Managed Care and its Business Structure
1.    It is roughly like indemnity section of standard insurance.
2.    Patient sees a doctor, gets a bill and then the HMO assumes responsibility for that patient.
3.    There is no usual and customary fee clause.  The HMO will pay for what is medically necessary.  A medical director is on hand to determine what is a medically necessary procedure and what is not.  This is contentious.
4.    Types
a.    PPO (preferred provider organization)
(1)    There is list of independent physicians who have agreed with the company providing insurance to see patients who have bought this insurance.  Doctors discount their fees for these patients.  The PPO will refer to only this list and the sheer volume of patients makes up for the discount.
b.    HMO (health maintenance organization)
(1)    Contracts with the physician and the hospitals, day surgery centers, home health care center, physical therapists, etc…
(2)    Patients contract is for a more complex delivery system than with a PPO.
c.    IPA (independent physician association)
(1)    This is the physician response to the HMO and the PPO.
(2)    It is made of many independent physicians in one city.  The administrative IPA will negotiate with HMOs.  The IPA will ask the doctors what the range of acceptable fees for a procedure is and then go to the insurance company to negotiate the fee range that will be delivered to these doctors.
(3)    This is the messenger model.