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Medicare Private-Fee-for-Service (PFFS), Health Maintenance Organization (HMO), and Preferred Provider Organization (PPO) plans are all different types of Medicare Advantage plans. Medicare Advantage plans are another way to receive your Original Medicare benefits through private insurance companies. All Medicare Advantage plans must offer at least the same level of coverage as Original Medicare. These plans may also offer additional benefits, such as vision, dental, or prescription drug coverage.
Learn the differences in cost and coverage between Medicare PFFS, HMO, and PPO plans.
Medicare PFFS plans differ in many ways from other Medicare Advantage plans. One significant difference is that the insurance company, not Medicare, determines how much it pays the provider and how much the beneficiary pays for a covered health service.
Medicare PFFS plans contract with all of the Medicare-participating providers that accept the plan’s payment terms. With a PFFS plan:
Under a Medicare Advantage PFFS plan, besides premium costs, you pay any cost-sharing expenses set by your plan (for example, copayments and coinsurance) at the time you receive the service. After that, the provider bills your plan for the remaining amount. Some Medicare PFFS plans allow “balance billing,” which lets providers charge up to 15% over what the plan pays for a covered service. In this case, you pay the remaining balance or the difference between what the provider charges and the plan’s reimbursement.
Some Medicare Advantage Private Fee-for-Service plans include prescription drug coverage. If your Medicare PFFS plan doesn’t include prescription drugs and you need this coverage, you can stay with the plan and sign up for a Medicare Part D prescription drug plan during the Annual Election Period (AEP), which takes place from October 15 to December 7 every year. You can also switch to a different Medicare Advantage plan during this time.
With a Medicare Advantage Health Maintenance Organization (HMO) plan:
HMO plans may have lower costs compared to a Medicare Advantage PPO or a PFFS plan.
With a Medicare Advantage Preferred Provider Organization (PPO) plan:
Under a Medicare Advantage PPO or HMO plan, you continue to pay the Part B premium, along with the Medicare Advantage plan’s premium. Unlike Medicare Advantage PFFS plans, Medicare-participating providers agree to accept the Medicare-approved amount as full payment for covered services (beneficiaries are still responsible for any plan cost-sharing expenses). Under a Medicare Advantage plan, providers aren’t allowed to use balance billing (except for PFFS plans).
Most Medicare Advantage HMO and PPO plans include prescription drug coverage. If you want drug coverage and your HMO or PPO plan doesn’t offer it, you cannot keep your plan and sign up for a stand-alone Medicare Prescription Drug Plan (in contrast to PFFS plans). You would need to switch to a Medicare Advantage plan that includes drug coverage during the AEP (October 15 to December 7 every year).
Here’s a rundown on some of the pros and cons of Medicare Advantage PFFS, HMO, and PPO plans.
Advantages of Medicare Private Fee-for-Service plans:
Disadvantages of PFFS plans:
Advantages of Medicare Advantage HMO and PPO plans:
Disadvantages of Medicare Advantage HMO and PPO plans:
If you like the structure of a managed care plan and don’t mind paying more for provider flexibility, a Medicare Advantage PPO plan may be a good option. On the other hand, if cost is a concern, you might pay less under an HMO plan.
To a large extent, the Medicare Advantage plan that’s best for you will depend on which plans are offered in your area and what your health needs are. If seeing a specific doctor is important to you, make sure the provider accepts any Medicare Advantage plan you’re considering.
Medicare Advantage plans can vary greatly in what they cover and how much you pay, and not every plan may be available where you live. Because of this, it’s always a good idea to shop around and compare prices. To start comparing plans, just enter your zip code where indicated on this page. You can also talk to one of eHealth’s licensed insurance agents – you’ll find contact information at the bottom of the page.
eHealth's Medicare website is operated by eHealthInsurance Services, Inc., a licensed health insurance agency doing business as eHealth. The purpose of this site is the solicitation of insurance. Contact may be made by an insurance agent/producer or insurance company. eHealth and Medicare supplement insurance plans are not connected with or endorsed by the U.S. government or the federal Medicare program. We offer plans from a number of insurance companies.