Guide

Medicaid BH carve-outs: the second payer map

Summary

A Medicaid behavioral-health carve-out means the state pays behavioral claims through a separate system — a specialty behavioral organization, a county entity, or a state administrator — rather than the member's medical managed-care plan. Because Medicaid is designed state by state, there is no national rule: the member's card rarely names the behavioral payer, so a biller-of-one must verify, for each member, which plan covers behavioral health and enroll with that administrator.

By Gale Editorial · Updated 2026-07-26. Every figure cited to a dated source. How we write.

What a Medicaid behavioral health carve-out is, and why it varies

A carve-out means a state administers Medicaid behavioral-health benefits separately from the physical-health plan — routing them to a specialty behavioral organization, a county or regional entity, or a state-run administrator instead of the member's medical managed-care plan. There is no national answer to how it works, because Medicaid is designed state by state, so the first fact to establish is always which state you are billing in.

California is the clearest example of a carve-out: it delivers specialty mental health services through county mental health plans rather than the member's Medi-Cal managed-care plan 1Ref 1California Department of Health Care Services (2026).California Department of Health Care Services.That California delivers Medicaid specialty mental health services through county mental health plans rather than the member's Medi-Cal managed-care plan — a state-specific carve-out example.. That structure would be wrong for the next state over, which is the point — never carry one state's map across a border. Establish your state's model first, then everything downstream (enrollment, codes, authorization) follows from it.

Carve-out versus carve-in: who administers the benefit

The opposite of a carve-out is a carve-in, where behavioral benefits sit inside the same managed-care organization that handles physical health. States move between the two models over time, and many run a hybrid: routine outpatient therapy carved in to the medical plan, while specialty or higher-intensity behavioral services carve out to a separate system. Knowing which model your state uses tells you who to enroll with and who adjudicates the claim.

	Carve-in	Carve-out
Who pays BH claims	The member's medical managed-care plan	A separate behavioral entity or state administrator
Where you enroll	The medical plan's network	The behavioral administrator, separately
Common failure	—	Sending the behavioral claim to the medical plan

The carve-out administrator is often a managed behavioral health organization; one large behavioral network, for example, administers carved-out benefits through its own enrollment and claims portal 2Ref 2Optum Behavioral Health (2026).Provider Express.A managed behavioral health organization's enrollment, authorization, and claims portal as an example of a carve-out administrator (named example, not all payers or states).. That is why the distinction between a state Medicaid vs its MCOs matters: the card names one, the behavioral payer may be another.

Finding the real behavioral payer for a member

The member's Medicaid card rarely tells you who pays the behavioral claim, so verification is the job. Before the first session, confirm three things: whether the member is in fee-for-service Medicaid or a managed-care plan, whether behavioral health is carved out for that plan, and if so, the name of the behavioral administrator and its enrollment and authorization rules. Verifying bh benefits at intake prevents a month of denied claims.

Each state publishes the answer in its own provider portal. New York, for instance, runs enrollment, billing manuals, and benefit verification through its Medicaid provider portal 3Ref 3New York State Department of Health (2026).eMedNY.New York's Medicaid provider portal as the state authority for enrollment, billing manuals, and benefit verification in New York.. Make the verification call or portal check part of intake for every Medicaid member, and record the behavioral plan name, the member ID for that plan, and any authorization requirement before care starts — treating carve-outs as a routine verification step rather than a billing surprise.

The codes carve-outs use

Behavioral carve-outs bill on a mix you should know before you submit. Standard CPT psychotherapy codes — the 90791 evaluation and the 90832, 90834, and 90837 timed-therapy family — cover much of outpatient work 4Ref 4APA Services, Inc. (2025).Psychotherapy Codes for Psychologists.The CPT psychotherapy codes (90791; 90832/90834/90837) used in outpatient behavioral billing alongside state-defined H-codes.. Alongside them, many Medicaid programs and carve-outs use HCPCS Level II codes, the H-codes, for rehabilitative and community behavioral services that have no CPT equivalent, and the exact codes and their definitions are set by each state.

Because the H-codes are state-defined, do not assume a code that pays in one state exists or means the same thing in another. Pull your state's behavioral billing manual, confirm which CPT and H-codes the carve-out accepts for your service and license type, and check any modifier or place-of-service rules the manual attaches. The manual, not habit, is the authority for what the carve-out will actually pay.

