What Are MCOs and How do they work in Behavioral Health?

Managed Care Organizations (MCOs) play a critical role in the healthcare system, particularly in the United States. At their core, MCOs are organizations that provide or arrange managed care for health insurance, Medicaid, or other health programs. Their primary aim is to deliver quality healthcare services while controlling costs. They often achieve this by negotiating contracts with providers and focusing on preventive care to reduce the need for more costly, intensive interventions.

MCOs can take different forms, including Health Maintenance Organizations (HMOs), Preferred Provider Organizations (PPOs), and Point of Service (POS) plans. These entities function by creating networks of healthcare providers (such as doctors, hospitals, and therapists) and setting guidelines for services provided to patients and clients. They are particularly involved in Medicaid, where they help manage state funds to ensure that eligible individuals receive the necessary care.

The History of Managed Care Organizations

The concept of managed care has its roots in the early 20th century when private groups like Kaiser Permanente began to provide healthcare services for workers in exchange for prepaid fees. This early form of managed care was aimed at ensuring affordable access to healthcare for employees.

The broader managed care movement took off in the 1970s in response to the rapid rise in healthcare costs in the United States. At the federal level, the Health Maintenance Organization Act of 1973 provided government support for the development of MCOs, particularly HMOs. The hope was that these organizations would streamline healthcare delivery by emphasizing preventive care and negotiating lower fees with providers.

Over time, MCOs became more integrated into public healthcare programs, especially Medicaid. Today, many states have contracted with MCOs to help administer Medicaid programs, shifting from a traditional fee-for-service (FFS) model to managed care to improve efficiency and control costs.

How MCOs Work with Medicaid, Specifically in Mental and Behavioral Health

Medicaid, a state and federally funded program providing healthcare coverage to low-income individuals, often contracts with MCOs to manage healthcare services. MCOs play a pivotal role in administering Medicaid benefits, including those related to mental and behavioral health.

Under Medicaid’s traditional fee-for-service model, healthcare providers would bill Medicaid directly for each service rendered. However, under managed care, Medicaid contracts with MCOs, which are responsible for providing a set package of services for a fixed payment. This approach allows states to budget healthcare expenses more predictably, while also incentivizing MCOs to manage care efficiently.

MCOs working with Medicaid cover a broad range of services, including behavioral health, with some services being:

• Outpatient mental health therapy
• Substance use disorder treatment
• Case management
• Crisis intervention
• Inpatient psychiatric care

MCOs must comply with Medicaid requirements to ensure that these services are accessible and that clients receive appropriate care. Since MCOs have networks of providers, mental and behavioral health clinicians and practices typically need to join the MCO’s network to serve Medicaid patients and clients.

How Behavioral Health Clinicians and Practices Work with MCOs

For behavioral health clinicians, working with MCOs requires understanding the specific guidelines and processes of each organization. This includes credentialing, billing, and ongoing compliance with MCO requirements.

1. Credentialing Process: Before a behavioral health clinician can provide services to clients under an MCO, they need to go through a credentialing process. This process involves submitting documentation of licensure, professional history, insurance, and potentially even references to prove their qualifications. The MCO reviews this information to ensure the provider meets their standards.
2. Billing and Reimbursement: One of the most important aspects of working with MCOs is understanding the billing process. Unlike traditional Medicaid, where clinicians may bill directly on a fee-for-service basis, MCOs often negotiate specific rates for various services. Behavioral health clinicians must bill according to the MCO’s codes and guidelines. The MCO then reimburses the clinician or practice based on pre-negotiated rates.
3. Treatment Plans and Authorizations: Many MCOs require treatment plans and prior authorizations before certain services can be rendered. This means that a clinician may need to submit a treatment plan for review and approval by the MCO before starting long-term therapy or other interventions. Understanding these requirements is crucial for avoiding disruptions in care and ensuring timely reimbursement.
4. Continued Compliance: MCOs often have ongoing compliance requirements, which can include audits, reporting outcomes, and adhering to specific treatment protocols. Behavioral health clinicians must stay up to date with these requirements to maintain their status within the MCO’s provider network.

