Independent Practice Association
What Does Independent Practice Association Mean?
An independent practice association (IPA) is a type of health maintenance organization (HMO) that consists of health professionals, primarily licensed doctors, who have formed a partnership or entered into contracts to make their services available to insurance companies and other third parties. This arrangement allows physicians to maintain their individual practices and treat other patients, while also being part of an insurance network and gaining access to patient referrals from the insurance company or third parties.
Physicians within an IPA are typically compensated through a per-patient fee, a discounted fee schedule, or even a flat retainer fee to cover the various medical services they provide.
IPAs are beneficial to physicians and health professionals because they offer a steady flow of patients from the network. This arrangement is also advantageous for insurance companies and third parties, as they pay less for medical claims by negotiating discounted rates for services, thanks to the patient volume generated for doctors. This is a more cost-effective option compared to sending insured individuals to out-of-network providers, where treatment is subject to market rates.
An independent practice association is also referred to as an individual practice association.
Insuranceopedia Explains Independent Practice Association
The members of an independent practice association (IPA) are not affiliated with any legal health organization before joining the group, which is why they are considered independent. By coming together, they can form connections with health insurance organizations, health institutions, and individuals who may want to use the group’s services. These partnerships often provide financial benefits, such as discounts for services offered by members.
IPAs are a great option for physicians who want to maintain their individual practices but still want some connection to an insurance network. These associations are also convenient for patients, as those in the network typically do not need referrals to see any doctor within the association. This flexibility provides greater freedom and fewer restrictions for both physicians and patients.
Joining an IPA can also help doctors reduce administrative burdens and related costs, such as handling contracts, compliance, and other practice management tasks. By becoming part of an IPA, providers gain access to better technology and guidance on running a profitable practice, allowing them to focus more on their primary role: treating and caring for patients.
From the insurance company’s perspective, IPAs are beneficial because they can pre-negotiate reduced rates for common medical services with network members. This helps insurance companies reduce claims costs by paying below-market rates for treatment provided to insured individuals.
