MCO: Managed Care Organization
A managed care organization (MCO) is a popular way for US citizens to use medical services. MCO can be a health plan, health system, physician group, or hospital responsible for managing the health of various enrollees who decide to contract with them. In the case of MCOs, the client does not pay a separate fee for each time they receive medical services (Kongstvedt, 2019). Instead, they make a fixed-rate payment annually or monthly, depending on their plan. The providers also receive a fixed fee for their services called capitation. When the cost of their services is lower than the capitation amount, they make a profit. At the same time, if the actual cost of their services is higher than the capitation amount, they lose money.
MCOs have two main advantages, namely, the reduction of costs and the fast exchange of information across the network. When enrolling in an MCO plan, people usually want to decrease the amount of money they spend on health care. Paying for each doctor visit can be expensive, while contracting with an MCO can save resources (Pozen & Stimpson, 2017). Thus, MCO plans can be considered a low-cost option which popular among younger people or those without any considerable health problems. Additionally, when an MCO involves a network of organizations and physicians, they can quickly exchange medical records of their clients. Such an arrangement significantly facilitates the provision of services to patients, thus saving their time and resources and solving their health issues faster, preventing complications.
MCOs also have certain disadvantages, and the main ones are the limited provider choice and the potentially extended waiting periods. Enrollees in MCO plans often do not have an opportunity to change their physician if they do not like their services due to the network limits (Green, 2020). For instance, when an MCO includes only one hospital, enrollees practically have no other option than to stay with the same doctor. Additionally, some MCO networks are quite busy, and substantial periods of time may pass before the client is granted a chance to visit their doctor. As a result, people can wait for several weeks or even months for their appointment, especially in situations when their health issue does not require being addressed urgently.
HMO: Health Maintenance Organization
An HMO, or a health maintenance organization, is a type of MCO that provides preventive services to clients. HMOs function on a prepaid basis where enrollees have to pay a set amount of money annually or monthly, depending on their particular plan. The preventive services provided by HMOs ultimately contribute to the reduction of health care costs by detecting health problems of enrollees at early stages (Green, 2020). In the case of an HMO, every client has their primary care provider who coordinates their appointments with other health care professionals. In other words, enrollees cannot access the services of health care specialists without contacting their primary care provider first and receiving a referral from them. Nevertheless, there are still certain exceptions here because enrollees can avoid getting a referral if their particular HMO plan allows it. There are different models of HMOs, but all of them are subject to the HMO Act of 1973.
HMOs impose certain limitations on their enrollees in terms of the choice of health care providers. Namely, a subscriber of an HMO plan can use the services of physicians or other health care providers outside of the network, but they will have to pay out of their own pocket for it. It is always the responsibility of the enrollee to know which hospital or laboratory is in the network. Otherwise, they may face costly bills (Kongstvedt, 2019). There are, of course, exceptions to this rule since, in many cases, HMO clients can receive emergency care or services not provided by their HMO and still get full coverage. Apart from requiring a fixed annual or monthly payment, the services of HMOs also imply copayments that patients have to settle themselves. Such copayments can have different prices and are paid in addition to the provider fee. Nevertheless, the price of a copayment is always lower than the one paid by a person who does not have an insurance plan.
PPO: Preferred Provider Organization
Apart from HMOs, there is another form of MCOs called preferred provider organization, or PPO, which has a variety of differences compared to health maintenance organizations. The basic idea of PPOs is similar to that of HMOs. Enrollees pay a certain premium every month or every year to gain access to a network of health care providers (Green, 2020). Thus, entering a PPO contract allows people to save their health care costs compared to situations when they have to pay fees for each visit. Nevertheless, compared to HMOs, PPOs have two characteristics that make them ultimately different.
While PPOs have their own networks of health care providers, enrollees are still allowed to make an appointment with doctors and order lab tests outside of the network. In other words, people who have a PPO plan are not limited to a certain number of hospitals and can get insurance coverage even when receiving the services of specialists in other regions and states. In the case of HMOs, enrollees cannot continue visiting their old doctor when they decide to leave the network. While in the case of PPOs, there is no problem attending to a professional who is not included in the network. Nevertheless, while enrollees’ appointments with health care providers outside of the network will still be covered by the plan, they will also have to pay a larger fee for such visits. Thus, when choosing a PPO plan, people must realize that they will be asked to pay more for out-of-network visits.
