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

Abstract

OBJECTIVE: To compare expenditures for medical care in a closed-panel gatekeeper HMO and an open-panel point-of-service (POS) plan that share the same provider network. DATA SOURCE/STUDY SETTING: The two study HMOs are distinct product lines of a single managed care organization; both plans are commercial products. We used administrative data files from the study plans for 1994-95 to assess differences in total medical care expenditures and spending for five categories of services: physician services, inpatient hospital services, outpatient hospital services, prescription drugs, and other services. STUDY DESIGN: Multivariate analyses were based on the two-part model of the demand for medical care. The dependent variables in these models were expenditures in each of the five categories of services, and the independent variables were indicator variables for plan type and visit copayments, prescription drug copayment, distance to the nearest primary care physician (PCP), demographic characteristics, chronic conditions, area characteristics, and entry/exit indicator variables. PRINCIPAL FINDINGS: Total expenditures for medical care ranged from equal in both plans to 7 percent higher in the gatekeeper HMO (p < .10), depending on the copayments for physician visits. Expenditures were not higher in the POS plan for any of the five categories of services. These findings were robust to a wide range of sensitivity analyses. CONCLUSIONS: Direct patient access to specialists in POS plans does not necessarily result in higher medical care expenditures. When POS enrollees are required to choose PCPs, patient cost sharing, physician financial incentives, and utilization review may control expenditures without constraining direct patient access to providers.