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What is a POS medical plan?

Keep in mind...
  • The POS medical plan uses network resources to save costs
  • The POS medical plan requires a Primary Care Physician
  • The POS medical plan permits use of outside resources
  • The POS option authorizes cost-shared PCP referrals to outside resources

A POS medical plan is a point of service plan. This type of plan requires a primary care physician and the plan network. The POS also lets members use outside services as they choose.

Many people think of the POS as a mix of the HMO and the PPO. It takes the structure of an HMO and the flexibility of a PPO. The POS combines low costs of an HMO with an additional measure of consumer choice usually found in the PPO.

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Understanding Networks

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A network is the group of professionals, doctors, and hospitals that serve the members of the plan. They sign agreements to take the patients referred by the plan provider. The network prices make the system work. The contract prices are below-market rates, and they help the insurance company hold down premiums, serve a diverse population, cover a geographic area, and make a profit.

Insurance companies base their costs sharing and premiums on the prices they negotiate in network contract agreements.

When consumers use services outside of the network, the insurance company pays a lower percentage. The costs of outside services are higher than network fees. When the insurance company uses an outside service to serve its members, this is an example of a POS network.

Networks Help Medical Service Firms

The network concept helps the doctors and hospitals that sign the low-cost agreements too. The POS plan offers consumers low prices and flexibility. This is an attractive package.

The medical service providers get a large number of patients. The volume of patients is an important asset for the medical services providers. This is their market share, and the POS plan helps it grow a larger audience.

Understanding the Types of Managed Care

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There are several forms of managed care that consumers should understand. This will help them make choices that work best for them. The type of managed care has consequences in coverage, expenses, and plan limits. The below-listed descriptions give the main features of the most widely used forms of managed care.

HMO is the Health Maintenance Organization. This type of managed care began as an effort to control costs and improve preventive care. The features of the HMO are the primary care physician and network limits.

The primary care physician to deliver care and refer the members to other network resources. The HMO does not use or pay for outside resources. Consumers must pay these fees.

PPO is the Preferred Provider Organization. This type of managed care does not use a Primary Care Physician and lets members select among the network resources. The PPO pays when users go outside of the network but at a lower rate of costs sharing than when using network resources. The users pay more when going outside the network, and these dollars do not count towards maximums for out-of-pocket expenses.

EPO is the Exclusive Provider Organization. This type of managed care is simple and direct. It does not pay for outside services. Members can use network resources without a primary care physician and referrals. The EPO can provide lower prices and premiums than many other types of care. The trade-off is that, excepting emergency uses, the plan does not pay costs for outside resources.

FFFS is the fixed-fee-for-services type of managed care. This is the form that the Original Medicare uses. In Original Medicare, members can use any resource they wish that accepts Medicare.

This is a self-referral system that gives the greatest amount of freedom to the consumer and exercises control over the service providers. They must accept the Medicare payment or get the balance by their own efforts.

The Office of Personnel Management uses the FFFS extensively to connect to regional and local networks that serve federal employees.

POS is the point-of-service plan that lets users choose when to go outside of the network. Members get lower out-of-pocket costs when using network resources. Users pay more or all of the costs when going outside, except when referred to outside resources by the PCP. When referring clients to outside resources, using the POS option, the insurance company pays the expected cost-sharing rate.

The POS and Consumer Costs

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POS plans can lower costs when using network resources. They can cause additional expenses when using outside network resources. The Office Personnel Management uses fixed fee agreements with a POS option for providing Federal Employee Health Benefits in field locations and for small groups.

The main consumer advantage of the POS Plan is that one can choose when to pay for high priced services. The in-network coverage is lower in costs. It offers some out of network coverage.

Other Usages of POS

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The health insurance industry sometimes uses phrases and labels in more than one way. The term POS can cover many different situations depending on the point of view. In the listing below, there are four other common references to the POS Medical plan.

