Bank Negara: Insurers To Set Health Insurance Co-Payment Caps

Bank Negara said today it is up to insurers to set the maximum cap on co-payments in health insurance; minimum is 5%. BNM also said the premium for MHIT products with co-payment features is 19%-68% lower than those without, depending on co-payment level.

KUALA LUMPUR, July 6 — Bank Negara Malaysia (BNM) confirmed today that it is not capping co-payments in health insurance, but will instead allow insurers to determine the maximum limits.

The central bank’s statement was issued within 24 hours after CodeBlue reported a statement from the Galen Centre for Health and Social Policy yesterday that highlighted potential financial catastrophe for households, following BNM’s decision to mandate insurers/ takaful operators (ITOs) to provide co-payment options in medical and health insurance and takaful (MHIT) products.

“ITOs are expected to offer a range of co-payment levels that cater to varying financial needs and circumstances of consumers,” BNM said in its statement today that sought to “clarify recent commentaries” on the implementation of co-payment requirements for MHIT products.

“Co-payments are also subject to a maximum cap set by ITOs which serves to limit the amount of expenses borne by policy owners/ takaful participants.”

According to BNM’s “Medical and Health Insurance/ Takaful Business” policy document issued last February 29, Paragraph 9.4(a) states that the minimum co-payment amount is 5 per cent of claimable expenses, “subject to a maximum co-payment limit to be set by the licensed ITO” and/ or an RM500 deductible.

“With the option of co-payment, consumers can avail themselves to lower-cost MHIT products based on their financial circumstances and needs. MHIT products with co-payment features are not new in the Malaysian market,” BNM said in its statement today.

“It is observed that the premium/ contribution level for MHIT products with co-payment features is 19 per cent to 68 per cent lower compared to similar products without co-payment features depending on the level of co-payment.”

BNM also said that from September 1 this year, ITOs must offer consumers an option to purchase MHIT products with a co-payment feature.

“Consumers who have already purchased MHIT products without a co-payment feature can continue with their existing MHIT products at renewal. ITOs can also continue to offer MHIT products without a co-payment feature to new consumers.”

However, the central bank’s press statement did not say what would happen from January 1, 2025, such as whether existing MHIT products without a co-payment feature can continue to be sold, renewed, or updated from next year.

Paragraph 9.4(c) of BNM’s February 29 policy document states that ITOs must design “all new” individual medical reimbursement insurance/ takaful products with a minimum 5 per cent co-payment feature.

Footnote 12 defines “new product” as including “any changes to benefits and limits, including via rider add-ons, of any existing product as at 29 February 2024.”

“The minimum co-payment feature can be in the form of co-insurance/ co-takaful and/or deductible. For the avoidance of doubt, licensed ITOs are no longer permitted to design new medical reimbursement insurance/ takaful products without the minimum co-payment feature,” reads Footnote 13.

Although BNM’s policy document did not specify when ITOs will no longer be allowed to design new MHIT products without a co-payment feature, the Galen Centre said yesterday that this will be enforced from next year and expects co-payment features to eventually replace existing products.

Under Footnote 13, BNM’s policy document also states that ITOs cannot offer any add-ons in their MHIT products to reduce or fully waive the co-payment portion.

However, Paragraph 9.5(a) allows ITOs to “exercise discretion to consider any financial hardships or extenuating circumstances faced by the policy owner/ takaful participant when deciding whether or not to waive the requirement for the policy owner/ takaful participant to make co-payment at time of a claim, subject to respective internal governance and procedures.”

The central bank’s press statement today reiterated ITOs’ discretion to waive co-payments in circumstances of “any financial hardships or extenuating circumstances.”

Neither BNM’s policy document nor its media statement explained what would happen if a policyholder cannot make the co-payment at the time of filing a claim, such as whether ITOs simply must waive the co-payment or whether ITOs can seek payment from the patient through instalments with interest.

BNM’s press statement also repeated, from its policy document, the listing of circumstances in which co-payments shall not apply: emergency treatment, including in accident cases; outpatient treatment for follow-up treatments arising from critical illnesses such as cancer or kidney dialysis; and treatment sought at a government health care facility.

Appendix 1 of BNM’s policy document – which lists these three circumstances in which the co-payment feature shall not apply – also states that “a licensed ITO shall obtain the Bank’s prior written approval to provide additional circumstances beyond those listed above. Such applications shall be submitted with relevant details and clear justifications to the Bank.”

BNM’s press statement today said higher take-up of co-payment MHIT products is aimed at helping to contain medical inflation in Malaysia by “controlling the over-consumption of health services, alongside other health care reforms envisaged in the Health White Paper published by the government.”

“These include improving the transparency of medical costs to support consumers in making more informed choices when seeking treatment and transforming the health services delivery. As such, a whole-of-nation approach is critical to address medical cost inflation across the health care value chain.”

The central bank added that Malaysia recorded medical cost inflation at 12.6 per cent last year, significantly higher than the 5.6 per cent global average.

Essentially, BNM’s press statement today did not contain any policy reversal, but simply reiterated points from its February 29 policy document that came into effect last June 1, except for certain provisions with later dates of effect.

After CodeBlue’s post on X yesterday on the Galen Centre’s criticism of BNM’s new health insurance co-payment policy – which has received three million views at the time of writing – many Malaysians criticised the central bank that was perceived as favouring the insurance industry or pushing the burden of cost management from private hospitals to patients.

Some pointed out that insurance companies may also force people to switch to co-payment plans by drastically hiking up premiums for plans without co-payments.

“It occurs to me that among the three groups (health care providers, insurers, patients) involved, the burden of lowering costs has been placed onto the patients – the group with the least power to affect prices, least ability to choose their care, and the most affected,” pharmacist Mark Cheong wrote on X.

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