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

Private Fee-for-Service (PFFS) plans represent a distinct option within Medicare Advantage, sometimes referred to as Medicare Part C. These plans are offered by private insurance companies approved by Medicare. A PFFS plan provides all the benefits of Original Medicare, specifically Medicare Part A (hospital insurance) and Part B (medical insurance). Some PFFS plans also include prescription drug coverage, known as Part D.

Understanding Private Fee-for-Service Plans

Private Fee-for-Service (PFFS) plans operate on a payment model where providers receive a set amount for each service rendered. The private insurance company determines payment amounts for providers and beneficiaries, establishing the payment structure.

A key aspect of PFFS plans involves provider agreements. Some PFFS plans may establish a network of providers who have formally agreed to the plan’s terms and conditions. However, other PFFS plans may not have a provider network at all. In plans without a network, beneficiaries can seek care from any Medicare-approved provider who is willing to accept the plan’s specific terms and conditions of payment at the time of service. Providers are not obligated to accept the plan’s terms for every service or visit, meaning their acceptance can be on a case-by-case basis.

PFFS plans generally offer flexibility by not requiring beneficiaries to select a primary care physician (PCP). Consequently, referrals are typically not needed to see specialists. When seeking care, beneficiaries present their plan ID, and the provider decides whether to accept the plan’s payment terms for that visit.

Key Characteristics of PFFS Plans

The cost-sharing structure within PFFS plans includes deductibles, copayments, and coinsurance, which beneficiaries are responsible for. These amounts can vary significantly between different PFFS plans and the companies that offer them. All PFFS plans are required to set an annual limit on out-of-pocket costs, protecting beneficiaries from excessive expenses for covered services. For example, the maximum out-of-pocket cost for PFFS plans is set at $9,350 for the year 2025, though individual plans may set lower limits.

PFFS plans cover emergency and urgent care services, even if the provider is not part of a network or has not agreed to non-emergency terms. Medicare Advantage plans must cover emergency services nationwide.

Prescription drug coverage, known as Part D, is sometimes included as part of a PFFS plan. However, not all PFFS plans bundle this coverage. If a PFFS plan does not offer Part D coverage, beneficiaries have the option to enroll in a separate Medicare Prescription Drug Plan (PDP) to obtain their medication benefits.

Beyond the standard Medicare Part A and Part B benefits, many PFFS plans offer a range of supplemental benefits. These additional benefits can include services not covered by Original Medicare, such as routine vision, dental, and hearing care. Some plans may also provide coverage for fitness programs or transportation assistance to medical appointments.

How PFFS Plans Differ from Other Medicare Options

PFFS plans are administered by private insurance companies approved by Medicare, unlike Original Medicare which is federal. While PFFS plans must provide at least the same level of benefits as Medicare Part A and Part B, their cost-sharing structures, including deductibles and copayments, can differ from Original Medicare’s standardized rates. While Original Medicare allows beneficiaries to see any Medicare-approved provider who accepts Medicare, PFFS plans add the condition that the provider must agree to the plan’s specific payment terms for each service rendered.

Compared to Health Maintenance Organization (HMO) plans, PFFS plans offer greater flexibility in provider choice. HMOs generally require beneficiaries to choose a primary care physician and obtain referrals to see specialists. Additionally, HMOs typically limit coverage to services received from providers within their established network, except in emergency situations. In contrast, PFFS plans usually do not require beneficiaries to select a PCP or obtain referrals for specialist visits.

PFFS plans also operate differently from Preferred Provider Organization (PPO) plans. PPO plans offer more flexibility than HMOs by covering both in-network and out-of-network services, though out-of-network care usually incurs higher costs for the beneficiary. For PFFS plans, the primary consideration is whether the provider agrees to the plan’s payment terms for each service, distinguishing them from PPOs’ network-based cost variations.

Enrollment and Disenrollment in PFFS Plans

To enroll in a Private Fee-for-Service plan, an individual must first have both Medicare Part A and Part B. Additionally, the individual must reside within the PFFS plan’s specific service area. There are certain exceptions, such as individuals with End-Stage Renal Disease (ESRD), who are generally not eligible to join PFFS plans.

Enrollment in a PFFS plan, like other Medicare Advantage plans, is typically tied to specific periods throughout the year. The Initial Enrollment Period (IEP) is a 7-month window that begins three months before an individual turns 65, includes the birth month, and extends for three months afterward. This period also applies to individuals who become eligible due to disability, typically in their 25th month of receiving Social Security disability benefits.

The Annual Enrollment Period (AEP), running from October 15 to December 7 each year, is the primary time when most individuals can join, switch, or disenroll from Medicare Advantage plans, including PFFS plans. Any changes made during AEP become effective on January 1 of the following year. Outside of these periods, Special Enrollment Periods (SEPs) may allow for enrollment or disenrollment due to specific life events, such as relocating to a new service area, losing other health coverage, or qualifying for Extra Help.

Individuals can enroll in a PFFS plan by contacting the private insurance company that offers the plan directly. Alternatively, the official Medicare website provides tools to search for and enroll in plans. Beneficiaries can disenroll during the AEP or qualifying SEPs, returning to Original Medicare or switching plans. An Open Enrollment Period from January 1 to March 31 also allows existing Medicare Advantage enrollees to switch plans or return to Original Medicare.