The Association of Private Hospitals Malaysia (APHM) remains deeply committed to actively addressing the ongoing challenge of medical cost inflation. As part of its continued efforts, APHM met with the Minister of Finance II, the Minister of Health, as well as representatives from Bank Negara Malaysia (BNM) and Insurance and Takaful Operators (ITOs) today at the Ministry of Finance in Putrajaya to present APHM’s proposed recommendations.
In addition to presenting APHM’s proposal, APHM took the opportunity during this meeting to express support for the insurance sector’s proposed recommendations published by the Life Insurance Association of Malaysia (LIAM), the Malaysian Takaful Association (MTA) and Persatuan Insurans Am Malaysia (PIAM) on March 7, 2025.
While APHM is broadly aligned with these recommendations, there are specific points of recommendation by ITOs that will require further input and consideration from APHM to ensure alignment and cohesion.
APHM is committed to actively contributing to these recommendations and working collaboratively with ITOs.
APHM also hopes that, in the best interest of patients and continued access to care, insurance companies will maintain cashless reimbursements and not remove this option to private hospitals, as both private hospitals and ITOs move forward together on aligned initiatives.
APHM is encouraged by the joint leadership of the Minister of Finance II and the Minister of Health in spearheading the set-up of collaborative industry efforts as outlined in the proposal.
These collaborative efforts, through joint committees, are anticipated to take place in the coming month. APHM remains resolute in its commitment to fostering a sustainable and transparent health care system, and, in partnership with the government and all stakeholders, we are determined to work together to identify innovative, evidence-based, and effective solutions to strengthen Malaysia’s health care system.
APHM’s Proposed Measures To Address Medical Inflation
1. Expansion and Inclusion of Primary Care in the Patient Care Pathway: APHM members are keen and willing to play a role in training and co-managing of patients to allow primary care to provide basic procedures at the primary care level. This will significantly reduce cost and increase the appropriateness of seeking hospital services.
2. Establish an Independent Health Care Cost and Reimbursement Review Committee: The establishment of an Independent Health Care Cost and Reimbursement Review Committee is proposed to oversee fair pricing and reimbursement practices and conduct regular reviews of premium pricing and reimbursement structures to ensure they align with actual health care costs and prevailing market conditions.
This committee, consisting of representatives from the Ministry of Finance (MOF), Ministry of Health (MOH), APHM, and ITOs, would promote structured, data-driven negotiations between hospitals and ITOs, fostering transparency and ensuring the long-term sustainability of the health care system.
3. Enhance Transparency in Health Claims Volume and Costs: APHM supports efforts to establish fair and appropriate claims payouts to health care providers while ensuring premium structures remain sustainable. A comprehensive review of industry costs, including distribution expenses and provider reimbursements, will help achieve a balanced approach that promotes cost efficiency and long-term financial stability.
Greater transparency in these areas will also enable a thorough assessment of premium structures and improve the management of agency and acquisition costs, contributing to a more sustainable health care financing system in Malaysia.
4. Establish a Joint Working Committee between APHM and ITOs to Review Billing Structure and Ensure Fair Pricing: A dedicated working committee is proposed, comprising representatives from APHM member hospitals and ITOs, with the oversight of the Ministry of Finance and Bank Negara Malaysia, and the support of the Ministry of Health.
Its primary objective is to review the current billing structure and address the issue of cross-subsidisation, ensuring that charges more accurately reflect the true cost of delivering health care services, including drugs and medical supplies.
This initiative aims to improve transparency in hospital pricing while maintaining affordability for patients. The committee will also work towards developing a fair pricing model for drugs and consumables, balancing cost sustainability for hospitals with reasonable reimbursement structures.
By aligning reimbursement rates with market realities, the initiative seeks to prevent selective coverage and cost-shifting, fostering a more equitable and financially sustainable health care system.
5. Pre-Policy Medical Screening for Insurance Seekers: APHM emphasises the importance of addressing the under-declaration of health status by individuals applying for insurance policies.
Since pre-policy medical screenings are not mandatory for all insurance policies, applicants may not fully disclose pre-existing conditions or family health history, which could affect their future coverage.
Additionally, APHM recommends that all private hospitals reinforce to their clinicians the importance of fair and transparent reporting of medical history and diagnoses in medical reports, to ensure accurate insurance coverage adjudication.
6. Establishment of a National Medico-Legal Committee: The establishment of a National Medico-Legal Committee is proposed to review and recommend measures to manage and contain medico-legal claims and payouts, including the mandatory use of arbitration.
The set-up of this committee aims to mitigate the practice of defensive medicine and reduce legal and insurance costs, both of which are direct and indirect contributors to the rise in health care costs.
7. Review and Implement Recommendations to Reduce Regulatory Burden: A clear plan will be developed by APHM to move towards self-regulation while upholding high standards, with continued oversight by the MOH, similar to practices in neighboring countries.
This measure is aimed at reducing the regulatory burden on health care providers and hospitals, including those outlined in previous government-led initiatives under the Malaysia Productivity Corporation.
This will also strengthen the role of the MOH and support the alignment with the National Health Care Financing Scheme.
8. Establish an Industry-Wide Joint Communication Working Group between APHM and ITOs: The purpose of this proposed working group is to develop effective communication strategies and tools aimed at promoting the appropriate use of medical policies by all stakeholders, including patients and insurance agents.
Furthermore, hospitals and ITOs would be able to effectively collaborate on public education initiatives to empower policyholders with the knowledge they need to make informed health care decisions and better understand their coverage.
Dr Kuljit Singh is president of the Association of Private Hospitals Malaysia (APHM).
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