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The Medicare Advantage program is a private plan alternative to the traditional fee-for-service Medicare coverage. All Medicare Advantage plans must provide coverage for the services that are currently provided under Medicare Parts A and B, other than hospice care. Medicare Advantage plans may also offer supplemental benefits that are not covered under the traditional fee-for-service Medicare plan. Most Medicare beneficiaries may choose any Medicare Advantage option that is available in their geographic area. These options include the following:

• Health maintenance organization (HMO): An HMO is a managed care plan in which beneficiaries pay a small co-payment for services as opposed to deductibles and co-payments under the traditional Medicare plan. Most HMOs require the beneficiary to select a primary care physician (PCP) from those that are part of the plan. The PCP is responsible for managing the beneficiaries' medical care, and can make referrals to specialists.
• Preferred provider organization (PPO): A PPO is similar to an HMO, but with more flexibility. The Medicare beneficiary can 1) visit any doctor in the health care network without a referral, or 2) go to any doctor outside the network at an additional cost.
• Provider sponsored organization (PSO): A PSO is organized by groups of doctors and hospitals to offer health care items and services. PSOs are similar to HMOs except that they are run by medical providers, not insurance companies. These provider-controlled organizations will contract directly with Medicare.
• Private fee-for-service plan: This plan allows the beneficiary to obtain service from a nonparticipating provider and pay out-of-pocket expenses equal to the provider's full fee minus the amount of Medicare reimbursement up to the Medicare fee schedule. Under the current Medicare system, providers cannot accept fees above the Medicare limits from Medicare beneficiaries.