Some of Hawaiʻi doctors say they are struggling financially under the Hawaii Medical Service Association's new payment model, arguing it is exacerbating the state's serious physician shortage and extending wait times for patients.

As HMSA Changes Doctors' Pay To Lower Costs, State Isn't Watching

Evaluating the impact of the changes has been difficult because the state doesn't have the means to monitor the wholesale changes underway that potentially impacts an estimated 750,000 HMSA members, more than 60 percent of the state's residents.

The state insurance division says it lacks jurisdiction to monitor the latest payment system, and Hawai'i lawmakers recently failed to pass a measure that calls for data collection on the changes.

Two years ago, HMSA, the state’s largest insurer, launched quite possibly the most expansive remaking of Hawaiʻi's health care structure in decades. Called payment transformation, the changes put in place a new compensation system for Hawaiʻi doctors – one that has been receiving mixed reviews.

"There’s a group of physicians that like the way that it works and feels like their practice is doing well," said Chris Flanders, executive director of the Hawaiʻi Medical Association, the professional group representing doctors. "But there’s a vocal portion of our physician groups who are struggling with this and whose practices aren’t thriving under payment transformation."

Flanders said a major shortcoming in evaluating payment transformation is the lack of data showing whether the new model is working. It's also not clear whether physicians are able to generate enough through patient care reimbursements to not only sustain their practices but to thrive, he said.

HMSA now pays doctors what's called a capitated rate that averages $24 per patient, per month. For some primary care physicians, it's not enough to keep their doors open, they say.

Hilo primary care doctor Michelle Mitchell is one who left payment transformation to return to the old way of receiving reimbursements -- fee for services. Doctors provide services and are paid by HMSA without a cap.

"It’s not a matter of us being greedy," said Mitchell. "Studies are actually showing that the payment for such a [payment transformation] model is actually twice what HMSA is showing. I don’t think it’s unfair for us to expect to be able to pay our bills."

Dr. Steve Kemble, a local health policy expert and psychiatrist, said Hawaiʻi is already about 25 percent short of the number of doctors it needs, estimated at 800 statewide.

"Either HMSA is going to have to raise the capitation rate across the board to where primary care practices become viable again or weʻre going to lose half of our primary care doctrors in the next two to three years," Kemble predicted.

HMSA argues that it has already raised the pay by about 10 percent since the program began two years ago and that it plans to increase it further.

Dr. Mark Mugiishi, chief medical officer, said HMSA aims to set the rate so it's above the national average.

"We want to target a larger than national target so that Hawaiʻi becomes the best place to practice, because not only do you get to practice in a way that’s good for you and your patient, but also youʻre gonna get paid more than the national average," he said.

Hawaiʻi lawmakers took up the issue of HMSA's payment changes again this year. House Bill 1464 would have directed the state insurance commissioner to examine the HMSA’s payment system with that of other states.

The House unanimously approved the measure but the Senate Committee on Ways and Means and Committee on Commerce, Consumer Protection and Health did not hold hearings on it, killing it for this session.

"This is something that I think we have no choice -- we need to do this. We need to ascertain a proper capitation rate to keep our doctors here," said state Rep. John Mizuno, chair of the House Committee on Health.

Mizuno plans to push the bill again next year but says legislators need data to corroborate these stories of struggling doctors, who he said should step forward.

"And again, we’ve heard from a few but not enough saying that, 'I’m gonna close shop, I can’t afford it,'" he said.

Until the state is in a position to gather its own data, only HMSA which has advocated the changes is monitoring the changes.

"That’s all the reason why the state should be concerned about what the effects of this program is," Flanders said.

Flanders said given HMSA's reach, its payment changes have the potential to affect everyone in Hawaiʻi, not just doctors.

"This is an important issue," said Flanders. Not only does it potentially impact anyone trying to get in to see a doctor when they need it and how long they have to wait but whether "we’re able to recruit physicians to come into the state and practice and stay here."

Also read:

Are Medical Costs Dropping Under HMSA's New Doctor Payment Plan?

Hawaiʻi's Small Independent Doctors May Be Struggling Under New Payment System