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Date:  October 6, 1995
For Release:  Immediately
Contact:  HCFA Press Office, (202) 690-6145

HCFA Issues Guidelines on "Point-of-Service"
Option for Medicare HMO Beneficiaries

The Health Care Financing Administration today issued guidelines to health-maintenance organizations on offering a "point- of-service" option for Medicare enrollees.

A "point-of-service" (POS) benefit increases flexibility for Medicare HMO enrollees by allowing them to seek care outside the HMO's provider network.

HHS Secretary Donna E. Shalala, in announcing the point-of- service guidelines, said HHS supports efforts to increase choices for Medicare beneficiaries who are enrolled in HMOs.

"The goal of our policy is informed choice in a fair marketplace in which beneficiaries have full and objective information and are protected against discrimination," Secretary Shalala said. "Point-of-service plans can meet the basic tests of financial reliability and beneficiary protection that we require for Medicare coverage, and I am pleased to welcome them to the Medicare family."

POS benefits are very popular in commercial HMOs and a number of HMOs had requested direction from HCFA on how to structure a POS benefit for Medicare enrollees.

"A point-of-service benefit may encourage Medicare enrollees who were previously reluctant to enroll in an HMO because they wanted more flexibility in seeking care," said HCFA Administrator Bruce C. Vladeck.

Typically, a point-of-service option allows members of an HMO the flexibility to receive certain services outside the plan's established provider network, with higher cost-sharing. The HMO will provide partial reimbursement for out-of-network services.

According to the guidelines, Medicare managed care plans with risk-based contracts may offer a point-of-service benefit. Plans with risk-based contracts provide care for about 2.8 million Medicare beneficiaries. Medicare pays risk plans a fixed amount for each enrollee, and these plans assume all the financial obligations of providing service to Medicare beneficiaries through their provider networks.

The plans often provide many other services not available under Medicare, such as prescription drugs, although no additional Medicare payments are made to risk contractors that choose to offer such additional benefits. Nor will additional Medicare payments be made to plans that choose to offer a point-of-service benefit.

All Medicare HMOs, regardless of whether or not they offer a point-of-service benefit, must allow beneficiaries to seek emergency medical care and urgently needed care when the beneficiary is out of the HMO's service area from providers outside the HMO's network.

Risk plans will have considerable flexibility in designing and managing a point-of-service benefit to best meet the needs of Medicare enrollees. For example, plans may:

  • Determine what services will be offered through the POS benefit;

  • Set annual cost limits on services provided through the point-of-service benefit; and

  • Design beneficiary cost-sharing provisions, such as premiums, coinsurance, copayments and deductibles. HCFA will review beneficiary cost-sharing requirements to ensure they comply with certain statutory limits. "Plans that offer a point-of-service option will be monitored by HCFA to ensure that the plans continue to make all Medicare- covered services available and accessible in the plan's established health care provider network," Vladeck said. "HCFA also will ensure plans' continued financial soundness."

    HMOs that choose to offer a point-of-service benefit must provide beneficiaries with clear and concise information about the benefit, including information about any costs associated with using the benefit, restrictions on using the benefit and appeal rights.

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