Hawaiian plan adopts shared-risk model

August 1, 2012

A large health insurer in Hawaii is taking an aggressive step away from the traditional fee-for-service delivery system.

HONOLULU-A large health insurer in Hawaii is taking an aggressive step away from the traditional fee-for-service delivery system. Hawaii Medical Service Association (HMSA), a Blue Cross and Blue Shield organization, and Hawaii Pacific Health (HPH), an integrated health system, are forming a new statewide population health management model.

The model directly links more than 50% of HPH's future payment rate increases to specific measures to improve quality, mitigate costs and improve access. For the physician network and the four system hospitals, it's a shared-savings and shared-losses arrangement.

The agreement, which will be implemented in 2014, is based on the premise that higher quality care will produce some short-term cost savings but will ultimately improve health and yield long-term savings. HPH plans to meet certain quality standards by outlining best practices for diagnostic services, for example.

Michael A. Gold, president and chief operating officer at HMSA, says the agreement, which covers 701,000 HMSA members, includes specific measurements that are generally tied to Healthcare Effectiveness Data and Information Set (HEDIS) measures as well as generally accepted quality outcomes for hospitals. While the outcomes and payment rates are clearly defined as part of the arrangement, Gold says how HPH reaches those goals will be up to the provider and physicians.

"What we are interested in is not so much how they achieved that care management for the patient, but the results that they get," he says.

The organizations completed a detailed nine-month planning process to clearly define the agreement and how success will be measured. To show their commitment to the new model, HPH and HMSA have entered into a five-year contract with mutual benefits and shared risk.

"When we are talking about management of chronic diseases, management of a diabetes patient, we have to know exactly how that's defined, what it looks like and how we mutually consider success against that goal," Vara says.

HPH will now be reimbursed for care-management services that HMSA had previously administered, which translates to an estimated 90% growth in preventive care and chronic management services for HPH.

The arrangement will place significant responsibility on HPH as a provider, but Vara says he believes the system has the infrastructure in place to achieve the defined outcomes.

HPH plans to meet the quality demands by using a technology infrastructure that centers on an electronic medical record system that includes a patient portal to help facilitate communication between physicians and patients. Vara says if primary care physicians are able to communicate with their patients through emails and telephone calls as a possible alternative to an office visit, they will be able to expand access to those patients who need to be seen by a physician in the office.

"If we are truly going to be intent about decreasing the rate of emergency room utilization, the fact is, while it's more costly care it's also a revenue driver," Vara says. "We have to be certain that we are going to be financially viable in the future."