Private-Fee-For-Service Plans (PFFS) Within Medicare

What are Medicare Private-Fee-For-Service (PFFS) Plans?

Medicare Private-Fee-For-Service plans are an alternative Medicare insurance that allows individuals to receive personal benefits and personal premiums from an insurance company. Private insurance agencies are paid a certain amount each month by the government to provide insurance services. Based on the insurance company, a patient can have better benefits and insurance premiums than with Original Medicare.

Types of Medicare PFFS Plans

There are many different types of PSSF Plans, here are the most common ones. Similar to Health Savings Accounts (HSAs), Medical Savings Accounts (MSAs) deposit a certain amount of money into a savings account that patients use to reach a certain deductible. Once the deductible is reached, MSAs will cover the rest of the Medicare expenses from Parts A and B throughout the remainder of the year.

Developed by the On Lok Senior Health Services, a non-profit based in the Chinatown area of San Francisco Bay in 1972, Programs for All-Inclusive Care of the Elderly (PACEs) provide day care services and in-home services to prevent the elderly from being placed in nursing homes. PACE services include medical, pharmaceutical, social and recreational therapies. They even provide transportation for the elderly to commute to and from the PACE health care center.

Employer/Union Sponsored Group Plans for Retirees allow both unions and individual employers to offer health plans not only to retirees but also to their dependents (children and others) and spouses. One of the advantages of owning an employer/union sponsored group plan is that employers cannot exclude employees or their dependents from health plans due to existing health conditions. However, employers are not obligated to offer insurance to all their employees and can simply choose to offer insurance to employees who work in the same position, such as managers rather than sales associates, or to only full-time workers and not part-time workers. Another factor to consider when buying employer/union sponsored group plans is that specialized insurance plans (cancer policies, for example) are not covered under the same rules as employer/union sponsored group plans.

There are three types of employer/union sponsored group plans:

  • Health Maintenance Organizations (HMOs)
  • Preferred Provider Organizations (PPOs)
  • Retirees under Group PFFS plans

Health Maintenance Organizations (HMOs) require new members to select a primary care physician. They also require participants to use insurance providers within their given network, and will often refuse to pay insurance expenses should patients see an insurance provider outside of the prescribed network.

Preferred Provider Organizations (PPOs), also known as "Participating Provider Organization" or "Preferred Provider Option," allows patients to travel outside of the insurance provider network. However, there is usually a higher copayment for so doing. Some PPOs even require an up-front deductible before paying for needed medical expenses.

Retirees under Group PFFS plans (unlike those insured under HMOs and PPOs), do not have to concern themselves with the prescribed networks and can go to any doctor or hospital in the country that accepts the Group PFFS plan of payment and Medicare billing. While offering convenience, group PFFS plans may or may not be accepted by physicians, home health agencies, or equipment suppliers. It pays to learn about the doctors and hospitals in your area and what plans they accept before using a group PFFS.

There is another downside to Private-Fee-For-Service Plans. Generally, PFFS plans are only available in large cities across the country. For those who live in the right areas, PFFS plans can provide a good alternative to Original Medicare.