Health Care Costs Will Rise Further If TPAs Remain Unregulated — MMA

The business of TPAs involves patient care, therefore the Ministry of Health must ensure they are regulated, according to MMA.

The Malaysian Medical Association (MMA) calls for the regulation of Third Party Administrators (TPAs) to curb unethical practices such as fee-splitting and to protect the health care system against commercialism.

As the issue has an impact on health care delivery for the population, we call on MPs to address the matter in the upcoming parliamentary session.

TPAs are privately owned managed care organisations hired by companies to manage their employee health benefits. These middlemen in private health care earn from providing managed care services to employers and from charges to private GP clinics to be listed as a panel clinic.

The majority of private GPs rely on TPAs for the network of clientele (companies) they provide and administrative services managing the various employers (companies).

Private GPs will not be able to sustain their practice from solely relying on out-of-pocket paying patients. As much as 50 per cent of private clinic patients come under the category of managed care.

One of the issues that have been brought to light is the practice of fee-splitting, where TPAs take a percentage from the total bill charged to patients, leading to increased costs incurred among private GPs and specialists who are involved.

This can potentially compromise patient care. The MMA has pointed out that some TPAs have been known to deduct 10 to 15 per cent from the total bill.

Over time, this can affect the sustainability of the private clinic and the quality of patient care being provided as the GPs involved might be forced to make cost-cutting decisions or even adjustments in charges to cover losses.

We wish to remind all private medical practitioners that under the guidelines set by the Malaysian Medical Council (MMC), fee-splitting is unethical practice.

If left unchecked, these unethical practices in our health care system will lead to a further escalation in health care costs, in particular private primary care services.

Since the Ministry of Health (MOH) claims that it does not regulate Third-Party Administrators (TPAs), we urge the government to take action against private medical practitioners involved in fee-splitting. By doing so, TPAs will be pressured to comply with ethical standards.

Despite the MMA’s engagements with the MOH on the matter since 2015, there has been no regulatory action to address the issue. The absence of regulation and oversight of TPAs has been a lingering problem even though it has been highlighted in the Malaysian Productivity Council Report 2016.

Even Bank Negara Malaysia (BNM), which regulates insurance providers, has remained passive concerning the regulation of TPAs, despite the fact that they handle claims for insurance providers. 

High Registration Fees

TPAs also charge private GP clinics high registration fees of up to RM5,000 just to be listed as a panel clinic. We find this fee to be unreasonable as the TPAs already earn a substantial amount from providing services to their clients (employers).

It is also unfair for GPs who are just starting their private practice. Many of these private GPs were former contract doctors in the public health care system.

Delayed Payments And Claim Rejections

Many GPs are faced with financial challenges as a result of delayed payments and the rejection of claims by TPAs.

Sometimes, GPs are notified of these rejections long after the service has been provided, creating a backlog of unpaid services that clinics depend on for their cash flow​​​​.

While this may seem to be an administrative issue to be sorted out between private GP and the TPA, it has an impact on the operations of the clinic.

Staff salaries, rental, and other commitments need to be paid on time. Issues in employee health benefit claims at private specialist centres are also leading to delayed treatments.

Health care costs can increase when health conditions worsen as a result of these delays.

Operational Inefficiencies

The unstandardized registration and verification processes among different TPAs cause confusion and inefficiency at GP clinics, further compounding the administrative burden when more time and attention should be given to patient care.

The inconvenience caused to patients can affect the reputation of the clinic.

Lack Of Transparency

Most TPAs prohibit private GPs from disclosing information from their contractual agreement such as eligibility and coverage with the enrollees.

This lack of information hinders the registration process and the delivery of care, leaving many patients unaware of their coverage limitations. Oftentimes, it leads to a misunderstanding between patient and the private GP.

Pricing And Fee Cap Issues

While TPAs enforce fee caps set by employers as a cost-control measure, it is also the responsibility of employers to ensure that their employees receive quality care.

These caps can impede effective treatment, especially for cases involving multiple diagnoses and medications.

Many TPAs, through their contractual agreement with clients, also prohibit private GPs from accepting co-payments from patients even if the patient is willing to pay for any additional treatment required.

This too, can have an effect on the quality of care being provided which should be based on patient’s needs.

Many patients end up making multiple visits to the clinic as a result because their complaint could not be fully addressed on their first visit, due to the fee cap.

Regulatory Inaction And Recommendations

Despite ongoing concerns from medical associations and practitioners, regulatory bodies like the MOH and BNM have shown a lack of decisive action regarding the regulation of TPAs.

Although there are provisions in the Private Healthcare Facilities and Services Act (PHFSA) for managed care in Part XV of the Act, the MOH has clarified that TPAs are not defined as health care facilities under this Act, hence there is no regulation and enforcement for TPAs, even though the Act has been in force since 2006.

Additionally, BNM only regulates insurance companies, leaving TPAs outside their jurisdiction. Given these regulatory gaps, it is crucial for the government to establish a mechanism to effectively oversee TPAs and ensure compliance with health care standards.

As solutions to these issues involving TPAs, MMA proposes:

  • Addressing fee-splitting in contracts.
  • Establishing an authoritative body to regulate TPAs and enforce ethical practices to protect patients and private medical practitioners.
  • Standardising processes and creating a unified clinic registration system.


The ongoing absence of regulation for TPAs in Malaysia has led to serious concerns among private GPs and private specialists.

This issue necessitates an urgent review and overhaul of the system to ensure ethical practices, duty of care, high care standards, and financial fairness.

The business of TPAs involves patient care, therefore the MOH must ensure they are regulated.

Dr Azizan Abdul Aziz is the president of the Malaysian Medical Association (MMA).

  • This is the personal opinion of the writer or publication and does not necessarily represent the views of CodeBlue.

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