Hawaii Health Systems Corp. is the latest hospital group to reach an agreement with the Hawaii Medical Service Association on a new reimbursement structure that ties HMSA’s payments to the quality of service delivered by health care providers.

Under the so-called pay-for-performance reimbursement model, HMSA offers hospitals a bonus if they can demonstrate that they have improved the quality of patient care with measures such as decreased hospital readmission rates and avoidance of blood stream infections and ventilator-associated pneumonia.

Hawaii Health Systems, which operates 14 state-subsidized hospitals, said the agreement announced yesterday should help control its costs.

"We realize that health care costs in Hawaii are increasing," said Alice Hall, HHSC interim president and CEO. "HHSC and HMSA are working together to address costs and quality. This agreement focuses on quality, efficient care, which will help us manage our costs better," Hall said.

HMSA reached agreement in principle with Hawaii Pacific Health last fall on a similar arrangement that has yet to be finalized. HMSA also is in similar talks with the Queen’s Medical Center.

The four-year contract with HHSC is built on a sliding scale with HMSA’s payments to Hawaii Health increasing as the hospital network meets various performance metrics.

HHSC could receive as much as a 15 percent bonus on top of its base rate for meeting its goals.

HHSC, with an annual budget of $537 million, operates Maui Memorial Medical Center, Kula Hospital, Lanai Community Hospital, Hilo Medical Center, Yukio Okutsu State Veterans Home, Hale Hoola Hamakua, Kau Hospital, Kauai Veterans Memorial Hospital, Samuel Mahelona Medical Hospital, Kona Community Hospital, Kohala Hospital, Leahi Hospital, Maluhia Health Center and Kahuku Medical Center.