KUALA LUMPUR, Dec 12 — The Life Insurance Association of Malaysia (LIAM) has voiced strong support for the proposed introduction of diagnosis-related groups (DRG) payment model to regulate private health care charges and curb escalating medical costs.
“The industry will be represented on the DRG Technical Committee. The industry is very much supportive of DRG as hospitals will need to work within a fixed and pre-agreed price,” LIAM chief executive officer Mark O’Dell told CodeBlue. “This will require them to do what is necessary and should help reduce costs and unnecessary diagnostics and other charges.”
CodeBlue understands that discussions to establish a DRG Technical Committee, led by the Ministry of Health’s (MOH) Health Transformation Office, are still in the preliminary stages.
Under the DRG model, hospital cases are categorised into groups based on diagnoses and procedures. This system establishes standard payment rates by providing a fixed amount for each group rather than itemising individual charges. Hospitals must operate within this predetermined budget, which is negotiated in advance between payers and hospitals.
Dr Kuljit Singh, president of the Association of Private Hospitals Malaysia (APHM), said that private hospitals are open to the concept and are willing to engage in discussions. “We are happy to discuss and understand more about it as we go along in this issue,” he said.
In a statement cited by the New Straits Times, Dr Kuljit also called for a comprehensive analysis of factors driving health care costs, including the impact of advanced technologies, digitalisation, and medical supply pricing.
He said that private hospitals will collaborate with stakeholders from the insurance industry, pharmaceuticals, Bank Negara Malaysia (BNM), and the MOH to develop effective treatment cost models in the coming weeks.
Dr Kuljit also highlighted that private hospitals contributed approximately RM6 billion to Malaysia’s gross domestic product (GDP) last year and provided employment for over 45,000 people. He added that cutting-edge interventions like robotic surgery and personalised treatment plans are projected to contribute an additional RM11 billion to the country’s GDP.
“As we adapt to regulated cost structures, it is vital to highlight that a strong, innovative private health care sector is key not only to economic growth but also to ensuring high-quality health care for the Malaysian population,” he said.
