A Complete Guide to (PFFS) Private Fee-For-Service Medicare Plans

A Complete Guide to (PFFS) Private Fee-For-Service Medicare Plans

What is a PFFS plan?

A Private Fee-for-Service (PFFS) plan is a type of Medicare Advantage plan offered by private insurance companies. PFFS plans are different from other Medicare Advantage plans in that they allow members to go to any Medicare-approved doctor or hospital that accepts the plan's payment terms.

PFFS plans are sometimes referred to as "private fee-for-service" plans because they mimic the fee-for-service structure of Original Medicare. With Original Medicare, providers can set their own fees for services and you can go to any doctor or hospital that accepts Medicare patients.

Similarly, with a PFFS plan, the insurance company sets its own reimbursement rates for providers. Providers can decide whether to accept those rates each time you visit. You can go to any Medicare-approved doctor, specialist or hospital that agrees to treat you under the plan's terms of payment, except in cases where providers are contracted with the plan.

In essence, PFFS plans combine some elements of Medicare Advantage plans with some elements of Original Medicare. Like other Medicare Advantage plans, PFFS plans are offered by private insurers and provide all Original Medicare Part A and Part B benefits. But like Original Medicare, PFFS plans allow you to choose your own providers, as long as the provider agrees to the plan's terms and conditions.

History and Background

Private Fee-for-Service (PFFS) plans were introduced in 1997 as part of the Balanced Budget Act. They were created by Medicare to increase options and flexibility for Medicare beneficiaries.

Up until that point, most Medicare beneficiaries had to choose between Original Medicare or Medicare HMOs. PFFS plans aimed to provide an alternative that combined elements of both. Like Original Medicare, PFFS plans allow members to see any provider who accepts the plan's terms and conditions. Like Medicare HMOs, PFFS plans are offered by private insurance companies and provide additional benefits beyond Original Medicare.

The PFFS model was still relatively new when the Medicare Modernization Act of 2003 brought significant changes to Medicare, including the introduction of Medicare Part D prescription drug coverage. The 2003 legislation led to rapid growth in PFFS plan availability and enrollment. By 2008, hundreds of PFFS plans were available across the U.S.

However, changes brought by the Affordable Care Act in 2010 led to a sharp decline. Stricter network requirements meant most insurers could no longer offer PFFS plans. Today only a handful of PFFS plans remain, offered by a single insurer in certain states. Though no longer widespread, PFFS plans still provide an alternative option combining Medicare Advantage flexibility with Original Medicare's open access.

How PFFS Plans Work

PFFS stands for Private Fee-for-Service. This type of Medicare Advantage plan is different from other types of MA plans in a few key ways:

  • Network Flexibility - PFFS plans do not have a network of contracted providers like HMOs and PPOs. Members can see any Medicare-approved provider who accepts the terms and conditions of the plan. Providers are not required to accept PFFS plans and can decide on a case-by-case basis.

  • Individualized Care - Without a set provider network, PFFS allows members flexibility in choosing health care providers for each service. This means members can switch doctors or hospitals for each visit or procedure if they want.

  • Fee Schedule - PFFS plans create their own fee schedule to determine how much they will pay providers for each covered service. Providers can choose to accept or reject these terms. If they accept, they agree to not charge the member more than the plan's fee schedule amount.

  • Pre-Authorization - Members typically need prior authorization from the plan before getting non-emergency services. This is to ensure the plan will cover and pay for the services. The provider must contact the plan to verify coverage.

  • Premiums and Cost Sharing - PFFS plans charge a monthly premium. Members are also responsible for deductibles, copays or coinsurance amounts for services, as outlined in the plan's coverage rules. Costs vary by plan.

In summary, PFFS plans offer more provider flexibility compared to network-based plans, but also require pre-authorization and provider willingness to accept the terms and conditions for payment. This gives members more choice but less predictability in costs.


One of the major benefits of PFFS plans is that they offer all the basic benefits included in Original Medicare, such as:

  • Hospital coverage (Part A)

  • Medical coverage (Part B)

  • Emergency care

  • Urgent care

  • Ambulance transportation

  • Durable medical equipment

  • Home health care

  • Outpatient services

  • Preventive services

  • Hospice care

In addition to the standard Medicare benefits, most PFFS plans also include extra benefits not covered by Original Medicare, such as:

  • Routine dental care

  • Routine vision care

  • Hearing exams and hearing aids

  • Gym memberships

  • Transportation to doctor appointments

  • Over-the-counter drugs

  • Meals delivered after hospitalization

The extra benefits offered can vary significantly between different PFFS plans. When shopping for a plan, it's important to closely compare the extra benefits offered to find the plan that best fits your healthcare needs and budget. Some PFFS plans offer very rich extra benefits while others offer more basic benefits.

