Issues & Projects
Medicare Physician Reimbursement for Hawaiʻi
Background: Financial concerns have led to an increasing number of physicians leaving the Hawaiian islands and/or closing their practices, especially in rural areas throughout the state. For example, more than 50% of providers are contemplating leaving, retiring from medicine, or moving to the mainland (Hawaiʻi Physician Workforce Assessment 2023).
Issue: The discrepancy between healthcare costs in Hawaiʻi and Medicare reimbursements have contributed to financial burdens for providers, as Medicare’s Geographic Practice Cost Index (GPCI) is not believed to adequately adjust reimbursement rates to account for high cost of living expenses and disproportionately low wages In Hawaiʻi.
Project: RHRPC is developing a technical paper and policy brief to provide further insight and policy recommendations for adjusting Medicare’s Geographic Cost Practice Index (GPCI) in order to ensure fair reimbursement rates for Hawaiʻi physicians who participate in Medicare.
Healthcare Workforce Shortages
Background: The Health Resources and Services Administration (HRSA) National Health Service Corps (NHSC) program provides federal resources and funding opportunities (such as scholarships, loan repayment programs, and workforce training) to promote equitable healthcare access in communities that are geographically isolated and economically or medically vulnerable.
Issue: HRSA’s Health Professional Shortage Areas (HPSA) system was established to address the geographic maldistribution of healthcare professionals. However, to properly allocate funding to mitigate health professional shortages, the methodology used to calculate the HPSA score is critical and must be accurate and appropriate. Organizations such as the Association of Asian Pacific Community Health Organizations (AAPCHO) have shown that the methodology overlooks issues such as language barriers, higher costs of living, and travel time to care that are more prevalent in Hawaiʻi. This has likely led to lower amounts of federal funding to Hawaiʻi through programs such as the National Health Service Corps Loan Repayment Program.
Project: RHRPC is developing a technical report and policy brief to provide a detailed overview of the HPSA designation (including relevant statutory and regulatory history and a summary of HPSA scoring methodology and calculations), an overview of HPSA-related funding programs, issues with the HPSA designation as it applies to non-contiguous areas like Hawaiʻi, and recommendations for consideration by policymakers at the state and federal level.
Geographic Impacts
Background: Healthcare workforce shortages in Hawaiʻi stem from a variety of factors, ranging from high costs to relatively low healthcare service reimbursement issues to access barriers to incentive programs to funding and resources that are exacerbated by the state’s non-contiguous geography.
Issue: There had previously been no study that holistically addresses these health and spatial economic factors in Hawaiʻi.
Project: RHRPC partnered with the University of Hawaiʻi Economic Research Organization (UHERO) to create technical reports that characterize the impact of Hawaiʻi’s economic geography on healthcare provision and health equity in the state. The main objectives of these reports included:
- Describing Hawaiʻi’s unique geography and how it impacts our economy, with particularly relevant economic geography mechanisms identified that affect healthcare provision and access.
- Analyzing the impact of geographical healthcare access barriers in Hawaiʻi affecting healthcare utilization/access and health outcomes.
One of the technical reports has been published and can be found here.
Transportation and Travel Impact on Health
Background: Hawaiʻi is one of the most isolated population centers in the world. While only 10% of the state’s total land area is classified as urban, approximately 70% of the state’s population is concentrated in the Honolulu metropolitan area on the island of Oʻahu (U.S. Census Bureau), where most specialized healthcare services are provided. The remaining 30% of the population of Hawaiʻi resides in rural communities distributed throughout the various islands.
Issue: Hawaiʻi’s rural communities have limited access to emergency medical services (EMS) as well as reliable or affordable transportation options to access primary care and specialized healthcare services. These issues are particularly prominent for pregnant mothers.
Project: RHRPC is currently working with stakeholders to identify and confirm specific transportation barriers for providers and patients to determine potential policy solutions that could improve transportation resources for healthcare access.
GET Exemption for Medical Services
Background: The General Excise Tax (GET) acts as a replacement in Hawaiʻi for the more common sales tax levied in other states. There are over 50 exemption categories, including but not limited to non-profit organizations, drug manufacturers, real estate sales, and mass transit. Private profit healthcare providers were previously not exempt.
Issue: Hawai‘i has an estimated unmet need of 776 full-time-equivalent (FTE) physicians. Many have articulated financial burden, particularly the GET assessment, as a major obstacle to practicing in the State since they are prohibited from passing the costs onto patients, unlike other businesses. Instead, they must absorb these increase costs.
Project: In collaboration with the Hawaiʻi Provider Workforce Shortage Taskforce, RHRPC developed a policy brief to help educate State lawmakers on the potential implications of SB1035. The brief noted the benefits of a GET exemption for medical services including but not limited to improving healthcare access, especially in rural communities and enhancing economic viability. Click here to view the full brief.
Result: SB1035 passed in the Hawaiʻi State Legislature and was signed into law (Act47) by the Governor on June 3, 2024. This law exempts private medical services from the GET starting in January 2026.