Medicare Advantage (MA) offers several different types of plans, including Private Fee-for-Service (PFFS) plans. While HMOs and PPOs are more popular, PFFS plans offer enrollees more freedom of providers. Of course, these plans aren’t the right choice for everybody, so let’s dive into exactly what PFFS plans are and what makes them different from other Medicare coverage options.
What is a Medicare Advantage PFFS plan?
PFFS plans are Medicare Advantage plans in which the insurance company determines ahead of time how much it pays health care providers for services. Providers can then decide to accept this amount as full payment, charge up to 15% more (a difference which you’ll have to cover), or choose not to treat you at all (except in emergency situations, of course).1
In some ways, a Medicare Private Fee-For-Service plan is like Original Medicare (traditional Medicare), which is an example of a Fee-for-Service (FFS) plan. Fee-for-service Medicare plans pay health care providers based on each service provided, from lab tests to checkups to heart surgery. With these plans, you can visit any provider who agrees to accept this insurance, and you don’t have to get all your care from providers in the same region.
Having a Fee-For-Service plan is a bit like building your health care team just the way you want it. PFFS plans work the same way, but instead of the Medicare program paying health care providers for the services you use, the plan pays the provider directly.
Is a PFFS Advantage plan right for me?
PFFS plans have a complex list of potential pros and cons, so deciding whether a PFFS plan is the right way to go can be challenging. Unfortunately, without knowing your specific situation, we can’t say which is best. That said, the following table may help put some of your options into perspective.
Comparison: Original Medicare, PFFS, PPO, and HMO
|Original Medicare 2||PFFS Advantage||PPO Advantage 3||HMO Advantage 4|
|Primary care physician required?||No||No||No||Yes|
|Specialist referral required?||No||No||No||Yes|
|Who can you see?||Any provider who accepts Medicare||Any Provider who accepts plan*||Any provider who accepts Medicare*||Network providers only|
|Coverage area||Anywhere in the US||Anywhere in the US||Only in plan's coverage area**||Only in plan's coverage area**|
|Annual out-of-Pocket maximum||None||$6,700 in 2018||$6,700 in 2018||$6,700 in 2018|
*Out-of-pocket costs may be higher when using providers who are not in the preferred network.
**Except in cases of emergency or urgent care.
Visit our page comparing Medicare Advantage plans to learn more.
What about other plans?
The above table doesn’t explore every option you have. There are two other types of MA plans that, while rare, are worth considering.
Medicare Advantage SNPs
Special Needs Plans (SNPs) are a type of managed care plan that insurance companies design specially for people with specific health care needs. Most work like an HMO or PPO with provider networks, and the insurer may assign a care manager to coordinate your benefits. All SNPs offer Part D prescription drug coverage.5
3 types of Special Needs Plans
- C-SNPs for people with chronic, disabling condition such as diabetes, HIV/AIDS, or mental illness.6
- D-SNPs for people with dual eligibility for both Medicare and Medicaid.7
- I-SNPs for people living in nursing homes or other care facilities.8
SNP vs. PFFS
Other than the fact that they’re both Medicare Advantage plans, these two types of plans are about as different as can be.
SNPs have provider networks and carefully manage care. Insurers require you to choose a primary care physician and get a referral to see a specialist. In-network providers are required to treat you and have agreed to accept the plan’s payout as full payment, minus a copayment or coinsurance from you.
Medicare Advantage MSA plans
Medical Savings Account (MSA) plans work differently than just about any other Medicare plan, but they’re similar to a Health Savings Account (HSA) you may have had through an employer.
In a nutshell, MSAs take a portion of your premium and use it to provide high-deductible coverage to you. The other portion goes into a savings account. The funds in this account are yours, tax-free, provided you use them only for qualified medical expenses.9
MSA vs. PFFS
Like PFFS plans, MSA plans allow beneficiaries to get help paying for services from a wide range of providers. Some MSAs offer a provider network where you can get services at a lower cost, but you’re free to go outside this network.
In some ways, an MSA offers even more freedom than a PFFS. You can use MSA funds to pay for some services Medicare doesn’t cover, though these costs won’t count toward your deductible.
Depending on your needs, an MSA could be a real cost saver. The catch is that deductibles of $10,000 or more are common for MSAs. If you use very few or quite a lot of medical services, you could have low out-of-pocket costs. If your needs lie in the middle or you don’t know what your needs might be, you could lose out.
Like PFFS plans, MSAs come with a lot of freedom and some uncertainty about costs.
Original Medicare vs. Medicare Advantage
In a sense, Private Fee-For-Service plans act a bit more like Original Medicare than some of the more common Medicare Advantage plans. Choosing a PFFS plan gives you the benefits of Medicare Advantage while getting around some of its hassles.
To understand why you might prefer a PFFS plan, let’s look at the main differences between a typical Medicare Advantage plan and Original Medicare. Essentially, you get more comprehensive managed care with most Medicare Advantage plans, while Original Medicare provides more freedom of where to get care.
Many Medicare Advantage plans offer comprehensive coverage that includes prescription drug, vision, dental, and hearing coverage. Plenty of policies also offer lower deductibles.
To get these benefits while enrolled in Original Medicare, you’d have to also enroll in a stand-alone Part D prescription drug plan and a Medigap policy—each with their own premium and potential confusion about which health plan covers you in different situations.
