IHC Group, Inc. - Page 14




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          in the event that petitioner achieved a budget surplus, the                 
          physicians may have qualified to receive additional payments.               
          However, in the event petitioner experienced a budget deficit,              
          the physicians did not incur any additional financial obligation.           
               Approximately 21 percent of petitioner’s expenditures for              
          physician services was attributable to services provided by                 
          physicians employed by Health Services.  The remaining 79 percent           
          of such expenditures was attributable to services provided by               
          members of independent physician medical groups.                            
               Petitioner fulfilled its obligation to arrange for its                 
          enrollees to receive hospital services by contracting with a                
          panel of hospitals including Health Services hospitals and a                
          limited number of independent hospitals.  Petitioner generally              
          compensated its contractor hospitals pursuant to a modified                 
          diagnosis related group (DRG) payment system under which an                 
          enrollee admitted to a hospital on either an inpatient or                   
          outpatient basis would be assigned a DRG and the hospital would             
          be paid a fixed fee consistent with the DRG schedule.                       
               Approximately 90 percent of petitioner’s expenditures for              
          inpatient hospital services, and approximately 91 percent of                
          petitioner’s expenditures for outpatient hospital services, were            
          attributable to services provided by Health Services’ hospitals.            
               A substantial portion of petitioner’s enrollees’ admissions            
          to independent hospitals were for admissions to either University           






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Last modified: May 25, 2011