Hawaii Medical Service Association has decided to phase in a major overhaul of its payment system to doctors.

The state’s largest health insurer, with 3,000 doctors in its network, is changing the way it reimburses its primary care physicians to a fixed monthly rate for each patient in a practice, instead of paying them based on the number of patients they see and the number of services they provide.

The change will allow doctors to spend more time with patients who need more care, HMSA said, while giving them the flexibility to use innovative ways to care for others over the phone, via email or text.

“There’s some real positives that include the ability to talk to patients via the phone to possibly even text or email them and create nontraditional visits. For busy working professional people who have a challenge getting into the office, it does make a real difference that is positive,” said Dr. Scott Miscovich, a Kaneohe primary care doctor who is part of the pilot program. “This is unlike anything, this is a complete transformation change.”

The company originally planned to roll out the new payment system to all primary care doctors on Jan. 1 but changed course based on feedback from 100 physicians in a pilot program that started on April 1. Groups of doctors now will move to the new system throughout the year.

“Our plan now is to introduce payment transformation gradually, beginning with about 100 additional PCPs (primary care physicians) who will join the program in January to complement the original 100 pilot physicians,” HMSA said.

The insurer also plans to change several components of the program to ease the administrative burden on physicians. Providers must invest in information technology and hire additional staff to handle increased reporting required under the new system, as well as more aides, care coordinators and social workers to follow up with patients and make sure they’re getting preventive screenings and checkups. The change will not affect the amount patients pay to see their doctors, HMSA said.

Some doctors fear the changes will reward physicians for seeing fewer patients and inevitably hurt patient care.

“You’re being paid up front to care for patients, not for procedures, so that is administratively simpler,” said Dr. Stephen Kemble, a psychiatrist and internist who plans to retire in August due to the changes. “But it has an incentive to skimp on care and to avoid treating sicker people. To counteract that incentive they require detailed documentation and data reporting and quality measures. In other words, they give it to you in one hand and take it away in the other.”

A quarter of Hawaii doctors are over the age of 65 and will not want to invest more money in their practices to comply with the new reimbursement system, Kemble said.

“In Hawaii we have an older physician workforce. Anyone older in a position to retire is going to leave their practice before they’re going to hire staff and (invest in) computer systems,” he said. “We could lose a quarter of our doctors over the next two to three years. That’s the danger.”

The monthly amount paid to physicians is dependent on the number of patients they take care of, how sick these patients are, and the quality of the care that they provide, HMSA said. It is calculating initial physician reimbursements based on the doctor’s average total payments for medical services over a period of three years. Eighty percent of that is paid as a fixed monthly base payment. Doctors must earn the other 20 percent of their reimbursement by checking patients once a year to talk about their health and resources available. Payments can increase over time based on the quality and value of care delivered.

In addition, physicians who care for more complex patients with chronic diseases will be paid more than those who provide basic medical care.

If doctors do not accept the new model, they can either choose to go outside the HMSA network and forgo payment bonuses, or accept the existing fee structure with no increases and performance payments.

“HMSA’s new program allows doctors to increase the amount of pay they receive if they meet quality measures that were recommended by an advisory panel made up of Hawaii physicians,” the insurer said.

HMSA said the change is necessary to improve the health of its 720,000 members. Nationally, the move to this new system — known as capitated payments — is being driven by the Affordable Care Act and the federal Medicare program in an effort to improve the overall health of the population and contain rising medical costs.

“I understand the reasoning behind it and understand the end goals. The concern is that we don’t want cost cutting at the expense of time and services on the patient,” said Dr. Chris Flanders, executive director of the Hawaii Medical Association, representing about 1,100 physicians. “If you keep costs down by not ordering testing and whatever it might be, then you also make more money. But it may be that those are tests that are needed.”

State Sen. Josh Green (D, Naalehu-Kailua-Kona), a Hawaii island emergency room doctor and head of the Hawaii Independent Physicians Association, a group of 50 physicians who have been a part of HMSA’s pilot program, said doctors in the pilot project have worked closely with HMSA to work out bugs in the program and have gradually become more comfortable with it.

“It’s a major change from the traditional payment model so we expected a lot of concern at first, but on the whole, physicians appear to be adapting well to it,” he said. “It’s not without bumps in the road. Some doctors still have concerns about the administrative burdens. But in general, people have been able to focus more on the total health of our population instead of worrying about seeing enough patients to pay the bills. The total focus is shifting to caring for the whole population … rather than episodic care, and that’s better for health care.”