Definition of IPA Managed Health Care Insurance
An Independent Practice Association, or IPA, is an organization comprised of physicians who maintain their independent practices and also join together as an association. The IPA negotiates with organizations, like HMOs, which will supply both patients and income to physicians. In exchange, IPA physicians treat patients.
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Purpose of an IPA
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Private physicians' medical practices are for-profit enterprises. To remain in practice, physicians need steady income and a guarantee of patients while minimizing costs.
A Health Maintenance Organization (HMO) pays physicians to treat the HMO's insured patients. The HMO also needs to maximize its income while minimizing costs.
A contract between an HMO and physicians can meet both sides' needs.
Physicians have more negotiating power as a group than does any physician acting alone. Physicians join together as an IPA. The IPA negotiates physicians' contracts with HMOs.
An IPA can make contracts with multiple HMOs, while the physicians maintain independent medical practices, separate from all other IPA physicians' practices. IPA physicians also treat other patients not insured by HMOs.
Not All IPAs Are Alike
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The contract terms between HMOs and IPAs vary. In addition to financial issues, the terms of HMO-IPA contracts may also involve shifts of liability, risk and claims processing from the HMO to the IPA. Different HMO-IPA contracts can also affect the medical services, actually delivered to HMO patients.
Therefore, from one and the same physician, one patient could receive different medical treatments for the identical disease, depending on the patient's insurance coverage. The choice of available treatments under an HMO, depends on the HMO-IPA contract. The choice of available treatments for that same patient, not insured by an HMO, may be quite different.
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Payment Types
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Payments by the HMO to physicians are based on fee-for-service (FFS) or capitation, a flat fee per patient. Under FFS, physicians are paid for each service provided. The physician's financial risk and liability to the HMO are limited to the particular services actually provided.
Under capitation, physicians are paid a fixed, flat fee for each patient, regardless of the patient's medical treatments. Financial risk is transferred from the HMO to the physicians. If the cost of patients' care exceeds the flat fee paid by the HMO, the physicians must absorb the excess cost.
Maximizing physicians' income requires minimizing physicians' costs of delivered medical care. Therefore, the capitation payment rate is the crux of the HMO-IPA contract.
Doctor- Patient Relationship Is Separate from HMO-IPA Contract
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Whether the HMO or the IPA is responsible for assuring that patients' treatment needs are met depends upon the contract between the HMO and the IPA.
However, the laws governing the relationship between the physician and patient are independent of the separate contracts, which the HMO makes with patients and with physicians.
Medical Care: Delivered or Denied
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The capitation payment method may affect the treatment choices offered by IPA physicians to patients.
The contract between the HMO and its insured patients differs from the contract between the HMO and the IPA physicians. The doctor-patient relationship is entirely independent of both those HMO contracts.
Accordingly, the liability for denial of, or withheld, medical care depends on the terms of the HMO-IPA contract. However, the treating physician remains liable to patients for medical mistakes and medical malpractice.
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References
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