Managed Care Organization

A Managed Care Organization (MCO) is a private health plan that contracts with state Medicaid programs to deliver care to beneficiaries, introducing market principles into a government program. MCOs demonstrate how private sector efficiency, care coordination, and innovation can improve outcomes even within public programs. They operate under defined budgets and compete for contracts, creating incentives to manage resources effectively while improving quality-a stark contrast to traditional fee-for-service Medicaid’s open-ended spending with limited accountability for outcomes.

Additional Resources

• Fee-for-service
• Medical Loss Ratio
• Supplemental Payments

Additional Paragon Research

• Managed Care in Medicaid – Need for Oversight, Accountability, and Reform
• Preserve and Improve Medicaid: State Action to Protect the Most Vulnerable and Taxpayers
• Biden’s Medicaid Changes: High Costs, Misguided Policy