HMSA, Hawaii Pacific Health reach agreement - Hawaii News Now - KGMB and KHNL

HMSA, Hawaii Pacific Health reach agreement

 By Howard Dicus - bio | email

HONOLULU (HawaiiNewsNow) - Hawaii Medical Service Association and Hawaii Pacific Health have announced agreement in principle on a new contract that will reward hospitals for favorable medical outcomes, not just pay for services rendered.

The agreement, announced Wednesday afternoon, was a pleasant surprise after a sudden, acrimonious and public disagreement between the two parties over how much HMSA should pay HPH.

HMSA is the state's Blue Cross-Blue Shield representative and its largest health insurer, covering three quarters of Hawaii residents. Hawaii Pacific operates the Straub, Kapiolani, Pali Momi and Wilcox hospitals.

"All health care organizations and providers have an obligation to do what's necessary to fix Hawaii's fragile health care environment," Hawaii Pacific CEO Chuck Sted said in a statement, while HMSA CEO Bob Hiam said the agreement has the potential "to transform the delivery of health care."

Both sides had publicly embraced the idea that it could slow the rise in medical costs if hospitals were compensated in part for positive outcomes rather than just for drugs prescribed, tests ordered, and other services provided. The thinking is that current pay systems create a financial incentive to order more services, while the new model focuses more on people getting well. For example, sources on both sides say one feature of the new system will be to reward hospitals for a lower number of rehospitalizations.

The recent dispute, in which Hawaii Pacific Health wanted compensation to reflect the start-up costs for new accounting procedures to measure positive outcomes, came to public notice when HMSA put a notice on its Web site warning consumers that there was a possibility that HMSA would no longer have a relationship with HPH when its current contract expired.

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