Risk transfer and accountability in managed care organizations' carve-out contracts

Area of Science:

• Health Services Research
• Healthcare Management
• Behavioral Health Policy

Background:

• Managed care organizations (MCOs) increasingly contract with specialized managed behavioral health organizations (MBHOs) to provide mental health and substance use services.
• Understanding the contractual relationships, financial structures, and performance expectations between MCOs and MBHOs is crucial for effective healthcare delivery.

Purpose of the Study:

• To examine the characteristics of contracts between MCOs and MBHOs.
• To analyze the delegation of functions, financial arrangements, and use of performance standards in these contracts.

Main Methods:

• A nationally representative telephone survey of 434 MCOs across 60 market areas.
• Data collected on administrative and clinical information for health maintenance organizations, preferred provider organizations, and point-of-service plans.
• Chi-square tests used to compare the delegation of functions (e.g., claims processing, network management, utilization management) and contractual terms (e.g., capitation, risk sharing, performance standards).

Main Results:

• MCOs extensively delegate major functions to MBHOs across all product types.
• Most contracts assign some financial risk to MBHOs, with variations by product type.
• Performance standards are common in contracts, but financial incentives tied to them are rare, except in preferred-provider organizations.

Conclusions:

• MCOs place substantial administrative and financial responsibility on MBHOs through contractual agreements.
• The findings highlight a significant reliance on MBHOs for managing behavioral health services within broader managed care frameworks.