One appealing aspect of PFFS extra benefits is that they often fill in major gaps in Original Medicare coverage, like dental, vision, and hearing care. For retirees needing these services, a PFFS plan can provide valuable coverage.

Overall, the combination of Original Medicare benefits plus extra benefits makes PFFS plans more comprehensive than Original Medicare alone. The extra benefits can greatly reduce out-of-pocket costs for services not covered under Parts A and B.


Monthly premiums, copays, coinsurance, and out-of-pocket costs vary widely among PFFS plans. When evaluating a plan's costs, consider the following:

  • Monthly Premiums - The monthly amount you pay for your PFFS plan coverage. Premiums often depend on where you live, your age, and the level of coverage you choose. The national average for PFFS plans is around $[X] per month.

  • Copays - A fixed amount you pay for certain medical services, usually when you receive the service. Common copays are $[X] for primary doctor visits and $[X] for specialist visits.

  • Coinsurance - The percentage you pay for services after you meet your deductible. For example, you may pay 20% coinsurance for hospital stays on a PFFS plan after reaching your deductible.

  • Out-of-Pocket Costs - This includes deductibles, copays, and coinsurance. Out-of-pocket costs are capped each year for PFFS plans. In 2022, the maximum out-of-pocket limit is $[X] for in-network services. You pay the full costs until you reach this limit.

The costs for PFFS plans can vary significantly, so it's important to evaluate premiums, copays, coinsurance rates, and out-of-pocket maximums when choosing a plan. Comparing costs across a few plan options can help identify the most affordable PFFS coverage for your healthcare needs and budget.

Provider Network

Private Fee-for-Service (PFFS) plans typically have larger provider networks than original Medicare, but smaller networks than Medicare Advantage plans. This gives enrollees more flexibility in choosing providers than original Medicare, but less than some Medicare Advantage plans.

PFFS plans can include providers who accept Medicare assignment as well as non-participating providers. Accepting assignment means the provider agrees to accept the Medicare-approved amount as payment in full.

  • In-network providers - Providers who formally agree to work with the PFFS plan are considered in-network. They accept plan-determined reimbursement rates.

  • Out-of-network providers - Providers who don't have a network contract can still see PFFS patients on an out-of-network basis. They can decide on a case-by-case basis whether to accept the PFFS plan's terms and reimbursement.

For out-of-network providers, the plan pays whatever Medicare would have paid, and the enrollee may be responsible for the difference between the provider's billed charges and what Medicare would have paid. Out-of-network providers may also choose not to accept a PFFS plan's terms and can require the enrollee to pay the full cost of care upfront.

The flexibility of seeing out-of-network providers under PFFS can be beneficial, but also carries more financial uncertainty compared to a Medicare Advantage HMO or PPO with a defined provider network. Enrollees must be prepared for the possibility of higher out-of-pocket costs when seeing out-of-network providers.


When and how to enroll in a PFFS plan depends on your eligibility. These Medicare Advantage plans have specific enrollment periods:

  • Initial Enrollment Period: When you first become eligible for Medicare at age 65, you have a 7-month Initial Enrollment Period to sign up for a PFFS plan. This window spans 3 months before you turn 65, the month you turn 65, and 3 months after your 65th birthday month.

  • Annual Election Period: Every year from October 15 to December 7, you can enroll in or switch PFFS plans for coverage starting January 1. This applies to Medicare beneficiaries who are already enrolled in Medicare.

  • Medicare Advantage Open Enrollment Period: From January 1 to March 31 each year, Medicare Advantage members can switch to a different MA plan or go back to Original Medicare and stand-alone Part D. Any changes made during this time are effective the first of the month after you enroll.

  • Special Enrollment Periods: Qualifying life events like moving, losing other health coverage, and more may provide Special Enrollment Periods outside the usual Medicare open enrollment windows.

To enroll in a PFFS plan, first check that you meet the eligibility requirements:

  • You have Part A and Part B.

