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Managed behavioral health care organizations are increasingly managing Americans' substance abuse by using carve-outs, but little information is available about how this has affected service utilization and costs when compared to HMOs. One employer's claims for substance abuse services delivered under a carve-out arrangement are compared to prior HMO claims information. Under the carve-out arrangement, inpatient and outpatient service utilization are found to decrease, but intermediate service utilization dramatically increases. Costs per unit service decrease for all services. The pattern of changes is different from that seen for mental health services, suggesting that different factors may be applicable to substance abuse services.

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The research described in this report was prepared for the California Department of Social Services under Contract No. H38030. RAND is a nonprofit institution that helps improve policy and decisionmaking through research and analysis. RAND ® is a registered trademark. RAND's publications do not necessarily reflect the opinions or policies of its research sponsors.