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Hawaii’s He@lthcare Revolution

Vast changes aim to control costs and improve care

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Hawaii’s changes are just one piece of the nationwide healthcare revolution aimed at improving care while slowing costs, which are rising 7 percent to 10 percent annually.

“We’re already spending 50 percent more than any other developed nation – that’s 16 percent to 17 percent of our GNP on healthcare,” says Raethel. “Other countries are spending 10 percent.” Yet America’s healthcare outcomes are no better than those of nations that spend much less per patient.

HMSA, the state’s largest health insurer, has already signed its first agreement – with Queen’s – on the new reimbursement framework. By 2013, HMSA expects to base 15 percent of reimbursements to hospitals, primary-care physicians and specialists on the quality of care delivered rather than the number of services rendered. The figure has been 2 percent.

“It would be wonderful if we could actually reduce costs, but our goal is to flatten out the cost curve and get the rate of medical inflation at the same rate as general inflation,” says Raethel. “Currently it’s something like three times the rate of the Consumer Price Index.”

Max Botticelli, president and CEO of UHA, one of the state’s smaller health-insurance players, with 33,000 members, says changes at UHA will begin next year and will echo those that HMSA is implementing, with increases going first to primary-care providers. “It’s a very significant change. It needs to happen, but making it happen is a tough job.”

Botticelli says UHA will evaluate care using quality measures developed by The Joint Commission, a nonprofit that accredits 17,000 hospitals and healthcare organizations nationwide. “They’ve come up with a bunch of measurements for hospitals and what we would love to do is just say we’ll let those people measure it and we’ll give hospitals bonuses based on those measurements.”

Nonetheless, Botticelli says, this kind of massive change will take years to accomplish, partly because reimbursements are now tied to a complex system of universal procedural codes. For example, “If someone sews up a laceration, there’s a code for that, and the reimbursement is determined by that,” he says.

Changes could also be slowed by Medicare’s minimal reimbursements. “They are a huge, unfunded liability,” says Botticelli. “Reimbursements are so low that providers tend to shift costs to the private insurers and one way to do that is generate a lot of services. So the real change will occur when the primary source of income (for providers) are the quality measures.”

HMAA, too, is looking to HMSA as the change leader while doing “early-stage due diligence” on reimbursement reforms, says John Henry Felix, chairman and CEO. “This includes evaluating policies that are more aligned with compensation for positive health outcomes rather than straight fee for services,” says Felix in a statement. “Our goal is to keep our members’ costs down while improving their health, and helping ensure a strong provider network is in place.”

“What HMSA is doing is really valuable. … It’s in all of our best interests to do a better job and provide better outcomes,” says John McComas, CEO of AlohaCare, a managed-care health insurer that serves 75,000 patients covered by Quest and Medicare. Quest serves low-income families; Medicare covers seniors.

Historically, McComas says, there has been more of an “adversarial relationship” between health insurers and providers, but the two sides are now moving toward partnerships. For example, AlohaCare is rewarding providers who increase the number of pregnant women coming in for prenatal care. “If you can save one premature delivery a year, you can save half-a-million dollars.”

As HMSA’s contracts with all the hospitals expire over the coming year, the local health-insurance giant expects to enter into new agreements with each – similar to the one signed with Queen’s. HMSA is already negotiating with Hawaii Pacific Health.

Under the new rules, doctors and hospitals will be reimbursed – and could also earn extra money – if patients get better faster or maintain healthier lives. For example, currently, fewer than 10 percent of diabetics, both locally and nationally, consistently receive the eight interventions called for as part of generally accepted best practices. Under HMSA’s new model, physicians would be rewarded for ensuring these patients are treated using those best practices.

     Chuck Sted, president and CEO of Hawaii Pacific Health,
     stands next to Dr. Thomas Nordyke, one of HPH’s first
     physicians able to access its Electronic Medical Records
     system. Over the last seven years, HPH spent $54 million
     installing EMR.
     Photo: Olivier Koning

“We really believe there are enough dollars in the system now. It’s just how they’re spent,” says Raethel. “The current model rewards hospitals and doctors primarily on volume. It incentivizes quantity over quality. … Very little money is tied to results for that patient.”

In addition to higher upfront costs, such far-reaching changes initially create anxiety and uncertainty for doctors. “When we were first rolling it out they (the physicians) didn’t want to start because they were afraid of the change,” says Dr. Dennis Scheppers, who was a family practitioner in Lihue, Kauai, associated with Wilcox Memorial Hospital when HPH started the changes seven years ago.

“When you first start it, you have to slow down,” says Scheppers, now medical and information director for HPH’s Epic system. “But then time speeds up and with the wealth of information you have with these patients, no one would change it for anything. One hundred percent are embracing it fully. And I don’t think anyone has had a problem with reimbursement.”

Physicians are seeing gains every day, says Scheppers. “Patients are occasionally discovered to have really high blood sugar and they get care right away before they get sick. I’ve seen that happen many times. They go to a routine physical, with their OB maybe, and they do blood tests, and the results pop up immediately with their primary care doctor. Now, instead of waiting for a piece of paper to make it through snail mail, we have results at our fingertips.”

What all of this is going to mean for HMSA’s 680,000 members is collaborating more closely with their primary-care physicians and understanding how to better manage their health, a concept known as the patient-centered medical home. It could also mean greater emphasis on generic drugs and using cheaper tests first, like ultrasound scans, before more expensive ones like MRIs.

“If you’ve done everything you can to take responsibility for your own health, you could see a reduced copay,” says Sted of HPH, which created a Web portal called MyHealthAdvantage, where patients can view their records, and get immediate updates from physicians and automatic health reminders. “It’s very empowering. Patients feel like they’re back in control of their own health.”

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