Posted: November 1st, 2023

The differences and similarities between Managed Care Organizations (MCOs) vs. Accountable Care Organizations (ACOs)

Discuss the differences and similarities between Managed Care Organizations (MCOs) vs. Accountable Care Organizations (ACOs). Given the current health care environment, provide a solid speculation to how MCOs and ACOs may transform to meet the needs of its consumers. Be sure to support your thoughts and analysis with scholarly sources.

Health care spending is the biggest drive for formulating the different kinds of payment systems in healthcare. Health care insurance enrollees may obtain care from various Managed Care Organizations (MCOs) or Accountable Care Organizations (ACOs).
Managed Care Organizations (MCOs): is a group of people working together to manage the cost of health care. MCOs work along with medical facilities and health care providers to render support to MCO patients. MCOs only pays for the care provided and its plan is not as flexible as ACOs. MCOs give incentives to physicians like the ACOs. There are four types of MCOs: Health Maintenance Organization (HMO), Preferred Provider Organization (PPO), Exclusive Provider Organization (EPO), and Point-of-Service Plan (POS). According to (Andrews, 2014), HMOs only pay within network health care and insurers need a referral to seek care from a specialist or else the services provider will not be covered. For PPOs, care is covered both in and out of the network, however; the patient pays a higher premium for out of network care. In EPO, care is not covered outside of the network, nevertheless; patients do not require referral to get seen by a specialist. In POS, plan varies between HMOs and PPOs, and insurers may seek out of network care but with a higher cost-sharing rate. PPO and HMO both have Medicare options.
Accountable Care Organizations (ACOs): is a number of individuals that consist of health care providers and health care settings, collectively working together to accomplish the goal of improving optimum quality of health care. This network of people may include physicians, surgeons, pharmacists, doctors, nurses, healthcare assistants, caregivers, lab specialists, psychiatrists, mental health professionals, rehabilitation workers, other healthcare specialties and hospitals. This group of people collaboratively work together to coordinate patient care to obtain maximum care for clients and the group “accepts joint responsibility for health care spending and quality for a defined population of patients” (Song, 2014). According to Song (2014), the three key characteristics of the ACO are: “joint accountability,” accountability for both quality of care and health care spending, and the ACO is responsible for the care of a population of people.” In the ACO plan patients have more freedom to choose the type of care within a restricted time period. ACO provides a variety of payment structures and incentives to health care providers and hospitals primarily focusing on quality of care and financial risks to hospitals and physicians. ACO reward health care providers for the quality of care provided to patients, while eliminating irrelevant spending. ACOs do not focus on profit, but the quality of care while MCOs focus on profit.
References:
Andrews, M. (2014). What’s the best health plan for you? HMO, PPO, EPO or POS? Retrieved from https://www.washingtonpost.com/national/health-science/whats-the-best-health-plan-for-you-hmo-ppo-epo-or-pos/2014/08/25/772f96a8-27c1-11e4-958c-268a320a60ce_story.html?utm_term=.51bd23ba540e
Humana. (n.d.). HMO vs. PPO: Which one is right for you? Retrieved from https://www.humana.com/all-products/understanding-insurance/hmo-vs-ppo
Song, Z. (2014). Accountable Care Organizations in the U.S. Health Care System. J Clin Outcomes Manag. 2014 Aug 1; 21(8): 364–371.

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Managed Care Organizations vs. Accountable Care Organizations: A Comparison of Payment Models
Introduction
As the United States healthcare system shifts its focus towards value-based care, it is important to understand the differences between traditional managed care organization (MCO) models and newer accountable care organization (ACO) approaches. While both aim to provide quality care cost-effectively, MCOs and ACOs utilize varying structures and incentives to achieve this goal. This paper will analyze the key distinctions between MCOs and ACOs, and speculate how their models may evolve in the future given trends in the healthcare environment.
Managed Care Organizations
MCOs such as health maintenance organizations (HMOs), preferred provider organizations (PPOs), exclusive provider organizations (EPOs), and point of service (POS) plans primarily utilize provider networks and care authorization to manage costs (Andrews, 2014; Humana, n.d.). By negotiating lower rates with in-network providers and requiring referrals, MCOs can offer lower premiums but restrict choice of doctors. Financial incentives focus on individual encounters rather than long-term outcomes. While successful in the past, critics argue MCOs do not sufficiently coordinate care or emphasize prevention.
Accountable Care Organizations
In contrast, ACOs hold groups of doctors and hospitals jointly accountable for meeting targets related to quality, cost, and patient experience (Song, 2014). They have more flexibility in care delivery without network constraints and can collaborate across settings. ACOs financially reward preventative care and achieving savings over time rather than short-term procedures. This holistic approach aims to improve overall population health rather than single encounters.
Potential Convergence of Models
As value-based payment grows, MCOs may adapt some ACO principles like increased coordination and long-term focus. Providers may form looser collaborative networks under MCOs or take on more risk. Conversely, ACOs may maintain narrow networks and fee-for-service elements for simplicity. Overall, both models will likely evolve further to balance affordability, quality, and choice in the changing U.S. system.
Conclusion
In summary, while MCOs and ACOs currently differ in structure and incentives, their payment models may gradually converge in the future as the industry shifts towards value. Elements of each could be combined to meet evolving priorities around cost, care, and experience. Continued changes will be needed for either approach to successfully adapt to healthcare reform demands.
References
Andrews, M. (2014). What’s the best health plan for you? HMO, PPO, EPO … or POS? Washington Post. https://www.washingtonpost.com/national/health-science/whats-the-best-health-plan-for-you-hmo-ppo-epo-or-pos/2014/08/25/772f96a8-27c1-11e4-958c-268a320a60ce_story.html

Humana. (n.d.). HMO vs. PPO: Which one is right for you? Humana. https://www.humana.com/all-products/understanding-insurance/hmo-vs-ppo
Song, Z. (2014). Accountable Care Organizations in the U.S. Health Care System. Journal of Clinical Outcomes Management, 21(8), 364–371.

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