Premium Prices and Referrals
Another characteristic of PPOs is the price of their premiums which is generally much higher than that of HMOs’. Essentially, PPO enrollees have to pay more every month or every year for the option of getting coverage at out-of-the-network providers. Moreover, the additional fee which enrollees pay when visiting doctors who are not part of the network is not included in their premium payments (Green, 2020). The increased cost of premium can also be offset by the ability to visit specialists without receiving any authorization in advance. Unlike HMOs, PPOs do not require enrollees to contact their primary care provider and ask them to coordinate their services. Instead, PPO enrollees simply bypass primary care providers and can visit specialists directly, making an appointment with them.
Affordable Care Act Changes
The Affordable Care Act has brought numerous changes to the American health care system, and it still affects the provision of medical services today. First of all, the passing of the act has led to an increase in the number of citizens with insurance. The extension of the Medicaid program and the emergence of health insurance marketplaces enabled more people to access health care (Pozen & Stimpson, 2017). Additionally, health care services have become more affordable compared to the period before the introduction of the act. For instance, the passing of the act led to the removal of copayments for preventive services such as cancer screenings. Finally, people now have better access to prescription drugs since the act forces insurance plans to cover drugs in different categories. The ability to get drugs with insurance also contributed to the reduction of the cost of health care.
Additional changes introduced by the Affordable Care Act include the ending of discrimination against people with preexisting conditions. Previously, insurance companies charged people higher premiums based on their health status and history. A person with a condition such as diabetes could end up paying more than a healthy individual. The act banned such discrimination, and now people with preexisting conditions have access to health care at affordable prices. Moreover, the act allowed women to receive essential health services such as breastfeeding support services, HIV screening, and access to contraception, which does not entail any out-of-pocket expenses. The Affordable Care Act also allowed individuals experiencing substance-use disorders to receive treatment. Such measures are particularly important in order to counter the current opioid crisis in the United States.
As mentioned earlier, the Affordable Care Act has expanded Medicaid coverage to include millions of people, many of whom could not afford medical insurance previously. Thus, individuals with lower incomes received an opportunity to access proper health care services without the need to pay large sums of money. The act also introduced advanced dependent coverage, which helped young adults and children to be included in the health insurance plans of their parents (Pozen & Stimpson, 2017). The extension of Medicaid also considerably facilitated the provision of medical services to children, especially those whose parents did not have enough resources to afford medical plans. Finally, the Affordable Care Act established strict employer mandates, which forced businesses with more than fifty workers to offer insurance plans to their employees. Thus, people, many people managed to acquire health care insurance through their place of employment, which also saved their resources and made medical assistance more affordable for them.
Felix Grossman’s Case
Felix Grossman was seen today for an upper respiratory infection. Total charges for today’s services are $140. The allowed amount is $90. What are the discount amount and the amount the carrier pays to the provider?
In the case of Felix Grossman, the carrier must pay the provider $90, which constitutes both the allowed amount and the discount amount. Thus, the remaining sum of $50 will become Mr. Grossman’s responsibility.
Emma Mastrangelo’s Case
In the case of Emma Mastrangelo, here, primary insurance in the form of benefits will cover $90 of the sum, which is $648.45, yet the carrier will only pay $462.60. The rest of the sum, $72.05, will be Emma Mastrangelo’s financial responsibility.
Mabel Smith’s Case
In the case of Mabel Smith, here total cost of the procedure was $85. The allowed amount which will be covered by the insurance is $52. Thus, $52 will constitute both the discount amount and the sum paid by the carrier to the provider. At the same time, Mabel Smith will have to pay a total of $33, including her copay.
Rufus Durst’s Case
In the case of Rufus Durst, the patient’s responsibility amount is $1198.28 since the carrier covers only 60% of the procedure, which is $1797.42. Nevertheless, with the allowed amount of $1745.32, the physician will have to write off the difference of $52.1.
Green, M. (2020). Understanding health insurance: A guide to billing and reimbursement. Cengage Learning.
Pozen, A., & Stimpson, J. (2017). Navigating health insurance. Jones & Bartlett Learning.
Kongstvedt, P. R. (2019). Health insurance and managed care. Jones & Bartlett Learning.