What Are Private Fee-for-Service (PFFS) Plans?

Private Fee-for-Service (PFFS) plans are a distinct option within the Medicare Advantage (Part C) program, offered by private insurance companies contracted with Medicare. Under a PFFS plan, the private insurer establishes payment rates for healthcare services, as well as the portion of costs beneficiaries are responsible for.

Understanding Private Fee-for-Service Plans

PFFS plans set payment amounts for medical services, determining how much they will pay doctors, hospitals, and other healthcare providers. Beneficiaries then pay the remaining balance, which may include deductibles, copayments, or coinsurance, as defined by their specific plan.

A core characteristic of PFFS plans is how providers accept payment. Providers must agree to the plan’s specific terms and conditions of payment for each service before providing care. While some PFFS plans may have a network of providers who have agreed to always treat plan members, many allow beneficiaries to see any Medicare-approved provider who accepts the plan’s payment terms.

This flexibility means beneficiaries do not need to select a primary care physician (PCP) or obtain referrals to see specialists. However, it is crucial to confirm that a provider will accept their PFFS plan’s terms for each visit. A provider can choose to accept the plan’s terms on a service-by-service basis. If a provider does not agree to the plan’s terms, the beneficiary may be responsible for the full cost of the service.

This arrangement requires proactive engagement from the beneficiary to ensure coverage, especially with non-contracted providers. While PFFS plans offer the potential to see a wide range of providers, the individual agreement for each service can introduce an element of uncertainty.

Key Differences from Other Medicare Advantage Options

Private Fee-for-Service plans distinguish themselves from other Medicare Advantage options, such as Health Maintenance Organizations (HMOs) and Preferred Provider Organizations (PPOs), primarily in their approach to provider networks and referral requirements. HMO plans require beneficiaries to choose a primary care physician within a defined network and obtain referrals to see specialists. PPOs offer more flexibility, allowing beneficiaries to see out-of-network providers, though at a higher cost, and do not require referrals for specialists within their preferred network.

In contrast, PFFS plans, especially those without established networks, do not require beneficiaries to stay within a specific group of providers. Beneficiaries can seek care from any Medicare-approved provider nationwide, provided that provider agrees to the PFFS plan’s payment terms for that service. This offers a broader choice of providers compared to the more restrictive networks found in HMOs. While some PFFS plans may have a network of contracted providers, beneficiaries still retain the option to seek care outside this network if the non-contracted provider accepts the plan’s terms.

Another difference lies in the absence of referral requirements for PFFS plans. Beneficiaries do not need a referral to see a specialist, which is a common requirement for many HMO plans. This direct access to specialists can simplify obtaining specialized care. The payment structure also differs, as PFFS plans set their own payment rates for services, and beneficiaries pay the remaining cost-sharing amounts, which contrasts with the fixed copayments associated with in-network care in HMO and PPO plans.

Costs and Coverage Details

Beneficiaries enrolled in a Private Fee-for-Service plan are still required to pay their Medicare Part B premium. The PFFS plan itself may charge an additional monthly premium. The specific amount of this plan premium can vary depending on the private insurance company offering the plan and the benefits included.

PFFS plans, like other Medicare Advantage plans, involve various cost-sharing elements such as deductibles, copayments, and coinsurance. A deductible is the amount a beneficiary must pay out-of-pocket before the plan begins to pay for services. Copayments are fixed amounts paid for specific services, while coinsurance is a percentage of the cost of a service paid by the beneficiary after the deductible is met. These amounts are determined by the individual PFFS plan and can differ based on the type of service received.

All Medicare Advantage plans, including PFFS plans, are mandated to include an annual out-of-pocket maximum. This limit ensures that once a beneficiary’s out-of-pocket costs for covered services reach this threshold within a calendar year, the plan will pay 100% of the costs for additional covered services for the remainder of that year. This maximum helps protect beneficiaries from catastrophic healthcare expenses.

PFFS plans are required to cover all benefits included in Original Medicare, which encompasses Part A (hospital insurance) and Part B (medical insurance) services. Many PFFS plans also offer additional benefits not covered by Original Medicare, such as prescription drug coverage (Part D), vision, dental, or hearing services. If a PFFS plan does not include prescription drug coverage, beneficiaries have the option to enroll in a separate stand-alone Medicare Part D plan to obtain this benefit.