There are five types of Medicare Advantage Plans: HMO, PPO, PFFS, SNP, and MSA. That's a lot of acronyms! Each of these types of Medicare Advantage plans is quite different, so you must understand each one.
Today, we're going to discuss PFFS plans - how they work, what coverage they offer, and the advantages and disadvantages of these plans.
PFFS Plans: How They Work
PFFS stands for "Private Fee-for-Service." These plans provide Medicare benefits that can help cover out-of-pocket expenses not covered by Original Medicare (Parts A and B).
Medicare Advantage plans are also called Medicare Part C.
PFFS plans are a type of Part C plan. Private insurance companies offer these plans.
Many Medicare Advantage plans require their members to receive care from in-network providers. Unfortunately, going outside their network of doctors often means that the member has no benefits from their Part C plan.
PFFS plans, however, do not require their members to see only in-network health care providers.
PFFS plans determine how much to pay providers contracted with private insurance companies who also accept Medicare Assignment. These plans also determine how much the member pays for services, depending on the provider and the individual plan. It will also determine how much it will reimburse the contracted providers.
However, providers can choose not to accept some of the rates set by the plan and can instead still choose to bill at their billing rate.
Medicare Advantage PFFS Plan Coverage
PFFS plans offer coverage for all the services that Medicare Parts A and B provide.
Part A is your hospital insurance. You can think of this as your "room and board" for hospital stays. It offers coverage for inpatient hospital care, skilled nursing facility care, nursing home care, hospice, and home health care.
Part B is your medical insurance. It covers medically necessary services and preventive care. For example, outpatient care, ambulance services, durable medical equipment (DME) are all covered under Medicare Part B.
While Parts A and B provide significant benefits, Part B only pays for 80% of the covered services. That's when your PFFS plan will kick in and help pay for that remaining 20% of out-of-pocket costs.
Like other Part C plans, PFFS may also offer additional benefits for dental care, vision, and health services. These are not included in your Original Medicare coverage.
PFFS Plans and Prescription Drug Coverage
Like all other types of Medicare Advantage plans, some PFFS plans offer prescription drug coverage, and others do not. If a plan does have prescription drug coverage, there will be a specific drug formulary associated with that plan. Therefore, knowing your current medications is essential when picking a PFFS plan.
If the PFFS plan you choose does not offer drug coverage, you may then enroll in a separate Part D policy. Part D policies are for prescription drug coverage only. Again, there will be specific drug formularies based on the Part D policy you choose.
Keep in mind that this ability to enroll in a separate Part D plan does not apply to HMO or PPO Medicare Advantage Plans.
Eligibility and Cost for PFFS Plans
To be eligible for a PFFS plan, you must already be enrolled in Medicare Part A and B.
Your monthly premium for one of these plans is like any other Medicare Advantage or Medigap plan - it will vary based on location, age, gender, and other factors like tobacco use.
Advantages of PFFS plans
Members enrolled in a PFFS plan do not have to choose a primary care physician (PCP). Members also do not need to have a referral to see a specialist and may enjoy the same coverage outside of their network. These are all advantages unique to PFFS plans.
These plans also have a maximum out-of-pocket cost (MOOP).
In 2021, it was $7550, but each individual plan can decide to have a lower MOOP.
Disadvantages of PFFS plans
While not required to stay in-network for care, members with PFFS plans may end up paying more out-of-pocket if they receive care from a provider who will not accept the plan's payment terms. (There are even some PFFS plans that DO require their members to receive care from a specific network of providers except for in some cases of emergency treatment.)
On that same note, a provider can choose to stop accepting the payment terms at any time.
As we've learned, there are several reasons to choose a PFFS policy. The most influential factor for people who want a Medicare Advantage plan is the freedom to choose providers. As with all other policies, speak with an agent about what PFFS options you may have in your area.