Reading your own state's map

Because the model is set locally, the durable skill is knowing where your state publishes its rules. Each state Medicaid agency runs a provider portal with the enrollment steps, the behavioral billing manual, the fee schedule, and the list of behavioral managed-care or carve-out entities. Texas routes provider enrollment and claims through its Medicaid partnership portal 5Ref 5Texas Health and Human Services Commission (2026).Texas Medicaid & Healthcare Partnership (TMHP).Texas's Medicaid provider portal as the state authority for behavioral enrollment, claims, and billing manuals in Texas., and Florida publishes its managed-care structure and manuals through its health-care administration agency 6Ref 6Florida Agency for Health Care Administration (2026).Florida Agency for Health Care Administration.Florida's health-care administration agency as the state authority publishing its Medicaid managed-care structure, billing manuals, and fee schedules..

The method transfers even where the model does not: find your state Medicaid agency, locate its behavioral-health section, and identify whether behavioral benefits are carved out and to whom. Do that once per state you practice in, and re-check when the state re-procures its managed-care contracts, because a carve-out can become a carve-in — or change administrators — at the start of a new contract cycle.

Documentation that survives a carve-out audit

Carve-outs authorize and audit against medical necessity, so your documentation has to carry the treatment forward without gaps. The golden thread — the through-line linking the assessment to the diagnosis, the treatment plan's goals, and every session note back to those goals — is what a behavioral carve-out reviewer looks for. Build it from intake, because carve-outs frequently require prior authorization and periodic reauthorization tied to documented progress.

Keep the covered services and carve-outs scope in view as you document: a carve-out pays for the services its contract defines, in the format its manual requires, and denies the rest. Note the authorization number and its expiration on the record, track sessions against the authorized units, and request reauthorization before the current one lapses so care and payment do not stop together.

Common questions

Verify it before the first session. Check whether the member is in fee-for-service Medicaid or a managed-care plan, then confirm with that plan whether behavioral health is carved out and, if so, to which administrator. The member's Medicaid card usually will not say, so the answer comes from your state's provider portal or a benefits call, not the plastic.

In a carve-in, the member's medical managed-care plan also pays behavioral claims, so you enroll and bill once. In a carve-out, a separate behavioral entity pays, so you must enroll with that administrator, follow its authorization rules, and send behavioral claims there. Sending a carved-out claim to the medical plan is a routine, avoidable denial.

Because they are. Medicaid is a state-designed program, so the delivery model, the covered codes, the H-code definitions, and the enrollment portal all change at the state line. California's county specialty mental health system looks nothing like another state's statewide managed-care model. Always source the rule from your own state's Medicaid agency rather than a neighbor's.

H-codes are HCPCS Level II codes many Medicaid programs use for rehabilitative and community behavioral services that standard CPT does not describe. Whether you use them, and exactly what each covers, is defined by your state's behavioral billing manual. For ordinary outpatient psychotherapy the CPT codes usually still apply; the H-codes appear for the state-defined services around them.

Usually yes. Enrolling as a state Medicaid provider does not automatically enroll you with a behavioral carve-out administrator or a managed-care plan's network. Check your state's portal for both the Medicaid enrollment and the separate behavioral plan or carve-out contracting steps, and complete them before you see carved-out members so claims are not denied for network status.

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References

1.California Department of Health Care Services (2026). California Department of Health Care Services. California Department of Health Care Services. link ✓That California delivers Medicaid specialty mental health services through county mental health plans rather than the member's Medi-Cal managed-care plan — a state-specific carve-out example.
2.Optum Behavioral Health (2026). Provider Express. Optum Behavioral Health. linkA managed behavioral health organization's enrollment, authorization, and claims portal as an example of a carve-out administrator (named example, not all payers or states).
3.New York State Department of Health (2026). eMedNY. New York State Department of Health. link ✓New York's Medicaid provider portal as the state authority for enrollment, billing manuals, and benefit verification in New York.
4.APA Services, Inc. (2025). Psychotherapy Codes for Psychologists. APA Services, Inc.. link ✓The CPT psychotherapy codes (90791; 90832/90834/90837) used in outpatient behavioral billing alongside state-defined H-codes.
5.Texas Health and Human Services Commission (2026). Texas Medicaid & Healthcare Partnership (TMHP). Texas Health and Human Services Commission. link ✓Texas's Medicaid provider portal as the state authority for behavioral enrollment, claims, and billing manuals in Texas.
6.Florida Agency for Health Care Administration (2026). Florida Agency for Health Care Administration. Florida Agency for Health Care Administration. link ✓Florida's health-care administration agency as the state authority publishing its Medicaid managed-care structure, billing manuals, and fee schedules.

https://www.gale.care/for-providers/par-medicaid-bh-carveouts · 6 sources. Competitor details are cited to dated public sources and maintained as they change; figures are estimates, not commitments. Synthetic demonstration.

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