Medicare Fee-for-Service

Fact Checked

Fee-for-service plans differ from alternative payment models, such as bundled payment plans. Fee-for-service plans encourage providers to supply more services rather than focusing on the quality of services rendered. There’s been a shift away from fee-for-service models toward more value-based payment methods that reward providers for their care’s quality, rather than quantity.

Who Should Get a Medicare Fee-for-Service Plan?

A Medicare Fee-for-Service plan may be a good choice for you if:

  • Want unrestricted access to providers who accept Medicare and your plan’s terms
  • Want to pay for services as you receive them as with Original Medicare, and also have access to extra benefits because it is a type of Medicare Advantage Plan
  • Want a Medicare Advantage Plan that allows you to purchase stand-alone drug coverage

What Is a Medicare Fee-for-Service Plan?

Medicare private fee-for-service (PFFS) plans are a form of Medicare Advantage Plan offered by private insurers who contract with the Centers for Medicare and Medicaid Services (CMS). As with other Medicare Advantage Plans, PFFS plans provide full Medicare benefits plus additional benefits at the insurer’s discretion.

Plan structure Medicare Advantage Plan that determines how much it will pay providers and how much you must pay for care.
Benefits available All Original Medicare benefits. May offer other benefits, such as prescription drug coverage, vision, dental, or hearing.
Cost sharing Plans may have a premium and deductible.You pay contracted rates in the form of copays or coinsurance when you receive services. Medicare-covered services count toward your out-of-pocket max.

How PFFS plans work

With a Medicare fee-for-service plan, you pay for each service received from a health care provider, says Matt Dworetsky, president of Dworetsky Financial in Manalapan, New Jersey.

“Medicare covers some of the expense, and the consumer pays the rest, but these charges are billed individually, not bundled,” he says. “Medicare will either pay this fee directly to the health care provider or reimburse the consumer after they file a claim.”

Each plan sets the rates it will pay and how much you will pay. Generally, in a fee-for-service model, the more extensive or costly the service is, the higher the fee, says Hiroko Haig, founder of Hiroko Haig Insurance Service.

With a fee-for-service plan, “you can go to any doctor or any hospital, but you will pay more for doctors that are out-of-network vs. doctors that are in-network,” says investment advisor Cynthia Pruemm, founder and CEO of SIS Financial Group in Hoffman Estates, Illinois.

Fee-for-service plans are also not standardized so that benefits can vary from company to company and from year to year, Pruemm says.

Benefits available with a PFFS plan

You have all the benefits from Medicare Part A (hospital insurance) and Part B (medical insurance), including:

  • Inpatient hospital and skilled nursing facility care
  • Home health care
  • Medically necessary outpatient care
  • Preventive care

Some PFFS plans offer additional benefits that Medicare doesn’t cover, like:

  • Routine hearing, dental, and vision exams
  • Prescription drug coverage

If you choose a plan that doesn’t have prescription drug coverage, you can purchase a standalone Part D plan.

Advantages of a Medicare Fee-for-Service Plan Disadvantages of a Medicare Fee-for- Service Plan
  • Flexibility and control: You can choose your own medical providers
  • You don’t need a primary care doctor or a referral to see a specialist
  • Some plans may include prescription drug coverage
  • Health care providers can change their policy at any time and decide to no longer accept your PFFS plan.
  • You could owe a higher payment if you use out-of-network providers.

See how a Medicare PFFS compares to Original Medicare and other Medicare Advantage Plan types.

Plan type Costs* Part A coverage Part B coverage Part D coverage Out-of-state care**
Original Medicare Part B premium Yes Yes No Yes
Medicare Advantage HMO Part B premium plus plan premium Yes Yes Usually Emergency only
Medicare Advantage PPO Part B premium plus plan premium Yes Yes Usually Emergency, plus other care if in your plan’s network, or you pay more for out of network
Medicare Advantage PFFS Part B premium plus plan premium Yes Yes Sometimes Emergency, plus other care if contracted with your plan and agrees to treat you.
Medicare Advantage MSA Part B premium plus high deductible Yes Yes No Emergency plus other care but you pay higher cost for out of network if your plan has a network
Medicare Advantage SNP Part B premium Yes Yes Yes Emergency and out-of-area dialysis plus other care if in your plan’s network

*All plans include deductibles, copays and/or coinsurance for services received. Medicare Advantage Plans have an out-of-pocket max that applies to Medicare-covered benefits. There is no cap on what you spend for Original Medicare services, but if you purchase a Medigap plan, which has a monthly premium, it will cover most of Original Medicare’s cost-sharing requirements.

