The Hawaii Medical Service Association (HMSA) today announced that its annual operating results included a shortfall after taxes of $64.39 million.
The shortfall represented 3.9 percent of revenue, and was due in large part to a significant increase in hospital and physician costs over the previous year.HMSA also announced that it filed documents with the state Insurance Division requesting health plan rate adjustments for its 11,000 community-rated employer groups, which are businesses with fewer than 200 employees.
The state has 60 days to review the rate request.
The average rate increase requested for HMSA’s prevalent plan, the Preferred Provider Plan (PPP), is 7.8 percent.
The plan year for community-rated groups begins July 1.
HMSA health plan rates are based on actual health care costs (i.e., benefit usage by members), health care cost trends (cost projections and inflation), and health plan administrative expenses.
Based on current cost trends and last year’s $64.39 million shortfall, HMSA requested the following rate adjustments:
HMSA Preferred Provider Plan (PPP) – Average increase of 7.8 percent (includes drug, dental and vision).
Health Plan Hawaii (HPH) Plus – Average increase of 15.1 percent (includes drug, dental and vision).
HMSA CompMED – Average increase of 10.5 percent (includes drug, dental and vision).
“We know it’s hard for business owners right now during the current economic downturn, and the last thing we want to do is make things more difficult,” said Van Ribbink. “But the reality is our members’ health care costs are continuing to outpace revenue, and we must adjust rates to cover costs.”
“At the same time, it’s clear that current health care cost trends are simply not sustainable,” said Van Ribbink. “We must significantly bend the cost curve down so that the community can afford access to quality health care. To accomplish this, HMSA is fundamentally changing its provider reimbursement model. The traditional ‘fee for service model’ is being transitioned to a ‘quality outcome and efficiency model.’ Under this model, providers will be paid for the health outcomes of our members as well as for delivering health care services in an efficient manner.”
