IPAs see ACOs as a second chance
■ After going bust in the 1990s, independent practice associations have become more appealing to physicians.
By Victoria Stagg Elliott — Posted June 6, 2011
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Independent practice associations are poised for a comeback as physicians seek to unite with larger systems, particularly for the purpose of forming accountable care organizations.
Many IPAs went bust about a decade ago after capitation rates that were negotiated with plans were insufficient to cover physicians' overhead as costs rose. However, IPAs see an opportunity in ACOs, borne under the Patient Protection and Affordable Care Act as a way for physicians and the health system to share savings -- and risk -- by tying pay of a specific Medicare patient population to quality metrics.
"When you go back and you look at the '90s, IPAs formed for defensive reasons because the health plans were economically credentialing doctors and hospitals," said Dennis R. Horrigan, president and CEO of the Catholic Medical Partners IPA in Buffalo, N.Y., a partnership between the hospital system and area physicians. "Now I think this model 10 or 15 years later has matured and is much more of an offensive philosophy than defensive. The current strategy for IPAs is to attack the gaps in the delivery system to improve accountability. It's very different."
IPAs are organizations in which physicians retain their practice's independent corporate status, but become part of a separate organization with other practices to contract as a group to provide services. Under federal law, as enforced by the Federal Trade Commission, an IPA can't negotiate on behalf of its practices merely for higher rates from insurers. Normally, it can negotiate with plans only if it takes on economic risk or offers clinical integration that could result in lower health care costs.
Objective data tracking the number of IPAs and participating physicians are not available. There are about 500 IPAs with 120,329 primary care physicians and 144,080 specialists across the country, according to the Managed Care Information Center in Manasquan, N.J. People in the IPA industry say the number of such organizations is going up in part because of interest from some doctors. These physicians don't want to give up control by selling their practices to a hospital or a larger practice, but want some of the benefits of a larger organization.
"IPAs are uniquely positioned to take care of [ACO-required] populations of 5,000 or more, and they are getting some respect," said Robert Jenkins, CEO of the Managed Care Information Center.
Albert Holloway, president and CEO of the IPA Assn. of America, said, "We do find a lot of activity now, and most are trying to grow in big ways." The association recently hosted sessions on how IPAs can run ACOs.
The new face of IPAs
Ten IPAs in Tennessee announced on April 18 that they were merging to form an IPA called Synergy HealthCare, which includes 250 primary care physicians and access to 2,000 specialists.
"And we're trying to partner with interested parties," said Donald Cole, MD, a partner in Lebanon (Tenn.) Digestive Disease Associates and a member of Synergy HealthCare's finance committee. "Some insurance companies are coming around, and some hospital systems are interested."
The Marin-Sonoma IPA in the San Francisco area announced April 11 that it will grow from about 350 physicians to more than 500. Four specialty groups in Maine released a statement on Jan. 26 with details of the formation of the Maine Specialty IPA with more than 250 physicians, the largest in the state.
The outlook for IPAs was not always so bright. Many, particularly in California, took on significant risk in the managed care and capitation era of the 1990s and went belly-up, leaving physicians with disrupted practices and unpaid bills.
"When the IPAs first began to form, some of them disappointed doctors," Jenkins said. "There was a lot of dissatisfaction, but the IPAs that survived have begun to get stronger and take on other functions."
For example, one of Synergy's main selling points for Dr. Cole will be the ability to track quality data on emergency department utilization and how many patients have been screened for colorectal cancer.
"That's what is exciting about it," he said. "If you're an independent physician, you cannot get that information from anybody, but we will be able to generate reports and bring all that back to the physician."
Doctors need to exercise due diligence before signing up.
"Physicians have to really look at what the IPA does," said Laura Jacobs, MPH, executive vice president of the Camden Group of El Segundo, Calif., which consults with several IPAs. "How is it representing them? Does the group meet certain solvency standards? What is the history of the group? Physicians should not be shy about asking about the financial position of the organization."
Other issues to consider are the links the IPA has or plans to have with local hospitals and the services offered. Experts also say it is important that physician leadership is in place.
"Physicians need to be in charge of this," Dr. Cole said.