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A Managed Care Organization (MCO) is a type of healthcare delivery system that coordinates and manages healthcare services for its members. The primary goal of an MCO is to control costs, while maintaining or improving the quality of care provided to its members. To achieve this, MCOs contract with hospitals, physicians, and specialists to offer services to their members at negotiated rates. They often use a network of these contracted providers to make a comprehensive range of medical services available to members.
Depending on the structure of a managed care organization, it might offer any number of managed care plans. Some of the most common types of managed care plans include.
Health Maintenance Organization (HMO). HMOs offer a comprehensive range of healthcare services through a network of doctors, hospitals, and other providers. Members usually select a primary care physician (PCP) and get referrals from the PCP to see specialists. HMOs often require members to receive care “within network.”
Preferred Provider Organization (PPO). PPOs also have a network of healthcare providers, but they offer more flexibility than most HMOs. Members can choose to see any doctor or specialist, either within the network (preferred providers) or outside of it (out-of-network). However, out-of-network care usually means high out-of-pocket costs.
Exclusive Provider Organization (EPO). EPOs are similar to PPOs, but they don’t provide coverage for out-of-network care, except in emergencies or special circumstances. Members must seek all non-emergency care within the network.
Point of Service (POS). POS plans combine features of HMOs and PPOs. Members select a primary care physician, like in an HMO, and need referrals to see specialists. However, they can also opt to receive care outside the network, albeit with higher out-of-pocket costs.
Medicare Advantage (Part C). Medicare Advantage plans are managed care plans offered by private insurance companies as an alternative to traditional Medicare (Parts A and B). These plans often include additional benefits like prescription drug coverage and may have different cost structures.
Medicaid Managed Care. Some state Medicaid programs contract with managed care organizations to provide healthcare services to eligible beneficiaries. These plans follow managed care principles to control costs and improve care coordination for Medicaid recipients.
These days, a majority of healthcare plan holders fall under some sort of MCO. Understanding how each type of MCO works provides a baseline for understanding the necessary compliance considerations that accompany them.
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