WGU C428 Task 2 |Latest Update with
Complete Solution
1
o Medicaid Managed Care Contracts
Medicaid Managed Care Contracts involve capitation. Capitation is known as a fixed
rate paid to organizations for services provided to each member enrolled. This is
disbursed to the MCO prior to treating patients. The MCO profits from Medicaid
Managed Care Contracts if the the allotted amount received for each member is not
spent in full.
o Medicare Advantage plans
Medicare Advantage plans are offered by private companies. They provide hospital
insurance, medical insurance, and in some cases coverage for dental, vision, and
hearing (Bogle, 2020). This plan is similar to Medicaid Managed Care Contracts in
which the MCO will receive a fixed rate for each enrollee. In this plan MCOs use
strategies like up-coding, billing patients for diagnoses that are more expensive than
what would be clinically accurate, as well as favorable selection, trying to reel in
healthier patients who would be less likely to utilize expensive services. These
strategies are both attempts to maximize profit margins.
o Commercial MCO partnerships
MCOs can partner with other MCOs to reach a larger market of patients, share
expertise, advice, and suggestions, and even share administrative costs like claims
processing and technology infrastructure. Sharing these costs could lead to rises in
revenue with decreases in overhead costs. MCOs working together are more likely to
negotiate lower rates with providers.
1a. Medical Managed Care Plans are the most beneficial to HCHC. Medicare is their
biggest source of revenue. Due to it being a large revenue source, adopting strategies
to maximize its profit margin and investing in capital could help increase profit. .
2
o Revenue generation: A greater amount of privately insured patients produces
higher profits. This is because private insurance companies reimburse in
greater rates than government funded programs like Medicare and Medicaid.
HCHC’s payer mix being predominantly occupied by Medicare and Medicaid
means its revenue is much lower.
o Financial stability: A payer mix with a balance between patients who are
privately insured and those enrolled in government programs can contribute to
stability in revenue and cash flow. Patients who are privately insured and
utilizing self pay could balance out costs associated with patients with expensive
medical costs or Medicare and Medicaid enrollees with lower reimbursement
rates. HCHC only has 22% of privately insured individuals in comparison to the
45% of Medicaid and Medicare insured patient. This means government
program reimbursements heavily outweigh privately insured reimbursements,
which would be significantly larger.
3.
o Updating Medical Equipment: HCHC should update their medical equipment to
ensure accurate diagnosing processes like imaging services. This will improve
Complete Solution
1
o Medicaid Managed Care Contracts
Medicaid Managed Care Contracts involve capitation. Capitation is known as a fixed
rate paid to organizations for services provided to each member enrolled. This is
disbursed to the MCO prior to treating patients. The MCO profits from Medicaid
Managed Care Contracts if the the allotted amount received for each member is not
spent in full.
o Medicare Advantage plans
Medicare Advantage plans are offered by private companies. They provide hospital
insurance, medical insurance, and in some cases coverage for dental, vision, and
hearing (Bogle, 2020). This plan is similar to Medicaid Managed Care Contracts in
which the MCO will receive a fixed rate for each enrollee. In this plan MCOs use
strategies like up-coding, billing patients for diagnoses that are more expensive than
what would be clinically accurate, as well as favorable selection, trying to reel in
healthier patients who would be less likely to utilize expensive services. These
strategies are both attempts to maximize profit margins.
o Commercial MCO partnerships
MCOs can partner with other MCOs to reach a larger market of patients, share
expertise, advice, and suggestions, and even share administrative costs like claims
processing and technology infrastructure. Sharing these costs could lead to rises in
revenue with decreases in overhead costs. MCOs working together are more likely to
negotiate lower rates with providers.
1a. Medical Managed Care Plans are the most beneficial to HCHC. Medicare is their
biggest source of revenue. Due to it being a large revenue source, adopting strategies
to maximize its profit margin and investing in capital could help increase profit. .
2
o Revenue generation: A greater amount of privately insured patients produces
higher profits. This is because private insurance companies reimburse in
greater rates than government funded programs like Medicare and Medicaid.
HCHC’s payer mix being predominantly occupied by Medicare and Medicaid
means its revenue is much lower.
o Financial stability: A payer mix with a balance between patients who are
privately insured and those enrolled in government programs can contribute to
stability in revenue and cash flow. Patients who are privately insured and
utilizing self pay could balance out costs associated with patients with expensive
medical costs or Medicare and Medicaid enrollees with lower reimbursement
rates. HCHC only has 22% of privately insured individuals in comparison to the
45% of Medicaid and Medicare insured patient. This means government
program reimbursements heavily outweigh privately insured reimbursements,
which would be significantly larger.
3.
o Updating Medical Equipment: HCHC should update their medical equipment to
ensure accurate diagnosing processes like imaging services. This will improve
