Insurance: Patients Choose Choice

From the WebMD Archives

May 2, 2001 -- Point-of-service insurance plans may be just what the doctor ordered to bridge the gap between traditional fee-for-service plans and HMOs, according to a new study.

A major attraction to the point-of-service, or POS, plans is that they allow patients to self-refer to another physician or specialist when they see the need. Simply having that option appears to be enough for the vast majority of patients, who tend not to exercise it. This scenario is an attractive one to patients, employers, and insurers alike, as it allows customer satisfaction to remain relatively high, while costs stay relatively low.

"I think our health system is wrestling between the excesses of indemnity insurance -- where people have the traditional fee-for-service insurance and can seek care from any physician at any time -- vs. the tightly-controlled managed care arrangements, where the physician-gatekeeper and the health plan are really controlling patient utilization," lead author Christopher Forrest, MD, PhD, tells WebMD.

"There has to be some middle ground," says Forrest, an associate professor in the department of health policy at Johns Hopkins University's Bloomberg School of Public Health, in Baltimore.

"The POS plan and other similar managed-care models are that middle ground for the health system. It is really a hybrid, an HMO plus indemnity, " he says, allowing managed-care companies and employers to cut costs while giving consumers some degree of personal choice over who provides their healthcare.

While details may vary, POS plan participants generally have three options: Members who use the principal HMO network and obtain authorization for referrals from their primary care physician pay a small co-payment; those who visit a physician within the network, but without a referral pay a bit more; and those who self-refer to out-of-plan practitioners have the most out-of pocket expenses (similar to an indemnity plan).

"Consumers are concerned about being locked into HMO or managed-care arrangements where they can't access specialists," says Forrest.

"The concern was that [a POS] type of plan would lead to a many-fold increase in costs ... ultimately leading to skyrocketing premiums. And our research suggests that this probably is not going to happen. This is a viable alternative for the health system," he adds.


Forrest and his colleagues analyzed statistics for one year from three POS plans around the country that enrolled almost 400,000 people.

They found that only 4-7% of enrollees chose to self-refer to a specialist during that given year, with a similar number self-referring to a generalist during that same time. Thirty-eight percent of those who self-referred said they preferred to directly access specialty care, 28% reported relationship problems with their PCP, and 23% had an ongoing relationship with a specialist. Patients with chronic conditions and orthopaedic patients were more likely to self-refer to a specialist than others.

Forrest says he was surprised by how few people are self-referring to a specialist.

"A POS plan costs about $600 ... more per year than an HMO plan, so you'd think that if you were purchasing that option to self-refer, you would to use it," he tells WebMD. "But it turns out people use it like homeowner's insurance: It's a safety net. And that really is the take-home message: People have these options to self-refer and they are not using them.

Ken Thorpe, PhD, professor of health policy at the Rollins School of Public Health at Emory University in Atlanta, says he also is surprised at the low number of self-referrals.

"One interpretation is that people felt comfortable knowing they could refer out," he says.

Another explanation, Thorpe says, could be that the people who are more inclined to refer themselves to specialists opted to join an indemnity plan (if it were available to them). Or perhaps, he says, the in-network choices are fairly broad, so people wouldn't have to refer themselves out-of-network as often.

"To really get a better handle on [the study findings] we would have to know more about the enrollees' choice of plans," he says.

Despite these questions, Thorpe says that POS plans are a happy medium and that is why they are the fastest-growing model in healthcare insurance. They provide some check on expenditures, while at the same time they don't reduce the satisfaction that patients may have with their health plans that much."


The bottom line, says Thorpe is choice -- choice within a plan, but especially choice between plans.

"We know from other studies that, to the extent that people have broader choices of plan designs available to them, they are going to be happier ... because you are giving people the opportunity to sort into the plan they are the most comfortable with."

Forrest's study appears in the current issue of the Journal of the American Medical Association.

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