Most patients trust their doctors. You probably have come to depend on your physician for sound, candid medical advice that places your medical interests above all else. It is what the Hippocratic Oath is all about, and it is the foundation of our medical care system.

Obviously, if your doctor told you that he or she were under financial pressure to do less than his best for you, or that she disagreed with limitations that your insurance company had placed on your care, it would undermine this trust --- not only in your doctor, but also in your managed care company (which generally tries to promote itself as your best friend).

In order to avoid this kind of negative publicity, most HMO contracts had  clauses that forbade their contracted doctors from saying anything derogatory about the managed care company or its policies to any patient. These gag clauses typically prohibit the doctor from discussing:

Actual Quote from a Managed Care Contract: (PHS, mid-1990's)

Relationship with Members. During the term of this Agreement and each renewal thereof, Physician shall discuss any concerns relating to compensation and other matters hereunder exclusively with PHS and not with Members. (italics added).

While, in many parts of the country, HMOs offer patients only coverage from  doctors who have "signed up," there are some places where that approach failed even though it offered a cheap way to obtain medical care. This was especially true in the New York area, where many patients bristled at the thought of having to give up their own doctors. To cope, managed care companies devised programs that allowed their "insured" the option of seeing either network providers (and complying with all the restrictions of the HMO) at little or no additional cost beyond the monthly premium, or seeking care from their own doctors with coverage that looks like indemnity insurance (deductibles, co-payments, "usual and customary" allowances).

And, in fact, these point-of-service (POS) plans have proved extremely popular. Although they cost more than the restrictive in-network-only plans (but far less than the increasingly hard-to-get pure indemnity insurance), they do allow patients to choose their own doctors for any given medical encounter. Because they look and function somewhat superficially like indemnity insurance, they give the impression that patients can still maintain control over their health care by choosing a point-of-service plan.

How are they different from pureindemnity insurance, as they must be if they are significantly cheaper?

Primarily in two ways.

First, although patients enrolled in point-of-service plans do have the freedom to choose their own doctors whenever they want, the managed care company still reviews all their medical care (including that provided by out-of-network doctors) and may refuse to cover anything that does not meet its guidelines. The rules controlling these reviews are usually buried in the small print of the policy's regulations, but are often critical determinants of what is and what is not covered.

  The other critical difference between most point-of-service plans and indemnity coverage is this: If a member of a point-of-service plan should become seriously ill (as defined in the managed care company guidelines), a participating HMO provider (usually a primary care physician) may assume control of the patient's care plan, even if the patient is still working with an out-of-network physician who will most likely be a specialist. The most common examples of this are open heart surgery and transplant therapies, which are often covered only if done by in-network providers in in-network hospitals even though the patient has a point-of-service plan  Similarly,  many procedures that are frequently employed as state-of-the-art medicine are still deemed experimental (and therefore ineligible for coverage) under point-of-service plans.

A variation on the point-of-service plan is the increasingly common Preferred Provider Organization (PPO).  Like point-of-service  plans,  PPOs allow patients the options of staying with health care providers under contract to the HMO at little cost beyond their premiums, or of obtaining medical care from their own doctors at greater expense. Unlike the ordinary point-of-service plan, the PPO option does not require those who remain in-network to use a gatekeeper, but merely to stay with in-network specialists.

In general, PPOs are not as restrictive as to how patients can be treated, nor do they tend to review each medical decision in terms of its medical necessity. Rather, they tend to exert cost controls by giving patients economic incentives to utilize physicians who have agreed to significantly reduce their fees and who work under the threat of deselection  if they choose expensive treatment options for their patients that do not conform to plan guidelines. PPOs also tend to allow out-of-network utilization of physicians with fewer restrictions than ordinary point-of-service plans.  Because of this, they tend to be more expensive than their more restrictive cousins.

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