Sometimes it feels like the healthcare field is just made up of one acronym after another, and your work is overrun by sets of three or four letters that each can represent very different things. One such area deals with the various types of healthcare organizations. What distinguishes an MCO from an ACO? How do these different organizations manage their medical billing processes? Keep reading to navigate these alphabetic categorizations and more!
- What Is a Healthcare Organization?
- 5 Types of Healthcare Organizations & Their Medical Billing Practices
What Is a Healthcare Organization?
A healthcare organization (HCO) involves a vast complex of stakeholders and participants, suppliers and purchasers, regulators and direct providers, and individual patients and their decision-making.
Healthcare organizations can be classified by their mission, services they provide, and whether they are publicly or privately owned. Publicly owned HCOs are commonly government, tax-supported county, state, or federal medical treatment facilities as opposed to private health care organizations that operate outside the bounds of government control and receive funding from patients and their insurance policies. Another way to classify HCOs is based on their financial classification, either for-profit or not-for-profit; both types generate revenues through the health services they provide.
5 Types of Healthcare Organizations & Their Medical Billing Practices
There are 5 types of healthcare organizational structures; some have overlapping qualities—such as the general goal of providing care to patients—but differ in how that care is delivered or in its medical billing processes.
Managed Care Organization (MCO)
The term managed care or managed healthcare is used to describe a group of activities intended to reduce the cost of providing for-profit healthcare and providing health insurance while improving the quality of that care. Managed care has two key components: utilization review—which serves to screen against unnecessary medical tests and treatments—and healthcare provider networks or arrangements.
Plans that restrict your choices usually cost you less; on the other hand, if you want a more flexible plan, it will probably cost more. There are three models of managed care plans:
- Health Maintenance Organizations (HMO) typically pay for care within the network; the patient chooses a primary care doctor who handles their care.
- Preferred Provider Organizations (PPO) usually pay if you get care within the network.
- Point of Service (POS) plans are more flexible and let you choose between an HMO or a PPO each time you need care
Patient-Centered Medical Home (PCMH)
The Patient-Centered Medical Home is a care delivery model whereby patient treatment is coordinated through their primary care physician to ensure they receive the necessary care when and where they need it, all in a manner they can understand.
The objective is to have a centralized setting that facilitates partnerships between individual patients and their personal physicians, and when needed, the patient’s family. The concept of PCMH originated with the specialty of pediatrics to provide care to children with complex illnesses, and similar concepts have been adopted by primary care professional organizations and are supported by multiple other organizations. The implementation of PCMH practices by individual physician groups is further spreading with new payment models and other key drivers.
A hallmark of successful PCMH practice is team-based care; physicians should generally spend their time on diagnosis and prescription of treatment. This means that tasks, such as initial history taking which doesn’t require a physician’s level of training and licensure, are completed by others. Where possible, protocols that enable others to act are developed; for example, under a physician-directed protocol, an LPN or MA can initiate immunizations, ordering of labs, etc. Efficient delegation and established procedures allow physicians to engage in tasks only the physician can perform and provide the time needed to engage in effective patient care and related activities.
The Patient-Centered Primary Care Collaborative (PCPCC) believes that the most effective way to incentivize this model would be to combine traditional payment for office visits with a three-part model that includes:
- A monthly care coordination payment (also known as a "bundled care coordination fee" that factors in the practice's service capability based on the PCMH model) for the work that falls outside of a traditional visit and which accounts for the system infrastructure, such as health information technologies
- A fee-for-service component for each visit that maintains a reward for the physician to see the patient in the office, when appropriate
- A performance-based element that recognizes a practice’s efforts towards quality and efficiency
Accountable Care Organization (ACO)
The Centers for Medicare & Medicaid Services (CMS) defines ACOs as “groups of doctors, hospitals, and other health care providers who come together voluntarily to give coordinated, high-quality care to their patients.” The goal of this approach to healthcare is to ensure that patients, especially those with chronic ailments, consistently receive excellent care without risking medical errors or unnecessary extra treatments, visits, and services.
Under government initiatives such as the Medicare Shared Savings Program, ACO healthcare participants that meet various quality and cost-savings objectives can share in the cost savings achieved overall—making it the first care delivery model that allows physicians to see tangible financial benefits from providing well-coordinated care to their patients.
How are medical practices motivated in the ACO model of healthcare? Members of ACOs work together to lower the costs of care while also meeting established care quality standards. They’re then rewarded by being allowed to pocket a portion of those savings; if they don’t meet performance and savings benchmarks, however, they can get stuck paying penalties.
The major key to the ACO healthcare model is to establish and encourage a feeling of shared responsibility for the cost and quality of care throughout the whole network. As such, payment methods are typically unorthodox, though they can take any variety of forms. Some ACOs operate by delivering physician members equal shares of overall revenue, while others pay by salary, capitation, or productivity-based compensation.
Concierge care, or “retainer-based” medicine, is a model in which patients pay an upfront fee to secure physician services. Though some patients pay a five-figure fee for their care, the average fee for membership in a concierge practice nowadays is between $1,500 and $2,400 a year—or between $125 to $200 a month. The most recent study from the Physicians Foundation found that almost 1 in 10 providers planned to convert their practices to concierge-style medicine.
The growing numbers have many healthcare observers worried, believing that the concierge model is an exclusively “boutique” approach. Negative articles on the trend typically portray the concept as “pay up or lose care,” focusing on those doctors who shift to the concierge model to cap their patient base at an appealing number and earn more money from patients with deeper pockets.
But that’s not the only way it can be utilized. For example, one San Antonio physician essentially flipped this model on its head and instituted a low-fee concierge model to serve low-income individuals in the community.
Pay-as-you-go clinics, also known as community health clinics or walk-in clinics, offer affordable healthcare to patients without insurance. One of the most appealing qualities about walk-in clinics is that, while you do have the option of making an appointment if you want to, you can just walk in without an appointment, which means you can get the medical attention you need without having to wait for an appointment with your primary care physician. Walk-in clinics also typically accept cash, credit cards, and insurance, so patients have a good deal of flexibility when it comes to paying for their medical care.
Community health clinics are likely available in your area; these can be free, or at a low cost, to patients while providing some of the most necessary care for people, such as preventive screenings and vaccinations, without the hefty price tag of a direct primary care provider or insurance requirements. Many of these allow patients to pay on a “sliding scale” based on their income, or even offer free services.
Walk-in clinics are also available for more routine issues, and they often take cash payments if patients don’t have health insurance. Patients can see a doctor at a walk-in clinic for minor issues and be billed for the visit, plus some walk-in clinics offer care at low or reduced rates, while others may be able to help you apply for free or low-cost health insurance, like Medicaid.
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At NCG Medical, we’ve been the outsourced medical billing experts for four decades by handling all the ins and outs of the medical billing process. Our customized solutions can improve revenue management cycles and ensure that your practice is receiving the most streamlined reimbursement process. Contact us today to learn more about how we can transform your medical billing.