This article first appeared in The Edge Financial Daily on August 16, 2017

KUALA LUMPUR: Malaysia-based insurance companies yesterday refuted allegations that they had requested for “cuts” from hospitals for medical expenses incurred by their policyholders.

The Life Insurance Association of Malaysia (LIAM), General Insurance Association of Malaysia and Malaysian Takaful Association (MTA) said in a joint statement that they viewed such unfounded allegations made by the hospitals with “serious concerns”. The General Insurance Association of Malaysia is also known as Persatuan Insurans Am Malaysia (PIAM).

“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% per annum during the period of 2010 to 2014,” the associations said.

Going forward, the associations said they expect the insurance premium to rise by 15% a year due to factors like an ageing population, demand for better healthcare services by a more affluent segment, higher prevalence of chronic and lifestyle diseases, and higher cost of drugs and treatments.

They also highlighted that while fees charged by doctors in private hospitals are regulated under the Thirteenth Schedule of the Private Healthcare Facilities and Services Regulations, other components of hospital charges such as fees for hospital stay, laboratory investigations, nursing care, use of equipment and operation rooms, as well as drugs, are not regulated.

“In view of this, there is a wide range of cost differences among private hospitals,” they said.

To manage rising healthcare costs, the grouping suggested that the government regulate and make public the recommended retail prices of pharmaceutical products, medical devices — like stents and implants — and medicines.

They would also like to see the government mandate all hospitals to 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,” they reasoned.

They also suggested that hospitals work to create awareness among consumers that a more detailed billing of charges can be provided upon request, so they can see the breakdown of the cost of treatments or medicines provided.

“Healthcare providers, especially the private hospitals, [should] provide greater transparency in the pricing of all healthcare products and services,” they added.