A Point of Service (POS) plan is a type of managed care health insurance that utilizes a specific network of doctors and hospitals. It functions as a hybrid model, combining characteristics from a Health Maintenance Organization (HMO) and a Preferred Provider Organization (PPO) plan. Like an HMO, the POS plan’s structure encourages members to use a defined group of contracted providers for the most affordable coverage. However, similar to a PPO, it offers the flexibility to seek care outside of this defined network, though doing so results in a significant difference in out-of-pocket costs. The name “Point of Service” reflects the choice a member makes each time they need care: whether to stay within the network structure or seek services outside of it.
How the POS Network is Built
The network in a Point of Service plan is the group of healthcare professionals and facilities that have agreed to provide services to the plan’s members at negotiated, discounted rates. This network is intentionally constructed to be a broad base of providers, often resembling or overlapping significantly with the insurer’s PPO network to ensure wide access. The inclusion of a provider in this “primary” network is based on a contract that establishes the maximum allowable charge for covered services. This network includes a comprehensive directory of primary care physicians, specialists, hospitals, and ancillary services like labs and imaging centers. By using providers within this established network, plan members benefit from these pre-negotiated rates, which drastically lowers their personal financial responsibility.
The Mandatory Primary Care Physician Requirement
A defining feature of the POS plan is the requirement for members to select a Primary Care Physician (PCP) from the established network. This chosen PCP becomes the member’s central point of contact, coordinating all routine and preventative healthcare needs. The PCP assumes a “gatekeeper” function, meaning they are responsible for managing and authorizing a patient’s access to specialized services.
To see any specialist, even one who is technically within the plan’s network, the member must first obtain an official referral from their PCP. This referral process is a mechanism for ensuring that specialist visits are medically necessary and that care is coordinated, which helps control overall healthcare costs. Crucially, if a member sees a specialist without the required PCP referral, the insurance plan will typically deny the claim or process it at the much lower, out-of-network benefit level.
Financial Differences Between In-Network and Out-of-Network Care
The financial structure of a POS plan is designed to strongly encourage members to remain within the established network for all services. When a member receives care in-network, their out-of-pocket costs are substantially lower. This typically involves just a low copayment for office visits and a lower coinsurance percentage for more extensive services. Furthermore, some POS plans may waive the deductible entirely for in-network services, making routine care financially predictable.
Out-of-Network Costs
Conversely, choosing to go out-of-network results in significantly higher costs. Out-of-network care usually involves a much higher deductible that must be met before the plan begins to pay anything. After meeting this higher deductible, the coinsurance percentage is also significantly greater, sometimes requiring the member to pay 40% to 50% of the allowed cost of the service.
A major financial risk of going out-of-network is the potential for balance billing, which occurs because the out-of-network provider has no contract with the insurance company. The provider can bill the patient for the difference between their total charge and what the insurance plan considers the “usual and customary” rate. In this scenario, the member is often responsible for paying the entire bill upfront and submitting a claim to the insurer for partial reimbursement.