the capitation you receive through your Medicare Advantage contract.


“Carve-outs” are services paid for by someone else outside your capitation.


An example of a “Carve-Out”:

Under my contract, when someone enrolled in hospice service, the capitation adjustment for their terminal diagnosis was removed and I was no longer financially responsible for associated expenses.

Instead, the hospice provider was paid directly by the Medicare Advantage Organization at a contracted rate.  I was not responsible for that expense.


This was a phenomenal deal for me. The end-of-life was when most costs were incurred.


After the patient passes, there would be no subsequent capitation to offset those costs. It would be best if they were never incurred in the first place.


When the patient was appropriate and ready for hospice, they were enrolled—and I didn’t have to worry a whit about end-of-life expenses.


Increasingly, though, insurers are re-writing contracts to incorporate expenses that, like hospice, were treated as “carve-outs” in the past.


This has the effect of shifting those expenses onto the PCPs and the organizations through which they work.


In the case of hospice, it also makes PCPs and organizations much less likely to use those services—even if the patient needs them.


If you’re asked to change your contract to accept more “carve-ins,” your default should be a simple “no”—until you find out what’s in it for you.