Disadvantages to a Medicare Private Fee for Service Insurance Policy

Medicare is a federally funded and operated program designed for the elderly (age 65 and over) and certain disabled individuals. Medicare Part C, also known as Medicare Advantage, are health insurance plans offered by private insurance companies for coverage of Medicare eligible services. Private Fee-For-Service (PFFS) plans are a type of Medicare Advantage plan that allows an individual to go to any Medicare participating provider, as long as the provider is willing to accept the PFFS plan. This differs from HMO and PPO plans, which require that the individual go to certain approved in-network medical providers, even if other medical providers who accept Medicare are available in the area. But there are some disadvantages to a PFFS plan.

Participating Providers

• Unlike original, HMO, PPO and other types of Medicare coverage, Medicare participating providers are allowed to refuse treatment to individuals with a PFFS plan. An exception to this is when an individual goes to an emergency room and is required by law to receive some type of treatment, then the provider is not permitted to refuse medical treatment to the individual. However, they may still refuse the PFFS plan as a form of payment.

Premium Cost

• HMO and PPO plans have a limit on the premium cost that may be charged by the private insurance company. PFFS plans do not have a limit on the cost of the premium. This means that a PFFS plan could cost significantly more than an HMO or PPO plan with the same amount of coverage.

Payment to Providers

• PFFS plans are exempt from paying the Medicare standard rates to medical providers, which means that PFFS plan providers may pay a much lower rate to medical providers for services than HMO or PPO plans. This is one reason why some medical providers will deny treatment to individuals with Medicare PFFS plans.