Insurers & Private Hospitals Scam

Insurance companies and Takaful operators have assured that they have not requested “cuts” from hospitals for the medical expenses incurred by policy holders. 

Three insurance companies – The Life Insurance Association of Malaysia (LIAM), General Insurance Association of Malaysia and Malaysian Takaful Association (MTA) – published in a joint statement that they viewed such unfounded allegations made by several private hospitals with serious concerns. 

This comes after the Ministry of Health (MOH) announced on 11 August that it will work with Bank Negara Malaysia (BNM) to investigate the ongoing practice of private health insurance companies imposing administrative charges on private hospitals. 

According to Health Minister, Datuk Seri Dr S. Subramaniam, the matter had long been in practice by almost all private health insurance companies nationwide. However, it has only come to his attention recently, after receiving complaints from several private hospital representatives.

Unethical practices could lead to hikes of medical costs

Subramaniam expressed that if these allegations were true, the practice “was unethical and could cause medical costs in the country to soar.”

“For example, a hospital bills the insurance company a total of RM1,000 for the patient’s treatment. The insurer only pays RM900 to the hospital while the remaining RM100 is calculated as an administrative of service charge,” he explained.

In addition, the private hospitals have reported having to follow the health insurance company’s requirement or risk losing patients. 

“If a private hospital refuses to pay the administrative charges, the insurer will remove them from the list of panel hospitals and advise their clients to seek treatment at another hospital,” said Subramaniam. 

The insurance companies and Takaful operators have rebutted, claiming that they have – through LIAM, PIAM and MTA – “worked closely with the hospitals and third party administrators to ensure the cost of healthcare is maintained at an affordable level.” 

Malaysia health insurance to face double-digit inflation regardless

According to a global survey done by consulting and broking entity Mercer Marsh Benefits, which is affiliated to Marsh Insurance Broking (Malaysia) Sdn Bhd (MIB), Malaysians are facing a double-digit healthcare inflation. 

Medical trend rates 2017 survey data. Photo credit: Mercer Marsh Benefits/The Edge Markets

The inflation which stood at 11.5% in 2016, is projected to rise to 12.7% this year. This is at a much faster pace than the average of 10.7% in Asia last year, which is projected to ease to 10.2% this year. 

The survey, conducted in 63 countries between March and May this year, also states that among the reasons for the hike of inflation rates are the increased utilization of medical servces as more people are succumbing to lifestyle diseases, the growing ageing population and the costly advancement of medical technology. 

Senior vice-president of MIB, Ho Mun Kiat also remarked that the weak ringgit is another major factor that has driven the inflationary pressure on healthcare – due to more expensive imported medical equipment and supplies. 

Insurance associations call for more transparency among private hospitals

The insurance associations also echoed the reasons, and stated that the more affluent segment of the population is also demanding better healthcare services. 

They highlighted that fees charged by doctors in private hospitals for consultation and performance of procedures are regulated under the Thirteenth Schedule of the Private Healthcare Facilities and Services Regulations. 

However, other components of the hospital charges – such as, fees for hospital stays, laboratory tests, nursing care, drugs, use of equipment and operation rooms – are not regulated. “This contributed to a wide range of cost differences among private hospitals,” they said. 

In light of this, they have suggested that the government make it compulsory for all hospitals to publish the fees for the cost of treatments. This would provide a choice to policy holders on which hospital he/she would like to be treated and encourage transparency all around. 

They have also assured that they will cooperate with the MOH, BNM and healthcare providers to ensure medical treatments are charged at fair prices and treatments recommended are clinically required.

Subramaniam has since directed the ministry’s secretary-general, Datuk Seri Dr Chen Chaw Min to liaise with BNM to take appropriate action and ensure that health insurance companies conducted business professionally.