ered; the requirements for patient cost sharing; and caps on the volume, frequency, or duration of a covered service. Some benefits, in particular more extensive inpatient and outpatient mental health benefits, are thought to attract higher-cost patients. Other benefits, for example, fitness and other health promotion programs, may attract healthier individuals. A health plan that chooses (or is required by courts or legislatures) to cover expensive services, such as transplants, hospice care, or certain experimental treatments, when other plans can exclude such services will likely have both a more costly benefit package and a more costly membership.

Another characteristic that may contribute to risk selection is whether a health plan limits coverage to a specified network of physicians, hospitals, and other health care practitioners and providers. As defined in Chapter 3, conventional health plans place no or few limits on choice of provider, whereas network plans (e.g., HMOs, preferred provider organizations [PPOs], and point-of-service [POS] plans) reduce or exclude coverage for nonnetwork providers. Plans that limit coverage to a defined panel of practitioners and providers may be unattractive to individuals with chronic health problems who want flexibility in choosing medical specialists and who have established a relationship with a physician that they do not want to disrupt. In addition, individuals such as retirees who travel a lot outside the plan's service area may find a network plan difficult.

Network plans may also be vulnerable to risk selection. Independent practice associations (IPAs), PPOs, and other health plans whose physicians also see patients in other plans may attract some higher-risk individuals who would have to switch physicians if they changed to a staff model HMO. Similarly, mature HMOs will likely have a core of older patients with established physician relationships who are not interested in switching to a new HMO. The latter thereby gains a selection advantage. In addition, because plans with maximum choice of provider generally cost more, network plans with nominal copayments may incur adverse selection for some conditions, such as routine pregnancies.

The composition of a particular limited or closed provider panel is also relevant. For example, a network plan that includes a university hospital known for its care of a particularly costly medical problem is more likely to attract patients with this problem than a plan that excludes this hospital. A plan that includes more subspecialists is similarly vulnerable. In general, the potential for risk selection is one more factor (in addition to cost, quality, reputation, and geographic coverage) to be weighed when network plans consider the composition of their provider panels.

The lore of health plan efforts to avoid poorer risks also includes a variety of imaginative administrative practices (Luft and Miller, 1988). These include requiring individuals to visit health plan offices in order to enroll, permitting long appointment queues to develop for certain kinds of services,

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