Medical care expenditures under gatekeeper and point-of-service arrangements

Area of Science:

• Health Services Research
• Managed Care Economics
• Healthcare Policy

Background:

• Managed care organizations (MCOs) offer various plan designs to control healthcare costs.
• Health Maintenance Organizations (HMOs) typically use a gatekeeper model, while Point-of-Service (POS) plans offer more flexibility.
• Understanding expenditure differences between these models is crucial for plan design and consumer choice.

Purpose of the Study:

• To compare medical care expenditures between a closed-panel gatekeeper HMO and an open-panel POS plan.
• To identify which service categories contribute to any observed expenditure differences.
• To assess the impact of plan design on healthcare spending within a shared provider network.

Main Methods:

• Utilized administrative data from 1994-95 for two distinct commercial MCO product lines.
• Analyzed total medical care expenditures and spending across five service categories: physician, inpatient hospital, outpatient hospital, prescription drugs, and other services.
• Employed multivariate analyses based on a two-part model of medical care demand, controlling for copayments, PCP proximity, demographics, and health status.

Main Results:

• Total medical care expenditures were comparable, with the gatekeeper HMO showing slightly higher costs (up to 7%) only when physician visit copayments varied.
• No significant expenditure increases were observed in the POS plan across any of the five service categories.
• Findings remained robust across various sensitivity analyses, indicating reliability.

Conclusions:

• Direct patient access to specialists in POS plans does not inherently lead to higher medical care expenditures.
• POS plans can effectively manage costs through mechanisms like primary care physician (PCP) selection, patient cost-sharing, financial incentives for physicians, and utilization review.
• These controls can maintain cost-effectiveness without restricting patient access to healthcare providers.