Management Services Organization (MSO), Medicaid Managed Care – Full Risk

By June 28, 2016Newsroom

The following piece is from the “CAPG’s Guide to Alternative Payment Models: Case Studies of Risk-Based Coordinated Care | 2016 A CAPG White Paper.” The full document can be downloaded below. Contributed by: Peter Winston, Executive Vice President, SynerMed

How it Works

Medicaid managed care plans make capitated payments to the MSO. As a management services organization (MSO), SynerMed negotiates health plan contracts on behalf of our physician groups, independent practice associations (IPAs), and hospitals. Health plans then make a capitated ( xed, per-member, per-month) payment to SynerMed.

This payment covers both the physician and hospital services. In general, the rate is risk-adjusted for certain Medicaid eligibility categories, including Temporary Assistance for Needy Families (TANF), seniors and people with disabilities, childless adults, and certain low-income children. The rates are risk-adjusted to re ect the estimated resources needed to treat these patient populations.

The MSO pays physicians capitation or fee-for-service. We pay individual providers on behalf of each of our physician groups and IPAs. Each of these clients determines how it will pay its physicians, so there are a variety of different payment models. Primary care physicians are paid either risk-adjusted capitation or fee-for-service. Again, Medicaid adjusts the payment for populations that require greater healthcare resources. In general, specialists are paid fee-for-service.

IPAs and medical groups pay the MSO. The IPAs and medical groups that use our services pay us a contracted rate. This rate varies depending on the scope of services we provide for them; it’s typically a percentage of the client’s capitated payment.

Our MSO assists clients with meeting quality goals. Our IPA clients use different quality metrics and incentives, depending on the challenges facing their speci c populations. For example, our clients may want to focus on initiatives around increasing vaccination rates or reducing readmissions. We assist IPAs in measuring and achieving their speci c quality improvement goals.

Why It’s a Success

We can invest in health for vulnerable populations. In markets where we have a capitated hospital and capitated physician organizations, our MSO can use this joint, prepaid funding to create innovative models of care delivery.

One example is the Downtown Coordinated Care Clinic (DC3). Located in downtown Los Angeles, the DC3 is dedicated to providing personalized, quality care to the most complex patients. The clinic provides services to Medicare and Medicaid patients and uses population analytics, advanced care coordination, care management, and team-based care to improve health and lower costs.

The benefits to patients are numerous. The DC3 prides itself on innovative strategies to meet patients’ total healthcare needs. It often provides socioeconomic services not covered by the health plan—such as temporary housing for a homeless patient or transportation services for needy populations. This program has been very successful and has reduced high-risk patient costs from an average of $30,000 per-member, per-month, to $6,000 per-member, per month—a 6:1 return on investment.

We can build the infrastructure needed for complex care management. The MSO model works for physicians and patients because it affords an opportunity to organize physicians into sophisticated groups, with an infrastructure to support population health.

While low reimbursement rates in Medi-Cal for any single provider may serve as a barrier to coordinated care, the MSO model allows physicians to combine resources to build the infrastructure needed for complex care management. This is particularly true in a “full-risk” model—which has prepaid capitation for both physician and hospital services. The combined prepaid funding can be used to invest in sophisticated care management tools to provide better care for patients.

Suggestions for Improvement

Integrate behavioral health. One challenge is that certain services are carved out or offered separately by the health plan or county, rather than by SynerMed and its clients. In particular, behavioral health and substance abuse treatments are often funded through separate streams and entities, due mostly to California’s 1999 Mental Health Parity Act.

This makes it difficult to achieve a “whole person” orientation, as behavioral health plays a key role in overall clinical health. A more integrated funding and care delivery approach would better serve Medicaid patients.

Expand successful models. There are barriers to expanding or replicating the success of the Downtown Coordinated Care Clinic (DC3) in new markets. First, it’s difficult to identify and deploy the startup funding to create this type of model in different geographic locations without scale.

Second, additional work must be done to identify other global-risk partners in the delivery system—such as hospitals or health plans—that may be interested in pursuing the DC3 model. The model’s success depends on participation from multiple entities in healthcare delivery. This is the only way to provide the funding and care systems to meet the needs of complex populations. More robust participation in the future will be key to expanding and building on the success of the DC3.

To read the full article, download the “CAPG APM Guide 2016” below:


About SynerMed

SynerMed is a market-leading healthcare organization specializing in government-sponsored programs that is headquartered in Monterey Park, California. SynerMed is dedicated to innovating healthcare through an integrated system of tools, purpose-built web platforms, and professional services that connect physicians, members, hospitals and health plans. SynerMed’s mission is to transform the healthcare delivery system by rewarding high-quality and value-based care. For more information about SynerMed, visit and

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