Private Fee-for-Service Plans and the Network-Size Exception

Most Medicare Advantage plans can tell a provider "we have enough clinicians in your specialty" and stop there. Federal rules carve out one type of plan from that answer. Under 42 CFR 422.205(b)(1), an MA organization may refuse "to grant participation to health care professionals in excess of the number necessary to meet the needs of the plan's enrollees (except for MA private-fee-for-service plans, which may not refuse to contract on this basis)." Before relying on that parenthetical, it helps to know what a private fee-for-service plan is and how it actually reaches providers.

What is a private fee-for-service plan?

The definition is in 42 CFR 422.4(a)(3). A PFFS plan is an MA plan that:

• "Pays providers of services at a rate determined by the plan on a fee-for-service basis without placing the provider at financial risk";
• does not vary rates based on how much a provider is used, though it may vary them by specialty, location or other factors unrelated to utilization;
• "Does not restrict enrollees' choices among providers that are lawfully authorized to provide services and agree to accept the plan's terms and conditions of payment"; and
• does not lower cost sharing when a provider or enrollee notifies the plan in advance.

The freedom-of-choice rule is repeated in 422.114(b): PFFS plans "must permit enrollees to obtain services from any entity that is authorized to provide services under Medicare Part A and Part B and agrees to provide services under the terms of the plan."

Why is the network-size exception narrow?

The exception stops a PFFS plan from saying "our network is full." It does not stop the plan from applying credentialing standards, quality measures or cost controls, which 422.205(b)(2) and (3) still allow, and it does not override the bars on excluded providers, Medicare opt-outs and the preclusion list in 422.204.

It also matters how the plan meets its access duty. Under 422.114(a)(2), CMS finds a PFFS plan has enough providers if it pays at least Original Medicare rates, has contracts with enough providers, or a mix of the two. But for plan year 2011 onward, a PFFS plan operating in a "network area," meaning an area with at least two network-based MA plans, meets the requirement "only if" it has contracts or agreements with enough providers to meet the statutory access standards (422.114(a)(3)). Those are the network PFFS plans, and they are the ones where a contract request has the most practical weight.

A network PFFS plan may also charge members a higher copayment when they see a provider in a category without a contract, if the plan met adequacy for that category through contracts (422.114(c)). Members notice that difference, which is part of why a contract can matter to your patients.

Can you be paid as a deemed contract provider?

Often the more useful rule is 42 CFR 422.216(f). A provider who has no contract with a PFFS plan "is treated as having a contract in effect" for a covered service when, before furnishing it, the provider:

• "Was informed of the individual's enrollment in the plan"; and
• "Was informed (or given a reasonable opportunity to obtain information) about the terms and conditions of payment under the plan."

Enrollment information can come from the member's card or a notice of enrollment (422.216(g)). Payment terms can come by mail, email, fax or phone to the provider, the employer or billing agent, or through a procedure that lets a provider request the information before the service; newspaper or broadcast announcements do not count (422.216(h)). The plan "must make information on its payment rates available to providers" (422.216(a)(1)(iii)).

Deemed providers are bound by the plan's terms like contract providers. Cost sharing and any balance billing must be the same for deemed and signed contract providers, with an exception tied to 422.114(c), and the plan may permit balance billing of no more than 15 percent of its payment rate (422.216(b)(1)).

How do you use these rules in a dispute?

1. Confirm the plan type. Many plans run HMO and PPO products under the same brand. The PFFS exception applies only to a PFFS plan, so get the product name from the member's card and the plan's materials.
2. Read the refusal. MA plans owe a written reason when they decline to include a provider (422.205(a)). If a PFFS plan's reason is network size, cite 422.205(b)(1) in a short reply asking it to reconsider.
3. If the reason is credentialing, treat it as a credentialing denial. See credentialing denial or network denial.
4. Know your deemed status. If you see the plan's members without a contract, keep proof that you checked enrollment and had the payment terms before each visit.

Every letter goes out under your signature. If the question becomes one of contract law or your legal rights, a healthcare attorney should answer it.

Where can we help?

We are a research and preparation service, not a law firm. A Network Rejection Review ($249, credited toward a dispute) confirms the plan type and the stated reason and tells you whether the PFFS rule applies at all. A Payer Network Dispute ($799 per payer) prepares the reply for you to sign and send. If the plan offers a contract, the win fee is a flat $1,500. For how MA participation works across plan types, see MA network participation rules.