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Glossary Terms

What is an Independent Physician Association (IPA)?

Glossary

An Independent Physician Association is a separate business entity consisting of independent healthcare physician practices. An IPA is created, in part, to attract other business ventures such as insurance companies and other third parties. 

This arrangement allows physicians to remain involved in their individual practices and treat additional patients within insurance networks. Physicians participating in an IPA may be compensated per patient, and also accept discounted and retainer fees from third parties such as insurance companies. Often times IPAs used capitation to compensate their physicians.

Benefits of an Independent Physician Association 

An IPA membership can benefit physicians with steady income streams from partner networks. For third parties and insurance companies, it can mean lower medical claims, since discounted rates are already pre-negotiated. These are better options than resorting to out-of-network providers with varying, often higher, rates.

An Independent Physician Association may also offer physicians access to important information technology platforms and other opportunities. These advantages include direct contact with employers, Health Maintenance Organizations (HMOs), Accountable Care Organizations (ACO), or Managed Care Organizations (MCOs). 

Healthcare companies are more likely to work with a larger group of physicians capable of providing comprehensive services, particularly if the participating physicians are in the same geographic area. In addition, an IPA gives them more negotiation power when contracting health plans.

Physicians also receive financial incentives, peer support, and more. These factors lead to better patient outcomes and improved physician satisfaction.

An IPA is a healthcare delivery model that helps physicians focus on providing quality care to their patients, instead of worrying about the business aspects of their profession. 

IPAs vs. Medical Groups

IPAs work differently from medical groups. In medical groups, a managing practice provides a physical space in which multiple practitioners and healthcare providers share care duties. Physicians in a medical group are partners and are compensated through monthly salaries. These may also include productivity bonuses or incentives. 

Physicians involved in an IPA still retain their independence; they are not partners, and the IPA does not take charge and has no responsibility for the physicians' compensation. However, being part of a larger group gives physicians more leverage when negotiating contracts for their services or third-party services such as radiology and laboratories.

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