HMSA’s payment rates under scrutiny

Nearly three years after the Hawaii Medical Serv­ice Association changed the way it pays primary- care doctors and pediatricians, lawmakers are considering funding a study to see whether the program is actually saving money and improving quality.

House Bill 1464, which would require the state insurance commissioner to compare so-called capitated payment rates with reimbursement models in other states, passed the House and was transmitted to the state Senate. The bill says the capitated rate primary care doctors are being paid — $24 per member per month — is worsening the physician shortage in Hawaii.

“One reason for the growing physician shortage is a lack of adequate reimbursement rates. This $24 per-member- per-month rate has not changed despite increasing costs to live and practice in Hawaii and statewide increases in the minimum wage,” the bill said. “Based on this rate, a solo practitioner must work over 200 hours per month and care for over 1,500 patients to receive a fair and reasonable salary, not including costs for overhead, staff, or supplies.”

More insurance companies are moving away from a fee-for-service model — based on the number of patient visits and type of service — for capitated payments, “a move that may negatively impact patient care by encouraging doctors to see fewer patients, discourage them from accepting new patients, or cause doctors to leave Hawaii to practice in other states with a lower cost of living and a higher capitated payment rate.”

HMSA started in 2017 reimbursing at a fixed monthly rate for each patient in a practice regardless how many times a doctor sees a patient, instead of payments based on volume.

“HMSA’s now in our second full year of our new payment model that pays primary care providers for delivering value instead of the volume of patient visits,” said Dr. Mark Mugiishi, HMSA executive vice president and chief health officer. “As of October, the vast majority of our PCPs and nearly 450,000 members are in our new payment model. We’ve seen quality increase across the board for physicians in our payment transformation program, whether they were at the top of the quality scale or had room for improvement. And that means better care and better outcomes for everyone. Quality, patient satisfaction and total cost of care have all been positively affected by the program.”

The state’s largest health insurer said improvements in quality and cost have allowed it to invest more money into primary care.

“We’re now able to pay our local PCPs, on average, above the national median,” Mugiishi said. “In 2019, we’ve invested more money in developing the capabilities of physician organizations to support doctors. We’ve asked the organizations to focus on physician burnout.”

But physician advocacy group Hawaii Medical Association said doctors are reporting they are “struggling to meet their costs of providing care under this new payment plan.” For the first time, a workforce assessment shows a decrease in the overall number of physicians practicing in the islands, HMA said.

“A lot of physicians are upset about it,” said Chris Flanders, HMA executive director. “There’s no data to see if the program’s saving money and improving quality like the intent was.”

The American Academy of Pediatrics Hawaii Chapter said local pediatricians surveyed are experiencing “emotional and physical exhaustion.”

“This appears to be due to stresses caused in large part by the capitation program of a single health insurance company in Hawaii,” the group wrote in testimony supporting the bill. “We have concerns that these stresses, if left unchecked, will degrade the future practice of pediatrics and adversely affect the health care of our pediatric population.”

The statewide physician shortage continues to hover around 700 as compared with similarly sized communities nationwide, according to the latest estimates from the University of Hawaii’s Hawaii/Pacific Basin Area Health Education Center. That number is projected to grow to 1,500 over the next decade as “more physicians retire early or leave Hawaii to practice in other states.”

State Insurance Commissioner Colin Hayashida told lawmakers in written testimony that the department does not have the expertise to study the issue, which would require hiring outside contractors at an estimated cost of at least $250,000.

A number of physicians testified that the current doctor shortage, particularly on the neighbor islands, is attributed in large part to “inadequate” reimbursements under the current payment model. High-quality primary care requires reimbursement rates of between $45 and $64, twice the current rate from HMSA, said Dr. Michelle Mitchell of Hawaii Family Health in written testimony.

“If any one of us had the answer to fair and reasonable reimbursement, I believe this would not be such a nationally debated issue. The solution isn’t easy,” she said. “However, continuing to follow a path that has been already proven its malfunction, for the purpose of continued study is nothing short of harmful to our communities, our families and our state.”