What distinguishes a fully insured funding arrangement for MBHOs?

The distinguishing feature of a fully insured funding arrangement for Managed Behavioral Health Organizations (MBHOs) is that it places no financial burden on employers. In this arrangement, employers pay a fixed premium to an insurance company, which then assumes the financial risks associated with providing behavioral health services. This model allows employers to have predictable costs because they do not bear the risk of fluctuating claims costs. The insurance company is responsible for covering all eligible claims, thus providing peace of mind to the employer regarding healthcare expenditures.

In contrast, other options such as paying a premium based on claims inherently suggest a performance-based funding mechanism that reflects self-funding characteristics. The notion that a program usually covers all psychiatric medications is not specific to fully insured arrangements, as drug coverage can vary widely based on the specific plan design. Lastly, the idea of self-insuring a percentage of the risk directly contradicts the fundamentals of a fully insured arrangement, where the risk is entirely borne by the insurer, not the employer. This clarity helps to reinforce the understanding of how fully insured funding operates within the context of MBHOs.