Since the early 1980s, there have been a number of governmental and corporate attempts to slow the dramatic rise in health care expenditures. Hospitals are often paid pre-established fees based on diagnoses; physicians receive Medicare payments based on an elaborate formula; capitation has become prevalent; and purchasers and insurers have attempted to define, quantify, monitor, and control health care costs.
Many insurance companies have either been created or reconfigured as publicly traded corporations that are bought, sold, expanded or consolidated, or put out of business. As corporate strategies have become more prevalent in health care, the scope of covered services has grown less important, and greater emphasis has been placed on a health plan's profitability.
In order to protect their interests, hospitals, physicians, and other large medical service organizations also have adopted a number of corporate strategies. Initially, both hospitals and physicians joined in various types of expanded organizational "networks." In order to pool resources and gain economies of scale, large primary care, multispecialty, single specialty, and disease-oriented physician groups have formed. Physicians in solo or small group practices, once the rule, have become less common.
Of those who remain in smaller practices, many belong to independent practice associations (IPAs). Unlike an integrated health plan, the IPA seeks to preserve traditional practice autonomy while introducing the advantages of business organization. Given the rapidly changing health care environment, it is important for physician assistants to understand the structure, function, and role of IPAs.
What is an IPA?
An IPA is a legal entity organized and directed by physicians in private practice to negotiate contracts with insurance companies on their behalf. Participating physicians are usually paid on a capitated or modified fee-for-service basis and may also continue to care for patients not covered by the insurers with whom the IPA contracts. Perhaps the most significant function of an IPA is to exert influence on behalf of its members to counterbalance the leverage of health care insurers.
However, IPAs can present a significant antitrust risk. Antitrust laws prohibit a range of behaviors designed to restrain trade. Among the most serious of antitrust violations are price fixing, group boycotts, and monopolization or attempts to monopolize. Price fixing occurs when competitors agree on a common fee schedule or discount. Group boycotts occur when a group of competitors conspire not to deal with a third party, such as a managed care organization. Monopolization or attempts to monopolize reflect an over-inclusive network that controls the availability of health care services, forcing purchasers to pay higher prices. Because an IPA is simply a loose combination of otherwise competing physicians, it can raise all three types of problems. Consequently, when forming an IPA, careful attention must be paid to federal and state anti-trust laws and their associated exceptions.
The advantages of an IPA are the functions it performs for medical practices. Using an administrative staff of its own, the IPA organizes the delivery of care. It negotiates contracts with insurance companies; assembles, credentials, and inspects member physicians, institutions and services; constructs authorization and referral processes; establishes primary care provider and specialist responsibilities; disburses payment to physicians; conducts utilization review and quality assurance; and ensures the fiscal integrity of the IPA itself.
Although they are highly variable in sophistication, IPAs are usually capable of assuming greater degrees of financial risks than individual physicians. They offer their members the advantage of strong physician leadership with the drive to develop progressively more mature organizations. IPAs wield far greater bargaining power than individual physicians or "networks," and they are usually able to undertake administrative functions that reduce health care costs.
How do IPAs affect PAs?
Contracts between IPAs and insurers may or may not include specific language regarding physician services provided by PAs. Furthermore, an IPA may or may not allow a PA to become a member. A physician assistant interested in IPA membership might want to investigate the following issues:
Glossary
Managed Care - A general term for organizing doctors, hospitals, and other providers into groups in order to enhance the quality and cost-effectiveness of health care. Managed care organizations include HMOs, PPOs, EPOs, etc.
Preferred Provider Organization (PPO) - Some combination of hospitals and physicians that agrees to render particular services to a group of people, perhaps under contract with a private insurer. The services may be furnished at discounted rates and the insured population may incur out-of-pocket expenses for covered services received outside the PPO if the outside charge exceeds the PPO payment rate. See also "exclusive provider organization."
Health Maintenance Organization (HMO) - HMOs offer prepaid, comprehensive health coverage for both hospital and physician services. An HMO contracts with health care providers, e.g., physicians, hospitals, and other health professionals, and members are required to use participating providers for all health services. Members are enrolled for a specified period of time. Model types include staff, direct contract, network and IPA.
Exclusive Provider Organization (EPO) - A managed care organization that is organized similarly to PPOs in that physicians do not receive capitated payments, but this model requires patients to choose medical care from network providers. If a patient elects to seek care outside of the network, then he or she will not be reimbursed for the cost of the treatment. See also "preferred provider organization."
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Many insurance companies have either been created or reconfigured as publicly traded corporations that are bought, sold, expanded or consolidated, or put out of business. As corporate strategies have become more prevalent in health care, the scope of covered services has grown less important, and greater emphasis has been placed on a health plan's profitability.
