Independent Practice Association

Updated: 29 February 2024

What Does Independent Practice Association Mean?

An independent practice association (IPA) is a type of health maintenance organization (HMO) composed of health professionals (mostly licensed doctors) who have formed a partnership or forged a contract to make their services available to insurance companies and other third parties. This arrangement allows physicians to keep their individual practices and treat other patients, but to also be a part of an insurance network and gain access to patient referrals from the insurance company or third parties.

Physicians that are part of an IPA are compensated by the referring partner on a per-patient fee, a discounted fee schedule or even paid a flat retainer fee to cover all the various medical services they may provide.

Independent practice associations are beneficial to physicians and health professionals because they get a steady flow of customers from the network. This arrangement is also beneficial to insurance companies and third parties because they get to pay less on medical claims since they pre-negotiate discounted rates (as a result of the lead flow and volumes they are able to generate for doctors) versus sending insureds to get treatment with out-of-network providers and paying market rates.

An independent practice association is also known as an individual practice association.

Insuranceopedia Explains Independent Practice Association

The members of an independent practice association are not affiliated with any legal health organization prior to their grouping (hence, they are independent). By grouping together, they can maintain ties with health insurance organizations, health institutions and people who may wish to avail themselves of the group’s services. These partnerships usually come with financial benefits like discounts for services from members.

Independent practice associations are good options for physicians who do not want to give up their individual practices, yet who want to have some connection to an insurance network. These associations can also be extremely convenient for patients, because patients in these networks typically do not need referrals to see any doctor in the association. Therefore, individual practice associations allow for a bit more freedom and fewer restrictions for physicians as well as patients.

An IPA can also help doctors offload some administrative tasks and related costs for things like contracts, compliance and other practice management activities. Joining an IPA gives providers access to better technology and even advice on how to run a profitable practice. This frees up a physician’s time to focus on their primary task: treating and caring for patients.

From an insurance company’s perspective, this sort of arrangement is beneficial as well because they can pre-negotiate reduced rates for common medical services with network members. This helps them reduce claims costs, as they can pay below-market rates for their insureds to receive medical treatment.


Individual Practice Association

Related Reading

Go back to top