Time will tell whether health insurer’s new model succeeds

Hawaii Medical Service Association is on the verge of making a historic change in how it reimburses primary care medical providers. Until now the largest private payer in the state has reimbursed physicians on a fee-for-service basis. Under its Payment Transformation Pilot, HMSA will instead pay selected providers a fixed dollar amount for each member in their practice each month. HMSA believes that this will benefit patients, providers and the insurer because it will improve clinical outcomes and contain costs. Will it work? That remains to be seen.

The Payment Transformation initiative is consistent with the spirit of the Affordable Care Act, also known as Obamacare. The ACA has done more than enact guidelines to create access to health insurance for more Americans. In an effort to ensure quality care and control costs, the ACA has also changed American medicine by encouraging shifts in the traditional payment model.

Fixed monthly checks to providers based on the number of HMSA patients they care for will, under the pilot, constitute an 80 percent guaranteed base payment. This is called capitation. The remaining 20 percent must be earned by providers by complying with certain standards known as “engagement measures.” These measures include a database to check for gaps in care for conditions such as high blood pressure and diabetes. It also involves checking on the well-being of each patient at least once per year, performing certain screening measures and referring patients to HMSA education workshops.

One problem with the current fee-for-service model is physicians only get reimbursed when they see a patient. This can result in patients being seen more frequently for shorter encounters, driving up costs without necessarily ensuring better outcomes. If, on the other hand, the capitated payments constituted 100 percent rather than a partial, base payment (80 percent in this case), the risk is that some physicians would have an excessively large number of patients but seldom see them.

Implicit in being a professional is an oath to uphold an ethical standard. Most physicians are deeply committed to the service of their patients and will do the right thing under any reimbursement scheme. Still, the wind blows from one side under the fee-for-service model and from the opposite side under the capitation scheme. The 20 percent held back in engagement measures creates a balance. HMSA will offer, in addition, quarterly incentives to physicians for a further set of “performance measures.” A final incentive, called the “total cost of care performance,” will be awarded annually based on how well physicians control HMSA’s cost of care.

In summary, the intention of HMSA’s Payment Transformation Initiative is to stop the high-cost, low-yield churning that occurs under the fee-for-service model. The benefit to both HMSA and to providers is steady expenses and revenues for each respectively. Additional revenues tied to engagement measures, performance measures and total cost of care perfor- mance are meant to ensure that patients get necessary preventive and interventional care in a manner that uses fiscal resources most efficiently.

The major risk of this scheme is the homogenization of medicine. The metrics being implemented are based on public health and actuarial statistics that study the herd, not the individual. The highest-quality and most gratifying care is that which is guided by science but where the sacred art of individualized care will still flourish. Proponents of the HMSA plan would argue that the move to capitation frees up the physician to practice our sacred art together with foundational measures and ensure the best outcomes. Detractors say that they have decided to close their practices and walk away from medicine, having become exhausted and depleted by the gauntlet of complex requirements that take them away from patient care.

Manakai o Malama Integrative Healthcare Group and Rehabilitation Center is strongly considering participation in HMSA’s Payment Transformation Pilot primarily because it has always sought to be on the vanguard of changes in health care. To this end, at the request of HMSA, Manakai developed and published promising results on an integrative chronic pain program. We were also the first to be trained for HMSA’s telehealth initiative and were in the first group of four clinics to achieve the top tier of HMSA’s Patient-Centered Medical Home Initiative. Being a relatively large, multidisciplinary and highly collaborative facility focused on the whole patient and on a culturally sensitive approach to care, Manakai intends to continue to contribute to the transformation of the culture of medicine. We’ll see how it goes with HMSA’s Payment Transformation Initiative.

Ira “Kawika” Zunin, MD, MPH, MBA, is a practicing physician. He is medical director of Manakai O Malama Integrative Healthcare Group and Rehabilitation Center and CEO of Global Advisory Services Inc. Please submit your questions to info@manakaiomalama.com.