In order to protect their interests, hospitals, physicians, and other large medical service organizations also have adopted a number of corporate strategies. Initially, both hospitals and physicians joined in various types of expanded organizational "networks." In order to pool resources and gain economies of scale, large primary care, multispecialty, single specialty, and disease-oriented physician groups have formed. Physicians in solo or small group practices, once the rule, have become less common.
Of those who remain in smaller practices, many belong to independent practice associations (IPAs). Unlike an integrated health plan, the IPA seeks to preserve traditional practice autonomy while introducing the advantages of business organization. Given the rapidly changing health care environment, it is important for physician assistants to understand the structure, function, and role of IPAs.
What is an IPA?
An IPA is a legal entity organized and directed by physicians in private practice to negotiate contracts with insurance companies on their behalf. Participating physicians are usually paid on a capitated or modified fee-for-service basis and may also continue to care for patients not covered by the insurers with whom the IPA contracts. Perhaps the most significant function of an IPA is to exert influence on behalf of its members to counterbalance the leverage of health care insurers.
However, IPAs can present a significant antitrust risk. Antitrust laws prohibit a range of behaviors designed to restrain trade. Among the most serious of antitrust violations are price fixing, group boycotts, and monopolization or attempts to monopolize. Price fixing occurs when competitors agree on a common fee schedule or discount. Group boycotts occur when a group of competitors conspire not to deal with a third party, such as a managed care organization. Monopolization or attempts to monopolize reflect an over-inclusive network that controls the availability of health care services, forcing purchasers to pay higher prices. Because an IPA is simply a loose combination of otherwise competing physicians, it can raise all three types of problems. Consequently, when forming an IPA, careful attention must be paid to federal and state anti-trust laws and their associated exceptions.
The advantages of an IPA are the functions it performs for medical practices. Using an administrative staff of its own, the IPA organizes the delivery of care. It negotiates contracts with insurance companies; assembles, credentials, and inspects member physicians, institutions and services; constructs authorization and referral processes; establishes primary care provider and specialist responsibilities; disburses payment to physicians; conducts utilization review and quality assurance; and ensures the fiscal integrity of the IPA itself.
Although they are highly variable in sophistication, IPAs are usually capable of assuming greater degrees of financial risks than individual physicians. They offer their members the advantage of strong physician leadership with the drive to develop progressively more mature organizations. IPAs wield far greater bargaining power than individual physicians or "networks," and they are usually able to undertake administrative functions that reduce health care costs.
How do IPAs affect PAs?
Contracts between IPAs and insurers may or may not include specific language regarding physician services provided by PAs. Furthermore, an IPA may or may not allow a PA to become a member. A physician assistant interested in IPA membership might want to investigate the following issues:
- What are the reasons for belonging or not belonging to an IPA?
- Does a PA have legal standing in this IPA? If so, should a PA join?
- Will joining or not joining the IPA have an impact on patient care?
- Will joining or not joining the IPA have on impact on the PA's employment situation?
- Will joining or not joining the IPA affect the relationship between the PA and the supervising physician(s)?
- As an IPA member, what would be the PA's obligations to patients? To the IPA? To the supervising physician?
- Do the IPA's contracts with insurers cover services provided by PAs?
- Can a PA belong to multiple IPAs?
- Who should a PA consult for legal help, and how can a consultant's qualifications be assessed?
- Who is the authoritative source within the IPA for information?
- How will joining or not joining the IPA impact the financial aspect of the practice?
Glossary
Managed Care - A general term for organizing doctors, hospitals, and other providers into groups in order to enhance the quality and cost-effectiveness of health care. Managed care organizations include HMOs, PPOs, EPOs, etc.
Preferred Provider Organization (PPO) - Some combination of hospitals and physicians that agrees to render particular services to a group of people, perhaps under contract with a private insurer. The services may be furnished at discounted rates and the insured population may incur out-of-pocket expenses for covered services received outside the PPO if the outside charge exceeds the PPO payment rate. See also "exclusive provider organization."
Health Maintenance Organization (HMO) - HMOs offer prepaid, comprehensive health coverage for both hospital and physician services. An HMO contracts with health care providers, e.g., physicians, hospitals, and other health professionals, and members are required to use participating providers for all health services. Members are enrolled for a specified period of time. Model types include staff, direct contract, network and IPA.
Exclusive Provider Organization (EPO) - A managed care organization that is organized similarly to PPOs in that physicians do not receive capitated payments, but this model requires patients to choose medical care from network providers. If a patient elects to seek care outside of the network, then he or she will not be reimbursed for the cost of the treatment. See also "preferred provider organization."
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