POS in Medicare is a commitment from an insurance company to pay the Original Medicare rate to meet its network coverage obligations. The CMS requires that insurers either fill out their network or guarantee that they will pay market rates to connect to a POS network.

POS covers situations where network and outside network professionals work together to serve a patient. As in a hospital setting when some members of a surgical team are out of network professionals.

POS in the Federal Employee Health Benefits Program when and HMO or FFS system for federal emp0lyees connects to another system to get regional coverage or add more professionals and facilities.

Some references use the term POS to describe the primary care physician. In this context, the PCP is the point of service, and all referrals that come are the network resources. The reference is the HMO with POS option.

POS is the Lesser Known Type

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The use of HMO and PPO dominates the health plan choices for most Americans. Despite the similarities to HMO and PPO, POS plans comprised only about nine percent of the pre-Obamacare market. It has price advantages over most PPO plans and flexibility advantages over most HMO plans.

Some experts suggest that the POS is complicated and not particularly well-explained. There are good reasons to consider the POS; the accepted criteria for finding the right plan include the below-listed advantages of the POS.

  • Advantages of the POS plan include low or no deductibles for in-network resources, few copays, and low rates of consumer-paid cost shares.
  • Disadvantages of the POS plan include delays, high copays, and coinsurance when using outside resources. Many POS plans require payment of deductibles before beginning to pay cost sharing on outside resources
  • Paperwork and reimbursement are also factors. They typically ask for paperwork when using outside resources for reimbursement of expenses. Reimbursement can take many weeks and consumers must usually pay the bills at the time of service.

How Does a POS Medical Plan Work?

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The POS requires a Primary Care Physician. This in-network doctor delivers patient care. When he or she decides it is needed, the patient can see other specialists and doctors in the network. When the Primary Care Physician cannot provide a specialist in the network, he or she can refer the patient to an outside specialist. The insurance plan pays the outside referral fee by the normal cost-sharing that the contract provides for network resources.

  • The PCP helps lower expenses. The goal of the PCP includes reducing coinsurance and other costs to the patient. The patient can see outside specialist without a referral. When using outside resources, the insurance will pay a low-cost sharing fee. Depending on the specialists, it may pay nothing at all. Network resources are the low-cost option for members.
  • Advantages of the Primary Care Physician include their expert advice on the need for specialists referrals and the type of discipline needed. Self-referral can lead to paying for the wrong type of service outside the network.
  • Paperwork is another factor to remember when going outside the POS network without a referral. Paperwork is a task that uses time and requires record keeping. There may be a delay between paying for the service and getting the partial reimbursement from the insurance company.

Network Deductibles and Expenses

Members that use their POS network resources generally have no deductibles. They can use network resources from the start without having to pay a lot of fees to get the insurance to begin cost sharing.

Network resources charge few copays. These small payments designed to slow the members use of services. Coinsurance is low for network resources and applies from the beginning without the need to first pay a deductible.

Outside Network Expenses

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The incentives all point inward to use network resources. The POS gives the consumer freedom to go outside, but it comes at a steep cost. The consumer will have to pay an outside network deductible before the insurance begins to cover outside network fees.

The outside resources will require large copays and large amounts of coinsurance. The other element is the overall limit on out-of-pocket expenses.

Obamacare added this limit on consumer expenses to all qualified health plans. However, the outside network spending does not move the member towards the out-of-pocket limit. That limit only applies to the consumer’s network spending.

A POS Medical Plan Is Flexible for a Price

The POS medical plan has a network and a primary care physician to make needed referrals. The primary care physician can make referrals to outside resources, and the insurance will pay costs sharing.

In POS plans, the users can go outside of the network for services, and the plan will often pay a lower rate of cost sharing than when using network resources.

The POS has features like the HMO and the PPO, but it also has flexibility for consumer choice. Comparison shopping can help consumers find the best values for their medical care needs. Comparison shopping focuses the search on the consumer’s preferences.

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