Most Medicare Advantage enrollees experience more seamless coverage for a single premium that costs little more than what they’d pay for Original Medicare.
Freedom of care
Medicare Advantage managed care plans like HMOs keep costs low and ensure beneficiaries get appropriate care by requiring them to see only in-network providers, choose a primary physician, and get referrals to see specialists.
Often, people choose Original Medicare because they don’t want to see only in-network doctors or choose a primary care physician. They want to see specialists when they see fit. And they’re willing to pay more premiums to get a lower deductible, prescription drug coverage, and extra coverage for things like vision and dental.
PFFS plans: the middle ground
For those who want the freedom to see more providers with a single plan that includes benefits such as prescription drug, vision, dental, and hearing coverage, along with the potential for lower deductibles, a Medicare Advantage PFFS plan can be a nice compromise. Of course, PFFS plans come with their own pros and cons.
PFFS and health care providers
· You can choose health care providers
PFFS insurance companies do not limit which providers they work with and will pay any Medicare-approved provider that agrees to accept your insurance for covered expenses.
That means you won’t have to stay within a predetermined network of providers like you would with an HMO. You can see doctors nationwide, making Medicare Private Fee-For-Service plans an excellent option for snowbirds and other people who don’t spend the whole year in one city.
· It’s easy to get a second opinion
With the freedom to see any number of doctors, getting a second or third opinion could be easier with a PFFS than with an HMO or PPO. Getting more services may be more straightforward too, since PFFS companies don’t manage plans with rules about primary care physicians or specialist referrals.
· Some plans offer helpful provider lists
You’re not restricted to these lists like you would be with an HMO’s provider network. Instead, you’ll have the comfort of knowing that the providers on your PFFS list have already agreed to treat members of your plan, and they’ll only charge what the plan covers.
· Treatment isn’t guaranteed
Just as you have the freedom to seek medical care from any Medicare-approved provider, doctors, hospitals, and other providers have freedom of treatment when it comes to people with PFFS plans.
Barring emergency situations, providers can choose not to treat you if they don’t agree to your plan’s payment terms. They can also stop treating you at any time, even if you’ve been going to them for years. That means you’ll need to make sure each provider agrees to accept your insurance each time you receive services.
· Out-of-pocket costs can change
PFFS companies decide how much they will pay out for medical services and make this information readily available to providers. When you present your insurance card at the doctor’s office, hospital, or pharmacy, the provider then decides whether they will treat you in exchange for that predetermined Fee-For-Service payment.
If a provider agrees to treat you, they still have some wiggle room on pricing. They can legally charge up to 15% more than the PFFS plan will pay, and you’ll be responsible for the difference. To ensure you don’t get stuck with a surprise bill, insist on getting rates up front in writing.
· You’ll need to manage your own care
Along with the freedom to choose from more providers, Medicare Advantage PFFS plans put more responsibility on the enrollee to manage their own health care.
There’s no primary physician to coordinate care between different providers, and the insurance company won’t ensure you get only those services appropriate to your situation.
You’ll have to ensure medical records get shared between providers and that doctors and pharmacists know what medications you’re already on. And you’ll be responsible for managing your out-of-pocket costs.
· Potential for conflict of interest
Depending on who you ask, non-managed plans can be a poor choice. Because PFFS plans pay out based on the number of services you use, providers could focus more on how many treatments, visits, or procedures they prescribe, rather than an outcome of better health for you. Opponents of PFFS plans say this creates a conflict of interest for doctors.
Am I eligible for a Medicare Advantage PFFS plan?
Eligibility requirements for Medicare PFFS plans are similar to other Medicare Advantage plans. First, you must have Medicare Parts A and B. You can’t have end-stage renal disease (ESRD) to join a PFFS plan, but if you develop the disease while on the plan, you can keep your PFFS coverage.10
PFFS plans differ from most other Medicare Advantage plans in that if the policy doesn’t include creditable Part D prescription drug coverage, you can enroll in a stand-alone Part D plan.11
Finally, you can enroll in a PFFS plan only if one is available in your service area. Although the plan doesn’t limit you to using only those providers in the plan’s service area, you do need to reside in the service area.12
Compared to HMO and PPO plans, insurance companies rarely offer PFFS plans. Many Medicare beneficiaries don’t have any PFFS plan options where they live.
If you think a PFFS plan might be right for you, let us help you find a Medicare Advantage plan. Our licensed sales agents can discuss all your options and help you choose the plan and health insurance company that match your unique situation.
- Medicare.gov, “Private Fee-For-Service (PFFS) Plans”
- Medicare.gov, “How Original Medicare Works”
- Medicare.gov, “Preferred Provider Organization (PPO)”
- Medicare.gov, “Health Maintenance Organization (HMO)”
- Medicare.gov, “Special Needs Plans (SNP)”
- CMS.gov, “Chronic Condition Special Needs Plans (C-SNP)”
- CMS.gov, “Dual Eligible Special Needs Plans (D-SNP)”
- CMS.gov, “Institutional Special Needs Plans (I-SNP)”
- Medicare.gov, “Medicare Medical Savings Account (MSA) Plans”
- Medicare.gov, “Who Can Join a Medicare Advantage Plan?”
- Medicare.gov, “Private Fee-For-Service (PFFS) Plans”
- Medicare.gov, “Who Can Join a Medicare Advantage Plan?”