Image via Wikipedia

Within the category of Health Maintenance Organization (HMO), there is a small sector of managed care called the independent practice association (IPA). As the name suggestions, this association is comprised of independent doctors, or doctors that are not tied exclusively to the HMO network. IPAs devise contracts with HMOs and other managed care organizations on a case-by-case basis to provide service to patients who are HMO members.

An HMO contacts an IPA, which then contacts independent physicians to perform certain medical duties. These independent physicians usually receive payment in one of three ways:

• Per capita rate: A rate that is in keeping with the proportion of the population
• Flat retainer fee: A specific amount of money, paid upfront, that does not change and does not depend on results
• Fee-for-service: The patient pays for each service individually as they arise

Physicians that make up IPAs typically own their own practices, and the IPA itself can be a limited liability company, an S corporation or a C corporation. Although an IPA’s purpose is not specifically to produce profit, they often are very successful financially. IPAs selectively form groups of doctors that fit their particular worldviews and they fill a region with those groups. The doctors get unlimited say in the care they provide, but the association connects the group in a way that creates more power in the medical field.

IPAs have the ability to fashion contracts with HMOs and other managed care organizations — and they frequently do so — but they are not barred from seeing patients who aren’t HMO members. This allows physicians to have freedom and complete control of the health care they provide.

There has been controversy over the formation of a number of IPAs over the years. Many believe that IPAs form in order to exert their power on those who pay for managed care. They tried to boost their prices and charge higher fees to the networks. Most IPAs, however, fall into the category of an association striving to provide the best care to its patients and continually improve the level of care.

Health care insurance in the United States is a complex system teeming with various types of elaborate plans. Within the topic of health insurance is the subtopic of managed care. Managed care is a system that governs how members receive and pay for health care depending on their plans. One type of managed care network is the Health Maintenance Organization, or HMO. The following paragraphs will explain what an HMO plan entails.

For an HMO to work, it must reach a deal with providers of health care, such as hospitals and doctors, to create a network of care. If a contract is made, the hospital will provide services to patients with an HMO plan for lower costs in exchange for outside referrals from the HMO. In order for the HMO holder to receive discounted services, however, that patient must visit a hospital with an HMO contract, which limits the patient. In many instances, HMO holders who visit a hospital not covered in the network will be charged the full amount owed. Some exceptions are made for emergency visits or visits that had been approved prior to the visit.

HMO members are required to select a physician, also known as a primary care physician, who handles all facets of their health care. When signing up for an HMO, members are given lists of general practitioners, family doctors and internists who are within the network. Because the primary care physician controls their care, the member is required to visit their primary care physician before seeing any specialists.

Every month, those with an HMO plan pay a fixed-rate fee for health care. This premium allows the HMO to keep costs low when you visit the doctor or hospital because of the contracts within the network. HMOs emphasize preventative care, which is why visits to doctor’s offices cost so little for the patient. If the patient sees a doctor, who then catches an illness before it progresses, the HMO is ultimately saving money because the doctor visit was able to prevent more serious health care, which the HMO would have to cover.