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

Choosing the right kind of medical insurance can make all the difference when you most need it most. There are several kinds of Medicare Advantage plans, also known as Medicare Part C, available in the market. A PFFS or a “Private Fee-For-Service plan” is a type of Medicare Advantage plan offered by private insurance companies. This kind of plan details how much healthcare providers are paid for the services they render and how much a patient will need to pay for the care they receive. It is not to be confused with original Medicare as it is a health insurance plan that is offered by private companies that contract with Medicare.

PFFS plans differ from county to county and state to state in the U.S. Many Private Fee-for-Service plans will have its own network of doctors and hospitals approved by the policy, and an enrollee can make use of these services. Specific plans may allow for an enrollee to use healthcare facilities outside their network, but this will usually cost more. It is therefore generally cheaper to use medical facilities within the plan’s network.

How Does a PFFS Plan Work?

All PFFS plans will cover services that are deemed necessary by original Medicare (Part A and Part B). Some PFFS plans have the benefit of vision, hearing and dental coverage as well as drug coverage. In case, there is no insurance offered to cover prescription drugs; individuals can take a separate Medicare Part D policy.

A significant point that sets a PFFS plan apart from other Medicare Advantage plans is that the private insurance company that offers the plan determines the payment terms and not Medicare. The PFFS plan also sets a particular limit on costs for services that have to be paid for by the enrollee on their own, which are not covered by the policy.

If a doctor or healthcare facility doesn’t have a contract with a PFFS network or decides not to accept their payment terms, they can choose not to treat a patient who is on the plan. In emergency cases, however, this may not apply.

Any Medicare-approved doctor who is outside of the network of the plan can decide to treat a patient on a case-by-case basis if they accept the terms of the plan. All healthcare providers that are approved by Medicare are listed on the Medicare website.

Who is Eligible for a PFFS Plan?

To be eligible for a Medicare PFFS plan, a person must already be enrolled in Medicare Parts A and B. Typically all Medicare Advantage PFFS plan enrollees pay a monthly premium in addition to the premiums they pay for Medicare Part B.

Generally, a person with End-Stage Renal Disease is not eligible to enroll in a PFFS plan unless they were already benefitting from a PFFS plan before they developed the disease. In the case they are currently enrolled in a PFFS after the onset of the disease, and the policy changes or no longer applies in the area where the person lives, they will get a chance to enroll in a new coverage plan.

Every PFFS plan enrollee gets a policy card which they can use when they visit a healthcare facility. They can use this card instead of the Medicare card.

What are the Costs Involved in a PFFS plan?

Medicare Advantage PFFS plans have specific coverage rules towards cost-sharing of medical expenses. Typically, enrollees pay a premium plus any extra costs such as copayments and coinsurance when they use a medical service. Once an enrollee pays their share, the healthcare provider usually sends a bill to the PFFS plan for the amount that is remaining.

Some plans follow a “balance billing” rule which allows healthcare providers to charge enrollees 15% more than what a policy will cover for a particular medical service. In addition to copayments, any cost difference is the enrollee’s responsibility.

If a person chooses to go to a healthcare facility outside the plan’s network, they can ask their plan for an advance organization or advance coverage determination. This is a way of checking with the plan if they will cover the costs of the treatment before it begins.

If an enrollee wishes to have insurance coverage for prescription drugs, they can choose to get a Medicare Part D drug plan between October 15 and December 7 annually. They can also change to another Medicare Advantage plan during this period as well.

What are the Advantages of PFFS Plans?

  1. PFFS plans offer an extensive network of healthcare providers. Specific plans have providers that will agree to treat an enrollee even if they have never seen them before.
  2. Enrollees can use Medicare-assigned healthcare providers based in a U.S. state or territory, who are not part of the network, as long as they accept the terms of payment.
  3. It is not mandatory to choose a primary care physician.
  4. Enrollees can receive specialist services without a primary care physician referral.
  5. There is a specific set annual limit on out-of-pocket costs.
  6. Enrollees can request for “advance coverage determination” that will state clearly whether the plan will cover the service requested or not.
  7. If an enrollee doesn’t have drug coverage and wishes to avail of this benefit, they can enroll in a Medicare Part D Prescription Drug plan. Some Medicare Advantage plans don’t allow enrollees to do this without changing their coverage plans

What are the Disadvantages of PFFS Plans?

  1. PFFS plans are not as readily available compared to HMO (Health Maintenance Organization) or PPO (Preferred Provider Organization) plans.
  2. Enrollees can use Medicare-assigned healthcare providers based in a U.S. state or territory, who are not part of the network, as long as they accept the terms of payment.
  3. Not every healthcare provider may accept the payment terms of a PFFS plan. Since plan rules keep changing, an enrollee may have to check whether a specific medical service will be offered by the same provider each time they visit them. Even if a provider accepts a plan’s terms to treat a patient once, there is no guarantee that they will agree to the same conditions the next time.
  4. PFFS plans can cost an enrollee more compared to HMOs or PPOs because of extra costs that may have to be borne by them for certain services.
  5. A healthcare provider has the right a patient enrolled in a PFFS unless it is an emergency case.
  6. PFFS plans vary by geographical location and accessibility to enroll will depend on where a person lives. Also, monthly premiums can differ from each geographic location.

How does a PFFS Plan differ from an HMO and PPO Plan?

PFFS plans offer a little more flexibility when compared to HMO and PPO plans. Unlike HMO plans that require an enrollee to have a primary care doctor, PFFS plans don’t insist on this. PFFS enrollees can also see specialists without a referral, unlike an HMO plan.

HMO plans don’t encourage patients to use healthcare facilities outside the network, for a non-emergency medical need, because they are typically not covered by the plan. In contrast, PFFS plan enrollees can visit Medicare-approved healthcare facilities outside the network, as long as they agree to the plan payment terms. Unlike PPO plans, however, the private insurance company is the one who determines the payment terms—both for a provider and a beneficiary—in a PFFS plan and not Medicare.

Another important point of difference is that PFFS plans allow enrollees to take a stand-alone Medicare Part D prescription drug plan, in addition to their existing policy, unlike HMO and PPO plans.

While each person must choose a plan best suited to their medical needs, Medicare Advantage PFFS plans offer the freedom and flexibility to access a vast network of healthcare providers. With the added advantage of an out-of-pocket cap, this may well be a good choice for people for whom these factors rank high in priority.

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