Carriers Dumping Medicare Advantage Private Fee-for-Service Plans


Health insurance carriers are dropping their Medicare Advantage Private Fee-for-Service (PFFS) plans, according to recent announcements by some health insurance providers, including Coventry and WellCare. A PFFS is a Medicare Advantage (MA) plan that is available through a state licensed, risk-bearing entity, or a PFFS Medicare Advantage Organization (MAO).

As a result of PFFS coverage drops by Coventry and WellCare alone, more than 500,000 Medicare plan holders will have to find new coverage.

At this point, Medicare Advantage plans receive government subsidies so that they can offer beneficiaries more benefits than simple Medicare plans. Medicare Advantage plans are offered to Medicare-eligible individuals by private health insurers. However, analysts are expecting the reimbursement rates for these PFFS programs to fall by approximately 5%, making them less profitable for insurance carriers.

How PFFS Currently Work

PFFS are popular amongst consumers because they allow Medicare beneficiaries to choose their own healthcare providers, rather than having to select their providers from a limited number of in-network of Medicare-approved providers. Beneficiaries can see any provider, as long as the provider agrees to charge based on the PFFS fee schedule. This fee schedule is the same as the Medicare schedule.

PFFS MAOs have yearly contracts with the Centers for Medicare and Medicaid Services to provide Medicare beneficiaries with their Medicare benefits as well as additional benefits that a company opts to provide. A PFFS provider pays for healthcare instead of Medicare when a beneficiary has such a plan.

The main benefit (which makes PFFS so popular) is that individuals who join PFFS MAOs are not required to use providers within a network and can, therefore, see any provider as long as the provider is able to receive payment from Medicare and the PFFS MAO.

More Changes to PFFS Plans

In addition to the decreased government reimbursement amount for PFFS plans, PFFS plans will be required to develop healthcare provider networks beginning in 2011. The change will force PFFS plan holders to select their healthcare providers from within the plan network, limiting their freedom to see providers that they prefer.

Experts predict that more healthcare insurance providers will follow Coventry and WellCare by dropping their PFFS plans in coming months. Individuals should contact their healthcare insurance providers if they are currently enrolled in a PFFS or are considering enrolling in a PFFS to get more information about how their provider will respond to the upcoming PFFS changes.

More Information About Medicare Advantage Plans

Medicare Advantage plans are specific types of Medicare plans that are in place to cover the cost of healthcare related expenses for Medicare participants. These plans are similar to traditional Medicare plans in that they provide financial support for individuals seeking medical or health-related services. However, Medicare Advantage plans generally have more benefits and lower copayments than other types of Medicare plans. In order to have a Medicare Advantage plan, Medicare participants need to have Medicare Part A and Medicare Part B plans.

One major difference between Medicare Advantage plans and other types of Medicare plans is that Medicare Advantage participants may need to see only doctors that are members of the Medicare Advantage provider plan. However, plans may allow participants to use a wide variety of services, including Medicare Health Maintenance Organizations, Preferred Provider Organizations, Private Fee-for-Service providers, and Medicare Special Needs providers.

Medicare participants should be aware that Medigap policies do not provide gap coverage for individuals that participate in the Medicare Advantage program.

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