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What is a “Point of Service” health care plan?

A brief overview...
  • A point-of-service health plan offers consumers savings, flexibility, and choice
  • The POS offers greater choice of resources than an HMO
  • The POS has lower prices than a typical PPO
  • The POS features medical guidance from a primary care physician

The POS or “Point-of-Service” health plan has features of an HMO and a PPO. It uses a primary care physician to provide care and to make referrals to network resources. It allows members to use outside resources by choosing to pay all or a higher percentage of the costs.

The POS pays cost sharing on outside resources when the PCP refers members to outside-of-network specialists. Comparison shopping is an important part of searching for and selecting a health plan. Comparison shopping focuses on the consumer’s priorities.

Find a point-of-service and other managed care plans by entering your zip code above!

POS and Obamacare

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The Marketplace and state exchanges offer POS health plans in all four types of Obamacare plans. The POS plans usually cost more than HMO plans and less than PPO plans. They use a primary care physician to control care and make referrals, but the POS permits members to go outside of the PCP system and the POS network.

Flexibility is the key to the POS advantage. The user can go outside of the network and geographically they can go outside of the network too. POS opens up the national medical system for every member.

POS and the FEHB

The Office of Personnel Management uses point-of-service networks to provide regional coverage for federal employees at various locations in the US. This flexible arrangement the OPM can create an adequate supply of medical service providers and cover a regional territory

It uses point-of-service networks in connection with fixed-fee-for-services arrangements for small employee groups.

Origins of POS

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Point-of-Service plans became popular in the early 1990’s. The situation was one characterized by dissatisfaction with strict HMO practices. The public resented prices and the strict control over services by the primary care physicians or gatekeepers.

The POS offered customers the option of going outside of the network and going outside of the advice and control of the Gatekeeper. There were three exercises in customer choice at work. They involved the gatekeeper, the strict network, and self-referral.

POS Differs from Other Forms

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The point-of-service health plan has attributes of the HMO, the PPO, and the fixed-fee-for-services types of managed care networks. It also has some important differences with each as discussed below.

  1. The POS uses a primary care physician to direct care and make referrals. The POS differs from the HMO because it permits users to go outside of the network, make self-referrals in the network, and self-referral outside of the network. The HMO does not use outside resources. It achieves low prices by limiting the network size and using in-network medical care.
  2. The POS is similar to the PPO. Both types permit members to go outside of the network when they choose, and both charge more for outside services. The PPO relies upon low prices, simple paperwork as the incentive to use network resources. The POS plans use very low prices for in network and charge few copays and usually no deductible. The POS makes use of network resources much more convenient and much less costly.
  3. FFFS is the fixed-fee-for-services type of managed care; it resembles the Original Medicare in which users select medical care providers. The POS is like the FFFS because it does not restrict the member when they go outside of the POS system. Once outside the primary care physician’s control and the plan network, customers make choices to self-refer and to select the medical services providers. The POS sets the prices, if any, that they will pay for the outside services.

POS and Out-of-Pocket Expenses

The Obamacare limit on out-of-pocket expenses in each year of insurance coverage applies to POS plans. These plans often set a separate limit for out-of-network services. Some plans have no limit on out-of-pocket costs for outside services. The Obamacare limit is an important protection.

After users pass the limit, the insurance company must pay all of the cost for benefits. The exception for outside network sources means that, in some plans, there is no limit.

POS Controls Costs

The point-of-service plan usually does not charge deductibles, and only small copays, or coinsurance when using network resources. When consumers go outside of the POS network, they may have to pay a deductible, higher copays, and substantial amounts of coinsurance.

The point-of-service plan covers outside network referrals by the primary care physician with cost sharing. Members have clear incentives to use POS plan network providers.

The POS has Advantages and Drawbacks

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Consumers that do not wish to get locked into a rigid plan can appreciate the POS health plan for its flexibility. It strikes a balance between strict control of an HMO and the higher-priced broad flexibility of a PPO.

The POS gives the consumer some economic choices; while the costs are higher than HMO, the consumer can decide when to exceed the network fees. The below-listed items describe some strengths and weaknesses of the POS plan.

  • In emergencies and when away from the home area, members can use services as the situation dictates.
  • POS plans charge higher premiums than similar HMO plans. This is largely due to the outside resources options in the PCP and in the member’s choice. If one is content to use network resources, then the higher priced premiums for a POS plan may be an unnecessary expense.
  • The primary care physician can be an asset and a distraction. Referrals may be difficult and time-consuming. The advice of the primary care doctor can be valuable too. It can save wasted effort seeking specialists that cannot provide the answers the patient seeks.

Outside the POS Network

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The POS plan makes life easier for members that choose to use network resources. The process is smooth, and there are few extra costs or requirements. In contrast, when using outside resources, the consumer experience is significantly different.

This is not simply to make network resources more appealing. The POS plan provider knows about the doctors and hospitals in its network. They have agreed on a below market price for service in exchange for a high value of patient referrals

  • Paperwork is a factor. The member must prepare the paperwork for reimbursement or payment of the outside network claim. This involves some record keeping and an accurate account of the service and prices. The time and effort required to handle paperwork for reimbursement also involve at least a short wait for insurance processing of the claim.
  • Copays are small payments at the time and place of the service. Outside resources require copays in POS plans. They are larger than the small and infrequent copays for using network doctors.
  • Deductibles are not used in network resources but are required for most outside of network services. Some plans require consumers to exceed a deductible amount before they pay any cost sharing for outside of network services.
  • Coinsurance shares are larger for out-of-network resources than when using POS network doctors and hospitals.

POS May Be the Right Choice

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The POS health plan offers choice and permits the consumer the exclusive power to decide when and if to spend more for a service. Consumers may decide that the choice of medical service provider is more important than the cost. In these points of service, consumers can choose to go outside of the plan network and pay any difference out-of-pocket.

They can request a referral to the outside source from the primary care physician. If granted, the referral to an outside of network provider will get full cost sharing from the plan. Comparison shopping helps the consumer see the strengths and advantages of POS health plans. It offers the flexibility to choose when to spend more to meet medical needs or preferences.

Comparison shopping helps the consumer see the strengths and advantages of POS health plans. It offers the flexibility to choose when to spend more to meet medical needs or preferences.

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