**Check with your plan for out-of-state coverage and service area.

Who Is Eligible for a Medicare PFFS Plan?

You’re eligible for a Medicare PFFS plan if you’re enrolled in Original Medicare Parts A and B, and a plan is available in your area. If you’re 65 or older or have a qualifying disability, you can qualify for Medicare. End-stage renal disease (ESRD) and amyotrophic lateral sclerosis (ALS or Lou Gehrig’s disease) qualify for Medicare, or you can qualify if you’ve received at least 24 Social Security Disability Insurance (SSDI) or Railroad Retirement Board (RRB) disability insurance payments.

How Much Does a Medicare PFFS Plan Cost?

You can expect to pay the plan’s monthly premium in addition to your monthly Medicare Part B premium. Additionally, you’re responsible for a service’s copayment or coinsurance amount. That copayment can be as much as 15% above the plan’s approved cost of service.

The monthly premium for Medicare Advantage PFFS plans are generally lower than Medicare Supplement plans, also called Medigap, Haig says, which can make these plans a good alternative for individuals who like Medigap but cannot afford the monthly premium.

Note: You can purchase a Medigap plan if you have Original Medicare, but not if you are enrolled in a Medicare Advantage plan.

See how costs compare for these PFFS plans in different areas of the country:

Plan name Monthly premium Deductible Copay Coinsurance Out-of-pocket max
Humana Gold Choice

(Chicago, IL)

$146 $0 medical, $380 drug deductible PCP: $15

Specialist: $45

50% out of network $6,700
Humana Gold Choice

(Denver, CO)

$90 $0 medical, $300 drug deductible PCP: $15

Specialist: $50

25% out of network $6,700

How Do I Enroll in a Medicare PFFS Plan?

To enroll in a Medicare Advantage Plan, you first need to be enrolled in Original Medicare Part A and Part B. After you’re enrolled in Original Medicare, you can enroll in a PFFS plan during your Initial Enrollment Period or during other enrollment periods throughout the year:

  • Initial Enrollment Period (IEP): This seven-month period starts three months before the month of your 65th birthday, the month of your birthday, and ends three months after your birthday month.
  • Initial Coverage Enrollment Period (ICEP): This is the enrollment period for those who want to enroll in a Medicare Advantage Plan and often occurs at the same time as the IEP for Original Medicare.
  • Annual Enrollment Period: This period runs from October 15 through December 7.
  • Medicare Advantage Open Enrollment: Medicare beneficiaries who have already enrolled in a Medicare Advantage Plan can switch plans between January 1 and March 31.

Use the Medicare Plan finder to research available PFFS plans in your area. When you’ve chosen a plan, go to the insurer’s website to check for online enrollment options or contact the insurance company by phone or email to request a paper enrollment form. You can also enroll by calling Medicare at (800) 633-4227.

To enroll, you need your Medicare number and the date your Parts A and B coverage began. Your Medicare card has this information.

Who Should Get a Medicare PFFS Plan?

Medicare PFFS plans represent a good choice for Medicare beneficiaries who are willing to pay more for a plan that may include coverage for vision, dental, hearing benefits, and prescription drugs while also providing the freedom to choose their own providers.

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Certified Senior Advisor (CSA)®

As a health care professional since 1987, Kelly Blackwell has walked alongside and cared for seniors as they journey through the season of their fourth quarter of life. Blackwell holds a Bachelor of Science in nursing from the University of Northern Colorado, a Master of Science in health care administration from Grand Canyon University, an interprofessional graduate certificate in palliative care from the University of Colorado Anschutz Medical Campus and holds a Certified Senior Advisor® credential from the Society of Certified Senior Advisors.

Blackwell contributes to the University of Colorado-Anschutz blog and has been published in “The Human Touch” distributed by the University of Colorado Center for Bioethics and Humanities. She cowrote “Dying Is” for Pathways Hospice.

A registered nurse, Blackwell understands health insurance choices influence quality of life and are driven by values, goals, and beliefs. She’s passionate about engaging with, educating, and empowering seniors as they navigate the health care system. She’s equipped to lend an experienced, compassionate voice to beneficiaries seeking information about Medicare Advantage Plans.

As a CSA®, Blackwell has access to valuable resources for Medicare beneficiaries. Her work as a bedside nurse and clinical manager has given her the opportunity to see how Medicare rules, regulations, and benefits work when patients need them. With a passion to learn and to make a difference in the lives of seniors, Blackwell supports seniors through Medicare and fourth-quarter life decisions.

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