What Is a Managed Care Organization (MCO)?

Amber Ratcliffe
Doctor talking with patients

There’s a world of acronyms in healthcare; some with more bearing than others. One of the most important to understand is MCO: Managed Care Organization. Let’s explore what it means for an MCO to coordinate care for members, and the compliance implications that come with this healthcare services model.

What Is a Managed Care Organization?

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.

What Are Types of Managed Care Plans?

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. 

What’s Needed for MCO Compliance?

MCOs need to comply with various regulations and requirements to operate effectively — and ensure they meet the standards set forth by regulatory bodies. Some key compliance elements for managed care organizations include:

  • Legal and Regulatory Compliance. MCOs must adhere to federal (Medicare) and state (Medicaid) laws and regulations governing the healthcare industry. These include laws related to insurance, healthcare privacy (HIPAA), billing practices, and fraud and abuse prevention.
  • Quality of Care Standards. MCOs are expected to maintain a certain level of quality in the services they provide to members. This includes establishing and implementing quality improvement programs, tracking performance metrics, and ensuring in-network providers meet regulatory standards.
  • Network Management. MCOs need to maintain a robust network of healthcare providers to ensure members have access to essential medical services. They must negotiate contracts with providers, monitor network adequacy, and continuously assess the availability of providers and services.
  • Member Grievance and Appeals. MCOs need to have an established process for addressing member complaints, grievances, and appeals regarding denied services or dissatisfactory experiences.
  • Financial and Risk Management. Risk management is a crucial aspect of healthcare compliance, including for MCOs. This includes proper financial planning, risk auditing and assessment, and documentation and recordkeeping.
  • Data Security and Privacy. MCOs handle sensitive healthcare information, which demands robust data security measures to protect member privacy and comply with HIPAA and HITECH standards.
  • Provider Credentialing and Accreditation. All healthcare providers in-network need to be qualified and meet the appropriate standards essential for MCOs. Credentialing and accreditation processes help verify the qualifications and competence of providers.
  • Reporting and Transparency. MCOs often need to submit reports to regulatory authorities and provide transparent information to their members about plan details, coverage, and costs.

In addition to these compliance considerations, there are also requirements around document and policy management, as well as ongoing training and education for providers. Ultimately, the reputation of the MCO hinges on the caliber of the services its members have access to. This means it’s in the best interest of MCOs to stay abreast of compliance standards and best practices for the in-network providers it works with. 

Use an All-In-One Platform To Manage MCO Compliance

With so many factors to consider, MCOs need help managing and maintaining compliance. MedTrainer is an enterprise grade compliance platform that helps them do it efficiently. 

By consolidating various compliance-related functions into a single platform, MedTrainer streamlines processes, saving compliance officers time and effort. Our platform provides comprehensive tools for regulatory compliance, quality management, training, documentation, and more. MCOs can easily track and monitor their network of healthcare providers, ensuring credentialing and accreditation are up to date. There’s also easy access to data, reporting, and analytics, to enhance decision-making and risk management. 

MedTrainer simplifies MCO compliance efforts, so they can focus on securing the highest caliber of care for members. Schedule a free demo today and learn how!