- 8 - with HMOs, collected capitation fees paid under those contracts, and distributed them to member physicians. UHMG contracted with a third-party administrator to perform the latter two functions for a fee of 15 percent of receipts. UHMG performed no other consolidated functions for its member physicians, such as other billing, patient record keeping, appointments, employment of staff, etc. Its member physicians continued to operate independent practices and to directly bill fee-for-service and preferred provider organization (PPO)7 patients. III. Decision To Affiliate A. Necessity of Affiliation By approximately late 1992 or early 1993, several factors prompted petitioners to consider affiliating with a larger health care organization. The penetration of the HMO model into the Davis area had become substantial. The principal employer in the Davis area, UC-Davis, faced with burgeoning costs in providing conventional fee-for-service health insurance coverage, arranged to have HMOs among the health insurance options for its employees 6(...continued) although UHMG's approximately 70 shareholder/members also included physicians who did not participate in the transactions at issue. 7 A PPO is an organization created by an insurer consisting of physicians and/or other health care providers who individually contract with the insurer to provide medical services to its insureds for reimbursement at a discount. The insureds have an incentive to use the insurer's "preferred providers" because the out-of-pocket costs of doing so are reduced.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 NextLast modified: March 27, 2008