A private fee for service plan is a type of Medicare Advantage plan sold by private insurance companies as an alternative to traditional Medicare Parts A and B.
By law, Medicare Advantage plans must offer at least as much coverage as Traditional Medicare. Medicare Advantage plans may operate as HMOs, PPOs or Private Fee for Service Plans.
What are Private Fee for Service Plans
In a Private Fee for Service Plan or PFFS, the insurance company decides what it will pay for a service or procedure, and what you must pay. Your costs may include annual deductibles, a percentage of the fee as coinsurance, or a flat copayment.
With a private fee for service plan, you can see any Medicare-approved healthcare provider who accepts your insurance plan’s payment rates and agrees to treat you. You do not need a referral from your primary care doctor to see a specialist.
However, not every healthcare provider will accept your plan – even if they do accept Medicare.
- Providers can decide whether to accept your plan on a patient-by-patient and visit-by-visit basis. A doctor who treated you three months ago may decide not to accept your plan on your next visit. This means you may have to ask your providers if they’ll take your plan before every visit.
- Some plans have networks of providers who have agreed to always accept your plan’s rates and treat you, even if you are a new patient. Seeing a network doctor relieves you from having to ask every time and guarantees you will be seen for follow-up visits.
- All hospitals and other providers must treat you in a medical emergency, even if they don’t accept your plan.
Some Private Fee for Service Plans offers prescription drug coverage. If you enroll in a plan without prescription coverage, you can also sign up for a standalone Medicare Part D prescription drug plan.
What will a Private Fee for Service Plan Cost?
With a PFFS plan, you’ll pay your Medicare Part B premium, plus an additional premium for the Medicare Advantage plan. Because each insurance company sets its own rates, the premiums, deductibles, copays, and coinsurance can vary.
A Private Fee for Service plan may also allow “balance billing” in which a provider is permitted to charge you an extra 15 percent over and above the plan’s payment rate.
How is a Private Fee for Service Plan different than other Medicare Advantage plans?
With a PFFS plan, your costs don’t vary between in-network and out of network doctors. You can see anyone who agrees to accept your plan’s rates. This potentially gives you greater choice and flexibility in choosing healthcare providers.
The other two main types of Medicare Advantage plans are:
- PPO plans. These plans operate with a network of healthcare providers. Although you can see a doctor outside the network, your out of pocket costs will be lower if you use providers in the network. With a PPO plan, you do not need a referral to see a specialist.
- HMO plans. HMOs also have a provider network, but you may not have coverage or may pay more if you want to see someone outside the network. You also generally need a referral from your primary care doctor to see a specialist.
Private Fee for Service Plan vs Original Medicare and Medigap
Original Medicare Parts A and B have standard premiums, deductibles, copays, and coinsurance. Medicare Supplement, or Medigap, insurance is private insurance that works alongside Original Medicare to pay healthcare costs that are not covered by Medicare. There are 10 standard Medigap plans to choose from.
Differences between Original Medicare/Medigap and a PFFS Plan include:
- Original Medicare and Medigap allow you to use any doctor who accepts Medicare. Choices are more limited with a PFFS Plan because the provider must accept the plan’s payment rates and agree to treat you.
- PFFS Plans may not be available in all localities.
- PFFS Plans generally have copays, coinsurance and other unpredictable out of pocket costs. Medigap plans, particularly Plan F and Plan G, can virtually eliminate these costs – your main cost is the monthly premium.
- PFFS Plans may have built-in prescription drug coverage. With Original Medicare and Medigap, you will need a Part D prescription drug plan.
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