HHSC gives notice it will drop insurance provider

If two Hawaii health care organizations cannot agree on a new contract by May 5, thousands of people could be impacted.

Hawaii Health Systems Corporation operates several Big Island hospitals including Hilo Medical Center, Ka‘u Hospital and Kona Community Hospital, among others.


HHSC currently has a contract with insurance company University Health Alliance, but after months of negotiations, HHSC informed UHA it intends to terminate the relationship if the parties cannot reach an agreement by May 5.

UHA’s members include 4,000 employer groups and 57,000 individuals statewide.

“HHSC believes that its hospitals should be paid at market rates for the critical health care services that they provide to the communities that we serve,” HHSC’s Chief Financial Officer Edward Chu told the Tribune-Herald on Monday. “That is HHSC’s goal in these contract negotiations with UHA.”

While UHA President and CEO Howard Lee remains hopeful an agreement will be reached, he was surprised by the notice from HHSC to terminate the relationship.

“We had been bargaining with HHSC in good faith over many months and were surprised by its official notification,” Lee told the Tribune-Herald on Tuesday. “Neither party wants to have a nonparticipating network situation, and are diligently working to avoid this. We believe strongly that it is in the best interests of our members for HHSC to remain in our provider network.”

UHA was established in 1996 by a local group of physician teachers at the University of Hawaii John A. Burns School of Medicine. Early on, UHA entered into a hospital services agreement with HHSC.

UHA currently pays between 80% and 90% of hospital and emergency room payments, depending on the type of plan and coverage.

“We are hopeful that we will be able to reach a mutually beneficial agreement with UHA shortly to remain in their network,” Chu said.

He added contract negotiations with commercial payors like UHA are a normal part of the hospital industry, and contract terms and length can vary.

“I want to make it clear that access to HHSC facilities and benefits for emergency services remain unchanged,” Lee said. “Neither will change in any way for our members.”

Emergency services must be provided by hospitals, as required under the federal No Surprises Act, which was designed to protect individuals from “surprise billing” for emergency services from an out-of-network provider without prior authorization.

“This (agreement) should only impact those seeking elective, not emergency, care,” Lee said. “That averages only 16 elective cases per month on the (Big Island).”

Lee added that UHA will continue to pay HHSC at the participating-provider benefit level, which is up to the eligible charge for services according to each member’s benefit plan. Any applicable copays or balance-billing that the hospital applies will be billed directly to the member by HHSC.

“We will pay the hospital directly for our covered portion,” he said. “We will work with the patient to find alternate providers of elective (nonemergency) services to help avoid a balance-bill situation for them.”

Alternative facilities on Hawaii Island include Big Island Endoscopy Center, Hawaii Vision Surgical Suites, Kona Ambulatory Surgery Center, Pacific Endoscopy Center, Punahele Associates Hilo Community Surgery Center, and Queen’s North Hawaii Community Hospital.

“We will continue to actively negotiate on behalf of our members,” Lee said. “We believe our current contract and proposal is fair, and we remain hopeful that an agreement will soon be reached for the best interest of our members and the community.”

Email Grant Phillips at gphillips@hawaiitribune-herald.com.

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