The Center for Medicare Advocacy Releases a REPORT
on Medicare Advantage Private Fee-for-Service Plans

The Center for Medicare Advocacy has issued a new report, Medicare Advantage Private Fee-for-Service (PFFS) Plans: A Primer for Advocates, (see which describes the legal requirements that PFFS plans must meet. The report also reviews PFFS plans in three states and compares the cost-sharing for key Medicare benefits with the cost-sharing for someone in traditional Medicare, and cost sharing for someone in traditional Medicare with a Medigap policy.  The report concludes that enrollees in PFFS plans may not have the same access to providers that they would have under traditional Medicare, they lack some of the consumer protections available under other Medicare Advantage options, and the cost of services may be greater than under traditional Medicare, especially if supplemented by a Medigap policy.


Medicare Private Fee-For-Service (PFFS) Plans


Private fee-for-service plans (PFFS) are the fastest growing of the private plan options included in Medicare Part C, the Medicare Advantage (MA) program.  According to a recent Kaiser Family Foundation Report, 100% of Medicare beneficiaries in both rural and urban counties have access to at least one PFFS plan, while 95% of all Medicare beneficiaries have access to other Medicare Advantage options.


In addition to being the fastest growing of the MA options, PFFS plans are the most overpaid.  Average payments to PFFS plans are 19% greater than what Medicare would pay for a PFFS plan enrollee if the enrollee had remained in traditional Medicare.  See Weekly Alert, Medicare Overpayments to Private Plans, March 29, 2007,


The proliferation of PFFS plans may be driven, in large part, by the extra payments they receive.  As reported in the New York Times, the Wall Street Journal and other publications, the increased enrollment in PFFS plans may result more from abusive sales tactics than from the improved quality of care provided by these plans.


PFFS Plan Pros and Cons


PFFS plans have been touted by health insurance organizations as providing Medicare beneficiaries with all the services of traditional Medicare – and sometimes more – with fewer limitations than other MA plans impose on the doctors and hospitals they can use.  These claims are incomplete and misleading.  It is true that PFFS plans, like all MA plans, are required by law to provide all medically necessary health care services covered by Medicare Parts A and B.  And PFFS plans do not restrict beneficiaries to a network of providers, but allow enrollees to go to any Medicare-eligible doctor or hospital in the United States that is willing to provide care and accepts the plan’s terms of payment. 


However, Medicare-participating providers are permitted to refuse to treat PFFS enrollees, so beneficiaries’ access to services may not be as broad as the plans assert.  In fact, a recent study found that PFFS enrollees have experienced difficulty finding doctors who will treat them. Moreover, whether a PFFS plan offers services identical to those provided under traditional Medicare or covers additional services as well, there is no limit on the premium the plan can charge beneficiaries in addition to the Part B premium.  Although PFFS plans typically adopt Medicare billing practices, a PFFS plan enrollee could potentially pay much more, for identical services, than a beneficiary in traditional Medicare or a MA coordinated care enrollee.  In addition, the PFFS plan is permitted to charge deductible, co-payment and co-insurance amounts different from those under Medicare and charge a premium for “extra” benefits, including prescription drugs. 


PFFS plans are also exempt from patient-protective statutory and regulatory standards that apply to other MA plans.  PFFS plans do not have to:





PFFS plans masquerade as a lower cost, open network alternative to traditional Medicare.  However, they result in extra costs for taxpayers and for many of the beneficiaries who enroll in these plans while offering far less provider choice than the traditional Medicare program.  Most important, their payment and regulatory structures have the effect of weakening traditional Medicare for the majority of beneficiaries who remain in that program.  Advocates and policymakers are advised to look closely at PFFS plans to ensure that older people and people with disabilities do not lose the protections they enjoy in traditional Medicare as a result of the proliferation of the PFFS option.


Private Fee-for-Service Resources

Marsha Gold,   Medicare Advantage In 2006-2007: What Congress Intended? Health Affairs (May 15, 2007),

Tracking Medicare Health and Prescription Drug Plans Report, Kaiser Family Foundation,


Jonathan Blum, Ruth Brown, Miryam Frieder, An Examination of Medicare Private Fee-For-Service Plans, Kaiser Family Foundation (March 2007).


“Medicare Policy Workshop on the Rise of Private Fee-For-Service Plans,” Kaiser Family Foundation (March 16, 2007),


California Health Advocates, Medicare Rights Center, Issue Brief #4 – After the Goldrush: The Marketing of Medicare Advantage and Part D Plan, (January 2007), the Goldrush-2007-01.pdf.


The Report was prepared by Marissa Gordon Picard, law intern, and Vicki Gottlich,

Senior Policy Attorney, in the Center for Medicare Advocacy’s Washington, D.C. office.

Copyright © Center for Medicare Advocacy, Inc. 09/04/2013