Picking a Plan

By Eric Roston

Do POSs or PPOs require PCPs? Woe is the new hire who must choose from a menu of health-care plans: a health-maintenance organization (HMO), preferred-provider organization (PPO), point-of-service program (POS) or fee-for-service plan (FFS). An explanation:

HMO Designed to lower costs by centralizing care. A member must choose a primary-care physician (PCP) from a network roster upon joining. He can visit this physician to his heart's content, unless his heart's content requires a cardiologist, in which case he'll need a referral. That's why PCPS are also called gatekeepers.

PPO No gatekeeper means more direct access to care. Recently, PPOS have emerged as the leaders of the pack. Most adopted a $10 co-payment to MDs within their networks, originally an HMO feature. Unlike HMOs, the PPOS do not require their doctors to seek approval before performing services. PPOS have also become more competitive as HMO premiums have risen.

POS This option was created by HMOS to let members see doctors outside the network, but freedom predictably comes with a higher price. An HMO with broad networks like CIGNA's, though, only has a small fraction of POS members actually seeking care outside the network.

FFS Patients shell out a deductible and 20% or so in fees after that. The norm for decades, these plans withered during the '90s managed-care revolution, victimized by rapidly escalating costs.

The plans are beginning to blend. Says Jason Lee, an industry researcher in Washington: "Boundaries that were firmly distinguishable are becoming increasingly more fuzzy."

--By Eric Roston