As NC Morphs to ACOs, the Brains (The Mental Side of Medicaid) Remain With MCOs: Perfect for the Headless Horseman

ACOs could be the answer to Medicaid budget problems. At least for physical services for the neck down. The brain, for now, will continue with the MCOs.

I understand that Medicaid services for physical needs will be within the parameters of the ACOs and that MH/DD/SA will remain with MCOs. But it seems that we are cutting the head off the body. This system would be perfect for the Headless Horseman; I assume the Headless Horseman did not suffer from any mental afflictions being that he had no head.

The shift to the ACO system is an attempt to revamp the fee-for-service payment method and dissuade physicians from ordering more procedures and services than are actually necessary.

According to a new Harvard study, as many as 42 percent of U.S. Medicare patients were subjected to procedures providing little if any medical benefit, costing the government program up to $8.5 billion in wasteful spending.

What could be the cause of this needless spending? You could argue that plaintiffs’ lawyers are at fault because of creating a fear of medical malpractice lawsuits. Doctors become so concerned about being the subject of a medical malpractice lawsuit that the physician is over-inclusive as to tests/procedures rather than risk being accused of medical malpractice by failing to test. This is commonly referred to as practicing “defensive medicine.”

But you could also argue that the entire fee-for-service payment method currently used by physicians gives a financial incentive to providers to recommend more services, more testing, more procedures. For example, ordering a test a patient doesn’t really need, in an effort simply to have the results show up in her records, would be considered practicing defensive medicine.

It is without question that defensive medicine is better for physicians, and very understandable. If I were a physician, knowing as much as I do about health care law, I would definitely practice defensive medicine. And purchase the Cadillac of the liability insurances, one that covers 100% of attorneys’ fees for my choice of attorney. Those plaintiff lawyers would scare me, too!

But defensive medicine is not the best approach for the Medicaid budget. One possible way to eliminate defensive medicine practices is to implement the accountable care organizations (ACOs). While ACOs do not completely do away with a fee-for-service payment system, they creates incentives to be more efficient by offering bonuses when physicians keep costs down. Providers get paid more for keeping patients out of the hospitals.

North Carolina is implementing the ACO model for physical health care (not for MH/DD/SA).

North Carolina Department of the Health and Human Services (DHHS) has announced that the NC Medicaid system will be changed over to the ACO model by July 2015, although some question whether the deadline is a bit unrealistic.

However, in NC, there are already ACOs, whose experience can give us an idea of what the NC Medicaid system’s ACO experience will resemble. Here is a list of active ACOs in NC (according to one website):

Physicians HealthCare Collaborative
AnewCare Collaborative
Cornerstone Health Care, PA
Meridian Holdings, Inc.
Triad Healthcare Network, LLC
Coastal Carolina Quality Care, Inc.
Accountable Care Coalition of Caldwell County, LLC
Accountable Care Coalition of Eastern North Carolina

Another article cites that in NC we have 14 ACOs currently active.

Our ACOs in NC service MediCARE patients, not MediCAID.

I am not aware of a single other state in USA that has implemented ACOs to Medicaid, which seems odd, considering the number of ACOs across the nation for Medicare and the touted success of ACOs in Medicare. Could NC possibly be the leader in ACOs for Medicaid? There is no question that, when we implement the ACOs, all eyes will be on NC to determine the success or failure of the program.

The ACOs will not, however, manage behavioral health. We will continue with the MCOs behavioral health care. So the ACOs will be in charge of everything the neck down. But is the ACO system going to replicate the MCO system? (As everyone knows who has read my blogs, I am not a fan of the MCO system).

ACO…MCO….What’s the difference?

Hopefully, and I believe it is correct to say, the ACOs will be vastly different from their counterpart, the MCO (in a good way).


In essence, I have high hopes for the ACOs. I believe that the brain (MH/DD/SA) should have been included with the rest of the body, but, maybe, in time it will be.

About kemanuel

Medicare and Medicaid Regulatory Compliance Litigator

Posted on May 14, 2014, in Accountable Care Organizations, Budget, Decrease in Medicaid Spending, Division of Medical Assistance, Health Care Providers and Services, Hospital Medicaid Providers, Hospitals, Legislation, Managed Care, MCO, Media, Medicaid, Medicaid Budget, Medicaid Costs, Medicaid Providers, Medicaid Services, Medicaid Spending, Medical Malpractice, Mental Health, Mental Health Problems, NC, NC DHHS, North Carolina, Tax Dollars, Taxes, Taxpayers, Unnecessary Medical Services and tagged , , , , , , , , , , , , , , , , , , . Bookmark the permalink. 6 Comments.

  1. I wish there was a brain included when making these decisions. As a medical professional, I am glad I do not work in the ER….this is where the MH/DD/SA patients will be seen.

  2. Knicole, where did you get the facts for your grid/chart above? Under MCO’s, medical necessity is mandatory for community-based MH services administered by private providers. An MD or PhD must sign off on the service. One “temporary” exception is for outpatient/counseling services delivered by LPCs and LCSWs…but after they reach the number of allowable “unmanaged” visits, they,too, must also have medical necessity signed off on by an MD or Phd. Also, by “entity” (in your chart) do you mean the MCO/ACO? And could you explain in what way entites are financially rewarding for denying services? Could this be the fact the MCOs must make a prfit to stay in business themselves? And lastly to address Carole’s comment…indeed ERs are being forced to serve MH/SA patients, because the providers can’t force patients to take their antipsychotic meds…and many choose not to. This is exacerbated by the fact that the state, Medicaid, and therefore the MCOs don’t have enough money to provide the types of services that keep close monitoring of med compliance.

    • Ron,

      Despite an MD or PhD signing off on the behavioral health care services, a non-MD or a non-PhD employed by the MCO determines whether the service should be authorized. Many times the non-MD or non-PhD determines medical necessity does not exist despite the treating physician’s signature to the contrary. Interestingly, this happens more with more expensive services, such as ACTT. The MCOs are financially rewarded for denying services because the MCOs are prepaid. The more services denied the higher the profit.

  3. Wilson Torts

    Point-counterpoint: If every MH service signed off on by a physician were authorized you would have the mess you describe in the first part of this article dealing with over-ordering of procedures that are not really needed. So I see where you’re coming from now (thank you) but the problem is way more complicated than that. Before MCO’s came into existence, there were doctors that were “selling” their signatures and barely looking at the patients’ treatment plans at all. Then Value Options, a completely independent for-profit entity hired by DHHS, rubber-stamped and authorized practically everything…and that was the beginning of the financial downward spiral the system is trying to climb out of.

    • “Curiouser and curiouser!”, said Alice.

      So they changed to this new system because the old system was a mess, but they didn’t plan the new system adequately to prevent it from becoming a mess as well?


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