Medicare Advantage Private Fee-for-Service Plans
Private Fee-for-Service (PFFS) plans are a type of Medicare Advantage plans that are sold by private insurance companies that have been approved by the federal program to offer such plans. They will offer at least as much coverage as Medicare Parts A and B offer but usually come with extra benefits. Since these are not standardized, each carrier can dictate the coverage and costs for each plan.
PFFS plans can offer full or partial networks of providers, and in certain cases, they may not use a network of providers at all. No matter what kind of network a specific PFFS plan provides, its enrollees can see any provider who is eligible to receive payment from Medicare and agrees to accept the plan’s terms and conditions of payment.
Medicare Advantage PFFS Plan Benefits
Private Fee-for-Service plans will provide their members with a list of Medicare-approved healthcare providers that also accept the plan’s payment rates and terms. These providers agree to treat PFFS plan members and do not require any referrals, even for specialist providers.
However, not every provider who accepts Medicare assignments will accept the PFFS payment terms. Providers can actually decide on a patient-by-patient basis if they want to accept the terms and can also terminate that relationship at any time. This causes some hardship for PFFS plan holders as they will need to verify plan acceptance prior to every visit and may end up switching providers frequently. This disrupts the continuity of care.
There are some PFFS plans that have a network of providers who have agreed to continue accepting the plan’s payment terms and to see new and existing plan members. This will help relieve the burden of asking before every appointment. That being said, all providers and hospitals must treat you in an emergency situation, regardless of what kind of insurance you do (or do not) have.
Some Private Fee-for-Service Medicare Advantage plans include prescription drug coverage. If the plan does not provide that benefit, individuals will want to verify that they are still allowed to enroll in a stand-alone Part D plan.
All in all, PFFS plans will cover everything that Medicare Part A (hospital insurance) and Medicare Part B (medical insurance) typically do which includes:
- hospital stays
- short-term in-patient rehabilitation
- doctor’s visits
- preventive care
- emergency room visits
- certain medical equipment
- ambulance rides
Medicare Advantage PFFS Plan Costs
Insurance companies who provide PFFS plans decide what they will pay for services and procedures. They also decide what the member will pay. As with any Medicare Advantage plan, individuals with a PFFS plan must still pay their Medicare Part B premium which is $164.90 in 2023. There will be an additional premium for the PFFS plan itself, and then the cost will vary based on the rules set by the private insurance company that is carrying the plan. You’ll have additional costs when you use your coverage, including:
- Copays: which you may need to pay if you visit the doctor or receive other medical services (The insurer sets this amount)
- Deductibles: You may have to pay an annual out-of-pocket amount before your insurance begins to pay for services.
- Out-of-network charges: These may apply if you seek care from a medical provider outside your plan network.
- Additional services: Some plans that offer vision, dental, and hearing coverage may charge higher premiums and a separate drug deductible.
PFFS plans may also allow “balance billing,” which means that providers can charge an extra 15% on top of the plan’s payment rate.
Comparing PFFS Plans to
Other Medicare Advantage Plans
In the other kinds of Medicare Advantage plans, like the HMOs and PPOs, the member’s out-of-pocket expenses will vary based on if they have services performed in or out of the plan’s network. Individuals can choose from any provider who is in the plan’s network. Going outside of the network may cause the member to pay more for services.
The expenses with a PFFS plan do not vary based on a provider being in or out of a network. Individuals with a PFFS plan can see any doctor who agrees to accept the plan’s payment terms. This will give beneficiaries more choices when it comes to their provider.
While comparing and choosing a Medicare Advantage plan, it is best to think about your stance on certain plan components and in what way are they important to you such as coverage for prescription drugs (Part D), referral requirements for specialist care, contracted network of doctors and hospitals, and the ability to use doctors or hospitals outside of the network. Also important to consider are your financial resources, the amount of flexibility you might need from a plan, and if there are specific needs that require special care.
Comparing Medicare Advantage PFFS Plans to Original Medicare and Medicare Supplements
Original Medicare – Parts A and B – have more in common with Medicare supplements than Medicare Advantage plans. Coverage for all individuals who are enrolled in Parts A and B is exactly the same. Coverage for all individuals enrolled in a Medicare supplement is exactly the same. If a provider accepts Original Medicare, they will also accept your Medicare supplement plan.
Medicare Advantage plans are different. They do offer the same coverage as Medicare Parts A and B, at a minimum. However, since they are sold by private insurance companies and utilize provider networks, the freedom to choose providers is limited with these plans. Also, Medicare Advantage plans, including the PFFS plans, are not available everywhere.
PFFS plans also have copays, coinsurance, and other unpredictable out-of-pocket expenses. Medicare supplements, on the other hand, have much more predictable costs. Some of them nearly eliminate all of the individual’s healthcare expenses. Premiums for Medicare supplements are generally higher than those for Medicare Advantage PFFS plans.
Lastly, there is often prescription drug coverage built into Medicare Advantage plans. No Medicare supplement offers prescription drug coverage, so individuals must enroll in a separate Part D plan.