KUALA LUMPUR (Dec 8): The proposed oversight on managed care organisations (MCOs) and healthcare third-party administrators (TPAs) would pave the way for regulation of medical bills, MBSB Research said.
The proposal, alongside other measures to address medical inflation, is likely to force hospitals to prioritise clinical standardisation and cost efficiency, said the research house.
"The new regulations for TPAs/MCOs authority within the medical space will be a challenging notion for other private healthcare providers, but major hospital networks may find benefits through other means including medical tourism," it said.
"Hospitals that can manage internal costs below the fixed-fee system will increase their margins and vice versa," the research house said.
TPAs have been in the spotlight as they are alleged to have influenced or overridden a doctor's professional judgement for cost-saving reasons, limiting care of patients under insurance claims.
The note follows a recent report citing the nation's oldest TPA PMCare Sdn Bhd, which has called for a standalone Act overseen by the Ministry of Health (MOH) to regulate TPAs and MCOs.
PMCare said it saw lower medical cost inflation, partly as it relies on general practitioners to gatekeep and reduce unnecessary referrals to hospitals — but going for case-by-case basis and without using blanket clinical opinion, which has been banned by the government, in order to prioritise patient care.
According to MBSB Research, the proposed oversight would provide regulators with mandatory transparency and scrutiny of contractual terms, which will in turn provide "visibility into the administrative price suppression and potential anticompetitive clauses".
"The information will serve as strong evidence for future regulations, potentially leading to mandates of minimum periods, standard consultation fee floors and banning specific interference clauses," MBSB Research said.
The exercise will pave the way for the transition into diagnosis-related group (DRG) system implementation.
While it improves patient care by eliminating the risk of TPAs denying claims, the DRG pricing pressure combined with stricter clinical standards — including case-by-case review by TPAs — could squeeze margins especially for routine procedures, the research house said.
"Compliance with MOH’s registry requirements and [proving] clinical necessity for claims will increase administrative and medico-legal costs," it said.
"Major providers can actively participate in industry bodies to negotiate with insurers and TPAs on cost review and billing structure, while seeking a fair pricing model that is supported by both MOH and BNM. This can aid in accurately reflecting the hospitals’ financial reality in the new reimbursement mechanisms," it added.
PMCare reported average costs for hospitalisation admission at RM9,300, general practitioner visits at RM131 and specialists at RM526 under its panel members.