OBJECTIVES: While pharmacy benefit carve-outs are promoted as a cost-containment tool, their impact on total medical spending is not well understood. We compare the healthcare spending of Blue Cross Blue Shield of Louisiana members with mental health conditions covered by an integrated (“carved-in”) pharmacy benefit with members covered under a pharmacy benefit carve-out.

METHODS: The study population included all Blue Cross members with continuous medical coverage from October 1, 2014 to September 30, 2018 with a diagnosis of one of the following mental health diseases: Depression, Anxiety Disorders, or Other Mental Health Diagnosis. Participants were primary members whereby their companies contracted Administrative Services Only (ASO) through Blue Cross. Additional inclusion were that members had to be continuously enrolled for four consecutive years in either a Carve-In or Carve-Out program. Outcomes of interest include: per member per month (PMPM) annual expenditures, emergency room visits and inpatient hospitalizations. Carve-Out mental health patients were 1:1 exact matched to Carve-In patients based on member demographics (gender, region), chronic comorbidities (Asthma, Diabetes), program participation (CMDM, Quality Blue, Product Network) and annual risk severity category (Healthy, Stable, At Risk, Struggling, In Crisis).

RESULTS: After exact matching our final sample was 20,485 members. Of which, 3,944 (19%) members were identified to have a mental health condition. These members accounted for about one-third of the total cost in the first year of the study (32% vs 33%). Findings show average annual costs consistently increase year over year for the Carve-Out patients (difference >$33.12 PMPM) with mental health conditions versus those in the Carve-In program.

CONCLUSIONS: Members with mental health conditions receiving an integrated pharmacy benefit experienced slower medical cost growth compared to members covered by a pharmacy carve-out. Managers may want to consider the implications of pharmacy benefit design for total cost of care, not just prescription drug costs.