THE INTERNAL TPA FUNCTION
Every Benefit Plan Should Have a
Carve-Out Strategy
in Place by 2027
A carve-out strategy is a plan for which categories of medical spend you remove from your carrier stack, which you renegotiate where they sit, and which you leave alone. Weltrio builds that plan from your own claims data, then runs the carve-outs worth running.
Most employers get this backward. They pick the carve-out first and look at the data afterward.
A carve-out is a tactic. It only produces savings when your claims data says that specific category is repetitive, schedulable, and mispriced.
WHY NOW
Why carve-outs became the
2027 conversation
Brokers and benefits leaders spent 2026 talking about carve-outs. The reason is simple arithmetic. Trend keeps landing in the high single digits, family coverage keeps climbing, and you've exhausted the obvious levers. You've already shifted cost to employees. You've already shopped the network. Carving out a category is the next available move.
So the term is everywhere heading into 1/1/2027 renewals. What's mostly missing is a method for choosing.
DEFINITIONS
What a carve-out actually is
(three kinds, often confused)
Carve-out covers three different strategies, and vendors rarely distinguish between them. Knowing which one you're discussing changes the whole conversation.
01
Category carve-out
You remove an entire spend category from your carrier or ASO and place it with a specialist. Pharmacy benefits, musculoskeletal care, dialysis, behavioral health, oncology. This is what most vendors mean by carve-out, because it's what they sell.
02
Claim-level carve-out
You route a specific repetitive or high-cost service to a better-priced provider or facility, without moving the whole category. J-code medications, infusion therapy, imaging, defined surgical procedures. Smaller move, faster to execute, and frequently where the real money sits.
03
Funding carve-out
The price doesn't move. The risk does. A vendor charges you a flat monthly rate per employee and absorbs the claims for that category, so your spend gets predictable instead of smaller. Employers almost never mean this when they ask about carve-outs. It's often what they end up buying
When someone pitches you a carve-out, ask which of the three they mean before you evaluate anything else.
OUR POSITION
Weltrio's position on carve-out strategy
A carve-out is a tactic. It only produces savings when your claims data says that specific category is repetitive, schedulable, and mispriced.
Without claims data evidence, a carve-out doesn't remove cost. It relocates the cost into a contract with even less visibility. Now you've added a vendor, a data feed, and a new set of incentives that may not match your plan.
That's the risk nobody selling carve-outs will raise with you. Carve aggressively without a method and you accumulate vendor sprawl. Sprawl is how the Pre-Claim Gap gets wider, not smaller.
Weltrio starts with the analysis, not the recommendation.
THE METHOD
How Weltrio builds your 2027 carve-out plan
01
We read the claims file first.
We take one to two years of your claims data and sort it three ways: what repeats, what your members can schedule ahead, and what you overpay for against better pricing. You get a ranked list of candidates with dollars attached to each one. So the conversation starts with your numbers, not a vendor's category.
02
We separate the three carve-out types.
For every candidate, we tell you whether it warrants a full category move, a claim-level routing change, or a renegotiation where it already sits. Renegotiating in place is often cheaper than carving out. It's also the option a category vendor has no reason to mention.
03
We run the ones worth running
Sourcing, pricing, contract review, and the member routing that makes the carve-out real instead of theoretical. Care Logistics owns execution, so the savings show up in claims rather than in a projection deck.
04
We plan for member disruption before it lands.
Most carve-outs don't fail on the math. They fail when members lose a doctor and nobody warned them. Health Advocates handle the calls, the transitions, and the anxiety. That's usually what decides whether a carve-out that looks right on paper survives your workforce.
05
We tell you when the answer is no.
Weltrio has no category to sell you, so recommending nothing costs us nothing. Sometimes the right 2027 move is two claim-level changes and a renegotiation, not the carve-out you were quoted.
THREE PHASES
Strategy, fulfillment, and optimization
A carve-out isn't a purchase. It's three phases, and most plans only ever get one of them.
Consultants sell you the strategy and leave. Category vendors sell you the fulfillment and report against their own baseline. Almost nobody comes back to check whether the dollars actually got saved in your plan,then adjusts for next year.
Your healthcare CFO does all three. That's what the role means.
PHASE ONE
Strategy.
We read one to two years of your claims data and sort it three ways: what repeats, what members can schedule ahead, and what you overpay for against available pricing. You get a ranked candidate list with dollars attached to each line, the savings mechanism named for each one, and a call on whether to move it, renegotiate it, or leave it. We read your plan document too, and flag the stop-loss consequences before you commit to anything. And we tell you when the answer is no. Weltrio has no category to sell, so recommending nothing costs us nothing.
PHASE TWO
Fulfillment.
Sourcing, pricing, and contract review. Plan document amendment language. Eligibility feed setup with your TPA. Stop-loss notification. Member communication and transition planning built before the effective date, not after it. Care Logistics owns the routing that makes a carve-out real instead of theoretical, and Health Advocates own the member side.
PHASE THREE
Optimization
This is the phase that gets skipped, and the one that compounds. Each quarter we verify savings against your claims file rather than the vendor's report. We measure how many eligible members actually used the preferred site. Then we renegotiate what underperformed, drop what didn't work, and refresh the candidate list for your next renewal.
Strategy without fulfillment is a slide deck.
Fulfillment without optimization is an invoice you renew out of habit.
THE REAL VARIABLE
How employee behavior changes
over time
Here's the part nobody puts in a proposal. A carve-out saves only what your members actually route through it.