How Clients Work with MCOs vs. Medicaid Directly

From the client’s perspective, working with an MCO may feel different from traditional Medicaid. When a state contracts with MCOs, Medicaid beneficiaries are often assigned to an MCO or given a choice between several options.

1. Selecting an MCO: Clients may be required to select an MCO from a list of contracted providers or be automatically assigned to one. They typically receive an enrollment packet outlining the MCO’s available network of providers and instructions for accessing services.
2. Accessing Behavioral Health Services: Once enrolled in an MCO, clients must use the MCO’s network of behavioral health providers. The MCO is responsible for coordinating the client’s care, including ensuring access to mental health professionals, substance use disorder treatment, and other behavioral health services.
3. Coordination of Care: MCOs often assign care coordinators to help clients manage their care. This may involve working with the client’s primary care provider to ensure that mental health services are integrated with overall healthcare needs. Clients may also need to follow MCO-specific procedures for referrals or authorizations before receiving specialized care.
4. Appeals and Grievances: If a client is dissatisfied with the care they receive or if a service is denied, they typically have the right to file an appeal or grievance with the MCO. Medicaid clients also retain the right to appeal directly to Medicaid if they believe the MCO is not meeting their needs.

Pros and Cons of MCOs in the Behavioral Health Field

Like any system, MCOs have both advantages and disadvantages, particularly in the context of behavioral health.

Pros:

• Cost Control: MCOs aim to reduce healthcare costs by emphasizing preventive care and managing resources efficiently. For states and taxpayers, this helps control Medicaid spending.
• Improved Care Coordination: MCOs often focus on integrating care, especially for clients with complex needs, such as co-occurring mental health and physical health issues.
• Predictable Reimbursement: For providers, working with MCOs can offer a more predictable payment structure compared to traditional fee-for-service Medicaid.
• Comprehensive Networks: MCOs often have broad networks of providers, which can make it easier for clients to access a range of services.

Cons:

• Administrative Burden: For clinicians, MCOs can add a layer of administrative complexity, from credentialing to billing and compliance. This can create more paperwork and delays in reimbursement.
• Limited Provider Networks: Clients may find that their preferred providers are not in the MCO’s network, or that certain services require prior authorization, leading to potential delays in care.
• Lower Reimbursement Rates: Behavioral health clinicians may find that MCOs negotiate lower reimbursement rates than traditional Medicaid or private insurance. This can make it financially challenging for smaller practices to accept MCO clients.
• Potential for Service Denials: Clients may face denials for certain services, especially if the MCO does not deem them medically necessary. Navigating the appeals process can be complex and time-consuming for both clients and clinicians.

Important Considerations for Therapists Accepting Payment from MCOs vs. Medicaid

Therapists considering working with MCOs versus Medicaid should weigh several factors:

1. Reimbursement Rates: MCOs may offer lower rates than traditional Medicaid, so therapists need to ensure that the rates are sustainable for their practice.
2. Administrative Requirements: MCOs often require more paperwork, such as prior authorizations, treatment plans, and periodic reviews. Therapists should ensure they have the time and resources to manage these requirements.
3. Network Limitations: If a therapist chooses to contract with an MCO, they may only be able to see clients who are enrolled in that specific MCO. This could limit the therapist’s client base if the MCO has a small number of enrollees in the area.
4. Client Access: On the positive side, working with MCOs can expand access to care for Medicaid beneficiaries who might not otherwise afford services. For therapists focused on underserved populations, this can be a significant benefit.

Ultimately, deciding whether to accept payment from MCOs vs. Medicaid requires a careful evaluation of the practice’s financial model, the therapist’s willingness to manage administrative tasks, and a commitment to serving Medicaid populations. For those committed to addressing mental health disparities, working with MCOs can be a rewarding, albeit challenging, avenue for increasing access to care.