Managing the financial challenges of public-private collaboration.

With the growing emphasis on Medicaid managed care waivers as a method for states to constrain healthcare cost overruns (see also State Policy Review on page 63), new and creative pricing techniques for carve-out and carve-in programs will be a key to their success. The author builds on his experience in developing a Medicaid behavioral healthcare carve-out in Massachusetts to illustrate some basic principles in the pricing and management of such public-private collaborations. These collaborative systems should be based on specific actuarial models, plans for enhanced access to services and the need to change incrementally in the context of the political process.