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Davis area became aware in 1985 that the University of California
at Davis (UC-Davis), the largest employer in the region, was
considering offering HMO style coverage as a health insurance
option for its employees. In response, a group of Davis area
independent physicians, including several of petitioners, began
to meet monthly to consider options for dealing with any
significant penetration of the HMO model into the Davis area
patient population.
B. Formation of IPA
One option for physicians desiring to serve patients with
HMO coverage was membership in an independent practice
association (IPA). An IPA is a collection of independent
physicians formed (typically as a corporate entity) to serve as
an intermediary between its member physicians and HMOs. IPAs
negotiate contracts directly with HMOs, administer claims,
collect capitation fees for the HMO patients who select a
physician member, and pay over those fees to the physician
members.
The penetration of the HMO model into the Davis area
continued after 1985. In 1987, several of petitioners and other
local doctors, principally primary care physicians, formed an
IPA, the Davis Area Medical Group, Inc., later renamed United
Health Medical Group, Inc. (UHMG).6 UHMG negotiated contracts
6 By 1994, each petitioner had become a member of UHMG,
(continued...)
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