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An independent practice association (or IPA) is an association of independent physicians, or other organization that contracts with independent physicians, and provides services to managed care organizations on a negotiated per capita rate, flat retainer fee, or negotiated fee-for-service basis.
An HMO or other managed care plan can contract with an IPA, which in turn contracts with independent physicians to treat members at discounted fees or on a capitation basis. The typical IPA encompasses all specialties, but an IPA can be solely for primary care or could be single specialty.
IPAs are typically formed as an LLC, S Corp, C Corp, or other stock entity. Their purpose is not to generate a profit for the shareholders although this can be done. The IPA assembles physicians in self-directed groups within a geographic region to invent and implement healthcare solutions, form collaborative efforts among physicians to implement these programs, and exert political influence upward within the medical community to effect positive change.
Despite a perception that IPAs have been formed to negotiate as a group with insurance companies in an attempt to improve rates of compensation, under the Federal Trade Commission Act, they cannot do this for the physician's other insurance reimbursement. The IPA can only negotiate for the IPA members those services which are contracted on capitated members. "Messengers", specialists who are selected to represent individual practices, can be used by IPA members to review and discuss coding and compensation with health insurance companies. These professionals do not collectively bargain and can only do so if the doctors have reorganized under a single tax ID number which is not an IPA model.