The Hawaii Medical Service Association, the state’s largest health insurer, warned its 691,000 members yesterday that they could potentially pay more for medical services if a new contract isn’t reached with Hawaii Pacific Health by Jan. 31.

The statement posted yesterday on HMSA’s website said Hawaii Pacific Health — which operates Straub Clinic & Hospital, Kapiolani Medical Center for Women & Children, Pali Momi Medical Center and Wilcox Memorial Hospital — hasn’t accepted HMSA’s contract offer and "may no longer participate in HMSA’s network after Jan. 31." The four-year contract also covers the hospital system’s 250 employed physicians.

Members of HMSA’s HMO plan, Health Plan Hawaii, who use Straub Clinic or Kauai Medical Clinic would have to find a new health center and personal care provider, according to HMSA.

In general, members could pay between 20 percent and 50 percent more to use an out-of-network, or nonparticipating provider, said Rick Jackson, chief operating officer of MDX Hawaii, a third-party health care administrator, and former president of the Hawaii Association of Health Plans.

HMSA and Hawaii Pacific Health have been negotiating for several months a new contract that covers, among other things, the rate at which HMSA will reimburse the hospital system for services.

"We offered to pay Hawaii Pacific Health a sizable increase over several years — that offer has not been accepted," said Elisa Yadao, HMSA’s vice president of community affairs. "We are at the point in these negotiations where we felt it was important to inform our members about the status of negotiations so that they can begin to start thinking about the plans they need to make in the event HPH decides to leave our network."

The situation has the potential to effect Kapiolani Medical Specialists, a specialty physician group comprised of more than 100 doctors providing newborn and women’s health services, and the Kauai Medical Clinic, Yadao said.

Chuck Sted, Hawaii Pacific Health president and CEO, said in a statement yesterday, "We are disappointed in HMSA’s actions and view on the situation, which we only learned of through their public statements. … This is not a good faith approach to negotiations."

Sted went on to say that HPH intends to work with HMSA to reach a contract settlement.

"We’re hopeful that HMSA will take the same approach and steer away from these counterproductive attacks," Sted said. "From our perspective, the negotiations have been progressing well."

HMSA said its goal is to change the current reimbursement system to reward hospitals for performance, quality care and good results for patients rather than the volume of services at a hospital.

"This is a new system, the first time we’ve seen of it in Hawaii," Jackson said. "I think these two giant corporations are going to ultimately reach an agreement."

The Queen’s Health Systems and HMSA reached a settlement in June in which HMSA would pay Queen’s based on quality and efficiency.

"Health care costs have been increasing at unsustainable levels," Art Ushijima, president and CEO, said at the time. "Queen’s and HMSA have come together to find concrete ways to address this urgent situation."