What Is a Private Fee-for-Service Plan?

Private Fee-for-Service (PFFS) plans are a specific type of Medicare Advantage plan, offered by private insurance companies approved by Medicare. These plans provide an alternative way for individuals to receive their Medicare benefits, differing from Original Medicare. A distinguishing characteristic of PFFS plans is that they generally do not require enrollees to choose a primary care physician or obtain referrals to see specialists. This offers flexibility in provider choice.

Defining Private Fee-for-Service Plans

Private Fee-for-Service plans pay for each medical service rendered, rather than a fixed payment per patient. These plans are offered by private insurance companies approved by Medicare. A core distinction of PFFS plans is their typical absence of a provider network, meaning enrollees are not restricted to a predefined group of doctors or hospitals. Healthcare providers are not under a contractual obligation to accept a PFFS plan’s terms for every enrollee or for all services. This means a provider may agree to the plan’s payment terms for one service or patient but not for another.

The PFFS plan determines the payment rates it will offer for services, and these rates may differ from what Original Medicare pays. The plan also sets the out-of-pocket costs, such as deductibles, copayments, and coinsurance, that an enrollee will be responsible for. These cost-sharing elements are tied directly to the utilization of specific services. While some PFFS plans may have a network, enrollees typically have the option to seek care from out-of-network providers who agree to the plan’s terms, though this may involve higher costs.

How Private Fee-for-Service Plans Operate

Enrollees must confirm with their chosen healthcare provider at each visit that the provider will accept the PFFS plan’s payment terms. Enrollees will use their plan membership identification card for services, as their Original Medicare card will not be used for payment while enrolled in a PFFS plan.

The healthcare provider typically submits the claim to the PFFS plan, which then pays its share of the approved amount. The enrollee is responsible for their portion, which includes any applicable deductibles, copayments, or coinsurance. This payment may be due at the time of service or through a bill received later. Some plans may require the enrollee to pay for the service upfront and then seek reimbursement from the plan.

PFFS plans generally do not require referrals to see specialists. However, the specialist must still agree to accept the PFFS plan’s payment terms. In emergency or urgent care situations, providers are obligated to treat the enrollee regardless of PFFS acceptance. For any follow-up care after an emergency, the enrollee needs to confirm the provider’s acceptance of the plan’s terms.

Key Considerations for Enrollees

A primary consideration for PFFS plans is the variability of provider acceptance. While PFFS plans offer the flexibility to see any Medicare-approved provider, it is crucial to reconfirm provider acceptance for each visit and for each specific service. If a provider does not agree to the plan’s terms, the enrollee may become responsible for the full cost of the service.

The cost structure of PFFS plans features deductibles, copayments, and coinsurance, which contribute to the enrollee’s out-of-pocket expenses. The specific amounts for these costs can vary significantly between different PFFS plans offered by various private insurers. All Medicare Advantage plans, including PFFS plans, must include an annual out-of-pocket maximum. This provides a ceiling for an enrollee’s spending on covered medical services in a calendar year. Once this maximum is reached, the plan pays 100% of the cost for covered services for the remainder of the year.

Another important aspect is prescription drug coverage. Some PFFS plans integrate Medicare Part D coverage, while others do not. If a PFFS plan does not include prescription drug coverage, enrollees would need to enroll in a separate stand-alone Medicare Part D plan to obtain this benefit. PFFS plans typically offer coverage for care received when traveling outside the primary service area, allowing enrollees to seek care from any provider who accepts the plan’s terms nationwide. Plan benefits, costs, and provider acceptance terms can change annually, so enrollees receive an Annual Notice of Change (ANOC) document detailing any modifications for the upcoming year.

Enrollment and Disenrollment

Enrolling in a Private Fee-for-Service plan requires individuals to be entitled to Medicare Part A and enrolled in Medicare Part B. Eligibility also typically requires residence within the plan’s service area.

There are specific periods during which individuals can join or switch PFFS plans:
Initial Enrollment Period (IEP): Occurs when an individual first becomes eligible for Medicare.
Annual Enrollment Period (AEP): From October 15 to December 7 each year, allowing current Medicare beneficiaries to join, switch, or drop a PFFS plan for coverage beginning January 1 of the following year.
Special Enrollment Periods (SEPs): May be available for certain life events, such as moving or losing other credible coverage.

To enroll, individuals can contact the specific plan directly, utilize Medicare’s online enrollment tools, or work with an insurance agent. The effective date of coverage typically begins on the first day of the month following enrollment, assuming the enrollment request is processed in a timely manner.

Individuals can generally disenroll during the AEP to return to Original Medicare or switch to another Medicare Advantage plan. There is also a Medicare Advantage Open Enrollment Period (MA OEP) from January 1 to March 31. During this period, individuals enrolled in a Medicare Advantage plan can switch to Original Medicare and join a Part D plan, or switch to a different Medicare Advantage plan. Disenrollment from a PFFS plan typically means returning to Original Medicare, and if prescription drug coverage is desired, a separate Part D plan would need to be selected.