KUALA LUMPUR (Nov 13): The Health Ministry (MOH) on Wednesday said it is exploring the use of the Diagnostic Related Groups (DRG) — a system that categorises hospital patients based on the complexity of their cases to determine the cost of treatment rather than itemising each charge — for private hospitals, amid surging hospital bills.

“It is still a work in progress. I have spoken to my medical adviser, Tan Sri Abu Bakar Suleiman, and we are really looking into it,” said Health Minister Datuk Seri Dr Dzulkefly Ahmad.

“This would be a better way to understand how you [private hospitals] are charging, so we would be in a better position to mitigate this [rising] medical inflation,” he told reporters after officiating the launch of the Association of Private Hospitals Malaysia (APHM) Factbook 2024.

DRG has been touted as a healthcare costing information for health managers and policymakers. It generates information that is useful for efficient and equitable allocation of resources.

In September, Dzulkefly was reported by health news website CodeBlue that his ministry had yet to decide on whether to regulate private hospital charges, following public outrage over huge hospital bills.

The issue erupted when insurance industry veteran Mark O'Dell shared a RM18,837.55 bill for a minor hernia surgery at a private hospital in Kuala Lumpur, which went viral. The bill had 13 categories and 95 line items. O'Dell, who is the chief executive of Life Insurance Association of Malaysia, called for the introduction of DRG.

Dzulkefly also urged private healthcare providers to take measures to control increasing healthcare costs, noting that the impact on the public could be significant.

He said there is a need for continued discussions to make private healthcare services more affordable, despite the challenges posed by medical inflation, which rose about 12.6% in 2023 — a level he described as relatively high compared to recent years.

The medical inflation rate for last year is even higher than the global average of 5.6% and Asia Pacific's 6.2%.

“Even though there are some measures of control in terms of doctors' fees, it is alarming to note that the hospital fees have increased very significantly,” he said.

“The impact to the rakyat is high, so there must be further discussions to ensure the prices of medical services in private healthcare can be more reasonable,” the minister said, as he urged the private healthcare sector to "do more to control increasing healthcare costs for the benefit of the rakyat”.

Dzulkefly also defended Bank Negara Malaysia' (BNM) decision to mandate that insurers and takaful operators provide a co-payment option in all new health and medical insurance products, at a minimum of 5% of claimable expenses, citing high medical inflation rate last year.

“I think it’s not without reason or rationale that BNM introduced this co-payment feature. Everyone has to play their part," he said when asked how this co-payment feature addresses the issue of overcharging, given that it shifts the burden of rising healthcare costs onto patients without addressing the root cause.

"But if you ask the ministry, I think it [the co-payment] would not be good for us. Imagine the worst-case scenario where they [the rakyat] end up going out of pocket. The rakyat will have to be more meticulous about who they want to buy insurance from,” he added.

Starting from September this year, insurers and takaful operators (ITOs) are required to offer consumers the option to purchase medical and health insurance takaful (MHIT) products with the copayment feature.

This refers to a specified amount or percentage that a policyholder or takaful participant must pay when incurring a medical expense covered under an MHIT policy or takaful certificate. The remaining medical expenses will be covered by the licensed ITO based on the coverage provided by the MHIT policy or takaful certificate.