July 1995 Bulletin

Point of service inexpensive for HMOs: study

A study conducted for the Patient Access to Specialty Care Coalition found that requiring a "point of service" (POS) option for all managed care plans will not greatly change the cost of managed care for health maintenance organization (HMO) benefits. The study by Milliman & Robertson demonstrates that a required POS can, in fact, lower the costs to an HMO or can be cost-neutral.

Using information from the 1994 study of the HMO industry conducted by the Group Health Association of America, the Milliman & Robertson study estimated the "net claim cost" in today's marketplace for HMOs with POS plans and HMOs without POS plans, examining several typical benefit designs. The study found that cost variations would range from a decrease of approximately 5 percent for a traditional HMO plan to an increase of about 10 percent for an HMO plan with a POS feature.

Under the POS option, patients retain the right to continue to go to a non-network provider of their choice. In doing so, however, the patient incurs a higher co-payment for the opportunity to go "out of network." Among other benefits, this would allow individuals to continue to see their current health care providers in the event that their health care coverage shifts due to a move to a managed care plan by an employer, a job change, or some other occurrence.

In releasing the study, the coalition called on federal and state legislators and regulators to require the POS option, guaranteeing patients timely access to appropriate specialty and subspecialty care which may be absent or not readily available in a health care plan.

Analysis of the data in the study suggests:

In this case, if the model assumes that the HMO has negotiated discounts with network providers of 40 percent, then the per patient claims cost would be from 7 percent to 9 percent over the cost of the pure HMO patient.


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