  • You live in the PFFS plan's service area.

  • You do not have End-Stage Renal Disease (except under certain circumstances).

Then, complete an enrollment application with the plan provider during one of the valid enrollment periods outlined above. You can enroll by paper application, online, over the phone, or through a broker. The plan will notify you when your enrollment is complete.


PFFS plans tend to receive mixed ratings when it comes to quality and customer satisfaction. According to a report from the Commonwealth Fund, PFFS plans generally score lower on quality ratings compared to HMOs and PPOs. Factors bringing down PFFS ratings include lower scores on preventive care measures, chronic care management, and care coordination.

On Medicare's 5-star rating system, most PFFS plans average between 2-3 stars. Only a handful of PFFS plans have achieved 4 stars or higher. Low ratings are attributed to lower scores on health plan customer service, member complaints, and how long members have to wait for appointments and decisions on appeals.

However, when it comes to member satisfaction specifically, PFFS plans tend to score higher. In a satisfaction survey conducted by Medicare, over 80% of PFFS enrollees said they were satisfied or very satisfied with their plan. Members appreciate the flexibility to see any Medicare-approved doctor without referrals. But some members have experienced issues finding doctors willing to accept PFFS plans due to reimbursement challenges.

Overall, PFFS plans offer flexibility but may lack in quality measures, care coordination, and customer service compared to other Medicare Advantage plans. Yet satisfaction remains relatively high among members. Those considering a PFFS plan should weigh flexibility and cost against scores on quality and service.

Pros and Cons

PFFS plans have several key advantages as well as some potential disadvantages to consider:


  • Freedom to choose providers. One of the biggest benefits of PFFS plans is the ability to see any Medicare-approved provider who agrees to accept the plan's terms and conditions for payment. This gives more flexibility compared to HMOs or PPOs with restricted networks.

  • National coverage. Most PFFS plans allow members to see any provider across the United States who accepts the terms and conditions. This makes it easier for snowbirds or frequent travelers.

  • Low or no monthly premium. Many PFFS plans have $0 premiums beyond the standard Medicare Part B premium. This helps limit out-of-pocket costs.

  • Part D drug coverage. Most PFFS plans include Medicare Part D prescription drug coverage with the medical benefits. This provides convenience with one integrated plan.

  • Simplicity. PFFS plans do not require referrals to see specialists. This can simplify the process for members who see multiple doctors.


  • Provider uncertainty. Because providers can choose whether to accept PFFS terms and conditions for each claim, it may be unclear ahead of time if a given provider will be in-network. This causes uncertainty.

  • Pre-approvals. Some PFFS plans require pre-approval for certain services like MRIs or hospitalization. This can delay care if the pre-approval process is not followed.

  • Limited networks. If few providers in an area accept the terms and conditions, the PFFS plan may have a limited practical network. This restricts choices.

  • Lack of coordination. Since each claim is handled individually, PFFS plans do not coordinate care across providers the way HMOs and PPOs do. This places more burden on the member.

  • Plan instability. Providers may stop accepting the terms and conditions at any time, disrupting coverage. Members could lose providers mid-plan year.


Compare PFFS to other Medicare plan types like HMOs, PPOs:

Private Fee-for-Service (PFFS) plans are one option for Medicare Advantage plans, but there are other types of plans to consider as well. Here's how PFFS compares to some other common Medicare Advantage plan types:

  • HMO (Health Maintenance Organization) - HMOs require you to get care from doctors and facilities within their network, except in emergencies. You may need referrals from your primary care doctor to see specialists. HMOs often have low costs like copays and no deductibles.

  • PPO (Preferred Provider Organization) - PPOs allow you to see out-of-network doctors for a higher cost. You pay less if you use in-network providers. PPOs typically have higher premiums than HMOs but provide more flexibility.

  • PFFS (Private Fee-for-Service) - PFFS plans let you go to any Medicare-approved doctor or hospital that accepts the plan's payment terms. PFFS plans have no networks. The premiums and out-of-pocket costs can be higher than other plans.

The choice between PFFS, HMO, PPO, or other plan depends on your budget, health, doctors, medications, and preference for flexibility vs. costs. PFFS offers open access to providers but less predictability for costs. HMOs and PPOs have networks and controls on spending. Review the options thoroughly to find your best fit.


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