What Is a Private Fee-for-Service (PFFS) Plan?

What Is a Private Fee-for-Service (PFFS) Plan?

A Private Fee-for-Service (PFFS) plan is a specific type of Medicare Advantage (MA) plan, also known as Medicare Part C. These plans are offered by private insurance companies that contract with the Centers for Medicare & Medicaid Services (CMS) to provide Medicare benefits. PFFS plans deliver all the coverage of Original Medicare (Parts A and B) and may include additional benefits, such as prescription drug coverage, vision, or dental care. They represent an alternative way for eligible individuals to receive their Medicare benefits through a private insurer.

Understanding the PFFS Model

The core of a PFFS plan lies in its “fee-for-service” payment structure, which distinguishes it from many other Medicare Advantage options. Instead of relying on pre-negotiated network agreements, the private insurance company establishes its own payment rates for all covered medical services. These rates dictate how much the plan will pay doctors, hospitals, and other healthcare providers for each specific service rendered, as well as the portion a member is responsible for. This model means providers are reimbursed directly by the PFFS plan for each service they provide, rather than through a traditional managed care arrangement.

PFFS plans typically do not operate with a restricted provider network in the conventional sense, offering a degree of flexibility. Members can generally see any Medicare-approved provider who agrees to accept the plan’s specific terms and conditions of payment. This arrangement requires providers to decide on a service-by-service basis whether to accept the PFFS plan’s payment rates and conditions for the care they provide. The plan’s payment terms may differ from what Original Medicare would pay.

How PFFS Members Access Care

PFFS plan members access medical care through a direct interaction with their provider and the plan’s payment terms. Members generally have the flexibility to seek care from any Medicare-approved doctor, hospital, or other healthcare provider. The crucial step for the member is to confirm that the chosen provider agrees to accept the PFFS plan’s specific payment terms and conditions before receiving services. This often means showing the plan’s membership identification card at each visit to allow the provider to verify acceptance.

Unlike some other Medicare Advantage plans, PFFS plans typically do not require members to select a primary care physician (PCP) or obtain referrals to see specialists. This provides members with greater autonomy in choosing their healthcare providers and specialists directly. However, it places the responsibility on the member to ensure the provider’s willingness to accept the plan’s terms for each specific service. While some PFFS plans may have a network, members are generally still permitted to seek care from out-of-network providers who agree to the plan’s payment rules, though this might involve different cost-sharing.

Costs Associated with PFFS Plans

Enrolling in a PFFS plan involves various financial responsibilities, similar to other health insurance plans. Members typically pay a monthly premium to the private insurance company for the PFFS plan, in addition to their standard Medicare Part B premium. Specific costs, such as deductibles, copayments, and coinsurance, are determined by the private plan and can vary. A deductible is the amount a member pays out-of-pocket before coverage begins. Copayments are fixed amounts for services, while coinsurance is a percentage of the service cost after meeting the deductible. These cost-sharing amounts may differ depending on provider acceptance, and out-of-network costs could be higher.

All PFFS plans, like other Medicare Advantage plans, include an annual out-of-pocket maximum. Once a member’s out-of-pocket spending on covered services reaches this limit, the plan covers 100% of additional covered healthcare costs for the remainder of the year.