Definitions
Health Insurance Terms
Carve-out

Carve-out

Definition:

Medical services that are separated from a contract and paid under a different arrangement.

Application:

For instance, an HMO plan negotiates with a pediatrician to provide primary care services, such as office visits and basic labs, at a capitated rate. However, the physician negotiates a carve-out for vaccinations and immunizations. This means that if a patient needs a vaccination or immunization, and the physician provides it, the payment does not come out of the physician's capitated payment. Instead, these services are paid fee-for-service. In this case, the pediatrician did not want to be at financial risk for these medications and negotiated a plan whereby the HMO would pay him/her additionally each time a vaccine or immunization was provided.

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