Insurance companies and takaful operators denied requesting for “cuts” from hospitals

LIAM, PIAM and MTA would like to confirm that none of their member insurance companies and takaful operators have requested for “cuts” from hospitals for the medical expenses incurred by their policyholders. The three Associations view such unfounded allegations made by the hospitals with serious concerns.

Insurance companies and takaful operators through LIAM, PIAM and MTA had worked closely with the hospitals and third party administrators to ensure that the cost of healthcare is maintained at an affordable level.

In recent years, premium rate increases have been driven by high inflation in healthcare costs, which averaged 12% p.a. during the period of 2010 to 2014. Going forward, this is projected to increase at a rate of 15% each year due to a number of reasons:

– Demands for better healthcare services from a more affluent segment of the population;

– An aging population and a higher prevalence of chronic and lifestyle diseases such as hypertension, diabetes and obesity are other factors contributing to the increase in healthcare costs;

– Technological advances in healthcare lead to an increase in the utilisation of advanced healthcare treatment technologies in medical facilities. For example, we have evolved from X-ray to CT (Computerized Tomography) scan and now to MRI (Magnetic Resonance Imaging). With medical innovation, consumers have a wider choice of diagnostic treatments; and

– Increase in the cost of drugs and treatments.

Currently, the 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 stay, laboratory investigations, nursing care, use of equipment and operation room and drugs are not regulated. In view of this, there is a wide range of costs differences among private hospitals.

In order to manage the rising healthcare costs, there are a number of measures that insurance companies and takaful operators would like to be implemented, such as:

– For the Government to regulate and make public the recommended retail price of pharmaceutical products, medical devices (e.g. stents, implants) and medicines. Whilst doctors’ fees are regulated, currently there is no regulation to curtail the increase in the prices of drugs;

– For the Government to mandate that all hospitals publish the fees for the cost of treatments. This is to provide a choice to policyholders to select the hospital in which he/she would like to be treated and to be aware of the amount that their insurers and takaful operators are able to reimburse;

– Hospitals to create awareness to consumers that a more detailed billing of charges can be provided upon request so that consumers are aware of the breakdown of the cost of the treatments/medicines provided to them; and

– Healthcare providers especially the private hospitals to provide greater transparency in the pricing of all healthcare products and services.

Insurance companies and takaful operators will continue to work with the Ministry of Health, Bank Negara Malaysia and healthcare providers to ensure that medical treatments are charged at fair prices and treatments recommended are clinically required.

Medical costs are on the rise. Insurance companies and takaful operators will continue to use best efforts to maintain health insurance premiums at a fair and affordable level with the cooperation of all stakeholders for the benefit of all consumers.

STATEMENT BY THE LIFE INSURANCE ASSOCIATION OF MALAYSIA (LIAM), PERSATUAN INSURANS AM MALAYSIA (PIAM) AND MALAYSIAN TAKAFUL ASSOCIATION (MTA) ON THE ALLEGATION THAT INSURANCE COMPANIES RECEIVING A “CUT” FROM HOSPITALS