Hawaii Medical Service Association, the state’s largest health insurer, and Hawaii Pacific Health, the operator of several major hospitals in Hawaii, reached an agreement today on what HMSA will pay the hospitals for services. The new contract will take effect on Feb. 1.

HMSA warned its members earlier this month that if no agreement was reached they may have to pay more for services at HPH facilities, which include Kapiolani Medical Center for Women & Children, Pali Momi Medical Center, Straub Clinic & Hospital and Wilcox Memorial Hospital & Kauai Medical Clinic

HMSA President and CEO Robert Hiam said in a statement: "Our agreement with Hawaii Pacific Health furthers our efforts to create a payment system that ties financial incentives to improved quality and delivery of care and positive patient outcomes. We believe that transitioning to this new payment model and away from simply paying for services based on volume and regardless of outcomes is a vital part of creating an economically sustainable health care delivery system."

Chuck Sted, president and CEO of Hawaii Pacific Health, said: "Hawaii Pacific Health is proud to take the lead in changing how health care is delivered in our state … Everyone benefits from this new contract – payers, providers and most importantly, patients.

"Breaking new ground always comes with unique challenges," said Hiam. "Throughout these negotiations, our goal was always to balance fair compensation for Hawaii Pacific Health with our responsibility to our employer groups and members to provide access to quality, affordable health care. We are extremely grateful to our members for their support and patience as we worked to reach a new contract."