Managed Care Organization (MCO)

Last Updated: July 30, 2018

Definition - What does Managed Care Organization (MCO) mean?

A managed care organization (MCO) is a business group that manages the delivery of health care services through managed health care plans. These managed health plans may be offered through insurers or to the self-insured, although they are much more common in self-insured group health plans. MCOs usually contract with a limited number of health care services providers, forming a network. Savings are realized by the MCO through contractual arrangements with the members of the MCO's network of providers of health services and products.

WorkplaceTesting explains Managed Care Organization (MCO)

Managed care organizations (MCOs) are one of the tools used by insurers and health care consumers to reduce the overall costs of health care. A managed health care organization may contract with hospitals, pharmacies, medical labs, and individual physicians to form a network of providers. By negotiating on behalf of insured members of the managed care organization's health insurance plan, MCOs can often attain reduced pricing for health care services.

Managed care organizations may take one of several forms. Some organizations compensate insured members only when those members use so-called in network providers. Other MCOs alllow the insured to see any health care provider but offer discounts or other incentives for choosing an in network provider. The three most common forms of managed care plans are health maintenance organizations (HMOs), point of service (POS) plans, and preferred provider organizations (PPOs). Employer funded healthcare plans sometimes offer employees a choice from among various managed care plans or organizations.

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