The differences between aco vs mco

2 min readJun 19, 2023

ACO (Accountable Care Organization) and MCO (Managed Care Organization) are healthcare delivery models aiming to improve care quality while controlling costs. However, there are some key differences between the two.

Managed Care Organizations (MCO) and Accountable Care Organizations (ACO) — From Pixabay

ACO (Accountable Care Organization): An ACO is a network of healthcare providers, including hospitals, physicians, and other healthcare professionals, who collaborate to deliver coordinated care to a defined population of patients. The primary goal of an ACO is to improve the quality of care and outcomes while reducing costs. Here are some key features of ACOs:

Payment Structure: ACOs typically operate under a value-based payment model. They may enter into contracts with payers, such as Medicare or private insurers, where they share in the financial risk and rewards based on achieving quality and cost-saving targets.
Coordination of Care: ACOs focus on care coordination and communication among healthcare providers to ensure that patients receive the right care at the right time. They aim to reduce duplicative or unnecessary tests, improve transitions of care, and promote collaboration among providers.
Emphasis on Quality Metrics: ACOs measure and report on various quality metrics, such as patient satisfaction, preventive care, and management of chronic conditions. They are incentivized to achieve improved health outcomes and patient satisfaction while reducing hospital readmissions and unnecessary emergency department visits.

MCO (Managed Care Organization): An MCO is a healthcare organization that manages and finances the delivery of healthcare services for a specific group of enrollees. MCOs often operate under a contractual agreement with insurance companies or government programs. Here are some key features of MCOs:

Insurance Coverage: MCOs typically offer health insurance coverage and manage the healthcare services for their members. They negotiate contracts with healthcare providers, establish networks, and determine payment rates.
Utilization Management: MCOs employ utilization management techniques, such as prior authorization and utilization review, to control costs and ensure the appropriate use of healthcare services. They may have specific guidelines or criteria for coverage and reimbursement of services.
Provider Networks: MCOs establish networks of healthcare providers who agree to deliver services to their members at negotiated rates. Members typically have a primary care physician who coordinates their care and provides referrals to specialists within the network.
Cost Management: MCOs focus on cost containment and efficiency in healthcare delivery. They negotiate discounted rates with providers and may implement strategies to manage healthcare utilization and control costs.

In summary, ACOs and MCOs have different approaches to improving healthcare delivery and controlling costs. ACOs emphasize care coordination, quality improvement, and shared savings arrangements, while MCOs focus on managing insurance coverage, utilization, and cost containment. Both models aim to achieve better health outcomes and cost-effective care, but their specific strategies and structures may vary.