What Is a PFFS Plan?

Through Medicare Advantage (Part C), today’s seniors can choose an insurer and policy that suits their unique needs.

Although many beneficiaries opt for traditional HMO or PPO plans, Medicare offers another option, known as a private fee-for-service plan, or PFFS. If you’re considering this type of policy, here’s what you should know.

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

A Medicare Advantage PFFS plan is a policy that’s administered by a Medicare-approved private insurance company using guidelines set by the federal government. Legally, PFFS plans must provide, at minimum, the benefits offered through Original Medicare Parts A and B. Plans typically only cover medically necessary treatments and services. However, coverage rules and costs may differ from Original Medicare.

PFFS plans often bundle in prescription drug coverage and may include supplemental benefits, such as dental, vision and hearing coverage. However, unlike Medicare Advantage HMO or PPO plans, if the PFFS plan you choose doesn’t include prescription drug benefits, you may purchase a Part D prescription drug plan separately.

These fee-for-service plans set the cost of specific treatments and services for both providers and beneficiaries. For example, if your doctor orders an ultrasound, your plan may set the cost of the service at $150, paying $125 to the provider and leaving you with a $25 co-pay if you’ve previously met your deductible. Costs, including co-pays, deductibles and out-of-pocket maximums, vary by insurer and individual policy.

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How Does a PFFS Plan Work?

If you enroll in a PFFS plan, you won’t need to choose a primary care physician or get a referral to see a specialist or out-of-network physician. Participants may seek services through an in-network provider or choose an out-of-network practitioner who accepts Medicare, agrees to provide the necessary services and accepts the plan’s proposed rates. Prior authorization isn’t required for diagnostic imaging, lab work and other covered services.

Provider networks vary by insurer, and out-of-network practitioners and facilities have the right to refuse services under a policy’s terms and conditions of payment, except in emergency situations. Out-of-network providers may also accept a plan’s payment terms on a case-by-case basis, so even if you’re an established patient, treatment or services may be refused at any time. Additionally, some PFFS plans let providers charge up to an additional 15% of the cost of services, which the patient is responsible for paying.

What Are the Advantages and Disadvantages of a PFFS Plan?

Although policies may differ depending on the insurance company offering them, Medicare beneficiaries may find advantages and disadvantages to most private fee-for-service plans.

Advantages typically include:

• Freedom to seek treatment through any provider who accepts the payment terms
• No need to coordinate services through a primary care physician
• No need for referrals or prior authorization
• The option to purchase a prescription drug plan if one isn’t bundled in
• Guaranteed emergency treatment throughout the United States

Disadvantages typically include:

• Higher monthly premiums
• Limited plan availability in certain areas
• The risk of being refused treatment by a physician or facility

Where Are PFFS Plans Available?

PFFS plans aren’t offered everywhere. You can find out what plans are available near you by calling 1-800-MEDICARE.

How Can You Enroll in a Medicare Advantage PFFS Plan?

You may join a Part C plan or switch policies during Medicare's open enrollment periods, which include:

• Initial open enrollment: When you turn 65, you’re eligible to enroll in Medicare. At this time, you can choose a Medicare Advantage plan, such as a PFFS policy.
• Annual open enrollment: From October 15 to December 7, you can enroll in a plan or switch from one plan to another. The new coverage begins on January 1.
• Medicare Advantage open enrollment: If you have a Part C policy and want to switch to a PFFS plan, you may do so from January 1 to March 31.

During these enrollment periods, you may also revert to Original Medicare Parts A and/or B.