You can contract the best imaging price in your market. But if members keep going wherever their doctor's office faxed the order, you saved nothing.
So behavior is the real variable. And it moves on a fairly predictable curve.
YEAR 01
Year one is one claim at a time.
Once you know which sites you want used, cost share follows. Waive or cut the member's out of pocket at the preferred site and you've stopped asking people for a favor. Now the cheaper choice is also their cheaper choice. That one change moves more volume than any communication campaign.
YEAR 02
Year two is plan design.
Members don't change habits because of an open enrollment slide. They change when a person calls them before the appointment and says there's a closer option that costs them nothing. That's Healthcare Engagement, and in year one it runs almost entirely on advocacy.
YEAR 03
Year three is habit.
Members start calling the advocate before they schedule instead of after they get the bill. The baseline shifts. So the same advocacy effort redirects more spend, because more people ask first.
CANDIDATES
Where the 2027 opportunities usually sit
Every plan differs, and the ranking always comes from your data. That said, these categories surface most often in the analysis:
01-RX
Specialty pharmacy & J-code drugs
Where the place a drug gets given can swing its cost several times over
02-GLP1s
GLP1s
Which went from a line item to a budget problem for most plans
03-MSK
Weltrio MoveWell©
Members get specialized assistance with MSK, Pain, Migraine
04-IMAGING
Advanced Imaging
Where a hospital outpatient site and an independent site can differ by a multiple
05-INFUSION
Dialysis & Infusion
Where contract structure matters more than the unit price
Treat these opportunities as a starting place, not a shopping list.
THE RIGHT FIT
Which plans this works for
This work needs claims visibility, so it's a self-funded and cash-pay conversation. If you're moving to self-funding for 2027, build the carve-out plan during the move, not after it.
Fully-funded and level-funded plans see more limited impact, because we can't get the data to rank candidates. Captives are similar, with one exception: when Weltrio services the whole captive plan, the analysis works fine.
THE BIGGER PICTURE
Where carve-outs fit
Carve-out strategy lives inside Plan Optimization, which is one of three pillars. Weltrio acts as your healthcare CFO, the internal TPA function responsible for pricing, negotiating, and auditing plan spend before a claim exists. Carve-outs are one instrument that function uses.
Across the full engagement, typical Weltrio clients save 15% to 23% of plan cost, net of our fee. We don't publish a separate number for carve-outs alone. Isolating what a single tactic contributed is harder than most vendors admit.
A dollar not spent is 100% of a dollar saved.
AUDIENCES
Who this helps
Employers.
You get a number that stops surprising you, plus the fiduciary work done properly. Plan document language, prudent vendor selection, stop-loss repricing, and documented savings verification all sit with the plan sponsor. We do that work and hand you the file that proves it.
Brokers.
You get an analytical bench you can't justify hiring. When a client asks which of four carve-out pitches to take, you come back with a ranked answer from their own claims data instead of a vendor's deck. We don't touch your relationship and we don't compete for your commission. And renewal becomes a conversation about a plan rather than an increase.
HR teams.
You stop absorbing the fallout. Denials, prior authorizations, transition confusion, and the angry call about a provider nobody warned a member about all route to Health Advocates instead of your desk. When a carve-out changes where members go, the communication plan exists before the effective date rather than after the complaints start.
FAQ
Frequently asked questions
What is a carve-out strategy?
A carve-out strategy is a plan, built from your claims data, for which medical spend you move out of your carrier stack, which you renegotiate in place, and which you leave alone. It ranks candidates on evidence, not on what a vendor happens to sell.
Is Weltrio a carve-out vendor?
No. Weltrio determines which carve-outs your data supports and then manages the ones worth doing. We don't own a category, which is why we can recommend against a carve-out when the numbers don't support it.
When should we start planning 2027 carve-outs?
Now. The analysis, sourcing, contracting, and member communication need 90 to 120 days before an effective date. Start in November for a January 1 change and you squeeze all the parts that matter.
Do carve-outs always save money?
No. A carve-out saves money when the category is repetitive, schedulable, and currently mispriced. Otherwise it moves spend into a contract with less visibility, which is why the analysis has to come first.
Will our employees notice?
Sometimes, and that's the part most carve-outs handle badly. If a category move changes who your employees can see, Weltrio will help build the communication and transition plan before the effective date, not after the calls start.
Can we do this with our current broker and TPA?
Yes. Most Weltrio engagements come through brokers, and your TPA keeps processing claims. We add the pre-claim engagement, data, analysis and negotiation layer neither one is built to provide.
How do you get employees to actually use a carve-out?
Two levers, in this order. An advocate calls the member before the appointment or treatment to offer a better options. Then plan design catches up, so the preferred site costs the member less or nothing out of pocket. Communication alone moves behavior a little. Money and a phone call move it a lot.
What happens after the carve-out goes live?
Optimization. Each quarter we verify savings against your claims file instead of the vendor's report, measure how many eligible members used the preferred site, renegotiate what underperformed, and refresh candidates for your next renewal.
What does this do for our broker?
It gives them a ranked, data-backed answer when a client asks which carve-out to take. Weltrio doesn't touch the client relationship or compete for commission.
NEXT STEPS
Build your 2027 carve-out plan
Send us your claims data and we'll show you the ranked candidate list, with dollars attached and our recommendation on each. Including the ones we'd tell you to skip
