Private Fee-for-Service (PFFS) plans are one of four main types of Medicare Advantage policies that private insurance companies administer. The plans have specific rules relating to costs paid to healthcare providers.
Private insurance companies offer Medicare Advantage plans to those who are eligible for Medicare benefits. Medicare Advantage plans are an alternative to Original Medicare (Parts A and B).
There are several plans available, depending on location and coverage requirements. One of these is the Private Fee-for-Service (PFFS) plan.
A PFFS plan offers the same coverage as Original Medicare but may have different restrictions and costs. PFFS plans could also provide additional benefits, such as vision and dental care.
This article examines Medicare Advantage PFFS plans, who offers these plans, the costs involved, how to enroll, and some alternative options.
Glossary of Medicare terms
We may use a few terms in this article that can be helpful to understand when selecting the best insurance plan:
- Out-of-pocket costs: An out-of-pocket cost is the amount a person must pay for medical care when Medicare does not pay the total cost or offer coverage. These costs can include deductibles, coinsurance, copayments, and premiums.
- Deductible: This is an annual amount a person must spend out of pocket within a certain period before an insurer starts to fund their treatments.
- Coinsurance: This is the percentage of treatment costs that a person must self-fund. For Medicare Part B, this is 20%.
- Copayment: This is a fixed dollar amount a person with insurance pays when receiving certain treatments. For Medicare, this usually applies to prescription drugs.
Medicare is health insurance run by the federal government for individuals ages 65 years old or older. Coverage is also available to those younger than 65 years old with specific health conditions.
A person can choose to receive their Medicare benefits by having an Original Medicare plan or through Medicare Advantage.
Two different parts make up Original Medicare. Part A covers inpatient hospital costs, while Part B covers outpatient medical costs.
Alternatively, private insurance companies offer Medicare Advantage plans. These plans provide the same coverage as Original Medicare and may also offer additional benefits.
Part D, also known as prescription drug plans (PDPs), is available to help cover the costs of prescribed medication. Private insurance companies also offer PDPs, and people can purchase these as a standalone plan or have them added to a Medicare Advantage policy. Some Medicare Advantage plans may include a PDP.
According to the Kaiser Family Foundation (KFF), those enrolled in Medicare Advantage plans accounted for around 51% of all Medicare beneficiaries in 2023.
Read more about Original Medicare vs. Medicare Advantage.
PFFS plans are a type of Medicare Advantage plan. A person who joins this plan can see a specialist without referrals, and they do not need to select a primary care physician (PCP).
Individuals can visit any provider who agrees to accept the PFFS plan’s conditions and payment terms.
Some PFFS plans have networks of service providers who offer care to anyone enrolled in the plan. To avoid additional costs, a person should ensure that any provider they visit outside of the network accepts the terms of the policy.
The amount a PFFS pays for each healthcare service is preset. The plan provider will decide how much the plan pays for services and how much a person will pay when receiving care.
PFFS plans are not allowed to charge more than Original Medicare for some kinds of care, such as chemotherapy, dialysis, and care that someone receives in a skilled nursing facility.
PFFS plans may charge higher copayments for other services, such as home healthcare, durable medical equipment, and hospital care that a person receives as an inpatient.
Medicare Advantage plans typically include prescription drug coverage, but some PFFS plans do not. A person who wants coverage for prescribed medication may also consider enrolling in a PDP.
Who offers PFFS plans?
Private insurance companies offer PFFS plans. The plans and private insurance companies that offer them vary by location.
A person can find a PFFS plan in their area using the search tool on the Medicare website.
Because private insurance companies offer PFFS plans, the costs can vary between companies and locations.
Medicare allows “balance billing,” which means that the PFFS plan providers can charge up to 15% of the total cost of deductibles, copayments, and other services.
In addition to a monthly premium that may be payable for a PFFS plan, a person will usually have to pay the Medicare Part B monthly premium.
In 2024, the standard monthly Part B premium is $174.70. The plan may cost more if it includes a PDP, however.
All PFFS plans have to set an annual limit on out-of-pocket costs. The limit protects plan holders from high costs if they need expensive treatments.
In 2024, the maximum out-of-pocket cost for PFFS plans is $8,850.
Individuals can enroll in a PFFS plan directly with their chosen plan provider during specific times, including the initial enrollment period (IEP) and the open enrollment period, October 15 to December 7 each year.
Individuals who already have a Medicare Advantage plan and would like to change it can do so between January 31 and March 1 each year.
Learn more about Medicare enrollment periods.
Before signing up for a Medicare Advantage plan, a person must first enroll with Medicare.
An individual can apply for Medicare through Social Security when they become eligible.
After deciding on a plan, a person should enroll by directly contacting the private insurance company they choose. Individuals can join in several ways, including:
- online, by signing up through the Medicare search tool
- by paper enrollment form, usually obtained by calling the insurer
- by calling Medicare at 800-633-4227
A person must live in the coverage area for the PFFS plan they wish to join.
Medicare rules do not allow those with end-stage renal disease (ESRD) to join a PFFS plan.
Learn more about Medicare enrollment.
Other types of Medicare Advantage plans are also available.
Health Maintenance Organization plans
Health Maintenance Organization (HMO) plans are usually less expensive than other Medicare Advantage plans because they use a network of contracted healthcare professionals, hospitals, and clinics.
These service providers offer care to plan members at a discounted rate. Most HMO plans do not cover out-of-network care, except in an emergency.
A person must select a PCP to coordinate their care and refer them to specialists.
HMO Point of Service plans
An HMO Point-of-Service plan is more flexible than an HMO plan. A person will still need to select a PCP, but members can access healthcare outside of the HMO network at a higher cost.
Preferred Provider Organization plans
Members typically use a network of healthcare providers, but they do not need to select a PCP to coordinate their care.
A Preferred Provider Organization (PPO) plan usually provides benefits outside of the network with higher coinsurance or copayments.
Because the PPO plan is more flexible than the HMO plan, it usually costs more.
Special Needs Plans
Medicare designs Special Needs Plans (SNPs) for those with particular needs, such as those who:
- have chronic conditions, such as chronic obstructive pulmonary disease
- live in a long-term care facility, such as a nursing home
- are eligible for Medicare and Medicaid
Read more about Medicare Advantage plans.
Medicare resources
For more resources to help guide you through the complex world of medical insurance, visit our Medicare hub.
A PFFS plan is a type of Medicare Advantage plan.
People may prefer to receive their Medicare benefits through a PFFS plan rather than Original Medicare because they could get additional benefits or increased coverage.
Some individuals may prefer a PFFS plan because they do not have to choose a PCP, and they can see a specialist without a referral.
Not all healthcare service providers accept payment through a PFFS plan. A person may need to pay higher out-of-pocket costs if they use out-of-network healthcare services.